S-4/AfalseRMG Acquisition Corp. III0001838108Non-Accelerated Filertruetruefalse0.20.21.21.21.2http://fasb.org/us-gaap/2022#DerivativeGainLossOnDerivativeNet1.2P10D00018381082023-01-012023-03-3100018381082021-12-3100018381082022-12-310001838108us-gaap:CommonClassBMember2022-12-310001838108us-gaap:CommonClassBMember2021-12-310001838108us-gaap:CommonClassAMember2022-12-310001838108us-gaap:CommonClassAMember2021-12-310001838108rmgc:CommonClassaSubjectToRedemptionMember2021-12-310001838108rmgc:CommonClassaSubjectToRedemptionMember2022-12-3100018381082021-01-012021-12-3100018381082022-01-012022-12-310001838108rmgc:CommonStockSubjectToRedemptionMember2022-01-012022-12-310001838108rmgc:CommonStockSubjectToRedemptionMember2021-01-012021-12-310001838108us-gaap:CommonStockMemberus-gaap:CommonClassAMember2020-12-310001838108us-gaap:AdditionalPaidInCapitalMember2022-12-310001838108us-gaap:RetainedEarningsMember2020-12-310001838108us-gaap:CommonStockMemberus-gaap:CommonClassBMember2022-12-310001838108us-gaap:CommonStockMemberus-gaap:CommonClassBMember2020-12-3100018381082020-12-310001838108us-gaap:RetainedEarningsMember2022-12-310001838108us-gaap:CommonClassAMemberus-gaap:CommonStockMember2022-12-310001838108us-gaap:AdditionalPaidInCapitalMember2020-12-310001838108us-gaap:RetainedEarningsMember2021-12-310001838108us-gaap:AdditionalPaidInCapitalMember2021-12-310001838108us-gaap:CommonClassBMemberus-gaap:CommonStockMember2021-12-310001838108us-gaap:CommonStockMemberus-gaap:CommonClassAMember2021-12-310001838108us-gaap:AdditionalPaidInCapitalMember2021-01-012021-12-310001838108us-gaap:RetainedEarningsMember2021-01-012021-12-310001838108us-gaap:RetainedEarningsMember2022-01-012022-12-3100018381082023-03-310001838108us-gaap:CommonClassAMember2023-03-310001838108us-gaap:CommonClassBMember2023-03-310001838108rmgc:CommonClassaSubjectToRedemptionMember2023-03-3100018381082022-01-012022-03-310001838108us-gaap:CommonClassBMember2022-01-012022-03-310001838108us-gaap:CommonClassAMember2023-01-012023-03-310001838108us-gaap:CommonClassBMember2023-01-012023-03-310001838108us-gaap:CommonClassAMember2022-01-012022-03-310001838108us-gaap:AdditionalPaidInCapitalMember2023-01-012023-03-310001838108us-gaap:CommonClassBMemberus-gaap:CommonStockMember2023-01-012023-03-310001838108us-gaap:RetainedEarningsMember2023-01-012023-03-310001838108us-gaap:CommonStockMemberus-gaap:CommonClassAMember2023-01-012023-03-310001838108us-gaap:RetainedEarningsMember2022-01-012022-03-310001838108us-gaap:CommonClassAMemberus-gaap:CommonStockMember2022-01-012022-03-310001838108us-gaap:CommonStockMemberus-gaap:CommonClassBMember2022-01-012022-03-310001838108us-gaap:AdditionalPaidInCapitalMember2022-01-012022-03-310001838108us-gaap:RetainedEarningsMember2023-03-310001838108us-gaap:AdditionalPaidInCapitalMember2023-03-310001838108us-gaap:CommonClassAMemberus-gaap:CommonStockMember2023-03-310001838108us-gaap:RetainedEarningsMember2022-03-310001838108us-gaap:CommonClassBMemberus-gaap:CommonStockMember2022-03-3100018381082022-03-310001838108us-gaap:CommonClassBMemberus-gaap:CommonStockMember2023-03-310001838108us-gaap:AdditionalPaidInCapitalMember2022-03-310001838108us-gaap:CommonStockMemberus-gaap:CommonClassAMember2022-03-3100018381082020-10-142020-10-140001838108us-gaap:IPOMember2021-02-092021-02-090001838108us-gaap:PrivatePlacementMember2021-02-092021-02-090001838108us-gaap:OverAllotmentOptionMember2021-02-092021-02-090001838108us-gaap:IPOMember2021-02-090001838108us-gaap:OverAllotmentOptionMember2021-02-090001838108rmgc:PrivatePlacementWarrantsMemberus-gaap:PrivatePlacementMember2021-02-090001838108rmgc:PrivatePlacementWarrantsMemberus-gaap:PrivatePlacementMember2021-02-092021-02-090001838108rmgc:ClassOrdinarySharesSubjectToPossibleRedemptionMember2022-12-310001838108rmgc:ClassOrdinarySharesSubjectToPossibleRedemptionMember2021-12-310001838108rmgc:WorkingCapitalConvertibleDebtMember2022-12-310001838108us-gaap:CommonClassAMember2021-01-012021-12-310001838108us-gaap:CommonClassAMember2022-01-012022-12-310001838108us-gaap:CommonClassBMember2022-01-012022-12-310001838108us-gaap:CommonClassBMember2021-01-012021-12-310001838108us-gaap:IPOMemberrmgc:PublicWarrantsMember2021-02-092021-02-090001838108rmgc:PublicWarrantsMemberus-gaap:IPOMember2021-02-090001838108rmgc:PrivatePlacementWarrantsMember2022-12-310001838108rmgc:PrivatePlacementWarrantsMember2022-01-012022-12-310001838108rmgc:RelatedPartyLoansMember2020-12-310001838108rmgc:RelatedPartyLoansMemberrmgc:WorkingCapitalLoansWarrantMember2022-12-310001838108rmgc:AdministrativeSupportAgreementMember2022-01-012022-12-310001838108rmgc:AdministrativeSupportAgreementMember2021-01-012021-12-310001838108rmgc:AdministrativeSupportAgreementMember2022-12-310001838108rmgc:AdministrativeSupportAgreementMember2021-12-310001838108rmgc:RelatedPartyLoansMemberrmgc:PromissoryNoteMember2022-12-310001838108rmgc:AdvisorMember2022-12-3100018381082021-02-092021-02-090001838108us-gaap:IPOMember2022-12-310001838108rmgc:CommonClassaNotSubjectToRedemptionMember2021-12-310001838108rmgc:CommonClassaNotSubjectToRedemptionMember2022-12-310001838108us-gaap:CommonClassBMember2021-02-090001838108us-gaap:CommonClassBMember2021-01-300001838108us-gaap:CommonClassBMember2021-01-302021-01-300001838108rmgc:PublicWarrantsMember2020-12-310001838108rmgc:PrivatePlacementWarrantsMember2020-12-310001838108rmgc:PublicWarrantsMember2022-12-310001838108rmgc:PrivatePlacementWarrantsMember2021-12-310001838108rmgc:PublicWarrantsMember2022-01-012022-12-310001838108rmgc:PublicWarrantsMemberrmgc:RedemptionOfWarrantsWhenPricePerShareOfClassCommonStockEqualsOrExceeds18.00Member2022-01-012022-12-310001838108rmgc:PublicWarrantsMemberrmgc:RedemptionOfWarrantsWhenPricePerShareOfClassCommonStockEqualsOrExceeds10.00Member2022-01-012022-12-310001838108rmgc:RedemptionOfWarrantsWhenPricePerShareOfClassCommonStockEqualsOrExceeds10.00Memberrmgc:PublicWarrantsMember2022-12-310001838108rmgc:RedemptionOfWarrantsWhenPricePerShareOfClassCommonStockEqualsOrExceeds18.00Memberrmgc:PublicWarrantsMember2022-12-310001838108us-gaap:FairValueInputsLevel1Memberus-gaap:MoneyMarketFundsMember2022-12-310001838108us-gaap:FairValueInputsLevel1Member2021-12-310001838108rmgc:PublicWarrantsMemberus-gaap:FairValueInputsLevel1Member2022-12-310001838108us-gaap:FairValueInputsLevel1Memberrmgc:PublicWarrantsMember2021-12-310001838108rmgc:PrivatePlacementWarrantsMemberus-gaap:FairValueInputsLevel3Member2022-12-310001838108us-gaap:FairValueInputsLevel3Memberrmgc:PrivatePlacementWarrantsMember2021-12-310001838108us-gaap:FairValueInputsLevel3Memberus-gaap:MeasurementInputExpectedDividendRateMember2022-12-310001838108us-gaap:FairValueInputsLevel3Memberus-gaap:MeasurementInputExpectedDividendRateMember2021-12-310001838108us-gaap:FairValueInputsLevel3Memberus-gaap:MeasurementInputRiskFreeInterestRateMember2022-12-310001838108us-gaap:MeasurementInputPriceVolatilityMemberus-gaap:FairValueInputsLevel3Member2022-12-310001838108us-gaap:FairValueInputsLevel3Memberus-gaap:MeasurementInputSharePriceMember2021-12-310001838108us-gaap:FairValueInputsLevel3Memberus-gaap:MeasurementInputPriceVolatilityMember2021-12-310001838108us-gaap:MeasurementInputExpectedTermMemberus-gaap:FairValueInputsLevel3Member2021-12-310001838108us-gaap:FairValueInputsLevel3Memberus-gaap:MeasurementInputExpectedTermMember2022-12-310001838108us-gaap:FairValueInputsLevel3Memberus-gaap:MeasurementInputSharePriceMember2022-12-310001838108us-gaap:FairValueInputsLevel3Memberus-gaap:MeasurementInputRiskFreeInterestRateMember2021-12-310001838108us-gaap:FairValueInputsLevel3Memberus-gaap:MeasurementInputExpectedDividendRateMemberrmgc:EmbeddedDerivativeOnWorkingCapitalLoansMember2022-12-310001838108us-gaap:MeasurementInputPriceVolatilityMemberrmgc:EmbeddedDerivativeOnWorkingCapitalLoansMemberus-gaap:FairValueInputsLevel3Member2022-12-310001838108us-gaap:FairValueInputsLevel3Memberus-gaap:MeasurementInputExercisePriceMemberrmgc:EmbeddedDerivativeOnWorkingCapitalLoansMember2022-12-310001838108us-gaap:MeasurementInputRiskFreeInterestRateMemberus-gaap:FairValueInputsLevel3Memberrmgc:EmbeddedDerivativeOnWorkingCapitalLoansMember2022-12-310001838108us-gaap:MeasurementInputExpectedTermMemberrmgc:EmbeddedDerivativeOnWorkingCapitalLoansMemberus-gaap:FairValueInputsLevel3Member2022-12-310001838108us-gaap:FairValueInputsLevel3Member2020-12-310001838108rmgc:EmbeddedDerivativeOnWorkingCapitalLoansMemberus-gaap:FairValueInputsLevel3Member2021-12-310001838108us-gaap:FairValueInputsLevel3Member2021-12-310001838108rmgc:PublicWarrantsMemberus-gaap:FairValueInputsLevel3Member2020-12-310001838108us-gaap:FairValueInputsLevel3Memberrmgc:PrivatePlacementWarrantsMember2020-12-310001838108rmgc:PublicWarrantsMemberus-gaap:FairValueInputsLevel3Member2021-01-012021-12-310001838108us-gaap:FairValueInputsLevel3Member2021-01-012021-12-310001838108us-gaap:FairValueInputsLevel3Memberrmgc:PrivatePlacementWarrantsMember2021-01-012021-12-310001838108us-gaap:FairValueInputsLevel3Member2022-01-012022-12-310001838108rmgc:PrivatePlacementWarrantsMemberus-gaap:FairValueInputsLevel3Member2022-01-012022-12-310001838108us-gaap:FairValueInputsLevel3Memberrmgc:EmbeddedDerivativeOnWorkingCapitalLoansMember2022-01-012022-12-310001838108rmgc:PublicWarrantsMemberus-gaap:FairValueInputsLevel3Member2022-01-012022-12-310001838108us-gaap:FairValueInputsLevel3Memberrmgc:EmbeddedDerivativeOnWorkingCapitalLoansMember2022-12-310001838108rmgc:PublicWarrantsMemberus-gaap:FairValueInputsLevel3Member2022-12-310001838108us-gaap:FairValueInputsLevel3Memberrmgc:PublicWarrantsMember2021-12-310001838108us-gaap:FairValueInputsLevel3Member2022-12-310001838108us-gaap:SubsequentEventMember2023-01-110001838108us-gaap:CommonClassAMemberus-gaap:SubsequentEventMember2023-01-112023-01-110001838108us-gaap:CommonClassAMemberus-gaap:SubsequentEventMember2023-01-110001838108us-gaap:SubsequentEventMemberrmgc:JulyTwoThousandAndTwentyTwoNoteMember2023-03-310001838108rmgc:WorkingCapitalConvertibleDebtMember2023-03-310001838108rmgc:ClassOrdinarySharesSubjectToPossibleRedemptionMember2023-03-310001838108rmgc:PrivatePlacementWarrantsMember2023-03-310001838108rmgc:RelatedPartyLoansMemberrmgc:WorkingCapitalLoansWarrantMember2023-03-310001838108rmgc:PrivatePlacementWarrantsMember2023-01-012023-03-310001838108rmgc:RelatedPartyLoansMemberrmgc:PromissoryNoteMember2023-03-310001838108rmgc:AdministrativeSupportAgreementMember2023-01-012023-03-310001838108rmgc:AdministrativeSupportAgreementMember2022-01-012022-03-310001838108rmgc:AdministrativeSupportAgreementMember2023-03-310001838108us-gaap:IPOMember2023-03-310001838108rmgc:CommonClassaNotSubjectToRedemptionMember2023-03-310001838108rmgc:PublicWarrantsMember2023-03-310001838108rmgc:PublicWarrantsMember2023-01-012023-03-310001838108rmgc:PublicWarrantsMemberrmgc:RedemptionOfWarrantsWhenPricePerShareOfClassCommonStockEqualsOrExceeds10.00Member2023-01-012023-03-310001838108rmgc:PublicWarrantsMemberrmgc:RedemptionOfWarrantsWhenPricePerShareOfClassCommonStockEqualsOrExceeds18.00Member2023-01-012023-03-310001838108rmgc:PublicWarrantsMemberrmgc:RedemptionOfWarrantsWhenPricePerShareOfClassCommonStockEqualsOrExceeds10.00Member2023-03-310001838108rmgc:RedemptionOfWarrantsWhenPricePerShareOfClassCommonStockEqualsOrExceeds18.00Memberrmgc:PublicWarrantsMember2023-03-310001838108us-gaap:CashMemberus-gaap:FairValueInputsLevel1Member2023-03-310001838108us-gaap:FairValueInputsLevel3Memberrmgc:PrivatePlacementWarrantsMember2023-03-310001838108rmgc:PublicWarrantsMemberus-gaap:FairValueInputsLevel1Member2023-03-310001838108us-gaap:MeasurementInputPriceVolatilityMemberus-gaap:FairValueInputsLevel3Member2023-03-310001838108us-gaap:FairValueInputsLevel3Memberus-gaap:MeasurementInputExpectedTermMember2023-03-310001838108us-gaap:MeasurementInputExpectedDividendRateMemberus-gaap:FairValueInputsLevel3Member2023-03-310001838108us-gaap:MeasurementInputRiskFreeInterestRateMemberus-gaap:FairValueInputsLevel3Member2023-03-310001838108us-gaap:FairValueInputsLevel3Memberus-gaap:MeasurementInputSharePriceMember2023-03-310001838108us-gaap:MeasurementInputRiskFreeInterestRateMemberrmgc:EmbeddedDerivativeOnWorkingCapitalLoansMemberus-gaap:FairValueInputsLevel3Member2023-03-310001838108us-gaap:FairValueInputsLevel3Memberus-gaap:MeasurementInputPriceVolatilityMemberrmgc:EmbeddedDerivativeOnWorkingCapitalLoansMember2023-03-310001838108us-gaap:FairValueInputsLevel3Memberrmgc:EmbeddedDerivativeOnWorkingCapitalLoansMemberus-gaap:MeasurementInputExpectedDividendRateMember2023-03-310001838108us-gaap:FairValueInputsLevel3Memberrmgc:EmbeddedDerivativeOnWorkingCapitalLoansMemberus-gaap:MeasurementInputExercisePriceMember2023-03-310001838108us-gaap:MeasurementInputExpectedTermMemberus-gaap:FairValueInputsLevel3Memberrmgc:EmbeddedDerivativeOnWorkingCapitalLoansMember2023-03-310001838108us-gaap:FairValueInputsLevel3Memberrmgc:PrivatePlacementWarrantsMember2023-01-012023-03-310001838108us-gaap:FairValueInputsLevel3Memberrmgc:PrivatePlacementWarrantsMember2022-01-012022-03-310001838108us-gaap:FairValueInputsLevel3Memberrmgc:PrivatePlacementWarrantsMember2022-04-012022-12-310001838108us-gaap:FairValueInputsLevel3Memberrmgc:PrivatePlacementWarrantsMember2022-03-310001838108us-gaap:FairValueInputsLevel3Memberrmgc:EmbeddedDerivativeOnWorkingCapitalLoansMember2023-03-310001838108rmgc:MergerAgreementMemberus-gaap:SubsequentEventMember2023-04-172023-04-170001838108us-gaap:SubsequentEventMember2023-04-162023-04-160001838108us-gaap:SubsequentEventMemberrmgc:MergerAgreementMember2023-05-090001838108rmgc:MergerAgreementMemberus-gaap:SubsequentEventMember2023-05-092023-05-0900018381082023-01-110001838108us-gaap:SubsequentEventMember2023-08-040001838108us-gaap:CommonClassAMemberus-gaap:SubsequentEventMember2023-08-042023-08-040001838108us-gaap:CommonClassAMember2023-01-112023-01-11iso4217:USDiso4217:USDxbrli:sharesxbrli:sharesrmgc:Businessxbrli:purermgc:Dayrmgc:VOTErmgc:itemrmgc:Integerutr:Drmgc:Votermgc:Itemrmgc:Underwriters
TABLE OF CONTENTS
As filed with the Securities and Exchange Commission on August 14, 2023
Registration No. 333-273150
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Amendment No. 1
to
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
RMG Acquisition Corp. III
(Exact Name of Registrant as Specified in Its Charter)
Cayman Islands*
|
|
|
6770
|
|
|
98-1574120
|
(State or other jurisdiction of
incorporation or organization)
|
|
|
(Primary Standard Industrial
Classification Code Number)
|
|
|
(I.R.S. Employer
Identification Number)
|
57 Ocean, Suite 403
5775 Collins Avenue
Miami Beach, Florida 33140
Telephone: (786) 359-4103
(Address, including zip code, and telephone number,
including area code, of Registrant’s principal executive offices)
Philip Kassin
57 Ocean, Suite 403
5775 Collins Avenue
Miami Beach, Florida 33140
Telephone: (786) 359-4103
(Name, address, including zip code, and telephone
number, including area code, of agent for service)
Copies to:
Lorenzo Corte, Esq.
Skadden, Arps, Slate, Meagher & Flom (UK) LLP
22 Bishopsgate
London EC2N 4BQ
United Kingdom
+44 20 7519 7000
|
|
|
Ryan J. Maierson, Esq.
Latham & Watkins LLP
811 Main Street, Suite 3700
Houston, TX 77002
(713) 546-5400
|
Approximate date of commencement of proposed sale
of the securities to the public: As soon as practicable after this registration statement is declared effective and all other conditions to the Business Combination described in the enclosed proxy
statement/prospectus have been satisfied or waived.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with General Instruction G, check the following box: ☐
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering: ☐
If this Form is a post-effective amendment filed pursuant to Rule
462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering: ☐
Indicate by check mark whether the registrant is a large accelerated
filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in
Rule 12b-2 of the Exchange Act.
Large accelerated filer
|
|
|
☐
|
|
|
|
|
|
Accelerated filer
|
|
|
☐
|
|
|
|
|
|
|
|
|
|
|
|
Non-accelerated filer
|
|
|
☒
|
|
|
|
|
|
Smaller reporting company
|
|
|
☒
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 7(a)(2)(B) of the Securities Act. ☐
If applicable, place an X in the box to designate the appropriate rule
provision relied upon in conducting this transaction:
Exchange Act Rule 13e-4(i) (Cross-Border Issuer Tender Offer) ☐
Exchange Act Rule 14d-l(d) (Cross-Border Third-Party Tender Offer) ☐
The registrant hereby amends this registration
statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act or until the registration statement shall become effective on such date as the SEC, acting pursuant to said Section 8(a), may determine.
TABLE OF CONTENTS
The information in this preliminary proxy statement/prospectus is not complete and may be changed. The registrant may not sell the
securities described in this preliminary proxy statement/prospectus until the registration statement filed with the U.S. Securities and Exchange Commission is declared effective. This preliminary proxy statement/prospectus is not an offer
to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.
SUBJECT TO COMPLETION, DATED AUGUST 14, 2023
PROXY STATEMENT FOR
EXTRAORDINARY GENERAL MEETING OF SHAREHOLDERS
AND
EXTRAORDINARY GENERAL MEETING OF WARRANT HOLDERS
OF
RMG ACQUISITION CORP. III
(A CAYMAN ISLANDS EXEMPTED COMPANY)
PROSPECTUS FOR
SHARES OF COMMON STOCK
OF
RMG ACQUISITION CORP. III
(AFTER ITS DOMESTICATION AS A CORPORATION INCORPORATED
IN THE STATE OF DELAWARE), THE CONTINUING ENTITY FOLLOWING
THE DOMESTICATION, WHICH WILL BE RENAMED
H2B2 ELECTROLYSIS TECHNOLOGIES, INC.
IN CONNECTION WITH THE MERGER DESCRIBED HEREIN
Dear RMG Acquisition Corp. III Shareholders and Warrant Holders:
As a shareholder (“RMG III
shareholder”) of RMG Acquisition Corp. III, a Cayman Islands exempted company (“RMG III”, and, after the Domestication as described below, “Domesticated RMG III”
and, after the Effective Time, the “Surviving Corporation” or “H2B2 Electrolysis’’) you are cordially invited to attend the extraordinary general meeting of RMG
III shareholders, at , Eastern Time, on , 2023, at the offices of Skadden, Arps, Slate, Meagher & Flom LLP located at One Manhattan West, New York, New York 10001 (the “Special Meeting”), or
at such other time on such other date and at such other place to which the meeting may be postponed or adjourned, or virtually via live webcast, at https://www.cstproxy.com/ .
As a warrant holder of RMG III (an “RMG
III warrant holder”), you are cordially invited to attend the extraordinary general meeting of RMG III warrant holders, at , Eastern Time, on , 2023, at the offices of Skadden, Arps, Slate, Meagher & Flom LLP located at One
Manhattan West, New York, New York 10001 (the “Warrant Holders Meeting” and, together with the Special Meeting, the “Special Meetings”), or at such other time on
such other date and at such other place to which the meeting may be postponed or adjourned, or virtually via live webcast, at https://www.cstproxy.com/ .
You will be able to attend the Special Meeting and/or the Warrant
Holders Meeting online, vote, view the list of RMG III shareholders and/or RMG III warrant holders entitled to vote thereat and submit your questions during the Special Meeting and/or the Warrant Holders Meeting by visiting . While RMG III
shareholders and RMG III warrant holders are encouraged to attend the Special Meeting and/or the Warrant Holders Meeting virtually, RMG III shareholders and RMG III warrant holders will be permitted to attend the Special Meeting and/or the
Warrant Holders Meeting in person at the offices of Skadden, Arps, Slate, Meagher & Flom LLP only if you (i) are fully vaccinated against COVID-19 and show proof of such vaccination, (ii) complete a visitor health form upon arrival and
(iii) reserve your attendance at least two (2) business days in advance of the Special Meetings by contacting Skadden, Arps, Slate, Meagher & Flom LLP, at One Manhattan West, New York, NY 10001, telephone (212) 735-3000. The accompanying
proxy statement/prospectus is dated , 2023, and is first being mailed to RMG III shareholders and RMG III warrant holders on or about , 2023.
At the Special Meeting, RMG III shareholders will be asked to
consider and vote upon a proposal, which is referred to herein as the “Business Combination Proposal,” to approve and adopt the Agreement and Plan of Merger, dated as of May 9, 2023 (as the same may be
amended from time to time, the “Merger Agreement”), by and between RMG III and H2B2 Electrolysis Technologies, Inc., a Delaware corporation (“H2B2”), a copy of
which is attached as Annex A to the accompanying proxy statement/prospectus. The Merger Agreement provides for, among other things, following the domestication of RMG III to Delaware as described below, the merger of H2B2 with and into
RMG III (the “Merger”), with RMG III surviving the Merger, in accordance with the terms and subject to the conditions of the Merger Agreement, as more fully described elsewhere in the accompanying proxy
statement/prospectus.
The board of directors of RMG III (the “RMG III Board”) has unanimously approved a change of RMG III’s jurisdiction of incorporation by deregistering as an exempted company in the Cayman Islands and continuing and domesticating as a corporation incorporated under
the laws of the State of Delaware (the “Domestication” and, together with the Merger Agreement and other transactions contemplated thereby, the “Business Combination”
and, RMG III following the Domestication, “Domesticated RMG III”). As more fully described elsewhere in the accompanying proxy statement/prospectus, RMG III shareholders will be asked to consider and
vote upon a proposal to approve the Domestication (the “Domestication
TABLE OF CONTENTS
Proposal”). In connection with
the consummation of the Business Combination, RMG III will change its name to “H2B2 Electrolysis Technologies, Inc.” As used herein and in the accompanying proxy statement/prospectus, the “Surviving Corporation” or “H2B2 Electrolysis” refers
to RMG III following the Business Combination, including after such change of name to “H2B2 Electrolysis Technologies, Inc.,” as applicable.
As a result of and upon the effective time of the Domestication,
(i) each of the then issued and outstanding Class A ordinary shares, par value $0.0001 per share, of RMG III (the “RMG III Class A Ordinary Shares”), will convert automatically, on a one-for-one basis,
into a share of Class A common stock, par value $0.0001 per share, of Domesticated RMG III (each, a share of “Domesticated RMG III Class A Stock”), (ii) each of the then issued and outstanding Class B
ordinary shares, par value $0.0001 per share, of RMG III (the “RMG III Class B Ordinary Shares” and, together with the RMG III Class A Ordinary Shares, the “RMG III
Ordinary Shares”), will convert automatically, on a one-for-one basis, into a share of Class B common stock, par value $0.0001 per share, of Domesticated RMG III (each, a share of “Domesticated RMG III
Class B Stock”), (iii) each of the then issued and outstanding redeemable warrants of RMG III (the “RMG III Warrants”) will convert automatically into a warrant to acquire one share of
Domesticated RMG III Class A Stock (each, a “Domesticated RMG III Warrant”) pursuant to the warrant agreement, dated as of February 4, 2021, by and between RMG III and Continental Stock Transfer &
Trust Company (“Continental”), RMG III’s warrant agent (the “Warrant Agreement”) and (iv) each of the then issued and outstanding units of RMG III that have not
been previously separated into the underlying RMG III Class A Ordinary Shares and RMG III Warrants upon the request of the holder thereof (“RMG III Units”), will be canceled, entitling the holder thereof
to one share of Domesticated RMG III Class A Stock and one-fifth of one Domesticated RMG III Warrant. For further information, see the section titled “The Domestication Proposal” of the accompanying
proxy statement/prospectus.
At the Special Meeting, in addition to the Business Combination
Proposal and the Domestication Proposal, RMG III shareholders will be asked to consider and vote upon (i) four separate proposals to approve material differences between RMG III’s Amended and Restated Memorandum and Articles of Association (as
may be amended from time to time, the “RMG III Governing Documents”) and the proposed certificate of incorporation and proposed bylaws of the Surviving Corporation (collectively, the “Organizational Documents Proposals”), (ii) a proposal to elect directors who, upon consummation of the Business Combination, will be the directors of the Surviving Corporation (the “Director Election Proposal”), (iii) a proposal to approve, for purposes of complying with the applicable provisions of Nasdaq Stock Market Listing Rule 5635, the issuance of shares of common stock, par value $0.0001 per share,
of the Surviving Corporation (the “Surviving Corporation Common Stock”) to the H2B2 Securityholders (as defined in the accompanying proxy statement/prospectus) pursuant to the Merger Agreement (the “Stock Issuance Proposal”), (iv) a proposal to approve and adopt the H2B2 Electrolysis Technologies, Inc. 2023 Incentive Award Plan (the “Equity Incentive Plan Proposal”)
and (v) a proposal to approve the adjournment of the Special Meeting to a later date or dates, if necessary, (a) to permit further solicitation and vote of proxies in the event that there are insufficient votes for the approval of one or more
proposals at the Special Meeting or (b) if the RMG III Board determines before the Special Meeting that it is not necessary or no longer desirable to proceed with the proposals (the “Adjournment Proposal”
and, together with the Business Combination Proposal, the Domestication Proposal, the Organizational Documents Proposals, the Director Election Proposal, the Stock Issuance Proposal and the Equity Incentive Plan Proposal, the “Proposals”). The Business Combination will be consummated only if the Business Combination Proposal, the Domestication Proposal, each of the Organizational Documents Proposals, the Director Election
Proposal, the Stock Issuance Proposal and the Equity Incentive Plan Proposal (collectively, the “Condition Precedent Proposals”) are approved at the Special Meeting, and the Warrant Amendment Proposal
(as defined below) is approved at the Warrant Holders Meeting. Each of the Condition Precedent Proposals is cross-conditioned on the approval of each other. The Adjournment Proposal is not conditioned upon the approval of any other proposal.
Each of these Proposals is more fully described in the accompanying proxy statement/prospectus, which RMG III shareholders are encouraged to read carefully and in its entirety.
At the Warrant Holders Meeting, RMG III warrant holders will be asked
to consider and vote upon (i) a proposal, which is referred to herein as the “Warrant Amendment Proposal,” to approve and adopt the amendment to the Warrant Agreement (the “Warrant Amendment”), a copy of
which is attached as Annex J to the accompanying proxy statement/prospectus, to provide that, upon Closing, each of the then outstanding Domesticated RMG III Warrants will be canceled and exchanged for the right to receive 0.075
shares of Surviving Corporation Common Stock and (ii) a proposal to approve the adjournment of the Warrant Holders Meeting to a later date or dates, if necessary, (a) to permit further solicitation and vote of proxies in the event that there
are insufficient votes for the approval of the Warrant Amendment Proposal at the Warrant Holders Meeting or (b) if the RMG III Board determines before the Warrant Holders Meeting that it is not necessary or no longer desirable to proceed with
the proposals (the “Warrant Holders Adjournment Proposal”).
As a result of and upon the closing of the Business Combination (the
“Closing”), among other things, (i) all outstanding shares of common stock, par value $0.00001 per share, of H2B2 (the “H2B2 Common Stock”) as of immediately
prior to the Closing, and all shares of H2B2 Common Stock reserved in respect of the outstanding options to purchase shares of H2B2 Common Stock (each, an “H2B2 Option”) as of immediately prior to the
Closing, will be canceled in exchange for the right to receive, or converted into an option to purchase (in the case of an H2B2 Option, if and to the extent earned and subject to its terms), an aggregate of approximately shares of
Surviving Corporation Common Stock equal to the quotient obtained by dividing (A) $ by (B) $10.00, (ii) each of the then issued and outstanding shares of Domesticated RMG III Class A Stock, will
convert automatically, on a one-for-one basis, into a share of Surviving Corporation Common Stock, (iii) a
TABLE OF CONTENTS
number of shares of Domesticated RMG III Class B Stock equal to six percent of the
shares of Surviving Corporation Common Stock issuable in respect of H2B2 securities, subject to adjustments set forth in the Merger Agreement and described in the accompanying proxy statement/prospectus, will convert into issued and
outstanding shares of Surviving Corporation Common Stock and the remaining shares of Domesticated RMG III Class B Stock issued and outstanding will be canceled without consideration and (iv) in the event the Warrant Amendment Proposal is
approved, prior to the Effective Time, each of the then outstanding Domesticated RMG III Warrants will be canceled and exchanged for the right to receive 0.075 shares of Surviving Corporation Common Stock. As used herein, “Public Shares” means the RMG III Class A Ordinary Shares (including those underlying the RMG III Units) that were registered pursuant to the Registration Statement on Form S-1 (333-251889) and the
shares of Surviving Corporation Common Stock issued as a matter of law upon the conversion thereof on the effective date of the Domestication and “RMG III Public Warrants” means
those RMG III Warrants underlying the RMG III Units, including those RMG III Warrants that trade separately from the RMG III Units.
In connection with the Business Combination, certain related
agreements have been or will be entered into on or prior to the date of the Closing (the “Closing Date”), including (i) the Sponsor Support Agreement, (ii) the Company Support Agreement, (iii) the
Registration Rights Agreement and (iv) the Lock-Up Agreement (in each case, as defined and further discussed in the accompanying proxy statement/prospectus). For additional information, see the section titled “The
Business Combination Proposal — Related Agreements” in the accompanying proxy statement/prospectus.
Pursuant to the RMG III Governing Documents, a holder of Public
Shares (a “Public Shareholder”), which excludes shares held by RMG Sponsor III, LLC, RMG III’s sponsor (the “Sponsor” and such shares, the “Founder Shares”) prior to RMG III’s initial public offering (the “Initial Public Offering”) may request that RMG III redeem all or a portion of such Public
Shareholder’s Public Shares for cash in connection with the Business Combination. Holders of RMG III Units must elect to separate such units into the underlying Public Shares and RMG III Public Warrants prior to exercising redemption rights
with respect to their Public Shares. If Public Shareholders hold their RMG III Units in an account at a brokerage firm or bank, such Public Shareholders must notify their broker or bank that they elect to separate the RMG III Units into the
underlying Public Shares and RMG III Public Warrants, or if a Public Shareholder holds RMG III Units registered in its own name, the Public Shareholder must contact the transfer agent directly and instruct it to do so. Public Shareholders may elect to redeem their Public Shares even if they vote “FOR” the Business Combination Proposal or any other Proposal. If the Business Combination
is not approved or does not proceed the Public Shares will be returned to the respective Public Shareholder, broker or bank. If the Business Combination is approved and proceeds and if the Public Shareholder properly exercises its right to
redeem all or a portion of the Public Shares that it holds and timely tenders or delivers its shares (and share certificates (if any) and other redemption forms) to Continental, RMG III’s transfer agent, RMG III will redeem such Public Shares
for a per-share price, payable in cash, equal to the pro rata portion of the trust account established at the consummation of the Initial Public Offering (the “Trust Account”), calculated as of
two business days prior to the consummation of the Business Combination. If a Public Shareholder exercises its redemption rights in full, then it will be electing to exchange its Public Shares for cash and will no longer own Public Shares. The
redemption of Public Shares will take place immediately prior to the Domestication (and, therefore, prior to the Merger) when a redeeming Public Shareholder’s RMG III Class A Ordinary Shares are canceled in exchange for the right to receive the
cash consideration described above. Such cash will be paid to the redeeming Public Shareholders promptly after consummation of the Business Combination. See the section titled “Special Meeting of RMG III —
Redemption Rights” in the accompanying proxy statement/prospectus for a detailed description of the procedures to be followed for the Public Shareholders who wish to redeem their Public Shares for cash.
The Sponsor has agreed to, among other things, vote in favor of
the Merger Agreement and the transactions contemplated thereby, in each case, subject to the terms and conditions contemplated by Sponsor Support Agreement, dated May 9, 2023 (the “Sponsor Support
Agreement”), a copy of which is attached as Annex B to the accompanying proxy statement/prospectus, and to waive their redemption rights with respect to all RMG III Ordinary Shares held by them in
connection with the consummation of the Business Combination, subject to the terms and conditions contemplated in the letter agreement, dated as of February 4, 2021. As of the date of the accompanying proxy statement/prospectus, the holders
of the Founder Shares prior to the Initial Public Offering (the “Initial Shareholders”) own approximately 95.0% of the issued and outstanding RMG III Ordinary Shares.
The Merger Agreement is subject to the satisfaction or waiver of
certain customary closing conditions as described in the accompanying proxy statement/prospectus, including, among others, (i) approval of the Business Combination and related agreements and transactions by RMG III shareholders and the
stockholders of H2B2 (which approval was obtained on June 19, 2023), (ii) approval of the Warrant Amendment by RMG III warrant holders, (iii) the expiration or termination of any applicable waiting period under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, and the rules and regulations promulgated thereunder, (iv) the absence of any legal restraints on the Closing, (v) RMG III having at least $5,000,001 of net tangible assets (as determined in accordance with
Rule 3a51-1(g)(1) of the Exchange Act) upon Closing, (vi) the Registration Statement on Form S-4 having been declared effective by the SEC, (vii) receipt of conditional approval for listing on the Nasdaq Capital Market (“Nasdaq”) for the shares of Surviving Corporation Common Stock to be issued in connection with the Merger, (viii) the consummation of the Capital Raise Transaction, as described in detail in the accompanying
proxy statement/prospectus and (ix) the absence of an H2B2 Material Adverse Effect (as described in the Merger Agreement, a copy of which is attached as Annex A to the accompanying proxy statement/prospectus). There can be no assurances
that RMG III or H2B2 would waive any such provision of the Merger Agreement.
TABLE OF CONTENTS
RMG III is providing the accompanying proxy statement/prospectus,
a shareholder proxy card and a warrant holder proxy card to RMG III shareholders and RMG III warrant holders, respectively, in connection with the solicitation of proxies to be voted at the Special Meetings and at any adjournments of the
Special Meetings. Information about the Special Meetings, the Business Combination and other related business to be considered by RMG III shareholders and the RMG III warrant holders at the Special Meetings is included in the accompanying proxy
statement/prospectus.
Whether or not you plan to attend the Special Meetings, all RMG III shareholders and RMG III warrant holders are urged to read the accompanying proxy statement/prospectus, including the
annexes attached thereto and other documents referred to herein or therein, carefully and in their entirety. You should also carefully consider the risk factors described in the section titled “Risk Factors” beginning on page 34 of the accompanying proxy statement/prospectus.
After careful consideration, the RMG III Board has
unanimously approved the Business Combination and recommends that the RMG III shareholders vote “FOR” the Business Combination, including the adoption of the Merger Agreement, and approval of the
transactions contemplated thereby, and “FOR” all other proposals presented to the RMG III shareholders in the accompanying proxy statement/prospectus. Further, the RMG III Board has unanimously approved the Warrant Amendment, and recommends
that the RMG III warrant holders vote “FOR” the Warrant Amendment Proposal and all other proposals presented to the RMG III warrant holders in the accompanying proxy statement/prospectus. When you consider the recommendation of these proposals
by the RMG III Board, you should keep in mind that RMG III’s directors and officers have interests in the Business Combination that may conflict with your interests as an RMG III shareholder or RMG III warrant holder, as applicable. See the
section titled “The Business Combination — Interests of RMG III’s Directors, Executive Officers and the Sponsor and its Affiliates in the Business Combination”
in the accompanying proxy statement/prospectus for a further discussion of these considerations.
The approval of the Domestication Proposal and each of the
Organizational Documents Proposals requires the affirmative vote of the holders of at least two-thirds of the RMG III Ordinary Shares represented in person or by proxy and entitled to vote thereon and who vote at the Special Meeting. The
Business Combination Proposal, the Director Election Proposal, the Stock Issuance Proposal, the Equity Incentive Plan Proposal and the Adjournment Proposal require the affirmative vote of the holders of a majority of the RMG III Ordinary
Shares represented in person or by proxy and entitled to vote thereon and who vote at the Special Meeting. The Initial Shareholders collectively have the right to vote approximately 95.0% of the RMG III Ordinary Shares, and are expected to
vote all of their shares in favor of each Proposal to be voted upon at the Special Meeting. Accordingly, it is expected that the RMG III Ordinary Shares held by the Initial Shareholders will be sufficient to establish a quorum and to approve
the Proposals. Therefore, assuming Initial Shareholders all vote in favor of each Proposal and all outstanding RMG III Ordinary Shares held by the Initial Shareholders are represented at the Special Meeting in person or by proxy, the
affirmative vote of holders of additional Public Shares is not required to approve the Proposals.
The approval of the Warrant Amendment Proposal requires the
affirmative vote of the holders of at least 65% of each of (i) the outstanding RMG III Public Warrants and (ii) the outstanding RMG III Private Placement Warrants (as defined below), each voting separately as a class. Approval of the Warrant
Holders Adjournment Proposal requires the affirmative vote of the holders of at least 50% of the RMG III Warrants present in person, online or represented by proxy at the Warrant Holders Meeting, with such votes cast by RMG III warrant holders
present or represented by proxy and entitled to vote at the Warrant Holders Meeting.
Your vote is very important. Whether or not you plan to attend the Special Meetings, please vote as soon as possible by following the instructions in the accompanying proxy
statement/prospectus to make sure that your shares and/or warrants are represented at the Special Meetings. If you hold your shares and/or warrants in “street name” through a bank, broker or other nominee or intermediary, you will need to
follow the instructions provided to you by your bank, broker or other nominee or intermediary to ensure that your shares and/or warrants are represented and voted at the Special Meetings. The transactions contemplated by the Merger Agreement
will be consummated only if the Condition Precedent Proposals are approved at the Special Meeting and the Warrant Amendment Proposal is approved at the Warrant Holders Meeting. Each of the Condition Precedent Proposals is cross-conditioned on
the approval of each other. The Adjournment Proposal and the Warrant Holders Adjournment Proposal are not conditioned on the approval of any other proposal set forth in the accompanying proxy statement/prospectus.
The RMG III Board has fixed the close of business on , 2023 as
the record date for the Special Meetings the (“RMG III Record Date”). Only RMG III shareholders and RMG III warrant holders of record on , 2023 are entitled to notice of and to vote at the Special
Meetings or any postponement or adjournment thereof. Further information regarding voting rights and the matters to be voted upon is presented in the accompanying proxy statement/prospectus.
If you sign, date and return your shareholder proxy card without
indicating how you wish to vote, your shareholder proxy will be voted FOR each of the proposals presented at the Special Meeting. If you fail to return your shareholder proxy card or fail to instruct your bank, broker or other nominee or
intermediary how to vote, and do not attend the Special Meeting in person or virtually, the effect will be, among other things, that your shares will not be counted for purposes of determining
TABLE OF CONTENTS
whether a quorum is present at the Special Meeting and will not be voted. An
abstention or broker non-vote will be counted towards the quorum requirement but will not count as a vote cast at the Special Meeting. If you are an RMG III shareholder of record and you attend the Special Meeting and wish to vote in person or
virtually, you may withdraw your proxy and vote in person.
If you sign, date and return your warrant holder proxy card without
indicating how you wish to vote, your proxy will be voted FOR each of the proposals presented at the Warrant Holders Meeting. In general, if your RMG III Warrants are held in “street” name and you do not instruct your broker, bank or other
nominee or intermediary on a timely basis on how to vote your RMG III Warrants, your broker, bank or other nominee or intermediary, in its sole discretion, may either leave your RMG III Warrants unvoted or vote your RMG III Warrants on routine
matters, but not on any non-discretionary matters. Proxies that are marked “abstain” and proxies relating to “street name” RMG III Warrants that are returned to RMG III but marked by brokers as “not voted” will be treated as RMG III Warrants
present for purposes of determining the presence of quorum on all matters, but they will not be treated as RMG III Warrants voted on the matter and will, therefore, have the effect of an “AGAINST” vote on the Warrant Amendment Proposal. If you
are an RMG III warrant holder of record and you attend the Warrant Holders Meeting and wish to vote in person or virtually, you may withdraw your proxy and vote in person.
TO EXERCISE YOUR REDEMPTION RIGHTS, YOU MUST DEMAND IN WRITING THAT
YOUR PUBLIC SHARES ARE REDEEMED FOR A PRO RATA PORTION OF THE FUNDS HELD IN THE TRUST ACCOUNT AND TENDER YOUR SHARES TO CONTINENTAL AT LEAST TWO (2) BUSINESS DAYS PRIOR TO THE VOTE AT THE SPECIAL MEETING. YOU MAY TENDER YOUR SHARES BY EITHER
DELIVERING YOUR SHARE CERTIFICATE TO THE TRANSFER AGENT OR BY DELIVERING YOUR SHARES ELECTRONICALLY USING THE DEPOSITORY TRUST COMPANY’S DWAC (DEPOSIT WITHDRAWAL AT CUSTODIAN) SYSTEM. IF THE BUSINESS COMBINATION IS NOT COMPLETED, THEN THESE
SHARES WILL BE RETURNED TO YOU OR YOUR ACCOUNT. IF YOU HOLD THE SHARES IN STREET NAME, YOU WILL NEED TO INSTRUCT THE ACCOUNT EXECUTIVE AT YOUR BANK OR BROKER TO WITHDRAW THE SHARES FROM YOUR ACCOUNT IN ORDER TO EXERCISE YOUR REDEMPTION RIGHTS.
If you have questions regarding the accompanying proxy
statement/prospectus or need assistance voting your RMG III Ordinary Shares and/or your RMG III Warrants, you may contact , RMG III’s proxy solicitor, by calling , or banks and brokers may call collect at , or by emailing .
The RMG III Board would like to thank you for your support and looks
forward to the successful completion of the Business Combination.
By Order of the RMG III Board,
|
|
|
|
|
|
|
|
|
|
|
|
D. James Carpenter
Chairman of the Board
|
|
|
|
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES REGULATORY
AGENCY HAS APPROVED OR DISAPPROVED THE TRANSACTIONS DESCRIBED IN THE ACCOMPANYING PROXY STATEMENT/PROSPECTUS, PASSED UPON THE MERITS OR FAIRNESS OF THE BUSINESS COMBINATION OR RELATED TRANSACTIONS OR PASSED UPON THE ADEQUACY OR ACCURACY OF THE
DISCLOSURE IN THE ACCOMPANYING PROXY STATEMENT/PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY CONSTITUTES A CRIMINAL OFFENSE.
|
|
|
○
|
|
|
The accompanying proxy statement/prospectus is dated , 2023 and is first
being mailed to RMG III shareholders and RMG III warrant holders on or about , 2023.
|
ADDITIONAL INFORMATION
No person is authorized to give any information or
to make any representation with respect to the matters that the accompanying proxy statement/prospectus describes other than those contained in this proxy statement/prospectus, and, if given or made, the information or representation must not
be relied upon as having been authorized by RMG III or H2B2. This proxy statement/prospectus does not constitute an offer to sell or a solicitation of an offer to buy securities or a solicitation of a proxy in any jurisdiction where, or to any
person to whom, it is unlawful to make such an offer or a solicitation. Neither the delivery of this proxy statement/prospectus nor any distribution of securities made under this proxy statement/prospectus will, under any circumstances, create
an implication that there has been no change in the affairs of RMG III or H2B2 since the date of this proxy statement/prospectus or that any information contained herein is correct as of any time subsequent to such date.
TABLE OF CONTENTS
RMG ACQUISITION CORP. III
57 Ocean, Suite 403, 5775 Collins Avenue, Miami Beach, Florida 33140
NOTICE OF EXTRAORDINARY GENERAL MEETING OF SHAREHOLDERS
TO BE HELD ON , 2023
TO THE SHAREHOLDERS OF RMG ACQUISITION CORP. III:
NOTICE IS HEREBY GIVEN that an extraordinary general meeting of RMG
Acquisition Corp. III, a Cayman Islands exempted company (“RMG III” and, after the Domestication as described below, “Domesticated RMG III” and, after the
Effective Time, the “Surviving Corporation” or “H2B2 Electrolysis”), will be held at , Eastern Time, on , 2023, at the offices of Skadden, Arps, Slate,
Meagher & Flom LLP located at One Manhattan West, New York, New York 10001 (the “Special Meeting”), or at such other time on such other date and at such other place to which the meeting may be
postponed or adjourned, or virtually via live webcast at https://www.cstproxy.com/ . You are cordially invited to attend the Special Meeting, which will be held for the following purposes:
•
|
Proposal No. 1: The Business Combination Proposal—to consider and vote upon a proposal
to approve by ordinary resolution and adopt the Agreement and Plan of Merger, dated as of May 9, 2023 (as may be amended from time to time, the “Merger Agreement”), by and between RMG III and
H2B2 Electrolysis Technologies, Inc., a Delaware corporation (“H2B2”), a copy of which is attached to the accompanying proxy statement/prospectus as Annex A. The Merger Agreement provides
for, among other things, the merger of H2B2 with and into RMG III (the “Merger”), with RMG III surviving the Merger, in accordance with the terms and subject to the conditions of the Merger
Agreement as more fully described elsewhere in the accompanying proxy statement/prospectus (the “Business Combination Proposal”);
|
•
|
Proposal No. 2: The Domestication Proposal—to consider and vote upon a proposal to
approve by special resolution, the change of RMG III’s jurisdiction of incorporation by deregistering as an exempted company in the Cayman Islands and continuing and domesticating as a corporation incorporated under the laws of the
State of Delaware (the “Domestication” and, together with the Merger, the “Business Combination” and, such proposal, the “Domestication Proposal”);
|
•
|
Proposal No. 3: The Organizational Documents Proposals—to consider and vote upon the
following four separate proposals (collectively, the “Organizational Documents Proposals”) to approve by special resolution, the following material differences between RMG III’s Amended and
Restated Memorandum and Articles of Association (as may be amended from time to time, the “RMG III Governing Documents”, a copy of which is attached to the accompanying proxy statement/prospectus
as Annex F) and the proposed new certificate of incorporation (“Proposed Certificate of Incorporation”) and the proposed new bylaws (the “Proposed
Bylaws” and, together with the Proposed Certificate of Incorporation, the “Proposed Organizational Documents”, copies of which are attached to the accompanying proxy statement/prospectus
as Annex G and Annex H, respectively) of the Surviving Corporation, each of the Proposed Organizational Documents to be effective upon the consummation of the Business Combination pursuant to which the
Surviving Corporation will be renamed “H2B2 Electrolysis Technologies, Inc.” in connection with the Business Combination (the “Organizational Documents Proposal”);
|
Organizational Documents
Proposal A—to authorize the change in authorized share capital of RMG III from 500,000,000 Class A ordinary shares, par value $0.0001 per share (“RMG
III Class A Ordinary Shares”), 50,000,000 Class B ordinary shares, par value $0.0001 per share (“RMG III Class B Ordinary Shares” and, together with the RMG III Class A Ordinary Shares, the “RMG III Ordinary Shares”),
and 5,000,000 preference shares, par value $0.0001 per share (“Preferred Shares”), to shares of common stock, par value $0.0001 per
share, of the Surviving Corporation (“Surviving Corporation Common Stock”) and shares of preferred stock, par value $0.0001 per
share, of the Surviving Corporation (“Surviving Corporation Preferred Stock”) (“Organizational
Documents Proposal A”);
Organizational Documents
Proposal B—to authorize the board of directors of the Surviving Corporation (the “Surviving Corporation Board”) to issue any or all shares of Surviving Corporation
TABLE OF CONTENTS
Preferred Stock in one or more classes or series, with such terms and conditions as
may be expressly determined by the Surviving Corporation Board and as may be permitted by the DGCL (“Organizational Documents Proposal B”);
Organizational Documents
Proposal C— to authorize the Surviving Corporation Board to be unclassified (“Organizational Documents Proposal C”);
Organizational Documents
Proposal D—to authorize all other changes in connection with the replacement of the RMG III Governing Documents with the Proposed Certificate of Incorporation and Proposed Bylaws in
connection with the consummation of the Business Combination (copies of which are attached to this proxy statement/prospectus as Annex F, Annex G and Annex H, respectively), including (i)
changing the corporate name from “RMG Acquisition Corp. III” to “H2B2 Electrolysis Technologies, Inc.,” (ii) making the Surviving Corporation’s corporate existence perpetual, (iii) adopting Delaware as the exclusive forum for certain
stockholder litigation, and (iv) removing certain provisions related to RMG III’s status as a blank check company that will no longer be applicable upon consummation of the Business Combination, all of which the RMG III Board believes is
necessary to adequately address the needs of RMG III and the Surviving Corporation after the Business Combination (“Organizational Documents Proposal D”);
•
|
Proposal No. 4—The Director Election Proposal—to consider and vote upon a proposal to
approve by ordinary resolution of the holders of the RMG III Class B Ordinary Shares, assuming the Business Combination Proposal, the Domestication Proposal and the Organizational Documents Proposals are approved, the election of
directors who, upon consummation of the Business Combination, will be the directors of the Surviving Corporation (the “Director Election Proposal”), to be effective as of the Closing;
|
•
|
Proposal No. 5—The Stock Issuance Proposal—to consider and vote upon a proposal to
approve by ordinary resolution for purposes of complying with the applicable provisions of Nasdaq Listing Rule 5635, the issuance of Surviving Corporation Common Stock to the H2B2 Securityholders (as defined elsewhere in the
accompanying proxy statement/prospectus) pursuant to the Merger Agreement (the “Stock Issuance Proposal”), to be effective prior to or substantially concurrently with the Closing;
|
•
|
Proposal No. 6—The Equity Incentive Plan Proposal—to consider and vote upon a proposal
to approve by ordinary resolution, the Incentive Plan (the “Equity Incentive Plan Proposal”, a copy of which is attached to this proxy statement/prospectus as Annex I), to be effective as of the
Closing; and
|
•
|
Proposal No. 7—The Adjournment Proposal—to consider and vote upon a proposal to approve
by ordinary resolution, the adjournment of the Special Meeting to a later date or dates, if necessary, (i) to permit further solicitation and vote of proxies in the event that there are insufficient votes for the approval of one or more
proposals at the Special Meeting or (ii) if the RMG III Board determines before the Special Meeting that is not necessary or no longer desirable to proceed with the proposals (the “Adjournment Proposal”
and, together with each of Proposal No. 1 through Proposal No. 7, the “Proposals”).
|
Each of Proposal No. 1 through Proposal No. 6 (collectively, the “Condition Precedent Proposals”) is cross-conditioned on the approval of each other. The Adjournment Proposal is not conditioned upon the approval of any other proposal set forth in the accompanying proxy
statement/prospectus.
These items of business are described elsewhere in the accompanying
proxy statement/prospectus, which RMG III encourages you to read carefully and in its entirety before voting.
Only holders of record of RMG III Ordinary Shares at the close of
business on , 2023 are entitled to notice of and to vote and have their votes counted at the Special Meeting and any adjournment of the Special Meeting.
The accompanying proxy statement/prospectus and proxy card are being
provided to RMG III shareholders in connection with the solicitation of proxies to be voted at the Special Meeting and at any adjournment of the Special Meeting. Whether or not you plan to attend the Special
Meeting, all of the RMG III shareholders
TABLE OF CONTENTS
are urged to read the accompanying proxy statement/prospectus,
including the annexes and the documents referred to herein, carefully and in their entirety. You should also carefully consider the risk factors described in the “
Risk Factors” section beginning on page
34 of the accompanying proxy statement/prospectus
.
After careful consideration, the RMG III Board has
unanimously approved the Business Combination and recommends that RMG III shareholders vote “FOR” the Business Combination, including the adoption of the Merger Agreement, and approval of the transactions contemplated thereby, and “FOR” all
other proposals presented to RMG III shareholders in the accompanying proxy statement/prospectus. When you consider the recommendation of these proposals by the RMG III Board, you should keep in mind that RMG III’s directors and officers have
interests in the Business Combination that may conflict with your interests as an RMG III shareholder. See the section titled “Business Combination Proposal — Interests of RMG III’s Directors and Executive
Officers in the Business Combination” in the accompanying proxy statement/prospectus for a further discussion of these considerations.
Pursuant to the RMG III Governing Documents, a holder of RMG III
Class A Ordinary Shares, including those underlying units of RMG III (“RMG III Units”), in each case, that were registered pursuant to the Registration Statement on Form S-1 (333-251889) offered and sold
by RMG III in its initial public offering (“Public Shares”), which excludes shares held by RMG Sponsor III, LLC, RMG III’s sponsor (the “Sponsor”) of the RMG III
Class B Ordinary Shares purchased by the Sponsor (the “Founder Shares”) prior to RMG III’s initial public offering (the “Initial Public Offering” and, such
shareholders, collectively, the “Initial Shareholders”) may request that RMG III redeem all or a portion of its Public Shares for cash in connection with the Business Combination. As a holder of Public
Shares (a “Public Shareholder”), you will be entitled to receive cash for any Public Shares to be redeemed only if you:
(i)
|
(a) hold Public Shares, or (b) if you hold Public Shares through RMG III Units, you elect to separate your units into the
underlying Public Shares and redeemable warrants (“RMG III Public Warrants”) prior to exercising your redemption rights with respect to the Public Shares;
|
(ii)
|
submit a written request to Continental Stock Transfer & Trust Company (“Continental”),
RMG III’s transfer agent, that RMG III redeem all or a portion of your Public Shares for cash; and
|
(iii)
|
tender or deliver your Public Shares (and share certificates (if any) and other redemption forms) to Continental electronically
through DTC.
|
Public Shareholders must complete the procedures
for electing to redeem their Public Shares in a manner described above prior to 5:00 p.m., Eastern Time, on , 2023 (two business days before the Special Meeting) in order for their shares to be redeemed.
Holders of RMG III Units must elect to separate
such units into the underlying Public Shares and RMG III Public Warrants prior to exercising redemption rights with respect to the Public Shares. If holders hold their RMG III Units in an account at a brokerage firm or bank, holders must notify
their broker or bank that they elect to separate the RMG III Units into the underlying Public Shares and RMG III Public Warrants, or if a holder holds RMG III Units registered in its own name, the holder must contact Continental, directly and
instruct them to do so. Public Shareholders may elect to redeem Public Shares regardless of if or how they vote in respect of any of the Proposals.
If the Business Combination is not approved or does not proceed, the
Public Shares will be returned to the respective Public Shareholder, broker or bank. If the Business Combination is approved and proceeds and if a Public Shareholder properly exercises its right to redeem all or a portion of the Public Shares
that it holds and timely tenders or delivers its shares (and share certificates (if any) and other redemption forms) to Continental, RMG III will redeem such Public Shares for a per-share price, payable in cash, equal to the pro rata portion of
the trust account established at the consummation of the Initial Public Offering (the “Trust Account”), calculated as of two business days prior to the consummation of the Business Combination. If a
Public Shareholder exercises its redemption rights in full, then it will be electing to exchange its Public Shares for cash and will no longer own Public Shares. The redemption of Public Shares will take place immediately prior to the
Domestication (and therefore, prior to the Merger) when a redeeming Public Shareholder’s RMG III Class A Ordinary Shares are canceled in exchange for the right to receive the cash consideration described above. Such
TABLE OF CONTENTS
cash will be paid to redeeming Public Shareholders promptly after consummation of the
Business Combination. See “Special Meeting of RMG III — Redemption Rights” in the accompanying proxy statement/prospectus for a detailed description of the procedures to be followed if you wish to redeem
your Public Shares for cash.
Public Shareholders, together with any of its affiliates or any
other person with whom it is acting in concert or as a “group” (as defined under Section 13 of the Securities Exchange Act of 1934, as amended), will be restricted from redeeming in the aggregate his, her or its shares or, if part of such a
group, the group’s shares, in excess of 15% of the RMG III Public Shares. Each redemption of RMG III Public Shares will reduce the amount of funds in the Trust Account.
The Sponsor has agreed to, among other things, vote in favor of
the Merger Agreement and the transactions contemplated thereby, subject to the terms and conditions contemplated by the Sponsor Support Agreement, dated May 9, 2023 (the “Sponsor Support Agreement”),
a copy of which is attached to the accompanying proxy statement/prospectus as Annex B, and to waive their redemption rights with respect to all RMG III Ordinary Shares held by them in connection with the consummation of
the Business Combination, subject to the terms and conditions contemplated in that certain letter agreement, dated as of February 4, 2021. As of the date of the accompanying proxy statement/prospectus, the Initial Shareholders own
approximately 95.0% of the issued and outstanding RMG III Ordinary Shares.
The Merger Agreement is subject to the satisfaction or waiver of
certain customary closing conditions as described in the accompanying proxy statement/prospectus, including, among others, (i) approval of the Business Combination and related agreements and transactions by RMG III shareholders and the
stockholders of H2B2, (ii) approval of the Warrant Amendment by RMG III warrant holders, (iii) the expiration or termination of any applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the
rules and regulations promulgated thereunder, (iv) the absence of any legal restraints on the Closing, (v) RMG III having at least $5,000,001 of net tangible assets (as determined in accordance with Rule 3a51-1(g)(1) of the Exchange Act) upon
Closing, (vi) the Registration Statement on Form S-4 having been declared effective by the SEC, (vii) receipt of conditional approval for listing on the Nasdaq Capital Market (“Nasdaq”) for the shares of
Surviving Corporation Common Stock to be issued in connection with the Merger, (viii) the consummation of the Capital Raise Transaction, as described in detail in the accompanying proxy statement/prospectus and (ix) the absence of an H2B2
Material Adverse Effect (as described in the Merger Agreement, a copy of which is attached as Annex A to the accompanying proxy statement). There can be no assurances that RMG III or H2B2 would waive any such provision of the Merger
Agreement.
The approval of each of the Domestication Proposal and Organizational
Documents Proposals requires the affirmative vote of the holders of at least two-thirds of the RMG III Ordinary Shares represented in person or by proxy and entitled to vote thereon and who vote at the Special Meeting. The approval of each of
the Business Combination Proposal, the Director Election Proposal, the Stock Issuance Proposal, the Equity Incentive Plan Proposal and the Adjournment Proposal require the affirmative vote of the holders of a majority of the RMG III Ordinary
Shares represented in person or by proxy and entitled to vote thereon and who vote at the Special Meeting.
The Initial Shareholders collectively have the right to vote
approximately 95.0% of the RMG III Ordinary Shares, and are expected to vote all of their shares in favor of each Proposal to be voted upon at the Special Meeting. Accordingly, it is expected that the RMG III Ordinary Shares held by the
Initial Shareholders will be sufficient to establish a quorum and to approve each Proposal. Therefore, assuming the Initial Shareholders all vote in favor of each Proposal and all outstanding RMG III Ordinary Shares held by the Initial
Shareholders are represented at the Special Meeting in person or by proxy, the affirmative vote of additional Public Shares is not required to approve the Proposals.
Your vote is very important. Whether or not you plan to attend the Special Meeting, please vote as soon as possible by following the instructions in the accompanying proxy statement/prospectus to make sure that your shares are represented at
the Special Meeting. If you hold your shares in “street name” through a bank, broker or other nominee, you will need to follow the instructions provided to you by your bank, broker or other nominee to ensure that your shares are represented
and voted at the Special Meeting. The transactions contemplated by the Merger Agreement will be consummated only if the Condition Precedent
TABLE OF CONTENTS
Proposals are approved at the Special Meeting. Each of the
Condition Precedent Proposals is cross-conditioned on the approval of each other. The Adjournment Proposal is not conditioned upon the approval of any other proposal set forth in the accompanying proxy statement/prospectus.
If you sign, date and return your proxy card without indicating how
you wish to vote, your proxy will be voted FOR each of the proposals presented at the Special Meeting. If you fail to return your proxy card or fail to instruct your bank, broker or other nominee how to
vote, and do not attend the Special Meeting in person, the effect will be, among other things, that your shares will not be counted for purposes of determining whether a quorum is present at the Special Meeting and will not be voted. An
abstention or broker non-vote will be counted towards the quorum requirement but will not count as a vote cast at the Special Meeting. If you are an RMG III shareholder of record and you attend the Special Meeting and wish to vote in person,
you may withdraw your proxy and vote in person.
Your attention is directed to the remainder of the accompanying proxy
statement/prospectus following this notice (including the annexes attached hereto and other documents referred to herein) for a more complete description of the proposed Business Combination and related transactions and each of the Proposals.
You are encouraged to read the accompanying proxy statement/prospectus carefully and in its entirety, including the annexes attached hereto and other documents referred to herein. If you have any questions or need assistance voting your public
shares, please contact , our proxy solicitor, by calling or banks and brokers can call collect at , or by emailing .
Thank you for your participation. RMG III looks forward to your
continued support.
|
|
|
By Order of the RMG III Board,
|
|
|
|
|
|
|
|
D. James Carpenter
|
|
|
|
Chairman of the Board
|
TO EXERCISE YOUR REDEMPTION RIGHTS, YOU MUST DEMAND IN WRITING THAT
YOUR PUBLIC SHARES ARE REDEEMED FOR A PRO RATA PORTION OF THE FUNDS HELD IN THE TRUST ACCOUNT AND TENDER YOUR SHARES TO CONTINENTAL AT LEAST TWO BUSINESS DAYS PRIOR TO THE VOTE AT THE SPECIAL MEETING. YOU MAY TENDER YOUR SHARES BY DELIVERING
YOUR SHARES ELECTRONICALLY USING THE DEPOSITORY TRUST COMPANY’S DWAC (DEPOSIT WITHDRAWAL AT CUSTODIAN) SYSTEM. IF YOU HOLD THE SHARES IN STREET NAME, YOU WILL NEED TO INSTRUCT THE ACCOUNT EXECUTIVE AT YOUR BANK OR BROKER TO WITHDRAW THE SHARES
FROM YOUR ACCOUNT IN ORDER TO EXERCISE YOUR REDEMPTION RIGHTS.
TABLE OF CONTENTS
RMG ACQUISITION CORP. III
57 Ocean, Suite 403, 5775 Collins Avenue, Miami Beach, Florida 33140
NOTICE OF EXTRAORDINARY GENERAL MEETING OF WARRANT HOLDERS
TO BE HELD ON , 2023
TO THE WARRANT HOLDERS OF RMG ACQUISITION CORP. III:
NOTICE IS HEREBY GIVEN that an extraordinary general meeting of the
warrant holders of RMG Acquisition Corp. III, a Cayman Islands exempted company (“RMG III” and, after the Domestication as described below, “Domesticated RMG III”
and, after the Effective Time, the “Surviving Corporation” or “H2B2 Electrolysis Technologies, Inc.” and, such warrant holders, the “RMG III warrant holders”), will be held at , Eastern Time, on , 2023, at the offices of Skadden, Arps, Slate, Meagher & Flom LLP located at One Manhattan West, New York, New York 10001 (the “Warrant Holders Meeting”), or at such other time on such other date and at such other place to which the meeting may be postponed or adjourned, or virtually via live webcast at https://www.cstproxy.com/ . You are cordially invited to attend the Warrant Holders Meeting, which will be held for the following purposes:
•
|
Proposal No. 1 — The Warrant Amendment Proposal — to consider
and vote upon an amendment to the warrant agreement that governs all of RMG III’s outstanding warrants (the “Warrant Agreement”). The Warrant Amendment proposes to amend
the Warrant Agreement to provide that, upon the closing of the Business Combination (the “Closing”), each of the then outstanding Domesticated RMG III Warrants (such warrants
being the (i) warrants of RMG III issued in RMG III’s initial public offering that was consummated on February 9, 2021 (the “Initial Public Offering”), which
entitle the holder thereof to purchase one Class A ordinary share, par value $0.0001 per share, of RMG III (an “RMG III Class A Ordinary Share”) at an exercise price of $11.50 per
share (the “RMG III Public Warrants”) and (ii) the warrants of RMG III, which entitle the holder thereof to purchase one RMG III Class A Ordinary Share at an
exercise price of $11.50 per share, issued in a private placement concurrent with the closing of the Initial Public Offering (the “RMG III Private Placement Warrants” and,
together with the RMG III Public Warrants, the “RMG III Warrants”) following the Domestication) will be canceled and exchanged for the right to receive 0.075 shares of shares of
common stock, par value $0.0001 per share, of the Surviving Corporation (the “Surviving Corporation Common Stock” and, such proposal, the “Warrant Amendment Proposal”), the substantive text of which is attached to the accompanying proxy statement/prospectus as Annex J; and
|
•
|
Proposal No. 2 — Warrant Holders Adjournment Proposal — to consider and vote upon a
proposal to approve the adjournment of the Warrant Holders Meeting to a later date or dates, if necessary, to permit the further solicitation and vote of proxies if, based upon the tabulated vote at the time of the Warrant Holders
Meeting, the Warrant Amendment Proposal would not be duly approved and adopted by the holders of the requisite amount of each of (i) the then outstanding RMG III Public Warrants and (ii) the then outstanding RMG III Private Placement
Warrants (the “Warrant Holders Adjournment Proposal” and, together with the Warrant Amendment Proposal, the “Warrant Holder Proposals”).
|
Only holders of record of RMG III Warrants at the close of business
on , 2023 are entitled to notice of and to vote and have their votes counted at the Warrant Holders Meeting and any adjournment of the Warrant Holders Meeting.
The resolutions to be voted upon in person or by proxy at the Warrant
Holders Meeting relating to the above proposals are set forth in the sections of the accompanying proxy statement/prospectus entitled “Warrant Holder Proposal No. 1—The
Warrant Amendment Proposal” and “Warrant Holder Proposal No. 2—The Warrant Holders Adjournment Proposal,” respectively.
We will provide you with the accompanying proxy statement/prospectus
and a warrant holder proxy card in connection with the solicitation of proxies to be voted at the Warrant Holders Meeting and at any adjournment of the Warrant Holders Meeting.
Whether or not you plan to attend
the Warrant Holders Meeting, we urge you to read, when available, the accompanying proxy statement/prospectus, including the annexes, carefully. Please pay particular attention to the section entitled “Risk Factors” beginning on page 34 of the accompanying proxy statement/prospectus.
TABLE OF CONTENTS
All RMG III warrant holders are cordially invited to attend the
Warrant Holders Meeting. To ensure your representation at the Warrant Holders Meeting, however, you are urged to complete, sign, date and return the proxy card accompanying the proxy statement/prospectus as soon as possible. If you are an RMG
III warrant holder of record holding one or more RMG III Warrants on , 2023, you may also cast your vote in person at the Warrant Holders Meeting. If your RMG III Warrants are held in an account at a brokerage firm or bank, you must
instruct your broker or bank on how to vote your RMG III Warrants or, if you wish to attend the Warrant Holders Meeting and vote in person, obtain a proxy from your broker or bank.
If you sign, date and return your warrant holder proxy card without
indicating how you wish to vote, your proxy will be voted FOR each of the proposals presented at the Warrant Holders Meeting. In general, if your RMG III Warrants are held in “street” name and you do not instruct your broker, bank or other
nominee or intermediary on a timely basis on how to vote your RMG III Warrants, your broker, bank or other nominee or intermediary, in its sole discretion, may either leave your RMG III Warrants unvoted or vote your RMG III Warrants on routine
matters, but not on any non-discretionary matters. Proxies that are marked “abstain” and proxies relating to “street name” RMG III Warrants that are returned to RMG III but marked by brokers as “not voted” will be treated as RMG III Warrants
present for purposes of determining the presence of quorum on all matters, but they will not be treated as RMG III Warrants voted on the matter and will, therefore, have the effect of an “AGAINST” vote on the Warrant Amendment Proposal.
Approval of the Warrant Amendment Proposal requires the affirmative
vote of the holders of at least 65% of each of (i) the outstanding RMG III Public Warrants and (ii) the outstanding RMG III Private Placement Warrants, each voting separately as a class. Approval of the Warrant Holders Adjournment Proposal
requires the affirmative vote of the holders of at least 50% of the RMG III Warrants present in person, online or represented by proxy at the Warrant Holders Meeting, with such votes cast by RMG III warrant holders present or represented by
proxy and entitled to vote at the Warrant Holders Meeting.
Your vote is important regardless of the number of RMG III Warrants
you own. Whether you plan to attend the Warrant Holders Meeting or not, please sign, date and return the warrant holder proxy card accompanying the proxy statement/prospectus as soon as possible in the envelope provided. If your RMG III
Warrants are held in “street name” or are in a margin or similar account, you should contact your broker to ensure that votes related to the RMG III Warrants you beneficially own are properly counted.
If you have any questions or need assistance voting your RMG III
Warrants, please contact , our proxy solicitor, by calling .
Thank you for your participation. We look forward to your continued
support.
|
|
|
By Order of the RMG III Board,
|
|
|
|
|
|
|
|
D. James Carpenter
|
|
|
|
Chairman of the Board
|
This notice was mailed by RMG III on , 2023.
TABLE OF CONTENTS
TABLE OF CONTENTS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TABLE OF CONTENTS
ANNEXES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TABLE OF CONTENTS
ABOUT THIS PROXY STATEMENT/PROSPECTUS
This document, which forms part of a registration statement on Form
S-4 filed with the SEC by RMG III, constitutes a prospectus of RMG III under Section 5 of the Securities Act with respect to Surviving Corporation Common Stock if the Business Combination described herein is consummated. This document also
constitutes notice for and a proxy statement under Section 14(a) of Exchange Act with respect to (i) the extraordinary general meeting of RMG III at which RMG III shareholders will be asked to consider and vote upon a proposal to approve the
Business Combination by the adoption of the Merger Agreement, among other matters, and (ii) the extraordinary general meeting of RMG III at which RMG III warrant holders will be asked to consider and vote upon the Warrant Amendment Proposal,
among other matters.
TABLE OF CONTENTS
FINANCIAL STATEMENT PRESENTATION
Presentation of Financial Information
This proxy statement/prospectus includes:
1.
|
The unaudited condensed financial statements and notes thereto as of and for the three months ended March 31, 2023 of RMG III
(hereinafter referred to as the “2023 Unaudited Condensed Financial Statements of RMG III”);
|
2.
|
The audited financial statements and notes thereto as of and for the years ended December 31, 2022 and 2021 of RMG III, prepared
in accordance with GAAP (hereinafter referred to as the “2022 Audited Consolidated Financial Statements of RMG III”);
|
3.
|
The unaudited condensed consolidated financial statements and notes thereto as of and for the three months period ended
March 31, 2023 of H2B2 (hereinafter referred to as the “Q1-2023 Unaudited Interim Condensed Consolidated Financial Statements of H2B2”);
|
4.
|
The audited consolidated financial statements and notes thereto as of and for the years ended December 31, 2022 and 2021 of
H2B2, prepared in accordance with GAAP (hereinafter referred to as the “2022 Audited Consolidated Financial Statements of H2B2”); and
|
5.
|
The unaudited pro forma combined financial information of H2B2 and RMG III as of and for the period ended March 31, 2023,
prepared in accordance with Article 11 of SEC Regulation S-X. (see “Unaudited Pro Forma Combined Financial Information” for further information).
|
The historical results presented below are not necessarily indicative
of the results to be expected for any future period. You should carefully read the following selected financial information in conjunction with the sections entitled “RMG III Management’s Discussion and
Analysis of Financial Condition and Results of Operations of RMG III”, “H2B2 Management’s Discussion and Analysis of Financial Condition and Results of Operations of H2B2”, RMG III’s financial
statements and the related notes and H2B2’s financial statements and the related notes appearing elsewhere in this proxy statement/prospectus.
This information should be read in conjunction with “Risk Factors”, “H2B2 Management’s Discussion and Analysis of Financial Condition and Results of Operations”, the 2022
Audited Consolidated Financial Statements of H2B2 and the Q1-2023 Unaudited Interim Condensed Consolidated Financial Statements of H2B2 included elsewhere in this proxy statement/prospectus. The selected historical combined financial
information in this section is not intended to replace the Q1-2023 Unaudited Interim Condensed Consolidated Financial Statements of H2B2 or the 2022 Audited Consolidated Financial Statements of H2B2 included elsewhere in this proxy
statement/prospectus. H2B2’s historical results are not necessarily indicative of future results. The Q1-2023 Unaudited Interim Condensed Consolidated Financial Statements of H2B2 have been prepared on a basis consistent with the 2022 Audited
Consolidated Financial Statements of H2B2.
The unaudited pro forma combined financial information of H2B2 and
RMG III included elsewhere in this proxy statement/prospectus is presented for illustrative purposes only, is based on certain assumptions, addresses a hypothetical situation and reflects limited historical financial data. The unaudited pro
forma combined financial information is not necessarily indicative of the results of operations and financial position that would have been achieved if the Business Combination had been consummated on the dates indicated above, or of the future
consolidated results of operations or financial position of the Surviving Corporation. Accordingly, the Surviving Corporation’s business, assets, cash flows, results of operations and financial condition may differ significantly from those
indicated by the unaudited pro forma combined financial information included in this proxy statement/prospectus. For more information, please see also sections entitled “Unaudited Pro Forma Combined Financial
Information,” “H2B2 Management’s Discussion and Analysis of Financial Condition and Results of Operations – The Business Combination and Preparation of Pro
Forma Combined Financial Information” and “Risk Factors.”
The non-GAAP information of H2B2 included elsewhere in this proxy
statement/prospectus should be read in conjunction with the Q1-2023 Unaudited Interim Condensed Consolidated Financial Statements of H2B2 and the 2022 Audited Consolidated Financial Statements of H2B2 included elsewhere in this proxy
statement/prospectus. Please see the section entitled “H2B2 Management’s Discussion and Analysis of Financial Condition and Results of Operations – Non-GAAP Financial Measures” for further information
regarding these measures, their presentation, calculation method and limitations.
TABLE OF CONTENTS
Unless otherwise indicated, information contained in this proxy
statement/prospectus concerning H2B2’s industry and the regions in which it operates, including H2B2’s general expectations and market position, market opportunity, market share and other management estimates, is based on information obtained
from various independent publicly available sources, including independent industry and research organizations, other third-party sources, and management estimates. Management estimates are derived from publicly available information released
by independent industry analysts and other third-party sources, as well as data from H2B2 internal research, and are based on assumptions made by H2B2 upon reviewing such data, and its experience in, and knowledge of, such industry and markets,
which H2B2 believes to be reasonable. While H2B2 believes that the market data, industry forecasts and similar information included in this proxy statement/prospectus are generally reliable, such information is inherently imprecise. Forecasts
and other forward-looking information obtained from third parties are subject to the same qualifications and uncertainties as the other forward-looking statements in this proxy statement/prospectus. In addition, assumptions and estimates of
H2B2’s future performance and growth objectives and the future performance of its industry and the markets in which it operates are necessarily subject to a high degree of uncertainty and risk due to a variety of factors, including those
discussed under the headings “Risk Factors,” “Cautionary Note Regarding Forward-Looking Statements” and “H2B2 Management’s
Discussion and Analysis of Financial Condition and Results of Operations” in this proxy statement/prospectus.
TABLE OF CONTENTS
As used in this proxy statement/prospectus, unless otherwise noted
or the context otherwise requires, references to:
“Adjournment Proposal” are
to the proposal by the RMG III Board to RMG III shareholders to approve the adjournment of the Special Meeting, as specified under the section titled “Proposal No. 7—The Adjournment Proposal.”
“Administrative Services Agreement”
are to that certain Administrative Services Agreement, dated February 4, 2021, by and between RMG III and RMG Acquisition Management.
“AEM” are to Anion
Exchange Membrane.
“Aggregate Closing Date Merger
Consideration” are to the number of shares of Surviving Corporation Common Stock equal to the quotient obtained by dividing (i) the Closing Date Purchase Price by (ii) $10.00.
“Aggregate Fully Diluted Company
Common Stock” are to, without duplication, the aggregate (a) number of shares of H2B2 Common Stock that are issued and outstanding immediately prior to the Effective Time including after giving effect to any Capital Raise Transaction,
plus (b) the maximum number of shares of H2B2 Common Stock that would be issuable upon the exercise in full of all H2B2 Options (whether vested or unvested) that are outstanding immediately prior to the
Effective Time.
“Agreement End Date” are to March 31, 2024.
“Americas” are to North and
South America.
“Ancillary Agreements” are
to the Sponsor Support Agreement, the Company Support Agreement, the Registration Rights Agreement and the Lock-Up Agreement.
“Antitrust Division” are to the Antitrust Division of the Department of Justice of the United States.
“APAC” are
to Asia-Pacific.
“Apenet Agreement”
are to that certain agreement, dated as of May 30, 2023, by and among Mr. Felipe Benjumea Llorente, Ms. Blanca de Porres Guardiola (his wife) and Apenet, S.L.U., as specified under the section titled “Certain
Relationships and Related Party Transactions—H2B2—Ardachon Share Acquisition”.
“ARCHES” are to Alliance for
Renewable Clean Hydrogen Energy Systems.
“Ardachon” are to Ardachon,
S.L.U, a stockholder of H2B2.
“Ardachon Option
Shares” are to 73,334 additional shares of H2B2 Common Stock that H2B2 has the option to purchase in connection with the Ardachon Share Acquisition, as specified under the section titled “Unaudited
Pro Forma Combined Financial Information—Ardachon”.
“Ardachon Proceedings” are to proceedings related to or arising from any effective or potential liquidation, administration or other insolvency proceedings related to Ardachon (and, specifically, but not limited to, the insolvency proceedings initiated by
the Madrid Mercantile Tribunal number 5—Juzgado Mercantil de Madrid Número 5—by resolution (auto), dated May 21, 2020, and published in the Spanish State Official Bulletin (Boletín Oficial del Estado), as of June 9, 2020, with number 162 and
reference BOE-B-2020-15872) including any public or private auctions related to the assets of Ardachon.
“Ardachon Share
Acquisition” are to the acquisition of H2B2 Common Stock by H2B2 in connection with the Ardachon Proceedings, as specified under the section titled “Certain Relationships and Related
Party Transactions—H2B2—Ardachon Share Acquisition”.“Ardachon Share Acquisition” are to the acquisition of H2B2 Common Stock by H2B2 in connection with the
Ardachon Proceedings, as specified under the section titled “Certain Relationships and Related Party Transactions—H2B2—Ardachon Share Acquisition”.
“ASC” are to Accounting
Standards Codification.
“AVR Option Amount” are to
$2,000,014 to account for the exercise by Mr. Jose Antonio Vázquez Romero of his option to acquire up to 68,966 shares of H2B2, pursuant to the option agreement entered into by Mr. Vázquez Romero and H2B2 on December 15, 2022, as specified
under the section titled “Unaudited Pro Forma Combined Financial Information—Adjustments to the unaudited Pro forma Combined Balance Sheet.”
TABLE OF CONTENTS
“AWE” are to alkaline
water electrolysis.
“Base Purchase Price” are to $750,000,000.
“BCW” are to BCW
Securities LLC, a Delaware limited liability company and an affiliate of RMG III.
“BCW Engagement Letter” are
to that certain engagement letter, dated as of January 24, 2023, as amended on March 2, 2023, by and between BCW and H2B2.
“BoP” are to balance of
plant.
“Business Combination” are
to the Domestication together with the Merger and other transactions contemplated by the Merger Agreement.
“Business Combination Proposal”
are to the proposal by the RMG III Board to RMG III shareholders to approve the Business Combination and the Merger Agreement, as specified under the section titled “Proposal No. 1—The Business Combination
Proposal.”
“CAGR” are to compound
annual growth rate.
“CapEx” are to capital
expenditures.
“Capital Raise Amount” are to the aggregate amount of capital actually raised by H2B2, any of its subsidiaries, or any special purpose vehicle or other entity in which H2B2 holds, directly or indirectly any equity interest, at or prior to the Closing
through any Capital Raise Transaction, but excluding, for the avoidance of doubt, (a) any capital actually raised by H2B2 or any of its subsidiaries utilized or to be utilized for the Ardachon Share Acquisition and (b) any cash available in
the Trust Account (after deducting any amounts required to satisfy the RMG III Share Redemption Amount).
“Capital Raise Investor” are to any person that has entered into a legal, valid and binding commitment to acquire or subscribe securities of H2B2, any of its subsidiaries, or any special purpose vehicle or other entity in which the Company holds, directly
or indirectly any equity interest, in each case in any Capital Raise Transaction.
“Capital Raise Transaction” are to (a) any sale or other issuance of Equity Interests or any debt instruments exercisable for or convertible into H2B2 Common Stock or other Equity Interests of H2B2, any of its subsidiaries, or any special
purpose vehicle or other entity in which H2B2 holds, directly or indirectly any Equity Interest (including, without limitation, any shares of capital stock, securities convertible into or exchangeable for shares of capital stock, or warrants,
options or other rights for the purchase or acquisition of such shares, and other ownership or profit interests, whether voting or non-voting, and convertible notes or similar convertible or exercisable debt instruments), for cash occurring
at any time, whether in a single transaction or a series of transactions, during the period commencing on or after the date of the Merger Agreement and ending at or prior to the Closing, or (b) any Debt Raise Transaction, in each case
involving BCW and/or Natixis.
“Cayman Islands Companies Act”
are to the Cayman Islands Companies Act as amended.
“CEC” are to California
Energy Commission.
“Closing” are to the
closing of the Business Combination.
“Closing Date” are to the
date of the Closing.
“Closing Date Purchase Price”
are to the Base Purchase Price after upward or downward adjustment solely as follows:
(a)
|
In the event H2B2 raises capital in any Capital Raise Transaction (other than a Debt Raise Transaction) based on a pre-money
valuation at or exceeding the Base Purchase Price, the Base Purchase Price shall be increased on a dollar for dollar basis by an amount equal to (i) the difference between the Base Purchase Price and the actual pre-money valuation of
such Capital Raise Transaction, plus (ii) the Capital Raise Amount, plus (iii) the AVR Option Amount;
|
(b)
|
In the event H2B2 raises capital in any Capital Raise Transaction (other than a Debt Raise Transaction) based on a pre-money
valuation below the Base Purchase Price, the Base Purchase Price shall be (i)
|
TABLE OF CONTENTS
decreased by an amount equal to the difference between the Base Purchase Price and
the actual pre-money valuation of such Capital Raise Transaction, and increased by (ii) the Capital Raise Amount, plus (iii) the AVR Option Amount, in each case on a dollar for dollar basis;
(c)
|
In the event H2B2 raises capital in any Debt Raise Transaction based on a Debt Transaction Pre-Money Valuation at or exceeding
the Base Purchase Price, the Base Purchase Price shall be increased on a dollar for dollar basis by an amount equal to (i) the difference between the Base Purchase Price and the actual Debt Transaction Pre-Money Valuation, plus (ii) the AVR Option Amount; or
|
(d)
|
In the event H2B2 raises capital in any Debt Raise Transaction based on a Debt Transaction Pre-Money Valuation below the Base
Purchase Price, the Base Purchase Price shall be (i) decreased by an amount equal to the difference between the Base Purchase Price and the actual Debt Transaction Pre-Money Valuation and (ii) increased by the AVR Option Amount, in each
case on a dollar for dollar basis;
|
provided, that, solely in the event that the Capital Raise Amount exceeds $15,000,000,
following any adjustment pursuant to the foregoing clauses (a), (b), (c) or (d), the Closing Date Purchase Price shall be further increased by an additional ten percent (10%), and
provided, further, that in the event H2B2 raises capital in any Debt Raise Transaction
where such Debt Raise Transaction consists exclusively of senior debt or any other form of debt for which a pre-money valuation has not been provided, then for a period of fifteen (15) business days following execution of definitive agreements
relating to such Debt Raise Transaction, the parties shall work together in good faith to agree a Closing Date Purchase Price. If, after such period, the parties are unable to agree upon the Closing Date Purchase Price, then the dispute
provisions set forth in Section 2.4(f) of the Merger Agreement shall apply.
“COD” are to commercial
operations date.
“Code” are to the Internal
Revenue Code of 1986, as amended.
“Cohen” are to J.V.B.
Financial Group, LLC, acting through Cohen & Company Capital Markets.
“Company Support Agreement”
are to that certain Company Stockholder Support Agreement, dated as of May 9, 2023, by and among RMG III, H2B2 and certain H2B2 Stockholders, as amended or modified from time to time, attached to this proxy statement as Annex C.
“Completion Window” are to
the period until (i) May 9, 2023 or (ii) August 9, 2023, in the event RMG III has signed a definitive agreement with respect to a Business Combination and has elected to extend the amount of time to complete a Business Combination for up to
three times for an additional one month each time (or if such date is further extended at a duly called extraordinary general meeting, such later date).
“Condition Precedent Approvals”
are to approval at the Special Meeting of the Condition Precedent Proposals.
“Condition Precedent Proposals”
are to the Business Combination Proposal, the Domestication Proposal, the Organizational Documents Proposals, the Director Election Proposal, the Stock Issuance Proposal and the Equity Incentive Plan Proposal.
“Continental” are to
Continental Stock Transfer & Trust Company.
“COVID-19” are to SARS-CoV-2
or COVID-19, and any evolutions or mutations of such virus or related or associated epidemics, pandemics or disease outbreaks.
“CO2” are to carbon
dioxide.
“CSIC” are to Consejo
Superior de Investigaciones Científicas (Spanish National Research Council).
“Debt Raise Transaction” are to any sale or other issuance of debt securities or instruments, or otherwise any incurrence of Indebtedness for borrowed money (including any issuance of senior secured or unsecured notes or junior subordinated notes), by H2B2
or any of its subsidiaries, occurring at any time, whether in a single transaction or a series of transactions, during the period commencing on or after the date of the Merger Agreement and ending at or prior to the Closing.
TABLE OF CONTENTS
“Debt Transaction Pre-Money
Valuation” are to an aggregate amount equal to the weighted average of all pre-money valuations (or any subsequent revisions thereof) submitted by Capital Raise Investors in “Phase II” of a Debt Raise Transaction (as such term is
defined in the Phase I Process Letter issued in connection with such Debt Raise Transaction), as calculated pursuant to the Debt Transaction Pre-Money Valuation Schedule.
“Debt Transaction Pre-Money
Valuation Schedule” are to a schedule delivered by H2B2 to RMG III pursuant to the Merger Agreement setting out (a) each and all of the pre-money valuations (or any subsequent revisions thereof) submitted by Capital Raise Investors in
“Phase II” of a Debt Raise Transaction and (b) the Debt Transaction Pre-Money Valuation; provided, that, for the avoidance of doubt, if any valuation submitted by a Capital Raise Investor in “Phase II” of a Debt Raise Transaction is presented
as a valuation range (and not a fixed amount), H2B2 shall first calculate a weighted median of such valuation range before calculating the Debt Transaction Pre-Money Valuation.
“Derivative Rights” are to,
with respect to any Equity Interests of any person, any and all options, warrants, rights, convertible or exchangeable securities, “phantom” equity rights, equity appreciation rights, profits interests, equity-based performance units,
commitments, contracts, agreements, arrangements or undertakings of any kind to which such person is a party or is bound obligating such person to issue, deliver or sell, or cause to be issued, delivered or sold, additional shares of capital
stock of or other equity (or phantom equity) interests in, or any security (including debt securities) convertible or exercisable for or exchangeable into any capital stock or other equity interest in, such person.
“Director Election Proposal”
are to the proposal by the RMG III Board to RMG III shareholders to approve the election of directors, as specified under the section titled “Proposal No. 4—The Director Election Proposal.”
“Dissenting Shares” are to
shares of H2B2 Common Stock issued and outstanding immediately prior to the Effective Time and held by a holder who has not voted in favor of adoption and approval of the Merger Agreement or consented thereto in writing and who is entitled to
demand and has properly exercised appraisal rights of such shares in accordance with Section 262 of the DGCL, until such time as such holder fails to perfect or otherwise waives, withdraws, or loses such holder’s appraisal rights under the DGCL
with respect to such shares.
“DGCL” are to the General
Corporation Law of the State of Delaware.
“DOE” are to United States
Department of Energy.
“Domestication” are to the
de-registration of RMG III as an exempted company incorporated in the Cayman Islands by way of continuation to the State of Delaware and domestication as a Delaware corporation in accordance with Section 388 of the DGCL and Part XII of the
Cayman Islands Companies Act.
“Domestication Proposal” are
to the proposal by the RMG III Board to RMG III shareholders to approve the Domestication, as specified under the section titled “Proposal No. 2—The Domestication Proposal.”
“Domesticated RMG III” are
to RMG III after the Domestication.
‘‘Domesticated RMG III Class A
Stock” are to shares of Class A common stock, par value $0.0001 per share, of Domesticated RMG III.
“Domesticated RMG III Class B Stock”
are to shares of Class B common stock, par value $0.0001 per share, of Domesticated RMG III.
“Domesticated RMG III Private
Placement Warrants” are, after the Domestication, a warrant to purchase one (1) share of Domesticated RMG III Class A Stock at an exercise price of $11.50.
“Domesticated RMG III Public
Warrants” are to, after the Domestication, a warrant to purchase one (1) share of Domesticated RMG III Class A Stock at an exercise price of $11.50.
“Domesticated RMG III Warrant”
are to the Domesticated RMG III Public Warrants and the Domesticated RMG III Private Placement Warrants.
“DTC” are to The
Depository Trust Company.
TABLE OF CONTENTS
“Effective Time” are to
the time when the Merger Certificate has been accepted for filing by the Secretary of State of the State of Delaware, or at such later time as may be agreed by RMG III and H2B2 in writing and specified in the Merger Certificate.
“EMEA” are to Europe, the
Middle East, and Africa.
“Equity Incentive Plan Proposal”
are to the proposal by the RMG III Board to RMG III shareholders to approve the Incentive Plan, as specified under the section titled “Proposal No. 6—The Equity Incentive Plan Proposal.”
“Equity Interests” are to,
with respect to any person, any and all shares, interests, participations, rights in, or other equivalents (however designated and whether voting or non-voting) of, such person’s capital stock or other equity interests (including partnership or
limited liability company interests in a partnership or limited liability company or any other interest or participation right that confers on a person the right to receive a share of the profits and losses, or distributions of assets, of the
issuing person), and all Derivative Rights with respect to any of the foregoing.
“EPC” are to engineering,
procurement and construction.
“ESG” are to
Environmental, Social and Governance.
“EU” are to European
Union.
“Exchange Act” are to the
Securities Exchange Act of 1934, as amended.
“Exchange Ratio” are to the
quotient obtained by dividing (a) the number of shares of Surviving Corporation Common Stock constituting the Aggregate Closing Date Merger Consideration, by (b) the number of Aggregate Fully Diluted Company Common Stock.
“Existing Articles”
are to the Third Amended and Restated Articles of Association of RMG III, dated August 4, 2023.
“Existing Memorandum”
are to the Third Amended and Restated Memorandum of Association of RMG III, dated August 4, 2023.
“Expiration Time” are to the
earliest of (a) the Effective Time, (b) such date and time as the Merger Agreement shall be terminated as specified in the Company Support Agreement and the Sponsor Support Agreement.
“Extension” are to the
extension of the date by which RMG III must consummate its initial business combination from February 9, 2023 to (i) May 9, 2023 or (ii) August 9, 2023, in the event RMG III has signed a definitive agreement with respect to a business
combination and has elected to extend the amount of time to complete a business combination for up to three times for an additional one month each time, as approved by RMG III shareholders on January 11, 2023.
“Extension Amendment” are to
the amendment to RMG III’s then-current amended and restated memorandum and articles of association, approved by RMG III shareholders on January 11, 2023 to extend the date by which RMG III must consummate its initial business combination from
February 9, 2023 to (i) May 9, 2023 or (ii) August 9, 2023, in the event RMG III has signed a definitive agreement with respect to a business combination and has elected to extend the amount of time to complete a business combination for up to
three times for an additional one month each time.
“FID” are to final
investment decision.
“FINRA” a to Financial
Industry Regulatory Authority.
“FTC” are to the Federal
Trade Commission of the United States.
“Founder Consideration Shares”
are to a number of shares of Domesticated RMG III Class B Stock equal to six percent (6%) of (a) (i) in the event there is a PIPE Transaction, the aggregate number of shares of Surviving Corporation Common Stock issued and outstanding on a
fully diluted basis immediately following the
TABLE OF CONTENTS
Effective Time (inclusive of the Founder Consideration Shares) after giving effect to
the maximum potential dilution as a result of any Capital Raise Transaction or (ii) in the event there is no PIPE Transaction, the Aggregate Closing Date Merger Consideration, in each case minus (b) the
Warrant Exchange Shares issued in connection with the Warrant Exchange.
“Founder Shares” are to the
RMG III Class B Ordinary Shares purchased by the Sponsor in a private placement prior to the Initial Public Offering, and the RMG III Class A Ordinary Shares that will be issued upon the conversion thereof.
“GAAP” are to accounting
principles generally accepted in the United States of America.
“GHG” are to greenhouse
gas.
“H2B2” are to H2B2
Electrolysis Technologies, Inc, a Delaware corporation.
“H2B2 Common Stock” are to
shares of H2B2 Common Stock, par value $0.0001 per share.
“H2B2 Fundamental Representations”
are to the representations and warranties made by H2B2 pursuant to: (i) the first and second sentences of Section 4.1 of the Merger Agreement (Company Organization), the first and second sentences of
Section 4.2 of the Merger Agreement (Subsidiaries), Section 4.3 of the Merger Agreement (Spanish Subsidiaries) Section 4.5 of the Merger Agreement (Due Authorization), Section 4.9 of the Merger Agreement (Capitalization of the Company), Section 4.10 of the Merger Agreement (Capitalization
of Subsidiaries) and Section 4.20 of the Merger Agreement (Brokers’ Fees).
“H2B2 Material Adverse Effect”
are to any event, state of facts, development, circumstance, occurrence or effect (collectively, “Events”) that (a) has had, or would reasonably be expected to have, individually or in the aggregate, a
material adverse effect on the business, assets, results of operations or financial condition of H2B2 and its subsidiaries, taken as a whole or (b) does or would reasonably be expected to, individually or in the aggregate, prevent the ability
of H2B2 to consummate the Merger; provided, however, that in no event would any of the following, alone or in combination, be deemed to constitute, or be taken into account in determining whether there has been or will be, a “H2B2 Material
Adverse Effect”: (i) any change in applicable law, treaty, convention, ordinance, rule, regulation, ruling, order, governmental order, circular or action, in each case, of any governmental authority or GAAP or any interpretation thereof
following the date of the Merger Agreement; (ii) any change in interest rates or economic, political, business or financial market conditions generally; (iii) the taking of any action required by the Merger Agreement or any Ancillary Agreement;
(iv) any natural disaster (including hurricanes, storms, tornados, flooding, earthquakes, volcanic eruptions or similar occurrences), pandemic or change in climate; (v) any acts of terrorism or war, the outbreak or escalation of hostilities,
geopolitical conditions, local, national or international political conditions; (vi) any failure of H2B2 to meet any projections or forecasts (provided that clause (vi) shall not prevent a determination that any Event not otherwise excluded
from this definition of H2B2 Material Adverse Effect underlying such failure to meet projections or forecasts has resulted in a H2B2 Material Adverse Effect); (vii) any Events generally applicable to the industries or markets in which H2B2 and
its subsidiaries operate (including increases in the cost of products, supplies, materials or other goods purchased from third-party suppliers); (viii) the announcement of the Merger Agreement and the Ancillary Agreements and consummation of
the transactions contemplated hereby and thereby, including any termination of, reduction in or similar adverse impact (but in each case only to the extent attributable to such announcement or consummation) on relationships, contractual or
otherwise, with any landlords, customers, suppliers, distributors, partners, employees, workers or officers of H2B2 and its subsidiaries (it being understood that this clause (viii) shall be disregarded for purposes of the representation and
warranty set forth in Section 4.6 of the Merger Agreement and the corresponding condition to Closing); (ix) any matter set forth on H2B2's disclosure letter, (x) any Events to the extent actually known by certain individuals set forth on RMG
III’s disclosure letter prior to the date of the Merger Agreement; or (xi) any action taken by, or at the request of, RMG III or taken or not taken by H2B2 as required by the Merger Agreement or any Ancillary Agreement; provided, further, that
any Event referred to in clauses (i), (ii), (iv), (v) or (vii) above may be taken into account in determining if a H2B2 Material Adverse Effect has occurred to the extent it has a disproportionate and adverse effect on the business, assets,
results of operations or condition (financial or otherwise) of H2B2 and its subsidiaries, taken as a whole, relative to similarly situated companies in the industry in which H2B2 and its subsidiaries conduct their respective operations, but
only to the extent of the incremental disproportionate effect on H2B2 and its subsidiaries, taken as a whole, relative to similarly situated companies in the industry in which H2B2 and its subsidiaries conduct their respective operations.
TABLE OF CONTENTS
“H2B2 Option” are to an
option to purchase shares of H2B2 Common Stock.
“H2B2 Optionholders” are
to the holders of H2B2 Options immediately prior to the Effective Time.
“H2B2 Securityholders” are
to H2B2 Optionholders and H2B2 Stockholders, collectively.
“H2B2 Stockholders” are to
the stockholders of H2B2 immediately prior to the Effective Time.
“H2B2 Stockholder Approval”
are to the adoption and approval of the Merger Agreement and the transactions contemplated thereby (including the Merger) by the affirmative vote of the holders of at least a majority of the voting power of the issued and outstanding H2B2
Common Stock pursuant to resolutions adopted by the Requisite Company Stockholders at a duly called special meeting of the H2B2 Stockholders in accordance with the terms and subject to the conditions of H2B2’s Governing Documents, the H2B2
Stockholders Agreement and applicable law.
“HRS” are to hydrogen
refueling stations.
“HSR Act” are to the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations promulgated thereunder.
“Incentive Plan” are to the
H2B2 Electrolysis Technologies, Inc. 2023 Incentive Award Plan, in the form attached hereto as Annex I.
“Initial Public Offering”
are to RMG III’s initial public offering that was consummated on February 9, 2021.
“Initial Shareholders” are
to the holders of the Founder Shares.
“Interim Period” are to the
date of the Merger Agreement through the earlier of the Closing or valid termination of the Merger Agreement.
“Investment Company Act”
are to the Investment Company Act of 1940, as amended.
“IPCEI” are to Important
Projects of Common European Interest.
“IPO Registration Statement”
are to the Registration Statement on Form S-1 (333-251889) filed by RMG III in connection with its Initial Public Offering, which was declared effective on February 4, 2021.
“IPO Underwriters” are to
BofA Securities Inc. and Barclays Capital Inc.
“IRA” are to Inflation
Reduction Act of 2022.
“IREC” are to Catalonia
Energy Research Institute.
“IRS” are to the U.S.
Internal Revenue Service.
“January 2022 Note” are to
that certain unsecured, non-interest bearing promissory note issued by RMG III to RMG Acquisition Management, dated January 19, 2022, pursuant to which RMG Acquisition Management agreed to lend to RMG III up to an aggregate of $500,000.
“JOBS Act” are to the
Jumpstart Our Business Startups Act of 2012.
“July 2022 Note” are to that
certain unsecured, non-interest bearing promissory note issued by RMG III to RMG Acquisition Management, dated July 27, 2022, pursuant to which RMG Acquisition Management agreed to lend to RMG III up to an aggregate of $475,000.
“Lock-Up Agreement”
are to Lock-Up Agreements substantially in the form attached to this proxy statement/prospectus as Annex E.
“Loan Agreement”
are to that certain Loan Agreement, dated as of May 30, 2023, by and between H2B2 (as borrower) and Apenet, S.L.U. (as lender), as specified under the section titled “Certain Relationships and Related
Party Transactions—H2B2—Ardachon Share Acquisition”.
“LTSA” are to Long-Term
Service Agreement.
“Merger Agreement” are to
the Agreement and Plan of Merger, dated as of May 9, 2023, by and between RMG III and H2B2 attached to this proxy statement/prospectus as Annex A.
TABLE OF CONTENTS
“Merger” are to the
merger by which H2B2 will merge with and into RMG III, the separate corporate existence of H2B2 will cease and RMG III will be the Surviving Corporation.
“Merger Certificate” shall
mean a certificate of merger with respect to the Merger.
“Minimum Investment Amount”
are to $40,000,000, which, for the avoidance of doubt, shall exclude (i) the AVR Option Amount and (ii) any capital raised by H2B2 or any of its subsidiaries at or prior to the Closing through any Capital Raise Transaction in connection with
the Ardachon Share Acquisition.
“MW” are to megawatts.
“Nasdaq” are to The Nasdaq
Capital Market.
“Natixis” are to Natixis
Partners Iberia, S.A., the co-placement agent to H2B2 in connection with the Capital Raise Transaction.
“OEM” are to original
equipment manufacturer.
“OpEx” are to operating
expenditures.
“O&M” are to
operations and maintenance.
“Organizational Documents Proposals”
are to the proposals by the RMG III Board to RMG III shareholders to approve the Proposed Organizational Documents, as specified under the section titled “Proposal No. 3—The Organizational Documents Proposals.”
“PEM” are to Proton
Exchange Membrane.
“Person” are to individual,
firm, corporation, partnership, limited liability company, incorporated or unincorporated association, joint venture, joint stock company, governmental authority or instrumentality or other entity of any kind.
“PFIC” are to passive
foreign investment company.
“PG” are to Production
Guarantees.
“PM” are to Preventive
Maintenance.
“PIPE Transaction” are to a
transaction pursuant to which RMG III enters into subscription, purchase or similar agreements with investors, pursuant to which such investors will agree to purchase Equity Interests of RMG III with such purchase to be consummated prior to or
concurrently with the Closing.
“Private Placement” are to
the private placement of 8,216,330 warrants consummated by RMG III simultaneously with the closing of the Initial Public Offering.
“Pro Forma” are to giving
pro forma effect to the Business Combination and the other related events contemplated by the Merger Agreement.
“Proposed Bylaws” are to the
proposed bylaws of the Surviving Corporation from the Effective Time attached to this proxy statement/prospectus as Annex H.
“Proposed Certificate of
Incorporation” are to the proposed certificate of incorporation of the Surviving Corporation from the Effective Time attached to this proxy statement/prospectus as Annex G.
“Proposed Organizational Documents”
are to the Proposed Certificate of Incorporation and the Proposed Bylaws, collectively.
“PPAs” are to purchase
price agreements.
“PP&E” are to
property, plant and equipment.
“PTC” are to production
tax credit.
“Public Shareholders” are to
holders of Public Shares, whether acquired in the Initial Public Offering or acquired in the secondary market.
TABLE OF CONTENTS
“Public Shares” are to
the RMG III Class A Ordinary Shares (including those that underlie the RMG III Units) that were offered and sold by RMG III in its Initial Public Offering and registered pursuant to the IPO Registration Statement or the shares of Surviving
Corporation Common Stock issued as a matter of law upon the conversion thereof at the time of the Domestication, as the context requires.
“RED II” are to Renewable
Energy Directive II.
“Redemption” are to each
redemption of Public Shares for cash pursuant to the RMG III Governing Documents and the Proposed Organizational Documents.
“Registration Rights Agreement”
are to the Amended and Restated Registration Rights Agreement to be entered into at Closing, by and among the Surviving Corporation, the Sponsor, and certain H2B2 Stockholders substantially in the form attached to this proxy
statement/prospectus as Annex D.
“RFNBOs” are to renewable
liquid and gaseous fuels of non-biological origins.
“RFQ” are to request for
quotes.
“Requisite Company Stockholders”
are to holders of H2B2 Common Stock representing the majority of the outstanding H2B2 Common Stock.
“RMG III” are to RMG
Acquisition Corp. III, a Cayman Islands exempted company.
“RMG III Board” are to the
board of directors of RMG III.
“RMG III Class A Ordinary Shares”
are to RMG III’s Class A ordinary shares, par value $0.0001 per share (prior to the Domestication).
“RMG III Class B Ordinary Shares”
are to RMG III’s Class B ordinary shares, par value $0.0001 per share (prior to the Domestication).
“RMG III Governing Documents”
are to RMG III’s Amended and Restated Memorandum and Articles of Association, as amended from time to time, attached to this proxy statement/prospectus as Annex F.
“RMG III Ordinary Shares”
are to the RMG III Class A Ordinary Shares and the RMG III Class B Ordinary Shares, collectively.
“RMG III Private Placement Warrants”
are, prior to the Domestication, a warrant to purchase one (1) RMG III Class A Ordinary Share at an exercise price of $11.50, issued to the Sponsor in a private placement simultaneously with the closing of the Initial Public Offering, and,
following the Domestication, a warrant to purchase one (1) share of Domesticated RMG III Class A Stock, such warrant having been exchanged for a warrant issued to the Sponsor in connection with the Initial Public Offering.
“RMG III Public Warrants”
are to, prior to the Domestication, a warrant to purchase one (1) RMG III Class A Ordinary Share at an exercise price of $11.50 that was included in the Units sold as part of the Initial Public Offering.
“RMG III Record Date” are to
, 2023.
“RMG III Share Redemption”
are to the election of an eligible holder of RMG II Class A Ordinary Shares to redeem all or a portion of the shares of RMG III Class A Ordinary Shares held by such holder at a per-share price, payable in cash, equal to a pro rata share of the
aggregate amount on deposit of the Trust Account.
“RMG III Share Redemption Amount”
are to the aggregate amount payable with respect to all RMG III Share Redemptions.
“RMG III Shareholder Approval”
are to the approval of (a) the Domestication Proposal and the Organizational Documents Proposals, in each case, by a special resolution under Cayman Islands law, being the affirmative vote of the holders of at least two-thirds of the RMG III
Ordinary Shares represented in person or by proxy and entitled to vote thereon and who vote at the Special Meeting; (b) the Business Combination Proposal, the Stock Issuance Proposal and the Adjournment Proposal, in each case, by an ordinary
resolution under Cayman Islands law, being the affirmative vote of the holders of a majority of the RMG III Ordinary Shares represented in person or by proxy and entitled to vote thereon and who vote at the Special Meeting; (c) the Director
Election Proposal, by an ordinary resolution of the holders of the RMG III Class B Ordinary Shares,
TABLE OF CONTENTS
being the affirmative vote of the holders of a majority of the RMG III Class B
Ordinary Shares represented in person or by proxy and entitled to vote thereon and who vote at the Special Meeting; and (d) any other proposals to be proposed to the RMG III shareholders, in each case, by the requisite approval required under
the RMG III Governing Documents, the Cayman Islands Companies Act or other applicable law.
“RMG III shareholders” are
to the holders of RMG III Ordinary Shares.
“RMG III Units” are to the
units of RMG III each unit comprised of one RMG III Class A Ordinary Share and one-fifth of one Public Warrant.
“RMG III warrant holder”
are to a holder of the RMG III Warrants.
“RMG III Warrants” are to
the RMG III Public Warrants and the RMG III Private Placement Warrants.
“RMG Acquisition Management”
are to RMG Acquisition Management, LLC, a Delaware limited liability company and an affiliate of the Sponsor.
“ROU” are to right of use.
“Rule 144” are to Rule 144
under the Securities Act of 1933 as amended.
“Sarbanes-Oxley Act” are
to the Sarbanes-Oxley Act of 2002, as amended.
“SEC” are to the United
States Securities and Exchange Commission.
“Second Extension
Amendment” are to the amendment to RMG III’s then-current amended and restated memorandum and articles of association, approved by RMG III shareholders on August 4, 2023 to extend the date by which RMG III must consummate its
initial business combination to February 9, 2024.
“Securities Act” are to
the Securities Act of 1933, as amended.
“SG&A” are to selling,
general and administrative.
“SOEC” are to Solid Oxide
Exchange Cell.
“Special Meeting” are to the
extraordinary general meeting of RMG III shareholders to be held at , on , 2023.
“Special Meetings” are to
the Special Meeting and the Warrant Holders Meeting.
“Sponsor” are to RMG
Sponsor III, LLC, a Delaware limited liability company.
“Sponsor Support Agreement”
are to that certain Support Agreement, dated as of May 9, 2023, by and among the Sponsor, RMG III and H2B2, as amended or modified from time to time, attached to this proxy statement/prospectus as Annex B.
“Stock Issuance Proposal”
are to the proposal by the RMG III Board to RMG III shareholders to approve the issuance or potential issuance of Surviving Corporation Stock pursuant to the Merger Agreement, as specified under the section titled “Proposal No. 5—The Stock Issuance Proposal.”
“Surviving Corporation” are
to RMG III following the Domestication and Merger, including after such change of name to H2B2 Electrolysis Technologies, Inc.
“Surviving Corporation Board”
are to the board of directors of the Surviving Corporation.
“Surviving Corporation Common Stock”
are to shares of Surviving Corporation common stock, par value $0.0001 per share.
“Surviving Corporation Options”
are to options to purchase shares of Surviving Corporation Common Stock.
“Surviving Corporation Preferred Stock” are to shares of preferred stock, par value $0.0001 per share, of the Surviving Corporation.
“TEP” are to technical
economical proposal.
“Trust Account” are to the
trust account established at the consummation of the Initial Public Offering, held at Citibank, N.A. and maintained by Continental, acting as trustee.
TABLE OF CONTENTS
“Trust Agreement” are to
the Investment Management Trust Agreement, dated February 4, 2021, by and between RMG III and Continental, as trustee.
“UCLM” are to University
of Castilla–La Mancha.
“Underwriting Agreement”
are to the Underwriting Agreement, dated as of February 4, 2021, by and between RMG III and the IPO Underwriters.
“Warrant Agreement” are to
the Warrant Agreement, dated as of February 4, 2021, by and between RMG III and Continental.
“Warrant Amendment” are to
the amendment to the Warrant Agreement which shall, following the execution of such amendment, cause, in connection with Closing, each of the then outstanding (x) Public Warrants and (y) Private Placement Warrants to be canceled and exchanged
for the right to receive 0.075 shares of Surviving Corporation Common Stock.
“Warrant Amendment Proposal”
are to the proposal by the RMG III Board to RMG III warrant holders to approve the Warrant Amendment.
“Warrant Exchange” are to
the transaction pursuant to the Warrant Amendment, whereby, in connection with Closing each of the then outstanding (x) Public Warrants and (y) Private Placement Warrants to be canceled and exchanged for the right to receive 0.075 shares of
Surviving Corporation Common Stock.
“Warrant Exchange Shares”
are to the shares of Surviving Corporation Common Stock issued in connection with the Warrant Exchange.
“Warrant Holders Adjournment
Proposal” are to the proposal by the RMG III Board to RMG III warrant holders to approve the adjournment of the Warrant Holders Meeting, as specified under the section titled “Warrant Holder Proposal
No—2—The Warrant Amendment Proposal.”
“Warrant Holders Meeting”
are to the extraordinary general meeting of RMG III warrant holders to be held at , on , 2023.
“Warrant Holder Proposals”
are to the Warrant Amendment Proposal and the Warrant Holders Adjournment Proposal, collectively.
Unless otherwise stated in this proxy statement/prospectus or the
context otherwise requires, all references in this proxy statement/prospectus to RMG III Class A Ordinary Shares, shares of Surviving Corporation Common Stock or the Warrants include such securities underlying the RMG III Units.
TABLE OF CONTENTS
TRADEMARKS, TRADE NAMES AND SERVICE MARKS
This document contains references to trademarks, trade names,
copyrights, products and service marks belonging to H2B2 and other entities. Solely for convenience, trademarks, trade names, copyrights, products and service marks referred to in this proxy statement/prospectus may appear without the ®, TM and
SM symbols, but such references are not intended to indicate, in any way, that the applicable licensor will not assert, to the fullest extent under applicable law, its rights to these trademarks, trade names, copyrights, products and service
marks. RMG III does not intend its use or display of other companies’ trademarks, trade names, copyrights, products and service marks to imply a relationship with, or endorsement or sponsorship of it by, any other companies.
TABLE OF CONTENTS
The following questions and answers below
highlight only selected information from this proxy statement/prospectus and only briefly address some commonly asked questions about the Proposals to be presented at the Special Meeting and the Warrant Holders Meeting, including with respect
to the Business Combination. The following questions and answers may not include all the information that is important to RMG III shareholders and RMG III warrant holders. RMG III shareholders and RMG III warrant holders are urged to read
carefully this proxy statement/prospectus in its entirety, including the annexes attached hereto and the other documents referred to herein, to fully understand the Business Combination and the voting procedures for the Special Meetings.
QUESTIONS AND ANSWERS ABOUT THE BUSINESS COMBINATION
Q:
|
WHAT IS THE BUSINESS COMBINATION?
|
A:
|
RMG III and H2B2 have entered into the Merger Agreement, pursuant to which (i) RMG III will de-register as an exempted company
incorporated in the Cayman Islands and domesticate as a Delaware corporation, and (ii) H2B2 will merge with and into RMG III, with RMG III surviving the Merger. In connection with the Closing, the Surviving Corporation will be renamed
“H2B2 Electrolysis Technologies, Inc.” RMG III will hold the Special Meeting to, among other things, obtain the approvals required for the Business Combination and the other transactions contemplated by the Merger Agreement, and you are
receiving this proxy statement/prospectus in connection with such meeting. See the section entitled “The Merger Agreement” for more information. In addition, a copy of the Merger Agreement is
attached to this proxy statement/prospectus as Annex A. We urge you to carefully read this proxy statement/prospectus, including the annexes and the other documents referred to herein, in their entirety.
|
Q:
|
WHY AM I RECEIVING THIS DOCUMENT?
|
A:
|
RMG III is sending this proxy statement/prospectus to its RMG III shareholders and RMG III warrant holders to help them decide
how to vote their RMG III Class A Ordinary Shares and/or RMG III Warrants with respect to the matters to be considered at the Special Meetings. The Business Combination cannot be completed unless RMG III shareholders approve the
Business Combination Proposal, the Domestication Proposal, the Organizational Documents Proposals, the Director Election Proposal, the Stock Issuance Proposal and the Equity Inventive Plan Proposal, and the RMG III warrant holders also
approve the Warrant Amendment Proposal set forth in this proxy statement/prospectus for their respective approvals. Information about the Special Meetings, the Business Combination and the other business to be considered by RMG III
shareholders and RMG III warrant holders at the Special Meetings is contained in this proxy statement/prospectus. This document constitutes a proxy statement/prospectus of RMG III. It is a proxy statement/prospectus because the RMG III
Board is soliciting proxies using this proxy statement/prospectus from RMG III shareholders and RMG III warrant holders.
|
Q:
|
WHAT WILL H2B2 STOCKHOLDERS RECEIVE IN THE BUSINESS COMBINATION?
|
A:
|
As part of the Business Combination, the H2B2 Stockholders will receive a number of shares of Surviving Corporation Common Stock
equal to the quotient obtained by dividing (i) the Closing Date Purchase Price by (ii) $10.00, as discussed in more detail in this proxy/statement prospectus (the “Aggregate Closing Date Merger
Consideration”). See the section entitled “The Merger Agreement—Merger Consideration; Conversion of Shares” for more information.
|
Q:
|
WHAT WILL HAPPEN TO RMG III SECURITIES UPON THE CONSUMMATION OF THE BUSINESS COMBINATION?
|
A:
|
RMG III Units, RMG III Class A Ordinary Shares and RMG III Public Warrants are currently listed on Nasdaq under the symbols
“RMGCU,” “RMGC” and “RMGCW,” respectively. At the time of Domestication, (i) each of the then issued and outstanding RMG III Class A Ordinary Shares will convert automatically, on a one-for-one basis, into a share of Domesticated RMG
III Class A Stock, (ii) each of the then issued and outstanding RMG III Class B Ordinary Shares will convert automatically, on a one-for-one basis, into a share of Domesticated RMG III Class B Stock, (iii) each of the then outstanding
RMG III Warrants will convert automatically into a Domesticated RMG III Warrant, and (iv) each then issued and
|
TABLE OF CONTENTS
outstanding RMG III Unit will be canceled and will entitle the holder thereof to
one share of Domesticated RMG III Class A Stock and one-fifth of one Domesticated RMG III Warrant. At the Effective Time, (i) each of the then issued and outstanding shares of Domesticated RMG III Class A Stock, will convert automatically, on a
one-for-one basis, into a share of Surviving Corporation Common Stock, (ii) a number of shares of Domesticated RMG III Class B Stock equal to the number of Founder Consideration Shares will convert into shares of Surviving Corporation Common
Stock and the remaining shares of Domesticated RMG III Class B Stock issued and outstanding will be canceled as part of the Merger and no consideration will be paid thereof and (iii) in the event the Warrant Amendment Proposal is approved,
prior to the Effective Time, each of the then outstanding Domesticated RMG III Warrants will be canceled and exchanged for the right to receive 0.075 shares of Surviving Corporation Common Stock.
Upon consummation of the Domestication, RMG III will change its name to “H2B2
Electrolysis Technologies, Inc.” and shares of Surviving Corporation Common Stock will be listed on Nasdaq under the symbol “HHBB.” The Surviving Corporation Common Stock will be the only outstanding class of common stock upon and following the
consummation of the Business Combination. The RMG III Units will not be traded on Nasdaq following consummation of the Business Combination and such units will be canceled and will entitle the holder to one share of Domesticated RMG III Class A
Stock and one-fifth of one Domesticated RMG III Public Warrant. RMG III shareholders who do not elect to have their RMG III Class A Ordinary Shares redeemed need not deliver or tender their RMG III Class A Ordinary Shares (and share
certificates (if any) and other redemption forms) to RMG III or to Continental and such securities will remain outstanding.
Q:
|
WHAT WILL HAPPEN TO H2B2 SECURITIES PRIOR TO OR UPON THE CONSUMMATION OF THE BUSINESS COMBINATION?
|
A:
|
At the Effective Time, all shares of H2B2 Common Stock issued and outstanding immediately prior to the Effective Time (excluding
(i) shares subject to H2B2 Options, (ii) any shares of H2B2 Common Stock held in the treasury of H2B2, which treasury shares shall be canceled as part of the Merger and shall not constitute capital stock of H2B2 (“Treasury Shares”) and (iii) any shares of H2B2 Common Stock held by the H2B2 Stockholders who have perfected and not withdrawn a demand for appraisal rights pursuant to the applicable provisions of
the DGCL (“Dissenting Shares”)) will be canceled and converted into the right to receive a portion of the Aggregate Closing Date Merger Consideration.
|
At the Effective Time, each H2B2 Option will convert into an option to purchase shares
of Surviving Corporation Common Stock upon substantially the same terms and conditions as are in effect with respect to the corresponding H2B2 Option immediately prior to the Effective Time, including with respect to vesting and
termination-related provisions, with adjustments based on the Exchange Ratio.
Q:
|
WHEN DO YOU EXPECT THE BUSINESS COMBINATION TO BE COMPLETED?
|
A:
|
It is currently anticipated that the Business Combination will be consummated promptly following the Special Meetings, which is
set for , 2023; however, each meeting could be adjourned, as described herein. Neither RMG III nor H2B2 can assure you of when or if the Business Combination will be completed and it is possible that factors outside of the control
of both parties could result in the Business Combination being completed at a different time or not at all. RMG III must first obtain the approval of RMG III shareholders and RMG III warrant holders for certain of the Proposals and the
Warrant Amendment Proposal as set forth in this proxy statement/prospectus and RMG III and H2B2 must also satisfy other closing conditions. See the section entitled “The Merger Agreement—Conditions to
Closing of the Business Combination” for more information.
|
Q:
|
WHAT HAPPENS IF THE BUSINESS COMBINATION IS NOT COMPLETED?
|
A:
|
If the Business Combination is not completed, RMG III will not complete the Domestication to Delaware unless all other
conditions to the consummation of the Business Combination have been satisfied or waived by the parties in accordance with the terms of the Merger Agreement. If RMG III is not able to complete the Business Combination with H2B2 by the
Completion Window and is not able to complete another business combination by such date, in each case, as such date may be extended pursuant to the RMG III Governing Documents, RMG III will: (1) cease all operations except for the
purpose of winding up; (2) as
|
TABLE OF CONTENTS
promptly as reasonably possible, but not more than ten (10) business days
thereafter, redeem the public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest (less up to $100,000 of interest to pay dissolution expenses and which interest
shall be net of taxes payable), divided by the number of then issued and outstanding public shares, which redemption will completely extinguish Public Shareholders’ rights as RMG III Shareholders (including the right to receive further
liquidating distributions, if any), subject to applicable law; and (3) as promptly as reasonably possible following such redemption, subject to the approval of our remaining RMG III shareholders and the RMG III Board, dissolve and liquidate,
subject in each case to our obligations under Cayman Islands law to provide for claims of creditors and the requirements of other applicable law.
Q:
|
HOW WILL RMG III BE MANAGED AND GOVERNED FOLLOWING THE BUSINESS COMBINATION?
|
A:
|
In connection with the Closing, RMG III will be renamed “H2B2 Electrolysis Technologies, Inc.” Following the Closing, the
Surviving Corporation will be managed by the Surviving Corporation Board, which is expected to consist of nine (9) directors (with a majority of the directors expected to be independent under applicable Nasdaq listing rules), and its
executive officers are expected to be the current management team of H2B2. See the section entitled “Management of the Surviving Corporation Following the Business Combination” for more
information.
|
Q:
|
WHAT WILL BE THE RELATIVE EQUITY STAKES OF PUBLIC SHAREHOLDERS, THE SPONSOR, THE RMG III INVESTORS AND H2B2
STOCKHOLDERS IN THE SURVIVING CORPORATION UPON CONSUMMATION OF THE BUSINESS COMBINATION?
|
A:
|
Upon consummation of the Business Combination, the undiluted post-Closing share ownership of Surviving Corporation is
expected to be as follows:
|
H2B2 Stockholders(2)
|
|
|
96,470,002
|
|
|
93.40%
|
|
|
96,470,002
|
|
|
93.54%
|
|
|
96,470,002
|
|
|
93.69%
|
|
|
96,470,002
|
|
|
93.83%
|
|
|
96,470,002
|
|
|
93.98%
|
Public Shareholders(3)
|
|
|
635,778
|
|
|
*
|
|
|
476,834
|
|
|
*
|
|
|
317,889
|
|
|
*
|
|
|
158,945
|
|
|
*
|
|
|
—
|
|
|
—
|
Sponsor(4)
|
|
|
4,816,935
|
|
|
4.66%
|
|
|
4,816,935
|
|
|
4.67%
|
|
|
4,816,935
|
|
|
4.68%
|
|
|
4,816,935
|
|
|
4.69%
|
|
|
4,816,935
|
|
|
4.69%
|
Other stockholders(5)
|
|
|
25,000
|
|
|
*
|
|
|
25,000
|
|
|
*
|
|
|
25,000
|
|
|
*
|
|
|
25,000
|
|
|
*
|
|
|
25,000
|
|
|
*
|
RMG III Warrants
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Holders of RMG III Private Placement Warrants(6)
|
|
|
616,225
|
|
|
*
|
|
|
616,225
|
|
|
*
|
|
|
616,225
|
|
|
*
|
|
|
616,225
|
|
|
*
|
|
|
616,225
|
|
|
*
|
Holders of RMG III Public Warrants(7)
|
|
|
724,500
|
|
|
*
|
|
|
724,500
|
|
|
*
|
|
|
724,500
|
|
|
*
|
|
|
724,500
|
|
|
*
|
|
|
724,500
|
|
|
*
|
Total Shares Outstanding
|
|
|
103,288,440
|
|
|
100%
|
|
|
103,129,496
|
|
|
100%
|
|
|
102,970,551
|
|
|
100%
|
|
|
102,811,607
|
|
|
100%
|
|
|
102,652,662
|
|
|
100%
|
Total Pro Forma Book Value
|
|
|
|
|
|
$97,964,545
|
|
|
|
|
|
$96,114,431
|
|
|
|
|
|
$94,264,317
|
|
|
|
|
|
$92,414,203
|
|
|
|
|
|
$90,223,612
|
Pro Forma Book Value per Share Outstanding
|
|
|
|
|
|
$0.95
|
|
|
|
|
|
$0.93
|
|
|
|
|
|
$0.92
|
|
|
|
|
|
$0.90
|
|
|
|
|
|
$0.88
|
(1)
|
Share ownership under each redemption scenario is only presented for illustrative purposes. RMG III cannot predict how many of
its Public Shareholders will exercise their right to have their Public Shares redeemed for cash. As a result, the RMG III Share Redemption Amount and the number of RMG III Class A Ordinary Shares redeemed in connection with the Business
Combination may differ from the amounts presented above. As such, the ownership percentages of H2B2 Stockholders, Public Shareholders, Sponsor, Holders of RMG III Public Warrants, and other stockholders may also differ from the
presentation above if the actual redemptions are different from these assumptions.
|
(2)
|
Assumes that (i) the Closing Date Purchase Price is $750,000,000, (ii) $125,000,000 is raised in the Capital Raise Transaction,
(iii) the conversion of the AVR Option Amount and (iv) the Closing Date Purchase Price has been increased by a 10% premium.
|
(3)
|
Excludes 724,500 shares of Surviving Corporation Common Stock issuable in respect of any RMG III Public Warrants that may be held
by Public Shareholders following the Warrant Amendment.
|
(4)
|
Excludes 616,225 shares of Surviving Corporation Common Stock issuable in respect of the 8,216,330 RMG III Private Placement
Warrants owned by the Sponsor following the Warrant Amendment.
|
(5)
|
Such shares of Surviving Corporation Common Stock issuable to Cohen for services provided in connection with the Extension, as
described elsewhere in this proxy statement/prospectus.
|
TABLE OF CONTENTS
(6)
|
Such shares of Surviving Corporation Common Stock issuable in respect of 8,216,330 RMG III Private Placement Warrants
following the Warrant Amendment.
|
(7)
|
Such shares of Surviving Corporation Common Stock issuable in respect of 9,660,000 RMG III Public Warrants following the
Warrant Amendment.
|
The following table further illustrates the impact on relative
fully diluted ownership levels of Surviving Corporation for each source of dilution, namely the issuance of Surviving Corporation Common Stock under the Incentive Plan.
H2B2 Stockholders(3)
|
|
|
96,470,002
|
|
|
|
|
|
96,470,002
|
|
|
|
|
|
96,470,002
|
|
|
|
|
|
96,470,002
|
|
|
|
|
|
96,470,002
|
|
|
|
Public Shareholders(4)
|
|
|
635,778
|
|
|
|
|
|
476,834
|
|
|
|
|
|
317,889
|
|
|
|
|
|
158,945
|
|
|
|
|
|
—
|
|
|
|
Sponsor(5)
|
|
|
4,816,935
|
|
|
|
|
|
4,816,935
|
|
|
|
|
|
4,816,935
|
|
|
|
|
|
4,816,935
|
|
|
|
|
|
4,816,935
|
|
|
|
Other stockholders(6)
|
|
|
25,000
|
|
|
|
|
|
25,000
|
|
|
|
|
|
25,000
|
|
|
|
|
|
25,000
|
|
|
|
|
|
25,000
|
|
|
|
RMG III Warrants
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Holders of RMG III Private Placement Warrants(7)
|
|
|
616,225
|
|
|
|
|
|
616,225
|
|
|
|
|
|
616,225
|
|
|
|
|
|
616,225
|
|
|
|
|
|
616,225
|
|
|
|
Holders of RMG III Public Warrants(8)
|
|
|
724,500
|
|
|
|
|
|
724,500
|
|
|
|
|
|
724,500
|
|
|
|
|
|
724,500
|
|
|
|
|
|
724,500
|
|
|
|
Equity Incentive Plan
|
|
Incentive Plan(9)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Shares Outstanding
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Pro Forma Book Value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pro Forma Book Value per Share Outstanding
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Share ownership under each redemption scenario is only presented for illustrative purposes. RMG III cannot predict how many of
its Public Shareholders will exercise their right to have their Public Shares redeemed for cash. As a result, the RMG III Share Redemption Amount and the number of RMG III Class A Ordinary Shares redeemed in connection with the
Business Combination may differ from the amounts presented above. As such, the ownership percentages of H2B2 Stockholders, Public Shareholders, Sponsor, Holders of RMG III Public Warrants, and other stockholders may also differ from
the presentation above if the actual redemptions are different from these assumptions.
|
(2)
|
This presentation includes shares that may be issued but are not presently outstanding and, as such, differ from the share
counts shown or assumed in the sections entitled “Summary Unaudited Pro Forma Condensed Combined Financial Information” and “Unaudited Pro
Forma Condensed Combined Financial Information”, which sections are limited to shares that are presently issued and outstanding
|
(3)
|
Assumes that (i) the Closing Date Purchase Price is $750,000,000, (ii) $125,000,000 is raised in the Capital Raise
Transaction, (iii) the conversion of the AVR Option Amount and (iv) the Closing Date Purchase Price has been increased by a 10% premium.
|
(4)
|
Excludes 724,500 shares of Surviving Corporation Common Stock issuable in respect of any RMG III Public Warrants that may be
held by Public Shareholders following the Warrant Amendment.
|
(5)
|
Excludes 616,225 shares of Surviving Corporation Common Stock issuable in respect of the 8,216,330 RMG III Private Placement
Warrants owned by the Sponsor following the Warrant Amendment.
|
(6)
|
Such shares of Surviving Corporation Common Stock issuable to Cohen for services provided in connection with the Extension, as
described elsewhere in this proxy statement/prospectus.
|
(7)
|
Such shares of Surviving Corporation Common Stock issuable in respect of 8,216,330 RMG III Private Placement Warrants
following the Warrant Amendment.
|
(8)
|
Such shares of Surviving Corporation Common Stock issuable in respect of 9,660,000 RMG III Public Warrants following the
Warrant Amendment.
|
(9)
|
Such shares of Surviving Corporation Common Stock expected to be reserved under the Incentive Plan (assuming the Equity
Incentive Plan Proposal is approved).
|
TABLE OF CONTENTS
Q:
|
WHAT ARE THE U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE DOMESTICATION?
|
A:
|
Any RMG III Class A Ordinary Shares that are redeemed pursuant to the redemption rights described herein will be canceled
prior to the Domestication, and will not be exchanged for shares of Domesticated RMG III Class A Stock pursuant to the Domestication. Accordingly, RMG III shareholders that exercise their redemption rights with respect to their RMG
III Class A Ordinary Shares are not expected to be subject to the U.S. federal income tax consequences of the Domestication described below with respect to such redeemed shares.
|
As discussed more fully under “U.S.
Federal Income Tax Considerations,” Skadden, Arps, Slate, Meagher & Flom LLP has delivered an opinion that the Domestication will qualify as a reorganization within the meaning of Section 368(a)(l)(F) of the U.S. Internal
Revenue Code of 1986, as amended (the “Code”). Assuming that the Domestication so qualifies, U.S. Holders (as defined in “U.S. Federal
Income Tax Considerations”) will be subject to Section 367(b) of the Code and, as a result:
•
|
A U.S. Holder whose RMG III Class A Ordinary Shares have a fair market value of less than $50,000 on the date of the
Domestication will not be required to include any part of RMG III’s earnings in income and will not, subject to the application of the PFIC rules described below, recognize any gain or loss;
|
•
|
A U.S. Holder whose RMG III Class A Ordinary Shares have a fair market value of $50,000 or more and who, on the date of the
Domestication, owns (actually or constructively) less than 10% of the total combined voting power of all classes of RMG III stock entitled to vote and less than 10% of the total value of all classes of RMG III stock will generally
recognize gain (but not loss) on the exchange of RMG III Class A Ordinary Shares for shares of Domesticated RMG III Class A Stock pursuant to the Domestication. As an alternative to recognizing gain, such U.S. Holder may file an
election to include in income as a deemed dividend the “all earnings and profits amount” (as defined in the Treasury Regulations under Section 367 of the Code) attributable to its RMG III Class A Ordinary Shares provided certain other
requirements are satisfied; and
|
•
|
A U.S. Holder whose RMG III Class A Ordinary Shares have a fair market value of $50,000 or more and who, on the date of the
Domestication, owns (actually or constructively) 10% or more of the total combined voting power of all classes of RMG III stock entitled to vote or 10% or more of the total value of all classes of RMG III stock will generally be
required to include in income as a deemed dividend the all earnings and profits amount attributable to its RMG III Class A Ordinary Shares.
|
RMG III does not expect to have significant cumulative earnings and profits, if any,
on the date of the Domestication. It is possible, however, that the amount of RMG III’s cumulative net earnings and profits may be greater than expected through the date of the Domestication.
Upon consummation of the Domestication, RMG III will, as a matter of law, become a
resident of the United States for U.S. federal income tax purposes. As a result of the Domestication, RMG III will begin a new taxable year. Therefore, at the Effective Time (and thus, at the time of the consummation of the Business
Combination), RMG III will, as a matter of law, be a resident of the United States for U.S. federal income tax purposes.
As discussed more fully under “U.S. Federal Income
Tax Considerations,” RMG III believes that it is likely classified as a PFIC for U.S. federal income tax purposes. In such case, notwithstanding the foregoing U.S. federal income tax consequences of the Domestication, proposed Treasury
Regulations under Section 1291(f) of the Code (which have a retroactive effective date), if finalized in their current form, would generally require a U.S. Holder to recognize gain on the exchange of RMG III Class A Ordinary Shares or RMG III
Warrants for shares of Domesticated RMG III Class A Stock or Domesticated RMG III Warrants pursuant to the Domestication. Any such gain would be taxable income with no corresponding receipt of cash in the Domestication. The tax on any such gain
would be imposed at the rate applicable to ordinary income and an interest charge would apply based on a complex set of rules. However, it is difficult to predict whether, in what form, and with what effective date, final Treasury Regulations
under Section 1291(f) of the Code may be adopted and how any such Treasury Regulations would apply. Importantly, however, U.S. Holders that make or have made certain elections discussed further under “U.S.
Federal Income Tax Considerations — PFIC Considerations — D. QEF Election and Mark-to-Market Election” with respect to their RMG III Class A Ordinary Shares are generally not subject to the same gain recognition rules under the
currently proposed
TABLE OF CONTENTS
Treasury Regulations under Section 1291(f) of the Code. Currently, there are no
elections available that apply to RMG III Warrants, and the application of the PFIC rules to RMG III Warrants is unclear. For a more complete discussion of the potential application of the PFIC rules to U.S. Holders as a result of the
Domestication, see “U.S. Federal Income Tax Considerations.”
Each U.S. Holder of RMG III Class A Ordinary Shares or RMG III Warrants should consult
its tax advisor concerning the application of the PFIC rules, including the proposed Treasury Regulations, to the exchange of RMG III Class A Ordinary Shares and RMG III Warrants for shares of Domesticated RMG III Class A Stock or Domesticated
RMG III Warrants pursuant to the Domestication. Additionally, the Domestication may cause non-U.S. Holders (as defined in “U.S. Federal Income Tax Considerations”) to become subject to U.S. federal
income withholding taxes on any amounts treated as dividends paid in respect of such non-U.S. Holder’s Surviving Corporation Common Stock after the Domestication.
The tax consequences of the Domestication are complex and will depend on a holder’s
particular circumstances. All holders should consult their tax advisors regarding the tax consequences to them of the Domestication, including the applicability and effect of U.S. federal, state, local and non-U.S. tax laws. For a more complete
discussion of the U.S. federal income tax considerations of the Domestication, see “U.S. Federal Income Tax Considerations.”
QUESTIONS AND ANSWERS ABOUT THE SPECIAL MEETING AND THE WARRANT
HOLDERS MEETING
Q:
|
WHEN AND WHERE ARE THE SPECIAL MEETING AND THE WARRANT HOLDERS MEETING?
|
A:
|
The Special Meeting and the Warrant Holders Meeting will be held at the offices of Skadden, Arps, Slate, Meagher & Flom LLP
located at One Manhattan West, New York, New York 10001, on , 2023, and virtually at . RMG III shareholders and RMG III warrant holders may attend, vote and examine the list of RMG III shareholders and RMG III warrant holders
entitled to vote at the Special Meeting and the Warrant Holders Meeting, respectively, by visiting and entering the control number found on their proxy card, voting instruction form or notice included in their proxy materials.
|
Q:
|
WHAT AM I BEING ASKED TO VOTE ON IN THE SPECIAL MEETING AND WHY IS THIS APPROVAL NECESSARY?
|
A:
|
The Public Shareholders are being asked to vote on the following:
|
•
|
A proposal to adopt the Merger Agreement and the transactions contemplated thereby. See the section entitled “Proposal No. 1—The Business Combination Proposal.”
|
•
|
A proposal to adopt the change of RMG III’s jurisdiction of incorporation by deregistering as an exempted company in the Cayman
Islands and continuing and domesticating as a corporation incorporated under the laws of the State of Delaware. See the section entitled “Proposal No. 2—The Domestication Proposal.”
|
•
|
A proposal to adopt the Proposed Organizational Documents of RMG Acquisition Corp. III (a corporation incorporated in the State
of Delaware, each to be effective upon completion of the Business Combination which will be renamed “H2B2 Electrolysis Technologies, Inc.” See the section entitled “Proposal No. 3—The Organizational
Documents Proposal.”
|
•
|
A proposal to elect, assuming the Business Combination Proposal, the Domestication Proposal and the Organizational Documents
Proposals are adopted, directors who, upon consummation of the Business Combination, will be the directors of the Surviving Corporation, to be effective as of the Closing. See the section entitled “Proposal
No. 4—The Director Election Proposal.”
|
•
|
A proposal to approve, for purposes of complying with applicable listing rules of Nasdaq, the issuance of shares of Surviving
Corporation Common Stock to the H2B2 Securityholders pursuant to the Merger Agreement. See the section entitled “Proposal No. 5—The Stock Issuance Proposal.”
|
•
|
A proposal to approve and adopt the H2B2 Electrolysis Technologies, Inc. 2023 Incentive Award Plan in the form attached hereto
as Annex I. See the section entitled “Proposal No. 6—The Equity Incentive Plan Proposal.”
|
TABLE OF CONTENTS
•
|
A proposal to approve the adjournment of the Special Meeting to a later date or dates, if necessary, (i) to permit further
solicitation and vote of proxies in the event that there are insufficient votes for the approval of one or more proposals at the Special Meeting or (ii) if the RMG III Board determines before the Special Meeting that it is not necessary
or no longer desirable to proceed with the proposals. See the section entitled “Proposal No. 7—The Adjournment Proposal.”
|
RMG III will hold the Special Meeting to consider and vote upon the Proposals.
Consummation of the Business Combination is conditioned on the approval of each of the Condition Precedent Proposals, subject to the terms of the Merger Agreement. If the Business Combination Proposal is not approved, the other Condition
Precedent Proposals will not be presented to RMG III shareholders for a vote.
This proxy statement/prospectus contains important information about the Business
Combination and the other matters to be acted upon at the Special Meeting. RMG III shareholders should read this proxy statement/prospectus carefully, including the annexes and the other documents referred to herein.
The vote of RMG III shareholders is important. RMG III shareholders
are encouraged to vote as soon as possible after carefully reviewing this proxy statement/prospectus.
Q:
|
I AM AN RMG III WARRANT HOLDER. WHY I AM RECEIVING THIS PROXY STATEMENT/PROSPECTUS?
|
A:
|
RMG III warrant holders are being asked to consider and vote upon a proposal to amend the Warrant Agreement to provide that, at
Closing, each of the then outstanding Domesticated RMG III Warrants will be canceled and exchanged for the right to receive 0.075 shares of shares of Surviving Corporation Common Stock.
|
This proxy statement/prospectus includes important information about H2B2 and the
Surviving Corporation following consummation of the Business Combination. As holders of RMG III Warrants are being asked to consider and vote upon the Warrant Holder Proposals and will be entitled to purchase Surviving Corporation Common Stock,
RMG III urges you to read the information contained in this proxy statement/prospectus carefully.
The vote of RMG III warrant holders is important. RMG III warrant
holders are encouraged to vote as soon as possible after carefully reviewing this proxy statement/prospectus.
Q:
|
WHAT AM I BEING ASKED TO VOTE ON IN THE WARRANT HOLDERS MEETING AND WHY IS THIS APPROVAL NECESSARY?
|
A:
|
The RMG III warrant holders are being asked to vote on the following:
|
•
|
A proposal to approve the amendment of the Warrant Agreement to provide that, at Closing, each of the then outstanding
Domesticated RMG III Warrants will be canceled and exchanged for the right to receive 0.075 shares of shares of Surviving Corporation Common Stock. See the section entitled “Warrant Holder Proposal No.
1—The Warrant Amendment Proposal.”
|
•
|
A proposal to approve the adjournment of the Warrant Holders Meeting to a later date or dates, if necessary, for the absence of
a quorum, to solicit additional proxies from RMG III warrant holders to approve the Warrant Amendment Proposal or to ensure that any supplement or amendment to this proxy statement/prospectus is timely provided to RMG III warrant
holders. See the section entitled “Warrant Holder Proposal No. 2—The Warrant Holders Adjournment Proposal.”
|
RMG III will hold the Warrant Holders Meeting to consider and vote upon the Warrant
Holder Proposals. The Warrant Amendment will only become effective if the Business Combination is completed. If the Business Combination is not completed, the Warrant Amendment will not become effective, even if the RMG III warrant holders have
approved the Warrant Amendment Proposal.
Q:
|
WHY IS RMG III PROPOSING THE BUSINESS COMBINATION?
|
A:
|
RMG III was organized to effect a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar
business combination with one or more businesses.
|
Based on its due diligence investigations of H2B2 and the industry in which they
operate, including the financial and other information provided by H2B2 in the course of their negotiations in connection with the
TABLE OF CONTENTS
Merger Agreement, RMG III believes that the Business Combination with H2B2 is
advisable and in the best interests of RMG III and RMG III shareholders. See the section entitled “The Business Combination— Recommendation of the H2B2 Board of Directors and Reasons for Approval of the
Business Combination.”
Q:
|
DID THE RMG III BOARD OBTAIN A THIRD-PARTY VALUATION OR FAIRNESS OPINION IN DETERMINING WHETHER OR NOT TO
PROCEED WITH THE MERGER?
|
A:
|
The RMG III Board did not obtain a fairness opinion or a third-party valuation from an independent investment banking firm or
another independent firm with respect to the Business Combination. RMG III is not required to obtain a third party opinion that the price it is paying is fair to RMG III from a financial point of view. The RMG III Board has
substantial experience in evaluating the financial merits of companies from a wide range of industries, including the clean energy technology and renewable energy sector, and has concluded that its experience and the backgrounds of
its members enabled it to make the necessary analyses and determinations regarding the Business Combination with H2B2. The factors and information considered by the RMG III Board, as further described under the section titled “The Business Combination — The RMG III Board’s Reasons for Approval of the Merger”, included estimates of potential addressable green hydrogen market, the terms of the Merger
Agreement, the projected future performance of H2B2 in calendar years 2023, 2024 and 2025, the potential investments by third-party investors participating in the Capital Raise Transaction and other relevant financial information
selected based on the business experience and professional judgment of RMG III’s management. In addition, the RMG III Board and RMG III’s management have substantial experience with mergers and acquisitions. Accordingly, investors
will be relying solely on the judgment of the RMG III Board in valuing H2B2’s business, and assuming the risk that the RMG III Board may not have properly valued the Business Combination.
|
Q:
|
WHY IS RMG III PROVIDING RMG III SHAREHOLDERS WITH THE OPPORTUNITY TO VOTE ON THE BUSINESS COMBINATION?
|
A:
|
We are seeking approval of the Business Combination for purposes of complying with applicable Nasdaq listing rules requiring
shareholder approval of issuances of more than 20% of a listed company’s issued and outstanding ordinary shares. In addition, pursuant to the RMG III Governing Documents, we must provide all Public Shareholders with the opportunity to
redeem all or a portion of their Public Shares upon the consummation of an initial business combination (as defined in our RMG III Governing Documents) either in conjunction with a tender offer or in conjunction with a RMG III
shareholder vote to approve such initial business combination. If we submit the Business Combination to RMG III shareholders for their approval, our RMG III Governing Documents require us to conduct a redemption offer in conjunction
with the proxy solicitation.
|
Q:
|
WHY IS RMG III PROVIDING RMG III WARRANT HOLDERS WITH THE OPPORTUNITY TO VOTE ON THE WARRANT AMENDMENT?
|
A:
|
We are seeking approval of the Warrant Amendment, which will amend the Warrant Agreement to provide that, at Closing, each of
the then outstanding Domesticated RMG III Warrants will be canceled and exchanged for the right to receive 0.075 shares of shares of Surviving Corporation Common Stock.
|
Q:
|
WHAT ARE THE U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE WARRANT AMENDMENT?
|
A:
|
As discussed more fully under “U.S. Federal Income Tax Considerations,” it is expected
that, for U.S. federal income tax purposes, the Warrant Amendment will be treated as a tax-free “recapitalization.” As a result of such treatment, U.S. Holders (as defined in “U.S. Federal Income Tax
Considerations”) of RMG III Warrants will generally not recognize gain or loss for U.S. federal income tax purposes on the Warrant Amendment.
|
All holders of RMG III Warrants should consult their tax advisors regarding the tax
consequences to them of the Warrant Amendment, including the applicability and effect of U.S. federal, state, local and non-U.S. tax laws. For a more complete discussion of the U.S. federal income tax considerations of the Warrant Amendment,
see “U.S. Federal Income Tax Considerations.”
Q:
|
HAVE THE H2B2 STOCKHOLDERS APPROVED THE BUSINESS COMBINATION?
|
A:
|
Yes. A special meeting of the H2B2 Stockholders was held on June 19, 2023, at which the H2B2 Stockholder Approval was obtained
with 91.782% of the H2B2 Stockholders voting in favor of adopting the Merger Agreement and the transactions contemplated thereby.
|
TABLE OF CONTENTS
Q:
|
DO I HAVE REDEMPTION RIGHTS?
|
A:
|
If you are a holder of Public Shares, you have the right to demand that RMG III redeem such shares for a pro rata portion of
the cash held in the Trust Account as of two business days prior to the consummation of the transactions contemplated by the Business Combination Proposal upon the Closing.
|
Q:
|
WILL MY VOTE AFFECT MY ABILITY TO EXERCISE REDEMPTION RIGHTS?
|
A:
|
No. You may exercise your redemption rights whether you vote for or against, or abstain from voting on, any or all of the
Proposals. As a result, the Condition Precedent Proposals can be approved by Public Shareholders who will redeem their Public Shares and no longer remain RMG III shareholders and the Merger may be consummated even though the funds
available from the Trust Account and the number of Public Shareholders are substantially reduced as a result of redemptions by Public Shareholders.
|
Q:
|
HOW DO I EXERCISE MY REDEMPTION RIGHTS?
|
A:
|
If you are a Public Shareholder and wish to exercise your redemption rights, you must demand that RMG III redeem your shares for
cash no later than the second business day preceding the Special Meeting by delivering or tendering your shares (and share certificates (if any) and other redemption forms) to Continental physically or electronically using the
Depository Trust Company’s DWAC (Deposit and Withdrawal at Custodian) system. Any holder of Public Shares will be entitled to demand that such holder’s Public Shares be redeemed for a pro rata portion of the amount then in the Trust
Account. Such amount, including interest earned, if any, on the funds held in the Trust Account and not previously released to RMG III to pay its taxes, will be paid promptly upon consummation of the Merger. However, under Delaware law,
the proceeds held in the Trust Account could be subject to claims that could take priority over those of the Public Shareholders exercising redemption rights, regardless of whether such holders vote for or against the Business
Combination Proposal. Therefore, the per Public Share distribution from the Trust Account in such a situation may be less than originally anticipated due to such claims. Your vote on any Proposal will have no impact on the amount you
will receive upon exercise of your redemption rights.
|
Any request for redemption, once made by a Public Shareholder, may be withdrawn at any
time up to the time the vote is taken with respect to the Business Combination Proposal at the Special Meeting only with the consent of the RMG III Board (in its sole discretion which it may do in whole or in part). If you tender or deliver
your Public Shares (and share certificates (if any) and other redemption forms) for redemption to Continental and later decide prior to such time not to elect redemption, you may request that Continental return the Public Shares (physically or
electronically).
If a Public Shareholder properly makes a request for redemption and the Public Shares
(and share certificates (if any) and other redemption forms) are tendered or delivered as described to Continental as described herein, then, if the Business Combination is approved and proceeds, RMG III will redeem those shares for a pro rata
portion of funds deposited in the Trust Account. If you exercise your redemption rights, then you will be exchanging your Public Shares for cash and you will cease to have any rights as an RMG III shareholder (other than the right to receive
the redemption amount) with respect to such Public Shares.
For a discussion of the material U.S. federal income tax considerations for holders of
Public Shares with respect to the exercise of these redemption rights, see the section entitled “Material U.S. Federal Income Tax Considerations—Material U.S. Federal Income Tax Considerations of the Redemption
of Public Shares.”
Q:
|
WHAT ARE THE U.S. FEDERAL INCOME TAX CONSEQUENCES OF EXERCISING MY REDEMPTION RIGHTS?
|
A:
|
In most circumstances, it is expected that a U.S. Holder (as defined in “U.S. Federal Income
Tax Considerations”) that exercises its redemption rights to receive cash from the Trust Account in exchange for its RMG III Class A Ordinary Shares will be treated as selling such ordinary shares resulting in the recognition
of capital gain or capital loss. There may be certain circumstances, however, in which the redemption may be treated as a distribution for U.S. federal income tax purposes depending on the amount of RMG III Class A Ordinary Shares that
such U.S. Holder owns or is deemed to own under certain constructive attribution rules (including through the ownership of RMG III Warrants). For a more complete discussion of the U.S. federal income tax considerations of an exercise of
redemption rights, see “U.S. Federal Income Tax Considerations.”
|
TABLE OF CONTENTS
Because any redemptions of RMG III Class A Ordinary Shares will occur immediately
prior to the Domestication, holders exercising redemption rights will be subject to the tax consequences of the U.S. federal income tax rules relating to PFICs, which are discussed more fully below under “U.S.
Federal Income Tax Considerations.” All holders considering exercising redemption rights should consult their tax advisors on the tax consequences to them of an exercise of redemption rights, including the applicability and effect of
U.S. federal, state, local and non-U.S. tax laws.
Q:
|
DO I HAVE APPRAISAL OR DISSENTERS’ RIGHTS IF I OBJECT TO THE PROPOSED BUSINESS COMBINATION?
|
A:
|
No. None of RMG III shareholders, RMG III unit holders or RMG III warrant holders have appraisal rights in connection with the
Business Combination or the Domestication under the DGCL. None of the RMG III shareholders have dissenters' rights in connection with the Business Combination or the Domestication under Cayman Islands law. See the section entitled “Appraisal Rights and Dissenters’ Rights.”
|
Q:
|
WHAT HAPPENS TO THE FUNDS DEPOSITED IN THE TRUST ACCOUNT AFTER CONSUMMATION OF THE BUSINESS COMBINATION?
|
A:
|
Following the closing of the Initial Public Offering, the net proceeds from the Initial Public Offering and the sale of the
RMG III Private Placement Warrants was placed in the Trust Account. In connection with the approval of the Extension Amendment in January 2023, and the approval of the Second Extension Amendment in August 2023, Public Shareholders
elected to redeem an aggregate of 47,664,222 Public Shares, representing approximately 98.6% of the issued and outstanding Public Shares. As of immediately following redemptions made in connection with the Second Extension Amendment,
there was $6,619,681 in the Trust Account.
|
These funds will remain in the Trust Account, except for the withdrawal of interest
to pay taxes, expenses relating to the administration of the trust account and limited withdrawals for working capital, if any, until the earliest of (i) the completion of a business combination (including the Closing) and (ii) the redemption
of all of the Public Shares if RMG III is unable to complete a business combination by February 9, 2024 (or if such date is further extended at a duly called extraordinary general meeting, such later date) (the “Completion Window”), subject to applicable law.
After consummation of the Merger, the funds in the Trust Account will be used to pay
holders of the Public Shares who exercise redemption rights, to pay fees and expenses incurred in connection with the Merger and for the Surviving Corporation’s working capital and general corporate purposes.
Q:
|
WHAT UNDERWRITING FEES ARE PAYABLE IN CONNECTION WITH THE BUSINESS COMBINATION?
|
A:
|
In connection with the Initial Public Offering, RMG III entered into the Underwriting Agreement with the IPO
Underwriters.Pursuant to the Underwriting Agreement, the IPO Underwriters were entitled to an aggregate deferred underwriting commission of $16,905,000 upon the consummation of the Business Combination, payable from the amounts held
in the Trust Account. In April 2023, each of the IPO Underwriters waived its entitlement to the payment of any deferred underwriting commission with respect to the Business Combination.
|
RMG III contacted each of the IPO Underwriters prior to the execution of the Merger
Agreement to request that each of the IPO Underwriters waive its entitlement to the payment of any deferred underwriting commission with respect to the Business Combination. In response, each of the IPO Underwriters provided such a waiver.
Neither of the IPO Underwriters provided a reason for such waivers and RMG III did not request that the IPO Underwriters provide a reason for such waivers. RMG III has not engaged, and has not received any services from, either of the IPO
Underwriters except in connection with the Initial Public Offering. Each of the IPO Underwriters facilitated introductions between RMG III and certain potential business combination targets, but neither of the IPO Underwriters has had any
role in the identification or evaluation of H2B2 as a business combination target for RMG III. RMG III did not expect the IPO Underwriters to provide a service in connection with the Business Combination; therefore, the waiver by the IPO
Underwriters of their respective entitlements to a deferred underwriting commission has not created any role in connection with the Business Combination.
TABLE OF CONTENTS
RMG III is not aware of any disagreements with either of the IPO Underwriters
regarding the disclosure in this proxy statement/prospectus. Although neither of the IPO Underwriters have affirmatively disclaimed responsibility for the disclosure in this proxy statement/prospectus, RMG III believes that the waiver by each
of the IPO Underwriters of their entitlement to a deferred underwriting commission indicates that they do not want to be associated with the disclosure or underlying analysis related to the Business Combination and contained in this proxy
statement/prospectus. Neither of the IPO Underwriters has been involved in the preparation or review of this proxy statement/prospectus.
Q:
|
WHAT HAPPENS IF THE MERGER IS NOT CONSUMMATED?
|
A:
|
If RMG III does not complete the Merger with H2B2 for whatever reason, RMG III may choose to search for another target business
with which to complete a business combination. If RMG III does not complete the Merger with H2B2 or another target business within the Completion Window, RMG III must redeem 100% of the outstanding Public Shares, at a per Public Share
price, payable in cash, equal to the amount then held in the Trust Account including interest earned, if any, on the funds held in the Trust Account and not previously released to RMG III to pay taxes, expenses relating to the
administration of the trust account and limited withdrawals for working capital (less up to $100,000 of interest to pay dissolution expenses) divided by the number of outstanding Public Shares. The Initial Shareholders have no
redemption rights in the event a business combination is not effected in the Completion Window, and, accordingly, their Founder Shares will be worthless. Additionally, in the event of such liquidation, there will be no distribution with
respect to outstanding RMG III Warrants. Accordingly, the RMG III Warrants will expire worthless.
|
Q:
|
HOW DOES THE SPONSOR INTEND TO VOTE ON THE PROPOSALS?
|
A:
|
As of the date of this proxy statement/prospectus, and due to the redemption of 47,664,222 Public Shares in aggregate in
connection with the RMG III shareholder vote in January 2023 and in August 2023, to approve the extension of the date by which RMG III must complete an initial business combination, the Sponsor owns approximately 95.0% of the issued
and outstanding RMG III Ordinary Shares, consisting of the Founder Shares. The Sponsor has agreed to vote any RMG III Ordinary Shares held by it as of the RMG III Record Date in favor of each of the Proposals presented at the Special
Meeting.
|
None of the Sponsor or RMG III’s directors or officers have purchased any RMG III
Ordinary Shares during or after the RMG III Initial Public Offering and, as of the date of this proxy statement/prospectus, neither RMG III nor RMG III Sponsor or RMG III’s directors or officers have entered into agreements, and are not
currently in negotiations, to purchase shares prior to the consummation of the Business Combination.
Q:
|
WHAT CONSTITUTES A QUORUM AT THE SPECIAL MEETING?
|
A:
|
A quorum will be present at the Special Meeting if the holders of a majority of the issued and outstanding Ordinary Shares
entitled to vote at the Special Meeting are represented in person (which would include presence at a virtual meeting) or by proxy. Abstentions and broker non-votes will be counted as present for the purpose of determining a quorum.
The Initial Shareholders, who currently own approximately 95.0% of the issued and outstanding RMG III Ordinary Shares, will count towards this quorum. In the absence of a quorum, the chairman of the Special Meeting has power to
adjourn the Special Meeting. As of the RMG III Record Date for the Special Meeting, 6,496,702 RMG III Ordinary Shares would be required to achieve a quorum. Accordingly, it is expected that the RMG III Ordinary Shares held by the
Initial Shareholders will be sufficient to establish a quorum.
|
Q:
|
WHAT VOTE IS REQUIRED TO APPROVE EACH PROPOSAL AT THE SPECIAL MEETING?
|
A:
|
The following votes are required for each proposal at the Special Meeting:
|
•
|
The Business Combination Proposal: The Business Combination Proposal may be approved by
an ordinary resolution under Cayman Islands law, being the affirmative vote of the holders of a majority of the RMG III Ordinary Shares represented in person or by proxy and entitled to vote thereon and who vote at the Special Meeting.
The Initial Shareholders and their permitted transferees have agreed to vote their shares in favor of each of the Proposals. As a result, the affirmative vote of any of the Public Shares is not required to approve the Business
Combination Proposal.
|
TABLE OF CONTENTS
•
|
The Domestication Proposal: The approval of the Domestication Proposal requires a
special resolution under Cayman Islands law, being the affirmative vote of the holders of at least two-thirds of the RMG III Ordinary Shares represented in person or by proxy and entitled to vote thereon and who vote at the Special
Meeting. The Initial Shareholders and their permitted transferees have agreed to vote their shares in favor of each of the Proposals. As a result, the affirmative vote of any of the Public Shares is not required to approve the
Domestication Proposal.
|
•
|
The Organizational Documents Proposals: The separate approval of each of the
Organizational Documents Proposals requires a special resolution under Cayman Islands law, being the affirmative vote of the holders of at least two-thirds of the RMG III Ordinary Shares represented in person or by proxy and entitled to
vote thereon and who vote at the Special Meeting. The Initial Shareholders and their permitted transferees have agreed to vote their shares in favor of each of the Proposals. As a result, the affirmative vote of any of the Public Shares
is not required to approve each of the Organization Documents Proposals.
|
•
|
The Director Election Proposal: The Director Election Proposal may be approved by an
ordinary resolution of the holders of the RMG III Class B Ordinary Shares under Cayman Islands law, being the affirmative vote of the holders of a majority of the RMG III Class B Ordinary Shares represented in person or by proxy and
entitled to vote thereon and who vote at the Special Meeting. The Initial Shareholders and their permitted transferees have agreed to vote their shares in favor of each of the Proposals. As a result, the affirmative vote of any of the
Public Shares is not required to approve the Director Election Proposal.
|
•
|
The Stock Issuance Proposal: The Stock Issuance Proposal may be approved by an ordinary
resolution under Cayman Islands law, being the affirmative vote of the holders of a majority of the RMG III Ordinary Shares represented in person or by proxy and entitled to vote thereon and who vote at the Special Meeting. The Initial
Shareholders and their permitted transferees have agreed to vote their shares in favor of each of the Proposals. As a result, the affirmative vote of any of the Public Shares is not required to approve the Stock Issuance Proposal.
|
•
|
The Equity Incentive Plan Proposal: The Equity Incentive Plan Proposal may be approved
by an ordinary resolution under Cayman Islands law, being the affirmative vote of a majority of the RMG III Ordinary Shares represented in person or by proxy and entitled to vote thereon and who vote at the Special Meeting. The Initial
Shareholders and their permitted transferees have agreed to vote their shares in favor of each of the Proposals. As a result, the affirmative vote of any of the Public Shares is not required to approve the Equity Incentive Plan
Proposal.
|
•
|
The Adjournment Proposal: The Adjournment Proposal may be approved by an ordinary
resolution under Cayman Islands law, being the affirmative vote of the holders of a majority of the RMG III Ordinary Shares represented in person or by proxy and entitled to vote thereon and who vote at the Special Meeting. The Initial
Shareholders and their permitted transferees have agreed to vote their shares in favor of each of the Proposals. As a result, the affirmative vote of any of the Public Shares is not required to approve the Adjournment Proposals.
|
Q:
|
WHAT CONSTITUTES A QUORUM AT THE WARRANT HOLDERS MEETING?
|
A:
|
A quorum will be present at the Special Meeting if the holders of at least 50% of the outstanding RMG III Warrants are
represented in person (which would include presence at a virtual meeting) or by proxy. Abstentions and broker non-votes will be counted as present for the purpose of determining a quorum. As of the RMG III Record Date, RMG III
Warrants would be required to achieve a quorum. In the absence of a quorum, the chairman of the Warrant Holders Meeting has power to adjourn the Warrant Holder Meeting. The Initial Shareholders own 100% of the outstanding RMG III
Private Placement Warrants and none of the RMG III Public Warrants. Accordingly, it is expected that the RMG III Public Warrants and RMG III Private Placement Warrants held by the Initial Shareholders will be sufficient to establish a
quorum.
|
Q:
|
WHAT VOTE IS REQUIRED TO APPROVE EACH PROPOSAL AT THE WARRANT HOLDERS MEETING?
|
A:
|
The following votes are required for each proposal at the Warrant Holders Meeting:
|
•
|
The Warrant Amendment Proposal: The approval of the Warrant Amendment Proposal requires
the affirmative vote of the holders of at least 65% of each of (i) the then outstanding RMG III Public
|
TABLE OF CONTENTS
Warrants and (ii) the then outstanding RMG III Private Placement Warrants, each voting
separately as a class. Abstentions and broker non-votes, while considered present for purposes of establishing quorum, will count as a vote “AGAINST” the Warrant Amendment Proposal. The Initial Shareholders own 100% of the outstanding RMG III
Private Placement Warrants and none of the RMG III Public Warrants. Accordingly, it is expected that the RMG III Private Placement Warrants held by the Initial Shareholders will be voted in favor of the Warrant Amendment Proposal and only the
affirmative vote of at least 65% of the outstanding RMG III Public Warrants represented in person or by proxy and entitled to vote thereon and who vote at the Warrant Holders Meeting will be required to approve the Warrant Amendment Proposal.
The RMG III Warrants will expire worthless if RMG III does not consummate an initial business combination by the Completion Window.
•
|
The Warrant Holders Adjournment Proposal: The Warrant Holders Adjournment Proposal may
be approved by the affirmative vote of the holders of at least 50% of the RMG III Warrants represented in person or by proxy and entitled to vote thereon and who vote at the Warrant Holders Meeting. Abstentions and broker non-votes,
while considered present for the purposes of establishing a quorum, will not count as votes cast on the Warrant Holders Adjournment Proposal at the Warrant Holders Meeting. The Initial Shareholders own 100% of the outstanding RMG III
Private Placement Warrants and none of the RMG III Public Warrants. Accordingly, it is expected that the RMG III Private Placement Warrants held by the Initial Shareholders will be voted in favor of the Warrant Amendment Proposal and
such proposal will not require any affirmative votes of the outstanding RMG III Public Warrants represented in person or by proxy and entitled to vote thereon and who vote at the Warrant Holders Meeting to approve the Warrant Holders
Adjournment Proposal.
|
Q:
|
HOW DOES THE SPONSOR INTEND TO VOTE ON THE WARRANT HOLDER PROPOSALS?
|
A:
|
As of the date of this proxy statement/prospectus, the Initial Shareholders own 100% of the outstanding RMG III Private
Placement Warrants and none of the RMG III Public Warrants. The Initial Shareholders intend to vote any shares of RMG III Warrants held by them as of the RMG III Record Date in favor of each of the Proposals presented at the Warrant
Holders Meeting.
|
None of the Sponsor or RMG III’s directors or officers have purchased any RMG III
Warrants during or after the Initial Public Offering and, as of the date of this proxy statement/prospectus, neither RMG III nor RMG III Sponsor or RMG III’s directors or officers have entered into agreements, and are not currently in
negotiations, to purchase warrants prior to the consummation of the Business Combination.
Q:
|
DO ANY OF RMG III’S DIRECTORS OR OFFICERS OR THE SPONSOR OR ITS AFFILIATES HAVE INTERESTS IN THE BUSINESS
COMBINATION THAT MAY DIFFER FROM OR BE IN ADDITION TO THE INTERESTS OF RMG III SHAREHOLDERS OR THE RMG III WARRANT HOLDERS?
|
A:
|
Certain of RMG III’s executive officers and certain non-employee directors, as well as the Sponsor and its affiliates, may have
interests in the Merger that may be different from, or in addition to, the interests of RMG III shareholders and the RMG III warrant holders generally. These interests include, among other things:
|
•
|
The Sponsor paid an aggregate of $12,349,495 for its purchases of the Founder Shares and the RMG III Private Placement Warrants.
Prior to the Initial Public Offering, the Sponsor purchased 10,062,500 Founder Shares for an aggregate purchase price of $25,000. Subsequently, RMG III effectuated a 5-for-6 share split of the RMG III Class B Ordinary Shares, resulting
in an aggregate outstanding amount of 12,075,000 Founder Shares outstanding. Simultaneously with the consummation of the Initial Public Offering, the Sponsor purchased 8,216,330 RMG III Private Placement Warrants for an aggregate
purchase price of $12,324,495 in a private placement. A portion of the proceeds from the sale of the RMG III Private Placement Warrants were added to the net proceeds from the Initial Public Offering held in the Trust Account. If the
Business Combination with H2B2 or another business combination is not consummated within the Completion Window, RMG III will cease all operations except for the purpose of winding up, redeeming the outstanding Public Shares for cash
and, subject to the approval of its remaining RMG III shareholders and the RMG III Board, dissolving and liquidating. In such event, the 12,075,000 Founder Shares held by the Initial Shareholders would be worthless because the Initial
Shareholders are not entitled to participate in any redemption or distribution with respect to such shares. Additionally, in such event, the
|
TABLE OF CONTENTS
8,216,330 RMG III Private Placement Warrants will also expire worthless. The Founder
Shares had an aggregate market value of $ based upon the closing price of $ per share of RMG III Class A Ordinary Shares on Nasdaq on the RMG III Record Date. The RMG III Private Placement Warrants had an aggregate market value of
approximately $ based upon the closing price of $ per Public Warrant on the Nasdaq on the RMG III Record Date.
•
|
In order to finance transaction costs in connection with a business combination, the Sponsor, members of the RMG III founding
team or any of their affiliates may, but are not obligated to (other than pursuant to the January 2022 Note and the July 2022 Note), make certain working capital loans as may be required. On January 19, 2022, RMG Acquisition
Management, LLC, an affiliate of the Sponsor (“RMG Acquisition Management”), agreed to lend RMG III up to an aggregate of $500,000 for working capital purposes, pursuant to the
January 2022 Note, an unsecured, non-interest bearing promissory note. The January 2022 Note is due and payable in full by RMG III upon the consummation of a business combination. On July 27, 2022, RMG Acquisition Management agreed to
lend RMG III up to an aggregate of $475,000 for working capital purposes, pursuant to the July 2022 Note, an unsecured, non-interest bearing promissory note. The July 2022 Note is due and payable in full by RMG III upon the
consummation of a business combination. In the event that the Business Combination does not close, RMG III may use a portion of proceeds held outside the Trust Account to repay the January 2022 Note and the July 2022 Note, but no
proceeds held in the Trust Account would be used to repay the January 2022 Note and the July 2022 Note. The January 2022 Note and the July 2022 Note will be repaid in cash upon consummation of the Business Combination. As of the date
hereof, RMG III has borrowed $500,000 under the January 2022 Note and $350,000 under the July 2022 Note. If RMG III does not complete a business combination by the Completion Window, there will not be sufficient assets to repay the
outstanding balance under the January 2022 Note and the July 2022 Note, and the January 2022 Note and the July 2022 Note will be worthless.
|
•
|
There will be no finder’s fees, reimbursements or cash payments made by RMG III to the Sponsor or RMG III’s officers or
directors, or RMG III’s or any of their affiliates, for services rendered to RMG III prior to or in connection with the completion of the Business Combination, other than payment of the amount for office space, utilities,
administrative and support services and repayments of any outstanding balance of the January 2022 Note and the July 2022 Note, as described below. RMG III’s directors and officers and their affiliates are entitled to reimbursement of
out-of-pocket expenses incurred by them in connection with certain activities on RMG III’s behalf, such as identifying and investigating possible business targets and business combinations. There is no cap or ceiling on the
reimbursement of out-of-pocket expenses incurred by such persons in connection with activities on RMG III’s behalf. However, if RMG III fails to consummate a business combination by the Completion Window, RMG III’s directors and
officers will not have any claim against the Trust Account for reimbursement. Accordingly, RMG III may not be able to reimburse these expenses if the Business Combination or another business combination is not consummated within the
Completion Window. As of , 2023, $ was outstanding in out-of-pocket expense reimbursements. Additionally, under the Administrative Services Agreement, dated February 4, 2021, between RMG III and RMG Acquisition Management (the
“Administrative Services Agreement”), RMG Acquisition Management is entitled to $20,000 per month for office space, utilities, administrative and support services provided to RMG
III’s management team, which commenced on February 4, 2021 and will continue through the earlier of consummation of a business combination and RMG III’s liquidation. For the three months ended March 31, 2023 and 2022 $60,000 of
administrative support expenses were incurred. As of March 31, 2023 and December 31, 2022, respectively the Company had $180,000 and $120,000, related to the Administrative Services Agreement was recorded in accounts payable — related
party.
|
•
|
RMG III’s existing directors and officers will be eligible for continued indemnification and continued coverage under RMG III’s
directors’ and officers’ liability insurance after the Business Combination pursuant to the Merger Agreement.
|
•
|
In the event of the liquidation of the Trust Account, the Sponsor has agreed, under the Letter Agreement, dated February 4,
2021, among RMG III, the Sponsor and RMG III’s officers and directors, to indemnify and hold harmless RMG III against any and all losses, liabilities, claims, damages and expenses to which RMG III may become subject as a result of any
claim by (i) any
|
TABLE OF CONTENTS
third party for services rendered or products sold to RMG III or (ii) a prospective
target business with which RMG III has entered into an acquisition agreement; provided that such indemnification of RMG III by the Sponsor will apply only to the extent necessary to ensure that such claims by a third party for services rendered
or products sold to RMG III or a target do not reduce the amount of funds in the Trust Account to below (i) $10.00 per share of RMG III Class A Ordinary Shares or (ii) such lesser amount per RMG III Class A Ordinary Share held in the Trust
Account due to reductions in the value of the trust assets as of the date of the liquidation of the Trust Account, in each case, net of the amount of interest earned on the property in the Trust Account, which may be withdrawn to pay taxes,
expenses related to the administration of the Trust Account and limited withdrawals for working capital, except as to any claims by a third party (including a target) who executed a waiver of any and all rights to seek access to the Trust
Account and except as to any claims under RMG III’s indemnity of the IPO Underwriters against certain liabilities, including liabilities under the Securities Act. If RMG III consummates the Business Combination, on the other hand, RMG III will
be liable for all such claims.
•
|
Pursuant to the Sponsor Support Agreement, the Sponsor has agreed to, subject to certain exceptions, among other things, vote in
favor of the Merger Agreement and the transactions contemplated thereby, in each case, subject to the terms and conditions contemplated by the Sponsor Support Agreement.
|
•
|
Subject to certain limited exceptions, the Surviving Corporation Common Stock will not be transferrable following the Closing
until the date that is 180 days after the Closing.
|
•
|
The Sponsor (including RMG III’s directors, officers and Initial Shareholders and their permitted transferees) owns RMG III
Private Placement Warrants which, in the event the Warrant Amendment Proposal is approved prior to the Effective Time, will be converted into the right to receive 0.075 shares of Surviving Corporation Common Stock per RMG III Private
Placement Warrant.
|
•
|
Certain of RMG III’s officers and directors presently have, and any of them in the future may have additional, fiduciary or
contractual obligations to other entities pursuant to which such officer or director is or will be required to present business combination opportunities to such entity. Accordingly, in the future, if any of RMG III’s officers or
directors becomes aware of a business combination opportunity which is suitable for an entity to which he or she has then-current fiduciary or contractual obligations, he or she will honor his or her fiduciary or contractual obligations
to present such opportunity to such entity. RMG III does not believe, however, that any fiduciary duties or contractual obligations of its officers or directors would materially undermine RMG III’s ability to complete a business
combination. The Existing Articles provide that RMG III’s renounces any interest or expectancy in, or in being offered, any corporate opportunity offered to any director or officer, but no director or officer of RMG III’s has any duty,
except and to the extent expressly assumed by contract, to communicate or offer any such corporate opportunity to RMG III’s and will not be in breach of any fiduciary duty as a director or officer, solely by reason of fact that such
party pursues or acquires such corporate opportunity for itself, himself or herself, directs such corporate opportunity to another person, or does not communicate information regarding such corporate opportunity to RMG III’s. This
waiver allows the Sponsor and its affiliates to allocate opportunities based on a combination of the objectives and fundraising needs of the target, as well as the investment objectives of the entity. However, RMG III does not believe
that the waiver of the corporate opportunities doctrine otherwise had a material impact on its search for an acquisition target.
|
Given the interests described above, the Sponsor and its affiliates may earn a
positive rate of return on their investment even if the Surviving Corporation Common Stock trades below the price initially paid for the RMG III Units in the Initial Public Offering and the Public Shareholders and Public Warrant holders
experience a negative rate of return following the completion of the Business Combination. As such, the Sponsor and its affiliates may have more of an economic incentive for RMG III to, rather than liquidate if it fails to complete an initial
business combination by the Completion Window, enter into an initial business combination on potentially less favorable terms with a potentially less favorable, riskier, weaker-performing or financially unstable business, or an entity lacking
an established record of revenues or earnings, than would be the case if such parties had paid the full offering price for their Founder Shares.
The RMG III Board was aware of and considered these interests to the extent such
interests existed at the time, among other matters, in approving the Merger Agreement and in recommending that the Business
TABLE OF CONTENTS
Combination and the Warrant Amendment be approved by RMG III shareholders and RMG
III warrant holders. See the section entitled “The Business Combination—Interests of RMG III’s Directors and Executive Officers and the Sponsor and its Affiliates in the Business Combination.” The RMG
III Board concluded that the Merger Agreement and the Business Combination are fair from a financial point of view to and in the best interests of RMG III and RMG III shareholders. In view of the wide variety of factors considered by the RMG
III Board in connection with its evaluation, negotiation and recommendation of the Business Combination and related transactions and the complexity of these matters, the RMG III Board did not consider it practical to, nor did it attempt to,
quantify, rank or otherwise assign relative weights to the specific factors that it considered in reaching its decision. Rather, the RMG III Board based its evaluation, negotiation and recommendation of the Business Combination and the Warrant
Amendment on the totality of the information presented to and considered by it. The RMG III Board evaluated the reasons described above with the assistance of RMG III’s outside advisors. In considering the factors described above and any other
factors, individual members of the RMG III Board may have viewed factors differently or given different weights to other or different factors.
After careful consideration, the RMG III Board unanimously (i) declared the
advisability of the Business Combination and the other transactions contemplated by the Merger Agreement and (ii) determined that the Business Combination and the other transactions contemplated by the Merger Agreement are in the best interests
of RMG III and RMG III shareholders. The RMG III Board further unanimously (i) declared the advisability of the Warrant Amendment and the other transactions contemplated thereby and (ii) determined that the Warrant Amendment and the other
transactions contemplated thereby are in the best interests of RMG III and RMG III warrant holders.
Q:
|
WHAT DO I NEED TO DO NOW?
|
A:
|
RMG III urges you to read and consider the information contained in this proxy statement/prospectus carefully, including the
annexes and the other documents referred to herein, and to consider how the Merger will affect you as a RMG III shareholder and/or RMG III warrant holder. RMG III shareholders and RMG III warrant holders should then vote as soon as
possible in accordance with the instructions provided in this proxy statement/prospectus and on the enclosed shareholder and/or warrant holder proxy card.
|
Q:
|
WHAT HAPPENS IF I SELL MY PUBLIC SHARES AND/OR RMG III PUBLIC WARRANTS BEFORE THE SPECIAL MEETINGS?
|
A:
|
The RMG III Record Date for the Special Meetings is earlier than the date that the Business Combination is expected to be
completed. If you transfer your Public Shares and/or RMG III Public Warrants after the RMG III Record Date but before the Special Meetings, unless the transferee obtains from you a proxy to vote those shares, you will retain your right
to vote at the Special Meetings. However, you will not be able to seek redemption of your Public Shares because you will no longer be able to tender them prior to the Special Meeting in accordance with the provisions described herein.
If you transferred your Public Shares and/or RMG III Public Warrants prior to the RMG III Record Date, you have no right to vote those shares at the Special Meetings or redeem those shares for a pro rata portion of the proceeds held in
the Trust Account.
|
A:
|
If you are a holder of record of Public Shares and/or RMG III Public Warrants on the RMG III Record Date, you may vote at the
Special Meetings in person (which would include presence at a virtual meeting) or by proxy. You may submit your proxy by completing, signing, dating and returning the enclosed shareholder and/or warrant holder proxy card in the
accompanying pre-addressed postage paid envelope. If you hold your shares and/or warrants in “street name,” which means your shares are held of record by a broker, bank or nominee, you should contact your broker to ensure that votes
related to the shares and/or warrants you beneficially own are properly counted.
|
Q:
|
IF MY SHARES AND/OR WARRANTS ARE HELD IN “STREET NAME” BY A BROKER, BANK OR OTHER NOMINEE, WILL MY BROKER,
BANK OR OTHER NOMINEE VOTE MY SHARES AND/OR WARRANTS FOR ME?
|
A:
|
If your shares and/or warrants are held in “street name” in a stock brokerage account or by a broker, bank or other nominee, you
must provide the record holder of your shares and/or warrants with instructions on
|
TABLE OF CONTENTS
how to vote your shares and/or warrants. Please follow the voting instructions
provided by your broker, bank or other nominee. Please note that you may not vote shares and/or warrants held in “street name” by returning a proxy card directly to RMG III or by voting in person (which would include presence at a virtual
meeting) at the Special Meetings unless you provide a “legal proxy,” which you must obtain from your broker, bank or other nominee. Please submit your legal proxy to Continental at proxy@continentalstock.com
in order to receive a control number to vote at the virtual meeting.
Under Nasdaq rules, brokers who hold shares and/or warrants in “street name” for a
beneficial owner of those shares typically have the authority to vote in their discretion on “routine” proposals when they have not received instructions from beneficial owners. However, brokers are not permitted to exercise their voting
discretion with respect to the approval of matters that Nasdaq determines to be “non-routine” without specific instructions from the beneficial owner. It is expected that all of the Proposals to be voted on at the Special Meetings are
“non-routine” matters. Broker non-votes occur when a broker or nominee is not instructed by the beneficial owner of shares and/or warrants to vote on a particular proposal for which the broker does not have discretionary voting power.
If you are an RMG III shareholder and/or RMG III warrant holder holding your shares in
“street name” and you do not instruct your broker, bank or other nominee on how to vote your shares and/or warrants, your broker, bank or other nominee will not vote your shares on any of the Condition Precedent Proposals.
Q:
|
WHAT IF I ATTEND THE SPECIAL MEETINGS AND ABSTAIN OR DO NOT VOTE?
|
A:
|
For purposes of the Special Meetings, an abstention occurs when a RMG III shareholder or a RMG III warrant holder attends the
meeting in person (which would include presence at a virtual meeting) and does not vote or returns a proxy with an “abstain” vote.
|
If you are an RMG III shareholder that attends the Special Meeting virtually and you
fail to vote on the Business Combination Proposal, the Domestication Proposal, the Organizational Documents Proposal, the Director Election Proposal, the Stock Issuance Proposal or the Equity Incentive Plan Proposal, your failure to vote will
have no effect on the Business Combination Proposal, the Domestication Proposal, the Organizational Documents Proposal, the Director Election Proposal, the Stock Issuance Proposal or the Equity Incentive Plan Proposal.
If you are an RMG III warrant holder who attends the Warrant Holders Meeting virtually
and you fail to vote on the Warrant Amendment Proposal, your failure to vote will have the effect of a vote “AGAINST” the Warrant Amendment Proposal.
Q:
|
WHAT WILL HAPPEN IF I RETURN MY PROXY CARD WITHOUT INDICATING HOW TO VOTE?
|
A:
|
If you sign and return your proxy card without indicating how to vote on any particular Proposal, the RMG III Ordinary Shares
and/or RMG III Warrants represented by your proxy will be voted “FOR” each of the Proposals presented at the Special Meetings.
|
Q:
|
MAY I CHANGE MY VOTE AFTER I HAVE MAILED MY SIGNED PROXY CARD?
|
A:
|
Yes. If you are a RMG III shareholder of record, you may change your vote at any time before your proxy is exercised by doing
any one of the following:
|
•
|
send another proxy card with a later date;
|
•
|
notify RMG III’s Secretary in writing before the Special Meetings that you have revoked your proxy; or
|
•
|
attend the Special Meeting and/or the Warrant Holders Meeting and vote electronically by visiting and entering the control
number found on your proxy card, instruction form or notice you previously received.
|
Simply attending the Special Meeting and/or the Warrant Holders Meeting will not
revoke your proxy. If you have instructed a broker, bank or other nominee to vote your RMG III Ordinary Shares and/or RMG III Warrants, you must follow the directions you receive from your broker, bank or other nominee in order to change or
revoke your vote.
TABLE OF CONTENTS
Q:
|
WHAT HAPPENS IF I FAIL TO TAKE ANY ACTION WITH RESPECT TO THE SPECIAL MEETINGS?
|
A:
|
If you fail to take any action with respect to the Special Meeting and the Business Combination is approved by RMG III
shareholders and the Warrant Amendment is approved by RMG III warrant holders and the Business Combination is consummated, you will become a stockholder of the Surviving Corporation. Failure to take any action with respect to the
Special Meeting will not affect your ability to exercise your redemption rights. If you fail to take any action with respect to the Special Meeting and the Business Combination is not approved, you will continue to be a RMG III
shareholder and/or RMG III warrant holder while RMG III searches for another target business with which to complete a business combination.
|
If you fail to take any action with respect to the Warrant Holders Meeting and the
Business Combination is approved by RMG III shareholders and the Warrant Amendment is approved by RMG III warrant holders and the Business Combination is consummated, you will become a stockholder of the Surviving Corporation.
If you fail to take any action with respect to the Warrant Holders Meeting and the
Warrant Amendment is not approved, or if or the Business Combination is not approved by RMG III shareholders so the Business Combination is not consummated, you will continue to be a RMG III shareholder and/or RMG III warrant holder while RMG
III searches for another target business with which to complete a business combination.
Q:
|
WHAT SHOULD I DO IF I RECEIVE MORE THAN ONE SET OF VOTING MATERIALS?
|
A:
|
RMG III shareholders and RMG III warrant holders may receive more than one set of voting materials, including multiple copies of
this proxy statement/prospectus and multiple proxy cards or voting instruction cards. For example, if you hold your shares and/or warrants in more than one brokerage account, you will receive a separate voting instruction card for each
brokerage account in which you hold shares and/or warrants. If you are a holder of record and your shares and/or warrants are registered in more than one name, you will receive more than one proxy card. Please complete, sign, date and
return each proxy card and voting instruction card that you receive in order to cast a vote with respect to all of your RMG III Ordinary Shares and RMG III Warrants.
|
Q:
|
WHO CAN HELP ANSWER MY QUESTIONS?
|
A:
|
If you have questions about the Merger or if you need additional copies of the proxy statement/prospectus or the enclosed proxy
card you should contact:
|
RMG III shareholders and RMG III warrant holders may call toll free:
Banks and Brokers may call collect:
You may also obtain additional information about RMG III from documents filed with the
SEC by following the instructions in the section entitled “Where You Can Find More Information.” If you are a holder of Public Shares and you intend to seek redemption of your Public Shares, you will
need to tender or deliver your shares (and share certificates (if any) and other redemption forms) (either physically or electronically) to Continental at the address below prior to the vote at the Special Meeting. If you have questions
regarding the certification of your position or delivery of your shares (and share certificates (if any) and other redemption forms), please contact:
Continental Stock Transfer & Trust Company
1 State Street 30th Floor
New York, New York 10004
TABLE OF CONTENTS
This summary highlights selected information
included in this proxy statement/prospectus and does not contain all of the information that may be important to you. You should read this entire document and its annexes and the other documents to which we refer before you decide how to
vote. Each item in this summary includes a page reference directing you to a more complete description of that item.
The Parties to the Business Combination
RMG III
RMG III is a blank check company incorporated on December 23, 2020
as a Cayman Islands exempted company for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses, which is referred to as a “business
combination.” RMG III has neither engaged in any operations nor generated any revenues to date. Based on RMG III’s business activities, it is a “shell company” as defined under the Exchange Act because it has no operations and nominal assets
consisting almost entirely of cash.
On February 9, 2021, RMG III consummated its Initial Public
Offering of 48,300,000 RMG III Units, including 6,300,000 RMG III Units issued pursuant to the exercise of the IPO Underwriters’ over-allotment option in full, at a price of $10.00 per RMG III Unit, generating gross proceeds of
$483,000,000. Simultaneously with the closing of the Initial Public Offering, RMG III consummated the sale of 8,216,330 RMG III Private Placement Warrants at a price of $1.50 per RMG III Private Placement Warrant in a private placement to
the Sponsor, including 840,000 RMG III Private Placement Warrants issued pursuant to the exercise of the IPO Underwriters’ over-allotment option in full, generating gross proceeds of $12,324,495. The RMG III Private Placement Warrants are
identical to the RMG III Public Warrants underlying the RMG III Units sold in the Initial Public Offering, except that the RMG III Private Placement Warrants and the RMG III Class A Ordinary Shares issuable upon the exercise of the RMG III
Private Placement Warrants will not be transferable, assignable or salable until 30 days after the completion of a business combination, subject to certain limited exceptions. Additionally, except as provided herein, the RMG III Private
Placement Warrants will be exercisable on a cashless basis and be non-redeemable so long as they are held by the Sponsor or its permitted transferees.
Following the closing of the Initial Public Offering, an amount of
$483,000,000 ($10.00 per RMG III Unit) from the net proceeds of the sale of the RMG III Units in the Initial Public Offering and the sale of the RMG III Private Placement Warrants was placed in the Trust Account, and has been invested only in
U.S. government treasury obligations with maturities of 185 days or less or in money market funds meeting certain conditions under Rule 2a-7 under the Investment Company Act, which invest only in direct U.S. government treasury obligations,
until the earlier of: (i) the completion of a business combination and (ii) the distribution of the funds held in the Trust Account.
RMG III previously had until February 9, 2023 to consummate a
business combination. On January 11, 2023, RMG III held an extraordinary general meeting pursuant to which RMG III shareholders approved amending RMG III’s then-current amended and restated memorandum and articles of association to extend
the date by which RMG III has to consummate a business combination from February 9, 2023 to May 9, 2023 and to allow RMG III, without another RMG III shareholder vote, to elect to further extend the date to consummate a business combination
up to three times by an additional month, upon two days’ advance notice prior to the applicable deadline, for a total of up to six months, to August 9, 2023, if RMG III has entered into a definitive business combination agreement. RMG III
shareholders approved the Extension Amendment and, as such, RMG III had until (i) May 9, 2023 or (ii) August 9, 2023, in the event RMG III has signed a definitive agreement with respect to a Business Combination and has elected to extend
the amount of time to complete a Business Combination for up to three times for an additional one month each time, to consummate a business combination. On January 11, 2023, RMG III Shareholders approved the Extension Amendment, amending
the RMG III Governing Documents, notice of which was filed with the Cayman Islands Registrar of Companies. After the redemption of RMG III Class A Ordinary Shares in connection with the extension vote, 918,402 RMG III Class A Ordinary
Shares remained outstanding. On August 4, 2023, RMG III held an extraordinary general meeting pursuant to which RMG III shareholders approved amending RMG III’s then-current amended and restated memorandum and articles of association to
extend the date by which RMG III has to consummate a business combination from August 9, 2023 to February 9, 2024. RMG III shareholders approved the Second Extension Amendment and, as such, RMG III has until February 9, 2024 to consummate a
business
TABLE OF CONTENTS
combination. On August 4, 2023, RMG III Shareholders approved the Second
Extension Amendment, amending the RMG III Governing Documents, notice of which was filed with the Cayman Islands Registrar of Companies. After the redemption of RMG III Class A Ordinary Shares in connection with the extension vote, 635,778
RMG III Class A Ordinary Shares remained outstanding.
If RMG III has not completed a business combination by the
Completion Window, RMG III will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than 10 business days thereafter, redeem 100% of the Public Shares, at a per-share price,
payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest earned on the funds held in the Trust Account and not previously released to RMG III to pay its taxes (less up to $100,000 of interest to
pay dissolution expenses and which interest shall be net of taxes payable), divided by the number of then issued and outstanding Public Shares, which redemption will completely extinguish Public Shareholders’ rights as RMG III shareholders
(including the right to receive further liquidating distributions, if any), and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the RMG III’s remaining RMG III shareholders and the RMG III Board,
liquidate and dissolve, subject in each case to the RMG III’s obligations under Cayman Islands law to provide for claims of creditors and the requirements of other applicable law. There will be no redemption rights or liquidating
distributions with respect to the RMG III Warrants, which will expire worthless if RMG III fails to complete a business combination within the Completion Window.
RMG III’s executive offices are located at 57 Ocean, Suite 403,
5775 Collins Avenue, Miami Beach, Florida 33140 and its telephone number is (786) 359-4103. RMG III’s corporate website address is www.rmgacquisition.com. The information contained on or accessible through RMG III’s corporate website or any
other website that it may maintain is not part of this proxy statement/prospectus.
H2B2
H2B2 Electrolysis Technologies, Inc., is a global green hydrogen
platform that provides bespoke integrated solutions to its customers across the whole hydrogen value chain and covering all business scales. H2B2’s customer-centric, one-stop shop offering enables seamless and effective support through the
entire lifecycle of a hydrogen production facility (including the identification of the opportunity, R&D, design, permitting, construction, and operation services for the exploitation of the hydrogen facility), and complete solutions for
transportation, storage, and sale of green hydrogen.
H2B2’s global strategy aims to offer its products and services in
regulated markets where hydrogen is expected to play a key role in decarbonizing mobility and industrial activities, among other sectors of the economy, and for hydrogen storage solutions to secure energy independence. Its target markets
include EMEA, Americas, and APAC where its has built a robust and diversified project pipeline and identified significant growth opportunities. By combining its proprietary technologies and successful track record in delivering large-scale
projects, H2B2 believes it is positioned to continue providing curated solutions that satisfy its customers’ needs and expectations while being at the forefront of green hydrogen’s growth, as a leading OEM, project developer, EPC provider,
O&M provider and producer in the green hydrogen sector.
H2B2’s principal executive office is located at 300 Delaware Ave
Ste 210-A, Wilmington, DE 19801. H2B2 can be reached by phone at +34 912 811 058, and by e-mail at info@h2b2.es. Its website is https://www.h2b2.es/.
The Business Combination
The Merger Agreement
The terms and conditions of the Business Combination are contained
in the Merger Agreement, a copy of which is attached to this proxy statement/prospectus as Annex A. We encourage you to read the Merger Agreement carefully, as it is the legal document that governs the Business Combination. See the
section entitled “The Merger Agreement” for more information.
On May 9, 2023, RMG III entered into the Merger Agreement with
H2B2, pursuant to which, among other things and subject to the terms and conditions contained in the Merger Agreement, (i) RMG III will deregister as an exempted company incorporated in the Cayman Islands and domesticate as a Delaware
corporation and be renamed “H2B2 Electrolysis Technologies, Inc.” and (ii) H2B2 will merge with and into RMG III, with RMG III surviving the Merger.
TABLE OF CONTENTS
RMG III has agreed to provide its Public Shareholders with the
opportunity to redeem Public Shares in connection with the transactions contemplated by the Merger Agreement.
The Domestication
Prior to the Effective Time, subject to the approval of RMG III
shareholders, and in accordance with the DGCL, the Cayman Islands Companies Act, and RMG III Governing Documents, RMG III will effect a deregistration under the Cayman Islands Companies Act and a domestication under the DGCL, pursuant to
which RMG III’s jurisdiction of incorporation will be changed from the Cayman Islands to the State of Delaware.
In connection with the Domestication, (i) each of the then issued
and outstanding RMG III Class A Ordinary Shares will convert automatically, on a one-for-one basis, into a share of Domesticated RMG III Class A Stock, (ii) each of the then issued and outstanding RMG III Class B Ordinary Shares will convert
automatically, on a one-for-one basis, into a share of Domesticated RMG III Class B Stock, (iii) each of the then outstanding RMG III Warrants will convert automatically into a Domesticated RMG III Warrant, and (iv) each then issued and
outstanding RMG III Unit will be canceled and will entitle the holder thereof to one share of Domesticated RMG III Class A Stock and one-fifth of one Domesticated RMG III Warrant. At the Effective Time, (i) each of the then issued and
outstanding shares of Domesticated RMG III Class A Stock, will convert automatically, on a one-for-one basis, into a share of Surviving Corporation Common Stock, (ii) a number of shares of Domesticated RMG III Class B Stock equal to the
number of Founder Consideration Shares will convert into shares of Surviving Corporation Common Stock and the remaining shares of Domesticated RMG III Class B Stock issued and outstanding will be canceled as part of the Merger and no
consideration will be paid thereof and (iii) in the event the Warrant Amendment Proposal is approved, prior to the Effective Time, each of the then outstanding Domesticated RMG III Warrants will be canceled and exchanged for the right to
receive 0.075 shares of Surviving Corporation Common Stock. Upon effectiveness of the Domestication, RMG III will change its name to “H2B2 Electrolysis Technologies, Inc.” See the section entitled “Proposal
No. 2—The Domestication Proposal” for more information.
Organizational Charts of RMG III’s and H2B2’s Structure and
Corresponding Ownership Percentages
Below, please find an organizational chart depicting each of H2B2’s
and RMG III’s current structure and corresponding ownership percentages:
(1)
|
Reflects 831,306 shares of H2B2 Common Stock held by H2B2 as Treasury Stock.
|
TABLE OF CONTENTS
Organizational Chart of the Surviving Corporation’s Intended
Structure and Corresponding Ownership Percentages
Below, please find an organizational chart depicting the Surviving
Corporation’s intended structure and corresponding ownership percentages (assuming that no Public Shares are redeemed):
Upon consummation of the Business Combination, the undiluted
post-Closing share ownership of Surviving Corporation is expected to be as follows:
H2B2 Stockholders(2)
|
|
|
96,470,002
|
|
|
93.40%
|
|
|
96,470,002
|
|
|
93.54%
|
|
|
96,470,002
|
|
|
93.69%
|
|
|
96,470,002
|
|
|
93.83%
|
|
|
96,470,002
|
|
|
93.98%
|
Public Shareholders(3)
|
|
|
635,778
|
|
|
*
|
|
|
476,834
|
|
|
*
|
|
|
317,889
|
|
|
*
|
|
|
158,945
|
|
|
*
|
|
|
—
|
|
|
—
|
Sponsor(4)
|
|
|
4,816,935
|
|
|
4.66%
|
|
|
4,816,935
|
|
|
4.67%
|
|
|
4,816,935
|
|
|
4.68%
|
|
|
4,816,935
|
|
|
4.69%
|
|
|
4,816,935
|
|
|
4.69%
|
Other stockholders(5)
|
|
|
25,000
|
|
|
*
|
|
|
25,000
|
|
|
*
|
|
|
25,000
|
|
|
*
|
|
|
25,000
|
|
|
*
|
|
|
25,000
|
|
|
*
|
RMG III Warrants
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Holders of RMG III Private Placement Warrants(6)
|
|
|
616,225
|
|
|
*
|
|
|
616,225
|
|
|
*
|
|
|
616,225
|
|
|
*
|
|
|
616,225
|
|
|
*
|
|
|
616,225
|
|
|
*
|
Holders of RMG III Public Warrants(7)
|
|
|
724,500
|
|
|
*
|
|
|
724,500
|
|
|
*
|
|
|
724,500
|
|
|
*
|
|
|
724,500
|
|
|
*
|
|
|
724,500
|
|
|
*
|
Total Shares Outstanding
|
|
|
103,288,440
|
|
|
100%
|
|
|
103,129,496
|
|
|
100%
|
|
|
102,970,551
|
|
|
100%
|
|
|
102,811,607
|
|
|
100%
|
|
|
102,652,662
|
|
|
100%
|
Total Pro Forma Book Value
|
|
|
|
|
|
$97,964,545
|
|
|
|
|
|
$96,114,431
|
|
|
|
|
|
$94,264,317
|
|
|
|
|
|
$92,414,203
|
|
|
|
|
|
$90,223,612
|
Pro Forma Book Value per Share Outstanding
|
|
|
|
|
|
$0.95
|
|
|
|
|
|
$0.93
|
|
|
|
|
|
$0.92
|
|
|
|
|
|
$0.90
|
|
|
|
|
|
$0.88
|
(1)
|
Share ownership under each redemption scenario is only presented for illustrative purposes. RMG III cannot predict how many of
its Public Shareholders will exercise their right to have their Public Shares redeemed for cash. As a result, the RMG III Share Redemption
|
TABLE OF CONTENTS
Amount and the number of RMG III Class A Ordinary Shares redeemed in connection
with the Business Combination may differ from the amounts presented above. As such, the ownership percentages of H2B2 Stockholders, Public Shareholders, Sponsor, Holders of RMG III Public Warrants, and other stockholders may also differ from
the presentation above if the actual redemptions are different from these assumptions.
(2)
|
Assumes that (i) the Closing Date Purchase Price is $750,000,000, (ii) $125,000,000 is raised in the Capital Raise Transaction,
(iii) the conversion of the AVR Option Amount and (iv) the Closing Date Purchase Price has been increased by a 10% premium.
|
(3)
|
Excludes 724,500 shares of Surviving Corporation Common Stock issuable in respect of any RMG III Public Warrants that may be
held by Public Shareholders following the Warrant Amendment.
|
(4)
|
Excludes 616,225 shares of Surviving Corporation Common Stock issuable in respect of the 8,216,330 RMG III Private Placement
Warrants owned by the Sponsor following the Warrant Amendment.
|
(5)
|
Such shares of Surviving Corporation Common Stock issuable to Cohen for services provided in connection with the Extension,
as described elsewhere in this proxy statement/prospectus.
|
(6)
|
Such shares of Surviving Corporation Common Stock issuable in respect of 8,216,330 RMG III Private Placement Warrants
following the Warrant Amendment.
|
(7)
|
Such shares of Surviving Corporation Common Stock issuable in respect of 9,660,000 RMG III Public Warrants following the
Warrant Amendment.
|
The following table further illustrates the impact on relative
fully diluted ownership levels of Surviving Corporation for each source of dilution, namely the issuance of Surviving Corporation Common Stock under the Incentive Plan.
H2B2 Stockholders(3)
|
|
|
96,470,002
|
|
|
|
|
|
96,470,002
|
|
|
|
|
|
96,470,002
|
|
|
|
|
|
96,470,002
|
|
|
|
|
|
96,470,002
|
|
|
|
Public Shareholders(4)
|
|
|
635,778
|
|
|
|
|
|
476,834
|
|
|
|
|
|
317,889
|
|
|
|
|
|
158,945
|
|
|
|
|
|
—
|
|
|
|
Sponsor(5)
|
|
|
4,816,935
|
|
|
|
|
|
4,816,935
|
|
|
|
|
|
4,816,935
|
|
|
|
|
|
4,816,935
|
|
|
|
|
|
4,816,935
|
|
|
|
Other stockholders(6)
|
|
|
25,000
|
|
|
|
|
|
25,000
|
|
|
|
|
|
25,000
|
|
|
|
|
|
25,000
|
|
|
|
|
|
25,000
|
|
|
|
RMG III Warrants
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Holders of RMG III Private Placement Warrants(7)
|
|
|
616,225
|
|
|
|
|
|
616,225
|
|
|
|
|
|
616,225
|
|
|
|
|
|
616,225
|
|
|
|
|
|
616,225
|
|
|
|
Holders of RMG III Public Warrants(8)
|
|
|
724,500
|
|
|
|
|
|
724,500
|
|
|
|
|
|
724,500
|
|
|
|
|
|
724,500
|
|
|
|
|
|
724,500
|
|
|
|
Equity Incentive Plan
|
|
Incentive Plan(9)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Shares Outstanding
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Pro Forma Book Value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pro Forma Book Value per Share Outstanding
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Share ownership under each redemption scenario is only presented for illustrative purposes. RMG III cannot predict how many
of its Public Shareholders will exercise their right to have their Public Shares redeemed for cash. As a result, the RMG III Share Redemption Amount and the number of RMG III Class A Ordinary Shares redeemed in connection with the
Business Combination may differ from the amounts presented above. As such, the ownership percentages of H2B2 Stockholders, Public Shareholders, Sponsor, Holders of RMG III Public Warrants, and other stockholders may also differ from
the presentation above if the actual redemptions are different from these assumptions.
|
(2)
|
This presentation includes shares that may be issued but are not presently outstanding and, as such, differ from the share
counts shown or assumed in the sections entitled “Summary Unaudited Pro Forma Condensed Combined Financial Information” and “Unaudited Pro
Forma Condensed Combined Financial Information”, which sections are limited to shares that are presently issued and outstanding
|
(3)
|
Assumes that (i) the Closing Date Purchase Price is $750,000,000, (ii) $125,000,000 is raised in the Capital Raise
Transaction, (iii) the conversion of the AVR Option Amount and (iv) the Closing Date Purchase Price has been increased by a 10% premium.
|
(4)
|
Excludes 724,500 shares of Surviving Corporation Common Stock issuable in respect of any RMG III Public Warrants that may be
held by Public Shareholders following the Warrant Amendment.
|
(5)
|
Excludes 616,225 shares of Surviving Corporation Common Stock issuable in respect of the 8,216,330 RMG III Private Placement
Warrants owned by the Sponsor following the Warrant Amendment.
|
(6)
|
Such shares of Surviving Corporation Common Stock issuable to Cohen for services provided in connection with the Extension,
as described elsewhere in this proxy statement/prospectus.
|
(7)
|
Such shares of Surviving Corporation Common Stock issuable in respect of 8,216,330 RMG III Private Placement Warrants
following the Warrant Amendment.
|
TABLE OF CONTENTS
(8)
|
Such shares of Surviving Corporation Common Stock issuable in respect of 9,660,000 RMG III Public Warrants following the
Warrant Amendment.
|
(9)
|
Such shares of Surviving Corporation Common Stock expected to be reserved under the Incentive Plan (assuming the Equity
Incentive Plan Proposal is approved).
|
Merger Consideration; Conversion of Shares
As part of the Business Combination, the H2B2 Stockholders will
receive a number of shares of Surviving Corporation Common Stock equal to the quotient obtained by dividing (i) the Closing Date Purchase Price by (ii) $10.00, as set forth in the Merger Agreement and discussed in more detail in this
proxy/statement prospectus (the “Aggregate Closing Date Merger Consideration”). See the section entitled “The Merger Agreement—Merger Consideration; Conversion of
Shares” for more information.
At the Effective Time, all shares of H2B2 Common Stock issued and
outstanding immediately prior to the Effective Time (excluding (i) any shares of H2B2 Common Stock subject to H2B2 Options, (ii) any Treasury Shares and (iii) any Dissenting Shares) will be canceled and converted into the right to receive a
portion of the Aggregate Closing Date Merger Consideration.
At the Effective Time, each H2B2 Option will convert into an option
to purchase shares of Surviving Corporation Common Stock upon substantially the same terms and conditions as are in effect with respect to the corresponding H2B2 Option immediately prior to the Effective Time, including with respect to
vesting and termination-related provisions, with adjustments based on the Exchange Ratio. See the section entitled “The Merger Agreement—Merger Consideration; Conversion of Shares” for more
information.
Ownership of the Surviving Corporation
As of the date of this proxy statement, there are 12,710,778 RMG
III Ordinary Shares issued and outstanding, which includes 12,075,000 Founder Shares and 635,778 Public Shares. As of the date of this proxy statement, there are an aggregate of 17,876,330 RMG III Warrants outstanding, which includes
8,216,330 RMG III Private Placement Warrants and 9,660,000 RMG III Public Warrants. Each whole warrant entitles the holder thereof to purchase one RMG III Class A Ordinary Share and, following the Domestication, will entitle the holder
thereof to purchase one share of Surviving Corporation Common Stock.
It is anticipated that, following the Business Combination
(assuming consummation of the transactions contemplated by the Merger Agreement), (i) Public Shareholders are expected to own approximately 0.62% of the outstanding Surviving Corporation Common Stock; (ii) H2B2 Stockholders (without taking
into account any public shares held by the H2B2 Stockholders prior to the consummation of the Business Combination or shares of Surviving Corporation Common Stock issuable to holders of Surviving Corporation Options) are expected to own
approximately 93.40% of the outstanding Surviving Corporation Common Stock, at a deemed value of $10.00 per share of Surviving Corporation Common Stock and after giving effect to the Exchange Ratio and payment of the Aggregate Closing Date
Merger Consideration to the H2B2 Stockholders and (iii) the Sponsor is expected to own approximately 4.66% of the outstanding Surviving Corporation Common Stock. These percentages assume (1) that no Public Shareholders exercise their
redemption rights in connection with the Business Combination, (2) each RMG III Warrant is exchanged and canceled in connection with the Warrant Exchange, and (3) that the Surviving Corporation issues or reserves 96,470,002 shares of
Surviving Corporation Common Stock to H2B2 Stockholders as part of the Aggregate Closing Date Merger Consideration pursuant to the Merger Agreement. If the actual facts are different from these assumptions, the percentage ownership retained
by current RMG III shareholders and H2B2 Stockholders in the Surviving Corporation will be different.
TABLE OF CONTENTS
Upon consummation of the Business Combination, the undiluted
post-Closing share ownership of Surviving Corporation is expected to be as follows:
H2B2 Stockholders(2)
|
|
|
96,470,002
|
|
|
93.40%
|
|
|
96,470,002
|
|
|
93.54%
|
|
|
96,470,002
|
|
|
93.69%
|
|
|
96,470,002
|
|
|
93.83%
|
|
|
96,470,002
|
|
|
93.98%
|
Public Shareholders(3)
|
|
|
635,778
|
|
|
*
|
|
|
476,834
|
|
|
*
|
|
|
317,889
|
|
|
*
|
|
|
158,945
|
|
|
*
|
|
|
—
|
|
|
—
|
Sponsor(4)
|
|
|
4,816,935
|
|
|
4.66%
|
|
|
4,816,935
|
|
|
4.67%
|
|
|
4,816,935
|
|
|
4.68%
|
|
|
4,816,935
|
|
|
4.69%
|
|
|
4,816,935
|
|
|
4.69%
|
Other stockholders(5)
|
|
|
25,000
|
|
|
*
|
|
|
25,000
|
|
|
*
|
|
|
25,000
|
|
|
*
|
|
|
25,000
|
|
|
*
|
|
|
25,000
|
|
|
*
|
RMG III Warrants
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Holders of RMG III Private Placement Warrants(6)
|
|
|
616,225
|
|
|
*
|
|
|
616,225
|
|
|
*
|
|
|
616,225
|
|
|
*
|
|
|
616,225
|
|
|
*
|
|
|
616,225
|
|
|
*
|
Holders of RMG III Public Warrants(7)
|
|
|
724,500
|
|
|
*
|
|
|
724,500
|
|
|
*
|
|
|
724,500
|
|
|
*
|
|
|
724,500
|
|
|
*
|
|
|
724,500
|
|
|
*
|
Total Shares Outstanding
|
|
|
103,288,440
|
|
|
100%
|
|
|
103,129,496
|
|
|
100%
|
|
|
102,940,551
|
|
|
100%
|
|
|
102,881,607
|
|
|
100%
|
|
|
102,652,662
|
|
|
100%
|
Total Pro Forma Book Value
|
|
|
|
|
|
$97,964,545
|
|
|
|
|
|
$96,114,431
|
|
|
|
|
|
$94,264,317
|
|
|
|
|
|
$92,414,203
|
|
|
|
|
|
$90,223,612
|
Pro Forma Book Value per Share Outstanding
|
|
|
|
|
|
$0.95
|
|
|
|
|
|
$0.93
|
|
|
|
|
|
$0.92
|
|
|
|
|
|
$0.90
|
|
|
|
|
|
$0.88
|
(1)
|
Share ownership under each redemption scenario is only presented for illustrative purposes. RMG III cannot predict how many of
its Public Shareholders will exercise their right to have their Public Shares redeemed for cash. As a result, the RMG III Share Redemption Amount and the number of RMG III Class A Ordinary Shares redeemed in connection with the
Business Combination may differ from the amounts presented above. As such, the ownership percentages of H2B2 Stockholders, Public Shareholders, Sponsor, Holders of RMG III Public Warrants, and other stockholders may also differ from
the presentation above if the actual redemptions are different from these assumptions.
|
(2)
|
Assumes that (i) the Closing Date Purchase Price is $750,000,000, (ii) $125,000,000 is raised in the Capital Raise Transaction,
(iii) the conversion of the AVR Option Amount and (iv) the Closing Date Purchase Price has been increased by a 10% premium.
|
(3)
|
Excludes 724,500 shares of Surviving Corporation Common Stock issuable in respect of any RMG III Public Warrants that may be
held by Public Shareholders following the Warrant Amendment.
|
(4)
|
Excludes 616,225 shares of Surviving Corporation Common Stock issuable in respect of the 8,216,330 RMG III Private Placement
Warrants owned by the Sponsor following the Warrant Amendment.
|
(5)
|
Such shares of Surviving Corporation Common Stock issuable to Cohen for services provided in connection with the Extension,
as described elsewhere in this proxy statement/prospectus.
|
(6)
|
Such shares of Surviving Corporation Common Stock issuable in respect of 8,216,330 RMG III Private Placement Warrants
following the Warrant Amendment.
|
(7)
|
Such shares of Surviving Corporation Common Stock issuable in respect of 9,660,000 RMG III Public Warrants following the
Warrant Amendment.
|
The following table further illustrates the impact on relative
fully diluted ownership levels of Surviving Corporation for each source of dilution, namely the issuance of Surviving Corporation Common Stock under the Incentive Plan.
H2B2 Stockholders(3)
|
|
|
96,470,002
|
|
|
|
|
|
96,470,002
|
|
|
|
|
|
96,470,002
|
|
|
|
|
|
96,470,002
|
|
|
|
|
|
96,470,002
|
|
|
|
Public Shareholders(4)
|
|
|
635,778
|
|
|
|
|
|
476,834
|
|
|
|
|
|
317,889
|
|
|
|
|
|
158,945
|
|
|
|
|
|
—
|
|
|
|
Sponsor(5)
|
|
|
4,816,935
|
|
|
|
|
|
4,816,935
|
|
|
|
|
|
4,816,935
|
|
|
|
|
|
4,816,935
|
|
|
|
|
|
4,816,935
|
|
|
|
Other stockholders(6)
|
|
|
25,000
|
|
|
|
|
|
25,000
|
|
|
|
|
|
25,000
|
|
|
|
|
|
25,000
|
|
|
|
|
|
25,000
|
|
|
|
RMG III Warrants
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Holders of RMG III Private Placement Warrants(7)
|
|
|
616,225
|
|
|
|
|
|
616,225
|
|
|
|
|
|
616,225
|
|
|
|
|
|
616,225
|
|
|
|
|
|
616,225
|
|
|
|
Holders of RMG III Public Warrants(8)
|
|
|
724,500
|
|
|
|
|
|
724,500
|
|
|
|
|
|
724,500
|
|
|
|
|
|
724,500
|
|
|
|
|
|
724,500
|
|
|
|
Equity Incentive Plan
|
|
Incentive Plan(9)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TABLE OF CONTENTS
Total Shares Outstanding
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Pro Forma Book Value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pro Forma Book Value per Share Outstanding
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Share ownership under each redemption scenario is only presented for illustrative purposes. RMG III cannot predict how many
of its Public Shareholders will exercise their right to have their Public Shares redeemed for cash. As a result, the RMG III Share Redemption Amount and the number of RMG III Class A Ordinary Shares redeemed in connection with the
Business Combination may differ from the amounts presented above. As such, the ownership percentages of H2B2 Stockholders, Public Shareholders, Sponsor, Holders of RMG III Public Warrants, and other stockholders may also differ from
the presentation above if the actual redemptions are different from these assumptions.
|
(2)
|
This presentation includes shares that may be issued but are not presently outstanding and, as such, differ from the share
counts shown or assumed in the sections entitled “Summary Unaudited Pro Forma Condensed Combined Financial Information” and “Unaudited Pro
Forma Condensed Combined Financial Information”, which sections are limited to shares that are presently issued and outstanding
|
(3)
|
Assumes that (i) the Closing Date Purchase Price is $750,000,000, (ii) $125,000,000 is raised in the Capital Raise
Transaction, (iii) the conversion of the AVR Option Amount and (iv) the Closing Date Purchase Price has been increased by a 10% premium.
|
(4)
|
Excludes 724,500 shares of Surviving Corporation Common Stock issuable in respect of any RMG III Public Warrants that may be
held by Public Shareholders following the Warrant Amendment.
|
(5)
|
Excludes 616,225 shares of Surviving Corporation Common Stock issuable in respect of the 8,216,330 RMG III Private Placement
Warrants owned by the Sponsor following the Warrant Amendment.
|
(6)
|
Such shares of Surviving Corporation Common Stock issuable to Cohen for services provided in connection with the Extension,
as described elsewhere in this proxy statement/prospectus.
|
(7)
|
Such shares of Surviving Corporation Common Stock issuable in respect of 8,216,330 RMG III Private Placement Warrants
following the Warrant Amendment.
|
(8)
|
Such shares of Surviving Corporation Common Stock issuable in respect of 9,660,000 RMG III Public Warrants following the
Warrant Amendment.
|
(9)
|
Such shares of Surviving Corporation Common Stock expected to be reserved under the Incentive Plan (assuming the Equity
Incentive Plan Proposal is approved).
|
Recommendation of the RMG III Board of Directors
The RMG III Board has unanimously determined that the Business
Combination, on the terms and conditions set forth in the Merger Agreement, is advisable and in the best interests of RMG III and RMG III shareholders and has directed that the Proposals set forth in this proxy statement be submitted to RMG
III shareholders for approval at the Special Meeting on the date and at the time and place set forth in this proxy statement. The RMG III Board unanimously recommends that RMG III shareholders vote or give instruction to vote “FOR” the Business Combination Proposal, “FOR” the Domestication Proposal, “FOR” each of the Organizational Documents
Proposals, “FOR” the Director Election Proposal, “FOR” the Stock Issuance Proposal, “FOR” the Equity Incentive Plan
Proposal and, if presented, “FOR” the Adjournment Proposal. See the section entitled “The Business Combination—Recommendation of RMG III’s Board of Directors and
Reasons for the Business Combination.”
The RMG III Board also believes that approval of each of the
Warrant Amendment Proposal and the Warrant Holder Adjournment Proposal to be presented at the Warrant Holders Meeting is in the best interests of RMG III and its RMG III warrant holders and unanimously recommends that its RMG III warrant
holders vote “FOR” each of the proposals. See the section entitled “The Warrant Holders Meeting.”
RMG III’s Special Meeting of Shareholders
The Special Meeting will be held at , Eastern Time, on ,
2023, in person or by proxy at the offices of Skadden, Arps, Slate, Meagher & Flom LLP located at One Manhattan West, New York, New York 10001 (or at such other time on such other date and at such other place to which the meeting may be
postponed or adjourned) or virtually via live webcast at https://www.cstproxy.com/ . At the Special Meeting, RMG III shareholders will be asked to vote on the Business Combination Proposal, the
Domestication Proposal,
TABLE OF CONTENTS
the Organizational Documents Proposals, the Director Election Proposal, the Stock
Issuance Proposal, the Equity Incentive Plan Proposal and, if presented, the Adjournment Proposal.
Voting Power; Record Date
RMG III shareholders will be entitled to vote or direct votes to be
cast at the Special Meeting if they owned RMG III Ordinary Shares at the close of business on the RMG III Record Date. RMG III shareholders are entitled to one vote for each RMG III Ordinary Share owned at the close of business on the RMG III
Record Date. If RMG III shareholders’ shares are held in “street name” or are in a margin or similar account, RMG III shareholders should contact their broker, bank or other nominee to ensure that votes related to the shares they beneficially
own are properly counted. RMG III Warrants do not have voting rights for the Special Meeting. As of the close of business on the RMG III Record Date, there were RMG III Ordinary Shares issued and outstanding, of which were issued
and outstanding Public Shares.
Purpose of the Special Meeting
The Proposals presented at the Special Meeting will require the
following votes:
•
|
The Business Combination Proposal: The Business Combination
Proposal may be approved by an ordinary resolution under Cayman Islands law, being the affirmative vote of the holders of a majority of the RMG III Ordinary Shares represented in person or by proxy and entitled to vote thereon and who
vote at the Special Meeting.
|
•
|
The Domestication Proposal: The Domestication Proposal requires a
special resolution under Cayman Islands law, being the affirmative vote of the holders of at least two-thirds of the RMG III Ordinary Shares represented in person or by proxy and entitled to vote thereon and who vote at the Special
Meeting.
|
•
|
The Organizational Documents Proposals: The separate approval of
each of the Organizational Documents Proposals requires a special resolution under Cayman Islands law, being the affirmative vote of the holders of at least two-thirds of the RMG III Ordinary Shares represented in person or by proxy
and entitled to vote thereon and who vote at the Special Meeting.
|
•
|
The Director Election Proposal: The Director Election Proposal may
be approved by an ordinary resolution of the holders of the RMG III Class B Ordinary Shares under Cayman Islands law, being the affirmative vote of the holders of a majority of the RMG III Class B Ordinary Shares represented in person
or by proxy and entitled to vote thereon and who vote at the Special Meeting.
|
•
|
The Stock Issuance Proposal: The Stock Issuance Proposal may be
approved by an ordinary resolution under Cayman Islands law, being the affirmative vote of the holders of a majority of the RMG III Ordinary Shares represented in person or by proxy and entitled to vote thereon and who vote at the
Special Meeting.
|
•
|
The Equity Incentive Plan Proposal: The Equity Incentive Plan
Proposal may be approved by an ordinary resolution under Cayman Islands law, being the affirmative vote of a majority of the RMG III Ordinary Shares represented in person or by proxy and entitled to vote thereon and who vote at the
Special Meeting.
|
•
|
The Adjournment Proposal: The Adjournment Proposal may be approved
by an ordinary resolution under Cayman Islands law, being the affirmative vote of the holders of a majority of the RMG III Ordinary Shares represented in person or by proxy and entitled to vote thereon and who vote at the Special
Meeting.
|
TABLE OF CONTENTS
Quorum and Vote of RMG III shareholders
A quorum of RMG III shareholders is necessary to hold a valid
meeting. A quorum will be present at the Special Meeting if the holders of a majority of the issued and outstanding Ordinary Shares entitled to vote at the Special Meeting are represented in person (which would include presence at a virtual
meeting) or by proxy. Abstentions and broker non-votes, while considered present for the purposes of establishing a quorum, will not count as votes cast at the Special Meeting. As of the RMG III Record Date, 6,496,702 RMG III Ordinary Shares
would be required to achieve a quorum. Accordingly, it is expected that the RMG III Ordinary Shares held by the Initial Shareholders will be sufficient to establish a valid quorum.
The Initial Shareholders have agreed to vote any RMG III
Ordinary Shares held by them in favor of the Proposals to be presented at the Special Meeting. As of the date of this proxy statement, the Initial Shareholders own approximately 95.0% of the issued and outstanding RMG III Ordinary Shares.
Accordingly, it is expected that the RMG III Ordinary Shares held by the Initial Shareholders will be sufficient to approve each Proposal and the affirmative vote of additional Public Shares will not be required for approval of the
Proposals.
Redemption Rights
Pursuant to the RMG III Governing Documents, a Public Shareholder
may request that RMG III redeem all or a portion of its Public Shares for cash in connection with the Business Combination. As a holder of Public Shares, you will be entitled to receive cash for any Public Shares to be redeemed only if you:
(a)
|
hold Public Shares or if you hold Public Shares through RMG III Units, you elect to separate your RMG III Units into the
underlying Public Shares and RMG III Public Warrants prior to exercising your redemption rights with respect to the Public Shares;
|
(b)
|
submit a written request to Continental, RMG III’s transfer agent, that RMG III redeem all or a portion of your Public
Shares for cash; and
|
(c)
|
tender or deliver your Public Shares (and share certificates (if any) and other redemption forms) to Continental, RMG III’s
transfer agent, electronically through DTC.
|
Holders must complete the procedures for
electing to redeem their Public Shares in a manner described above prior to 5:00 p.m., Eastern Time, on , 2023 (two business days before the Special Meeting) in order for their shares to be redeemed.
Holders of RMG III Units must elect to separate
such units into the underlying Public Shares and RMG III Public Warrants prior to exercising redemption rights with respect to the Public Shares. If holders hold their RMG III Units in an account at a brokerage firm or bank, holders must
notify their broker or bank that they elect to separate such units into the underlying Public Shares and RMG III Public Warrants, or if a holder holds RMG III Units registered in its own name, the holder must contact Continental, RMG III’s
transfer agent, directly and instruct them to do so. Public Shareholders may elect to redeem Public Shares regardless of if or how they vote in respect of the Business Combination Proposal.
If the Business Combination is not approved or does not proceed the
Public Shares will be returned to the respective Public Shareholder, broker or bank. If the Business Combination is approved and proceeds and if the Public Shareholder properly exercises its right to redeem all or a portion of the Public
Shares that it holds and timely tenders or delivers its shares (and share certificates (if any) and other redemption forms) to Continental, RMG III’s transfer agent, RMG III will redeem such Public Shares for a per-share price, payable in
cash, equal to the pro rata portion of the Trust Account calculated as of two business days prior to the consummation of the Business Combination. If a Public Shareholder exercises its redemption rights in full, then it will be electing to
exchange its Public Shares for cash and will no longer own Public Shares. The redemption of Public Shares will take place immediately prior to the Domestication when a redeeming Public Shareholder’s RMG III Class A Ordinary Shares are
canceled in exchange for the right to receive the cash consideration described above. Such cash will be paid to redeeming Public Shareholders promptly after consummation of the Business Combination. See “Special
Meeting of RMG III — Redemption Rights” in this proxy statement for a detailed description of the procedures to be followed if you wish to redeem your Public Shares for cash.
TABLE OF CONTENTS
Appraisal Rights and Dissenters’ Rights
None of RMG III shareholders, RMG III unit holders or RMG III
warrant holders have appraisal rights in connection with the Business Combination or the Domestication under the DGCL. None of RMG III’s shareholders have dissenters’ rights in connection with the Business Combination or the Domestication
under Cayman Islands law.
Proxy Solicitation
Proxies may be solicited by mail, telephone or in person. RMG III
has engaged to assist in the solicitation of proxies.
If a RMG III shareholder grants a proxy, it may still vote its
shares in person if it revokes its proxy before the Special Meeting. A RMG III shareholder may also change its vote by submitting a later-dated proxy as described in the section entitled “Special Meeting of
RMG III—Revoking Your Proxy.”
RMG III’s Warrant Holders Meeting
The Warrant Holders Meeting will be held at , Eastern Time,
on , 2023, in person or by proxy at the offices of Skadden, Arps, Slate, Meagher & Flom LLP located at One Manhattan West, New York, New York 10001 (or at such other time on such other date and at such other place to which the
meeting may be postponed or adjourned) or virtually via live webcast at www.cstproxy.com/ . At the Warrant Holders Meeting, RMG III warrant holders will be asked to vote on
the Warrant Amendment Proposal and, if presented, the Warrant Holders Adjournment Proposal.
Voting Power; Record Date
RMG III warrant holders will be entitled to vote or direct votes to
be cast at the Warrant Holders Meeting if they owned RMG III Warrants at the close of business on the RMG III Record Date. Warrant Holders are entitled to one vote for each RMG III Warrant owned at the close of business on the RMG III Record
Date. If RMG III warrant holders’ warrants are held in “street name” or are in a margin or similar account, RMG III warrant holders should contact their broker, bank or other nominee to ensure that votes related to the warrants they
beneficially own are properly counted. As of the close of business on the RMG III Record Date, there were RMG III Public Warrants outstanding and RMG III Private Placement Warrants outstanding.
Purpose of the Warrant Holders Meeting
The Proposals presented at the Warrant Holders Meeting will require
the following votes:
•
|
The Warrant Amendment Proposal: The Warrant Amendment Proposal may be approved by an affirmative vote of the holders of at
least 65% of each of (i) the then outstanding RMG III Public Warrants and (ii) the then outstanding RMG III Private Placement Warrants, each voting separately as a class.
|
•
|
The Warrant Holders Adjournment Proposal: The Adjournment Proposal may be approved by an affirmative vote of at least 50% of
the holders of the RMG III Warrants represented in person or by proxy and entitled to vote thereon and who vote at the Warrant Holders Meeting.
|
Quorum and Vote of RMG III shareholders
A quorum of RMG III warrant holders is necessary to hold a valid
meeting. A quorum will be present at the Warrant Holders Meeting if the holders of at least 50% of the outstanding RMG III Warrants are represented in person (which would include presence at a virtual meeting) or by proxy. As of the RMG III
Record Date, RMG III Warrants would be required to achieve a quorum. Accordingly, it is expected that the RMG III Warrants held by the Initial Shareholders will be sufficient to establish a valid quorum.
As of the RMG III Record Date, the Initial Shareholders own 100% of
the outstanding RMG III Private Placement Warrants and none of the RMG III Public Warrants. Accordingly, it is expected that the RMG III Private Placement Warrants held by the Initial Shareholders will be voted in favor of the Warrant
Amendment Proposal and only the affirmative vote of the holders of at least 65% of the outstanding RMG III Public Warrants will be required to approve the Warrant Amendment Proposal.
TABLE OF CONTENTS
RMG III’s Directors, Executive Officers and the Sponsor and its
Affiliates Have Financial Interests in the Business Combination
Certain of RMG III’s executive officers and certain non-employee
directors, as well as the Sponsor and its affiliates, may have interests in the Merger that may be different from, or in addition to, the interests of RMG III shareholders and RMG III warrant holders generally. These interests include, among
other things:
•
|
The Sponsor paid an aggregate of $12,349,495 for its purchases of the Founder Shares and the RMG III Private Placement
Warrants. Prior to the Initial Public Offering, the Sponsor purchased 10,062,500 Founder Shares for an aggregate purchase price of $25,000. Subsequently, RMG III effectuated a 5-for-6 share split of the RMG III Class B Ordinary
Shares, resulting in an aggregate outstanding amount of 12,075,000 Founder Shares outstanding. Simultaneously with the consummation of the Initial Public Offering, the Sponsor purchased 8,216,330 RMG III Private Placement Warrants for
an aggregate purchase price of $12,324,495 in a private placement. A portion of the proceeds from the sale of the RMG III Private Placement Warrants were added to the net proceeds from the Initial Public Offering held in the Trust
Account. If the Business Combination with H2B2 or another business combination is not consummated within the Completion Window, RMG III will cease all operations except for the purpose of winding up, redeeming the outstanding Public
Shares for cash and, subject to the approval of its remaining RMG III shareholders and the RMG III Board, dissolving and liquidating. In such event, the 12,075,000 Founder Shares held by the Initial Shareholders would be worthless
because the Initial Shareholders are not entitled to participate in any redemption or distribution with respect to such shares. Additionally, in such event, the 8,216,330 RMG III Private Placement Warrants will also expire worthless.
The Founder Shares had an aggregate market value of $ based upon the closing price of $ per share of RMG III Class A Ordinary Shares on Nasdaq on the RMG III Record Date. The RMG III Private Placement Warrants had an aggregate
market value of approximately $ based upon the closing price of $ per Public Warrant on the Nasdaq on the RMG III Record Date.
|
•
|
In order to finance transaction costs in connection with a business combination, the Sponsor, members of the RMG III
founding team or any of their affiliates may, but are not obligated to (other than pursuant to the January 2022 Note and the July 2022 Note), make certain working capital loans as may be required. On January 19, 2022, RMG
Acquisition Management, LLC, an affiliate of the Sponsor (“RMG Acquisition Management”), agreed to lend RMG III up to an aggregate of $500,000 for working capital
purposes, pursuant to the January 2022 Note, an unsecured, non-interest bearing promissory note. The January 2022 Note is due and payable in full by RMG III upon the consummation of a business combination. On July 27, 2022, RMG
Acquisition Management agreed to lend RMG III up to an aggregate of $475,000 for working capital purposes, pursuant to the July 2022 Note, an unsecured, non-interest bearing promissory note. The July 2022 Note is due and payable in
full by RMG III upon the consummation of a business combination. In the event that the Business Combination does not close, RMG III may use a portion of proceeds held outside the Trust Account to repay the January 2022 Note and the
July 2022 Note, but no proceeds held in the Trust Account would be used to repay the January 2022 Note and the July 2022 Note. The January 2022 Note and the July 2022 Note will be repaid in cash upon consummation of the Business
Combination. As of the date hereof, RMG III has borrowed $500,000 under the January 2022 Note and $350,000 under the July 2022 Note. If RMG III does not complete a business combination by the Completion Window, there will not be
sufficient assets to repay the outstanding balance under the January 2022 Note and the July 2022 Note, and the January 2022 Note and the July 2022 Note will be worthless.
|
•
|
There will be no finder’s fees, reimbursements or cash payments made by RMG III to the Sponsor or RMG III’s officers or
directors, or RMG III’s or any of their affiliates, for services rendered to RMG III prior to or in connection with the completion of the Business Combination, other than payment of the amount for office space, utilities,
administrative and support services and repayments of any outstanding balance of the January 2022 Note and the July 2022 Note, as described below. RMG III’s directors and officers and their affiliates are entitled to reimbursement of
out-of-pocket expenses incurred by them in connection with certain activities on RMG III’s behalf, such as identifying and investigating possible business targets and business combinations. There is no cap or ceiling on the
reimbursement of out-of-pocket expenses incurred by such persons in connection with activities on RMG III’s behalf. However, if RMG III fails to consummate a business combination by the Completion Window, RMG III’s directors and
officers will not have any claim against the Trust Account for
|
TABLE OF CONTENTS
reimbursement. Accordingly, RMG III may not be able to reimburse these expenses if
the Business Combination or another business combination is not consummated within the Completion Window. As of , 2023, $ was outstanding in out-of-pocket expense reimbursements. Additionally, under the Administrative Services
Agreement, RMG Acquisition Management is entitled to $20,000 per month for office space, utilities, administrative and support services provided to RMG III’s management team, which commenced on February 4, 2021 and will continue through the
earlier of consummation of a business combination and RMG III’s liquidation. For the three months ended March 31, 2023 and 2022 $60,000 of administrative support expenses were incurred. As of March 31, 2023 and December 31, 2022, respectively
the Company had $180,000 and $120,000, related to the Administrative Services Agreement was recorded in accounts payable — related party.
•
|
RMG III’s existing directors and officers will be eligible for continued indemnification and continued coverage under RMG
III’s directors’ and officers’ liability insurance after the Business Combination pursuant to the Merger Agreement.
|
•
|
In the event of the liquidation of the Trust Account, the Sponsor has agreed, under the Letter Agreement, dated February 4,
2021, among RMG III, the Sponsor and RMG III’s officers and directors, to indemnify and hold harmless RMG III against any and all losses, liabilities, claims, damages and expenses to which RMG III may become subject as a result of any
claim by (i) any third party for services rendered or products sold to RMG III or (ii) a prospective target business with which RMG III has entered into an acquisition agreement; provided that such indemnification of RMG III by the
Sponsor will apply only to the extent necessary to ensure that such claims by a third party for services rendered or products sold to RMG III or a target do not reduce the amount of funds in the Trust Account to below (i) $10.00 per
share of RMG III Class A Ordinary Shares or (ii) such lesser amount per RMG III Class A Ordinary Share held in the Trust Account due to reductions in the value of the trust assets as of the date of the liquidation of the Trust
Account, in each case, net of the amount of interest earned on the property in the Trust Account, which may be withdrawn to pay taxes, expenses related to the administration of the Trust Account and limited withdrawals for working
capital, except as to any claims by a third party (including a target) who executed a waiver of any and all rights to seek access to the Trust Account and except as to any claims under RMG III’s indemnity of the IPO Underwriters
against certain liabilities, including liabilities under the Securities Act. If RMG III consummates the Business Combination, on the other hand, RMG III will be liable for all such claims.
|
•
|
Pursuant to the Sponsor Support Agreement, the Sponsor has agreed to, subject to certain exceptions, among other things, vote
in favor of the Merger Agreement and the transactions contemplated thereby, in each case, subject to the terms and conditions contemplated by the Sponsor Support Agreement.
|
•
|
Subject to certain limited exceptions, the Surviving Corporation Common Stock held by the Sponsor will not be transferrable
following the Closing until the date that is 180 days after the Closing.
|
•
|
The Sponsor (including RMG III’s directors, officers and Initial Shareholders and their permitted transferees) owns RMG III
Private Placement Warrants which, in the event the Warrant Amendment Proposal is approved prior to the Effective Time, will be converted into the right to receive 0.075 shares of Surviving Corporation Common Stock per RMG III
Private Placement Warrant.
|
•
|
Certain of RMG III’s officers and directors presently have, and any of them in the future may have additional, fiduciary or
contractual obligations to other entities pursuant to which such officer or director is or will be required to present business combination opportunities to such entity. Accordingly, in the future, if any of RMG III’s officers or
directors becomes aware of a business combination opportunity which is suitable for an entity to which he or she has then-current fiduciary or contractual obligations, he or she will honor his or her fiduciary or contractual
obligations to present such opportunity to such entity. RMG III does not believe, however, that any fiduciary duties or contractual obligations of its officers or directors would materially undermine RMG III’s ability to complete a
business combination. The Existing Articles provide that RMG III’s renounces any interest or expectancy in, or in being offered, any corporate opportunity offered to any director or officer, but no director or officer of RMG III’s has
any duty, except and to the extent expressly assumed by contract, to communicate or offer any such corporate opportunity to RMG III’s and shall not be in breach of any fiduciary duty as a director or officer, solely by reason of fact
that such party pursues or acquires such
|
TABLE OF CONTENTS
corporate opportunity for itself, himself or herself, directs such corporate
opportunity to another person, or does not communicate information regarding such corporate opportunity to RMG III’s. This waiver allows the Sponsor and its affiliates to allocate opportunities based on a combination of the objectives and
fundraising needs of the target, as well as the investment objectives of the entity. However, RMG III does not believe that the waiver of the corporate opportunities doctrine otherwise had a material impact on its search for an acquisition
target.
Given the interests described above, the Sponsor and its affiliates
may earn a positive rate of return on their investment even if the Surviving Corporation Common Stock trades below the price initially paid for the RMG III Units in the Initial Public Offering and the Public Shareholders and Public Warrant
holders experience a negative rate of return following the completion of the Business Combination. As such, the Sponsor and its affiliates may have more of an economic incentive for RMG III to, rather than liquidate if it fails to complete an
initial business combination by the Completion Window, enter into an initial business combination on potentially less favorable terms with a potentially less favorable, riskier, weaker-performing or financially unstable business, or an entity
lacking an established record of revenues or earnings, than would be the case if such parties had paid the full offering price for their Founder Shares.
The RMG III Board was aware of and considered these interests to
the extent such interests existed at the time, among other matters, in approving the Merger Agreement and in recommending that the Business Combination and the Warrant Amendment be approved by RMG III shareholders and RMG III warrant holders.
See the section entitled “The Business Combination—Interests of RMG III’s Directors and Executive Officers and the Sponsor and its Affiliates in the Business Combination.” The RMG III Board concluded
that the Merger Agreement and the Business Combination are fair from a financial point of view to and in the best interests of RMG III and RMG III shareholders. In view of the wide variety of factors considered by the RMG III Board in
connection with its evaluation, negotiation and recommendation of the Business Combination and related transactions and the complexity of these matters, the RMG III Board did not consider it practical to, nor did it attempt to, quantify, rank
or otherwise assign relative weights to the specific factors that it considered in reaching its decision. Rather, the RMG III Board based its evaluation, negotiation and recommendation of the Business Combination and the Warrant Amendment on
the totality of the information presented to and considered by it. The RMG III Board evaluated the reasons described above with the assistance of RMG III’s outside advisors. In considering the factors described above and any other factors,
individual members of the RMG III Board may have viewed factors differently or given different weights to other or different factors.
After careful consideration, the RMG III Board unanimously
(i) declared the advisability of the Business Combination and the other transactions contemplated by the Merger Agreement and (ii) determined that the Business Combination and the other transactions contemplated by the Merger Agreement are in
the best interests of RMG III and RMG III shareholders. The RMG III Board further unanimously (i) declared the advisability of the Warrant Amendment and the other transactions contemplated thereby and (ii) determined that the Warrant
Amendment and the other transactions contemplated thereby are in the best interests of RMG III and RMG III warrant holders.
H2B2’s Directors and Officers Have Financial Interests in the
Business Combination
Certain of H2B2’s executive officers and non-employee directors may
have interests in the Business Combination that may be different from, or in addition to, the interests of RMG III shareholders and H2B2 Securityholders, generally. The members of the H2B2 board of directors were aware of and considered these
interests to the extent that such interests existed at the time, among other matters, when they approved the Merger Agreement and recommended that H2B2 Stockholders adopt the Merger Agreement and approve the Merger. See “The Business Combination—Interests of H2B2’s Directors and Executive Officers in the Business Combination.”
Appraisal Rights and Dissenters’ Rights
None of RMG III shareholders, RMG III unit holders or RMG III
warrant holders have appraisal rights in connection with the Business Combination or the Domestication under the DGCL. None of RMG III shareholders have dissenters’ rights in connection with the Business Combination or the Domestication under
Cayman Islands law.
TABLE OF CONTENTS
Sources and Uses of Funds for the Business Combination
The following table summarizes the sources and uses for funding the
Business Combination assuming no further redemptions. Where actual amounts are not known or knowable, the figures below represent H2B2 and RMG III’s good faith estimate of such amounts assuming a Closing as of March 31, 2023.
RMG III Cash*
|
|
|
$6,620
|
|
|
Repay Loan Agreement***
|
|
|
$16,046
|
Cash from H2B2
|
|
|
$5,120
|
|
|
Purchase Ardachon Option Shares***
|
|
|
$5,909
|
New Equity to H2B2**
|
|
|
$127,000
|
|
|
Transaction Accounting Costs****
|
|
|
$22,222
|
|
|
|
|
|
|
Cash to Balance Sheet
|
|
|
$94,563
|
Total Sources
|
|
|
$138,740
|
|
|
Total Uses
|
|
|
$138,740
|
The following table summarizes the sources and uses for funding
the Business Combination assuming RMG III shareholders exercise their redemption rights and assuming maximum redemptions. Where actual amounts are not known or knowable, the figures below represent H2B2 and RMG III’s good faith estimate of
such amounts assuming a Closing as of March 31, 2023.
RMG III Cash*
|
|
|
$6,620
|
|
|
Repay Loan Agreement***
|
|
|
$16,046
|
Cash from H2B2
|
|
|
$5,120
|
|
|
Purchase Ardachon Option Shares***
|
|
|
$5,909
|
New Equity to H2B2**
|
|
|
$127,000
|
|
|
Transaction Accounting Costs****
|
|
|
$22,222
|
|
|
|
|
|
|
Cash to Balance Sheet
|
|
|
$87,943
|
Total Sources
|
|
|
$138,740
|
|
|
Maximum Right’s Redemption
|
|
|
$6,620
|
|
|
|
|
|
|
Total Uses
|
|
|
$138,740
|
*
|
The amount of RMG III Cash reflects the amount in RMG III’s Trust Account and RMG III’s cash on the balance sheet, each as
of August 7, 2023.
|
**
|
See Footnotes (3) and (5) to the Unaudited Pro Forma Combined Balance Sheet as of March 31, 2023 included as part of the
section entitled “Unaudited Pro Forma Combined Financial Information” for further detail.
|
***
|
See the section entitled “Certain Relationships and Related Party
Transactions—H2B2—Ardachon Share Acquisition” for further detail.
|
****
|
See the Footnotes to the Unaudited Pro Forma Combined Balance Sheet as of March 31, 2023 included as part of the section
entitled “Unaudited Pro Forma Combined Financial Information” for further detail.
|
U.S. Federal Income Tax Considerations
For a discussion summarizing the U.S. federal income tax
considerations of the Domestication and exercise of redemption rights, please see “U.S. Federal Income Tax Considerations.”
Expected Accounting Treatment
The Domestication
There will be no accounting effect or change in the carrying amount
of the consolidated assets and liabilities of RMG III as a result of the Domestication. The business, capitalization, assets and liabilities and financial statements of the Surviving Corporation immediately following the Domestication will be
the same as those of RMG III immediately prior to the Domestication.
The Business Combination
The Business Combination will be accounted for as a reverse
recapitalization in accordance with U.S. GAAP. Under this method of accounting, RMG III, will be treated as the acquired company for accounting purposes, whereas H2B2 will be treated as the accounting acquirer. In accordance with this method
of accounting, the Business Combination will be treated as the equivalent of H2B2 issuing shares for the net assets of RMG III, accompanied by a recapitalization.
Regulatory Matters
Under the HSR Act and the rules that have been promulgated
thereunder, certain transactions may not be consummated unless certain information has been furnished to the Antitrust Division and the FTC, and certain
TABLE OF CONTENTS
waiting period requirements have been satisfied. The Business Combination is
subject to these requirements and may not be completed until the expiration of a 30-day waiting period following the filing of the parties’ respective Notification and Report Forms with the Antitrust Division and the FTC, unless early
termination is granted.
At any time before or after consummation of the Business
Combination, notwithstanding the expiration or termination of the waiting periods under the HSR Act, the Antitrust Division or the FTC, or any state or foreign governmental authority could take such action under applicable antitrust laws as
such authority deems necessary or desirable in the public interest, including seeking to enjoin the consummation of the Business Combination, conditionally approving the Business Combination upon divestiture of assets, subjecting the
completion of the Business Combination to regulatory conditions or seeking other remedies. Private parties may also seek to take legal action under the antitrust laws under certain circumstances. RMG III cannot assure you that the Antitrust
Division, the FTC, any state attorney general or any other government authority or private party will not attempt to challenge the Business Combination on antitrust grounds, and, if such a challenge is made, RMG III cannot assure you as to
its result.
Neither RMG III nor H2B2 is aware of any material regulatory
approvals or actions that are required for completion of the Business Combination other than the expiration or early termination of the waiting period under the HSR Act. It is presently contemplated that if any such additional regulatory
approvals or actions are required, those approvals or actions will be sought. There can be no assurance, however, that any additional approvals or actions will be obtained.
Emerging Growth Company
RMG III is an “emerging growth company,” as defined in Section 2(a)
of the Securities Act, as modified by the JOBS Act, and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies, including, but not
limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in RMG III’s periodic reports and proxy statements,
and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.
Further, Section 102(b)(1) of the JOBS Act exempts emerging growth
companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of
securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the
requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. RMG III has elected not to opt out of such extended transition period, which means that when a standard is issued or revised and it has
different application dates for public or private companies, RMG III, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make it difficult or
impossible to compare RMG III’s financial results with the financial results of another public company that is either not an emerging growth company or is an emerging growth company that has chosen not to take advantage of the extended
transition period exemptions because of the potential differences in accounting standards used.
RMG III will remain an emerging growth company until the earlier
of: (i) the last day of the fiscal year (1) following the fifth anniversary of the closing of the Initial Public Offering, (2) in which RMG III has total annual gross revenue of at least $1.235 billion or (3) in which RMG III is deemed to be
a large accelerated filer, which means the market value of RMG III’s common equity that is held by non-affiliates exceeds $700 million as of the end of the prior fiscal year’s second fiscal quarter and (ii) the date on which RMG III has
issued more than $1.00 billion in non-convertible debt securities during the prior three-year period. References herein to “emerging growth company” will have the meaning associated with it in the JOBS Act.
Conditions to Closing of the Business Combination
Conditions to Each Party’s Obligations
The respective obligations of each of RMG III and H2B2 to complete
the Business Combination are subject to the satisfaction or waiver at or prior to the closing of the following conditions: (i) approval of the Business
TABLE OF CONTENTS
Combination and related agreements and transactions by RMG III shareholders and the
stockholders of H2B2, (ii) approval of the Warrant Amendment by RMG III warrant holders, (iii) the expiration or termination of any applicable waiting period under the HSR Act, (iv) the absence of any legal restraints on the Closing,
(v) RMG III having at least $5,000,001 of net tangible assets (as determined in accordance with Rule 3a51-1(g)(1) of the Exchange Act) upon Closing, (vii) this Registration Statement on Form S-4 having been declared effective by the SEC,
(viii) receipt of conditional approval for listing on the Nasdaq Capital Market (“Nasdaq”) for the shares of Surviving Corporation Common Stock to be issued in connection with the Merger and (ix) the
consummation of the Capital Raise Transaction, as described in detail in the accompanying proxy statement/prospectus. See the section entitled “The Merger Agreement—Conditions to Closing of the Business
Combination—Conditions to Each Party’s Obligations” for more information.
Conditions to Obligations of RMG III
The respective obligations of each of RMG III to complete the
Business Combination are subject to the satisfaction or waiver at or prior to the Closing of the following conditions: (i) the accuracy of the representations and warranties of H2B2 as of the date of the Merger Agreement and as of the
Closing, (ii) each of the covenants of H2B2 having been performed in all material respects, (iii) the absence of any continuing H2B2 Material Adverse Effect after the date of the Merger Agreement and (iv) the delivery to RMG III of the
required documentation as set forth in the Merger Agreement. See the section entitled “The Merger Agreement—Conditions to Closing of the Business Combination—Conditions to the Obligations of RMG III”
for more information.
Conditions to Obligations of H2B2
The obligations of H2B2 to complete the Business Combination are
also subject to the satisfaction or waiver by H2B2 of the following conditions: (i) the accuracy of the representations and warranties of RMG III as of the date of the Merger Agreement and as of the Closing, (ii) each of the covenants of RMG
III having been performed in all material respects, (iii) completion of the Domestication and (iv) the delivery to H2B2 or the exchange agent, as applicable, of the required documentation as set forth in the Merger Agreement. See the section
entitled “The Merger Agreement—Conditions to Closing of the Business Combination—Conditions to the Obligations of H2B2” for more information.
No Solicitation
H2B2
Between the date of the Merger Agreement and the Closing, H2B2 and
its subsidiaries will use reasonable best efforts to cause its representatives not to, (i) initiate any negotiations with any person with respect to certain alternative transactions, (ii) enter into an agreement with respect to any such
alternative transactions or proposed transactions, (iii) grant any waiver, amendment or release under any confidentiality agreement or the anti-takeover laws of any state, or (iv) otherwise knowingly facilitate any inquiries, proposals,
discussions, or negotiations or any effort or attempt by any person to make a proposal with respect to any such alternative transaction, except, in each case, in relation to the Capital Raise Transaction.
RMG III
Between the date of the Merger Agreement and the Closing, RMG III
will not, and will instruct its representatives not to, (i) (x) make any proposal or offer that constitutes an initial business combination, (y) initiate any discussions or negotiations with any person with respect to such initial business
combination or (z) enter into any acquisition agreement, business combination agreement, merger agreement or similar definitive agreement, or any letter of intent, memorandum of understanding or agreement in principle, or any other agreement
relating to such initial business combination, in each case, other than to or with H2B2 and its respective representatives and (ii) immediately cease and terminate any such negotiations ongoing as of the date of the Merger Agreement.
Representations and Warranties
The Merger Agreement contains customary representations and
warranties by RMG III and H2B2. The representations and warranties of the respective parties to the Merger Agreement generally will not survive the Closing, except in the case of claims against a person in respect of such person’s actual
fraud. See the section entitled “The Merger Agreement—Representations and Warranties” for more information.
TABLE OF CONTENTS
Covenants
The Merger Agreement contains additional covenants, including,
among others, providing for (i) the parties to conduct their respective businesses in the ordinary course through the Closing, (ii) RMG III to approve and adopt the Incentive Plan that provides for grants of awards to eligible service
providers, (iii) RMG III to take certain actions to obtain the requisite approval of RMG III shareholders of certain proposals regarding the Business Combination (including the Domestication), (iv) RMG III to take all commercially reasonable
actions necessary to obtain a further extension of its liquidation deadline if Closing has not occurred by June 28, 2023, (v) RMG III to amend, or cause to be amended, the Warrant Agreement to effectuate the Warrant Amendment and (vi) the
parties to use reasonable best efforts to obtain necessary approvals from governmental agencies. See the section entitled “The Merger Agreement—Covenants” for more information.
Termination
The Merger Agreement may be terminated at any time prior to the
Closing (i) by mutual written consent of RMG III and H2B2, (ii) by H2B2, (a) if certain approvals of RMG III shareholders and RMG III warrant holders, to the extent required under the Merger Agreement, are not obtained as set forth therein,
(b) if there is a modification in recommendation by the RMG III Board for the Proposals, or (c) if prior to completion of the Capital Raise Transaction, a Capital Raise Investor or group of Capital Raise Investors, whose binding commitments
to fund such Capital Raise Transaction represent at least the Minimum Investment Amount (as defined in the section entitled “The Merger Agreement—Termination”), object to the Merger and deliver a
written notice to the H2B2 board of directors by no later than fifteen days following execution of definitive agreements relating to the Capital Raise Transaction, (iii) by RMG III (a) if the H2B2 Stockholder Approval is not obtained or (b)
if a H2B2 Stockholder exercises any right or takes and action required to satisfy the conditions or any closing deliverables pursuant to the Merger Agreement that prevents consummation of the Business Combination, (iv) by either RMG III or
H2B2 in certain other circumstances set forth in the Merger Agreement, including (a) if any governmental authority has issued or otherwise entered a final, nonappealable order making consummation of the Merger illegal or otherwise preventing
or prohibiting consummation of the Merger or (b) in the event of certain uncured breaches by the other party. See the section entitled “The Merger Agreement—Termination” for more information.
Reimbursement Fee
H2B2 will be required to pay RMG III a reimbursement fee amounting
to $3,300,000 in the following circumstances, and as further described in the Merger Agreement: (i) if H2B2 terminates the Merger Agreement (a) because it disagrees with the final determination of the Closing Date Purchase Price (defined in
the section entitled “The Merger Agreement—Aggregate Closing Date Merger Consideration” below) by an independent valuation firm, or (b) pursuant to an objection by a Capital Raise Investor or a group
of Capital Raise Investors as described above, and, in each of (a) and (b), following termination of the Merger Agreement, H2B2 consummates a Capital Raise Transaction resulting in proceeds that are equal to or exceed the Minimum Investment
Amount; (ii) if RMG III terminates the Merger Agreement because either (a) certain approvals of the H2B2 Stockholders were not obtained, or (b) any H2B2 Stockholder exercises any right, takes an action, or fails to take any action, required
to satisfy the conditions or closing deliverables set forth in the Merger Agreement, that prevents the consummation of the Business Combination, and, in each of (a) and (b), following termination of the Merger Agreement, H2B2 consummates a
Capital Raise Transaction resulting in proceeds that are equal to or exceed the Minimum Investment Amount; or (iii) if the Capital Raise Transaction is not consummated with a Capital Raise Amount of at least the Minimum Investment Amount, and
the Merger Agreement is terminated by written consent of the Parties or because Closing did not occur by the Agreement End Date (defined in the section entitled “The Merger Agreement—Termination”
below), but within six months following termination, H2B2 obtains commitments from Capital Raise Investor(s) which, when aggregated with any Capital Raise Transaction entered into prior to termination of the Merger Agreement and completed
thereafter, is equal to or exceeds the Minimum Investment Amount.
Other Agreements
Sponsor Support Agreement
On May 9, 2023, RMG III entered into the Sponsor Support Agreement,
pursuant to which the Sponsor agreed to, among other things, vote in favor of the Merger Agreement and the transactions contemplated thereby, in each case, subject to the terms and conditions contemplated by the Sponsor Support Agreement.
TABLE OF CONTENTS
The Sponsor Support Agreement will terminate and be of no
further force or effect upon the earliest of (a) Expiration Time, (b) the liquidation of RMG III and (c) the written agreement of RMG III, the Sponsor and H2B2. See the section entitled “Other
Agreements—Sponsor Support Agreement” for more information.
Company Support Agreement
On May 9, 2023, in connection with the execution of the Merger
Agreement, RMG III entered into the Company Support Agreement with H2B2 and certain H2B2 Stockholders. The H2B2 Stockholders who have executed the Company Support Agreement hold a majority of the shares of H2B2 Common Stock and such shares
exceed the minimum voting power required to approve the Business Combination. Pursuant to the Company Support Agreement, upon the terms and subject to the conditions set forth therein, each H2B2 Stockholder agreed, among other things, to vote
in favor of approving and adopting the Merger Agreement, the other agreements contemplated thereunder and the transactions contemplated thereby.
The Company Support Agreement will terminate and be of no further
force or effect upon the earliest of (a) the Expiration Time, (b) the liquidation of RMG III, and (c) as to each H2B2 Stockholder, the written agreement of RMG III, H2B2 and such H2B2 Stockholder.
Registration Rights Agreement
The Merger Agreement contemplates that, at the Closing, the
Surviving Corporation, the Sponsor, and certain H2B2 Stockholders will enter into a Registration Rights Agreement, pursuant to which the Surviving Corporation will agree to register for resale, pursuant to Rule 415 under the Securities Act,
certain shares of Surviving Corporation Common Stock and other equity securities of the Surviving Corporation that are held by the parties from time to time. See the section entitled “Other
Agreements—Registration Rights Agreement” for more information.
Lock-Up Agreement
The Merger Agreement contemplates that, at Closing, RMG III will
enter into Lock-Up Agreements with the Sponsor, and certain former stockholders of H2B2, in each case, which will restrict the transfer of (i) a number of shares of Surviving Corporation Common Stock held by such securityholder, as set forth
in the Lock-Up Agreement, immediately after the Effective Time, (ii) any shares of Surviving Corporation Common Stock held issuable upon the exercise or settlement, as applicable of Surviving Corporation Options held by a securityholder
immediately after the Effective Time, or (iii) any other securities convertible into or exercisable or exchangeable for Surviving Corporation Common Stock held by a securityholder immediately after the Effective Time. The Lock-Up Agreements
will restrict the transfer of the Lock-Up Shares until the date that is 180 days after Closing, subject to limited exceptions and the early release provisions set forth under the Lock-Up Agreements. See the section entitled “Other Agreements—Lock-Up Agreement” for more information.
RMG III Nasdaq Listing
The RMG III Class A Ordinary Shares, RMG III Units and RMG III
Public Warrants are listed on Nasdaq under the symbols “RMGC,” “RMGCU” and “RMGCW,” respectively. Following the Closing, the Surviving Corporation Common Stock will be listed on Nasdaq under the proposed symbol “HHBB”. RMG III Units will be
delisted and deregistered following the Closing.
Summary Risk Factors
You should consider all the information contained in this proxy
statement/prospectus in deciding how to vote for the Proposals presented herein. In particular, you should consider the risk factors described in the section entitled “Risk Factors” in this proxy
statement/prospectus. Such risks include, but are not limited to:
Risks related to the business of H2B2, including that:
•
|
H2B2 is an early-stage company with a history of losses and expects to incur significant expenses and continuing losses for
several years. H2B2 has yet to achieve positive operating cash flow and, given its projected funding needs, its ability to generate positive cash flow is uncertain.
|
TABLE OF CONTENTS
•
|
H2B2’s limited operating history makes evaluating its business and future prospects difficult and may increase the risk of
your investment.
|
•
|
H2B2’s business, financial condition, results of operations, cash flow and prospects depend on the level of development and
production activity in the hydrogen industry.
|
•
|
The growth of H2B2’s business depends upon sourcing new projects and its ability to continue to take pipeline projects to
completion.
|
•
|
H2B2 faces risks and uncertainties when developing electrolyzers and green hydrogen projects and it may fail to successfully
deliver electrolyzers and other services of sufficient quality, on schedule and at scale which may result in delayed or canceled payment, increased costs, termination of customer contract reputation damage and deteriorating customer
relationships.
|
•
|
H2B2 may be unable to develop effective new technologies for hydrogen production, or to obtain, protect, or enforce its rights
in its existing proprietary technology now or in the future, which may impact its ability to compete in the green hydrogen industry.
|
•
|
The markets for electrolysis solutions and green hydrogen are emerging markets and their development is dependent on the
development of a commercialized market for green hydrogen, broad decarbonization efforts, an increase of renewable energy production and technological development of end-user applications of green hydrogen, which will require
continuous long-term outside investments and is subject to general macroeconomic conditions.
|
•
|
The green hydrogen market is dependent on specific changes to regulations and policies that have not yet been developed.
|
•
|
H2B2’s products have not been on the market for the full length of their expected lifetime and its products may not maintain
the performance standards that H2B2 and its customers are expecting.
|
•
|
The development, construction, maintenance and operation of H2B2’s projects require governmental and other regulatory
approvals and permits, including environmental approvals and permits.
|
•
|
H2B2 currently owns or has interests in, and in the future may acquire, certain assets in which it has limited control over
management decisions, including through joint ventures, and its interests in such assets may be subject to transfer or other related restrictions.
|
•
|
Errors may occur in H2B2’s assembly and production processes, as well as in connection with installation, operation and
maintenance, which could cause its electrolyzers to be defective or flawed or impact its hydrogen product facilities.
|
•
|
H2B2’s EPC operations, as well as its warranties and guarantees, expose it to certain risks, including any unexpected warranty
and production guarantee claims.
|
•
|
Changes in technology, including any rise in the popularity of alternatives to green hydrogen, may render H2B2’s technologies
obsolete and there is no guarantee that newly developed technologies that H2B2 invests in will perform as anticipated.
|
•
|
The green hydrogen market is subject to global competition from both established multinational conglomerates and low-cost
electrolyzer producers.
|
•
|
Green hydrogen has not yet reached price parity with fossil fuels and derived energy carriers, which is critical for the
commercialization of green hydrogen and it may not reach price parity in the foreseeable future or at all.
|
•
|
H2B2 faces growing competition from traditional and renewable energy companies in developing hydrogen energy projects.
|
•
|
H2B2 may not be able to benefit from synergies from localized green hydrogen “hubs” or “Hydrogen Valleys” to the same extent
as its competitors.
|
•
|
Attractive offtake terms may become unavailable, or H2B2’s offtakers may be unable or unwilling to fulfill or renew their
contractual obligations with H2B2, which would adversely affect its business and growth.
|
TABLE OF CONTENTS
•
|
H2B2 has determined that its continuing operating losses and negative cash flows from operations raises substantial doubt
about its ability to continue as a “going concern.”
|
•
|
H2B2 identified a material weakness in its internal control over financial reporting. If H2B2 is unable to develop and
maintain an effective system of internal controls and procedures required by Section 404(a) of the Sarbanes-Oxley Act, it may not be able to accurately report its financial results in a timely manner, which may adversely affect
investor confidence in H2B2 and materially and adversely affect its stock price, business and operating results.
|
•
|
H2B2’s projects depend, and will depend, on third-party service providers to deliver high-quality products at prices similar
to historical levels.
|
•
|
Failure of third parties to manufacture quality products or provide reliable services in a timely manner could cause delays in
developing and operating H2B2’s projects, which could adversely affect H2B2’s partner relationships or adversely affect its growth.
|
•
|
H2B2’s projects and the industry in which it operates are highly regulated and may be adversely affected by legislative or
regulatory changes or a failure to comply with energy regulations.
|
•
|
Green hydrogen markets may face a rapidly evolving regulatory framework, which replaces or alters existing regulatory
frameworks, and the dynamics of green hydrogen markets and electrolyzer markets may be changed significantly as a result thereof.
|
•
|
Amendments to, or the enactment of, local and international laws and regulations, and industry standards that address data
security and privacy, regarding, the collection, distribution, use, security and storage of information, including personal information and confidential information.
|
•
|
H2B2 may not be able to obtain, or agree on, acceptable terms and conditions for government grants, loans and other incentives
for which H2B2 may apply.
|
•
|
Economic conditions in the European Union and Spain could have a material adverse effect on H2B2’s business, financial
condition, results of operations, cash flow and prospects.
|
Risks related to being a public company, including that:
•
|
The market price of shares of Surviving Corporation Common Stock may be volatile or may decline regardless of the Surviving
Corporation’s operating performance. You may lose some or all of your investment.
|
•
|
Surviving Corporation does not intend to pay dividends on Surviving Corporation Common Stock for the foreseeable future.
|
•
|
If securities or industry analysts do not publish research or reports about the Surviving Corporation’s business or the
Business Combination or publish negative reports, the market price of Surviving Corporation Common Stock could decline.
|
•
|
The Surviving Corporation’s ability to timely raise capital in the future may be limited, or may be unavailable on acceptable
terms, if at all. The Surviving Corporation’s failure to raise capital when needed could harm its business, operating results and financial condition. Debt issued to raise additional capital may reduce the value of Surviving
Corporation Common Stock.
|
•
|
The issuance of additional shares of Surviving Corporation Common Stock or convertible securities could make it difficult for
another company to acquire the Surviving Corporation, may dilute your ownership of the Surviving Corporation and could adversely affect the price of Surviving Corporation Common Stock.
|
•
|
Future resales of Surviving Corporation Common Stock after the consummation of the Business Combination may cause the market
price of the Surviving Corporation’s securities to drop significantly, even if the Surviving Corporation’s business is doing well.
|
•
|
The Surviving Corporation will be an “emerging growth company.” The reduced public company reporting requirements applicable
to emerging growth companies may make Surviving Corporation Common Stock less attractive to investors.
|
TABLE OF CONTENTS
•
|
The Surviving Corporation’s management has limited experience in operating a public company.
|
Risks relating to the Business Combination, including that:
•
|
The market price of shares of Surviving Corporation Common Stock after the Business Combination may be affected by factors
different from those currently affecting the prices of Public Shares.
|
•
|
There can be no assurance that Surviving Corporation Common Stock will be approved for listing on Nasdaq or that Surviving
Corporation Common Stock will be able to comply with the continued listing standards of Nasdaq.
|
•
|
The consummation of the Business Combination is subject to a number of conditions and if those conditions are not satisfied or
waived, the Merger Agreement may be terminated in accordance with its terms and the Business Combination may not be completed.
|
•
|
H2B2 will be subject to business uncertainties and contractual restrictions while the Business Combination is pending.
|
•
|
RMG III directors and officers may have interests in the Business Combination different from the interests of Public
Shareholders and Public Warrant holders.
|
•
|
The Sponsor has interests in the Business Combination different from the interests of Public Shareholders and Public Warrant
holders.
|
•
|
RMG III has not obtained a third-party valuation or a fairness opinion from an independent investment banking firm or
another independent firm, and consequently, you may have no assurance from an independent source that the terms of the Business Combination are fair to RMG III or RMG III shareholders from a financial point of view.
|
•
|
Because H2B2 will become a publicly traded company through the Business Combination rather than an underwritten initial public
offering, the scope of due diligence conducted may be different from that conducted by an underwriter in an underwritten initial public offering.
|
•
|
The Business Combination will result in changes to the board of directors that may affect the Surviving Corporation’s
strategy.
|
•
|
The Merger Agreement contains provisions that limit RMG III from seeking an alternative business combination.
|
•
|
The unaudited pro forma condensed combined financial information included in this proxy statement/prospectus is preliminary
and the actual financial condition and results of operations after the Business Combination may differ materially.
|
•
|
RMG III and H2B2 will incur transaction costs in connection with the Business Combination.
|
•
|
RMG III shareholders will have their rights as RMG III shareholders governed by the Proposed Organizational Documents.
|
•
|
The Sponsor has agreed to vote in favor of each of the Proposals presented at the Special Meeting, regardless of how Public
Shareholders vote.
|
•
|
RMG III’s and H2B2’s ability to consummate the Business Combination, and the operations of the Surviving Corporation following
the Business Combination, may be materially adversely affected by COVID-19.
|
Risks relating to redemption, including that:
•
|
If third parties bring claims against RMG III, the proceeds held in the Trust Account could be reduced and the per share
redemption amount received by RMG III shareholders may be less than $10.00 per share.
|
•
|
Public Shareholders who redeem their RMG III Class A Ordinary Shares may continue to hold any RMG III Public Warrants they
own, which would result in additional dilution to non-redeeming holders upon exercise of the RMG III Public Warrants.
|
TABLE OF CONTENTS
•
|
RMG III’s independent directors may decide not to enforce the indemnification obligations of the Sponsor, resulting in a
reduction in the amount of funds in the Trust Account available for distribution to Public Shareholders.
|
•
|
There is no guarantee that a Public Shareholder’s decision whether to redeem their Public Shares for a pro rata portion of the
Trust Account will put such Public Shareholder in a better future economic position.
|
•
|
If Public Shareholders fail to comply with the redemption requirements specified in this proxy statement, they will not be
entitled to redeem their Public Shares for a pro rata portion of the funds held in the Trust Account.
|
•
|
If, before distributing the proceeds in the Trust Account to Public Shareholders, RMG III files a bankruptcy petition or an
involuntary bankruptcy petition is filed against RMG III that is not dismissed, the claims of creditors in such proceeding may have priority over the claims of RMG III shareholders and the per share amount that would otherwise be
received by RMG III shareholders in connection with RMG III’s liquidation may be reduced.
|
•
|
If, after RMG III distributes the proceeds in the Trust Account to Public Shareholders, RMG III files a bankruptcy petition or
an involuntary bankruptcy petition is filed against RMG III that is not dismissed, a bankruptcy court may seek to recover such proceeds, and RMG III and the RMG III Board may be exposed to claims of punitive damages.
|
•
|
RMG III may redeem your unexpired RMG III Public Warrants prior to their exercise at a time that is disadvantageous to you,
thereby making your RMG III Public Warrants worthless, and the RMG III Private Placement Warrants have different cashless exercise rights than other warrants, including RMG III Public Warrants, issued by RMG III.
|
•
|
RMG III has a specified maximum redemption threshold. This redemption threshold may make it more difficult for RMG III to
complete the Business Combination as contemplated.
|
Risks relating to ownership of Surviving Corporation Common Stock
following the Business Combination, including that:
•
|
Subsequent to the consummation of the Business Combination, the Surviving Corporation may be required to take write-downs or
write-offs, or the Surviving Corporation may be subject to restructuring, impairment or other charges that could have a significant negative effect on the Surviving Corporation’s financial condition, results of operations and the
price of the Surviving Corporation’s securities, which could cause you to lose some or all of your investment.
|
•
|
Delaware law and the Proposed Organizational Documents contain certain provisions, including anti-takeover provisions, that
limit the ability of stockholders to take certain actions and could delay or discourage takeover attempts that stockholders may consider favorable.
|
Risks if the Domestication and Business Combination are not
consummated, including that:
•
|
If RMG III is not able to complete the Business Combination with H2B2 by the Completion Window and does not obtain an
additional extension, RMG III would be required to cease all operations except for the purpose of winding up and RMG III would redeem 100% of the Public Shares and liquidate the Trust Account, in which case the Public Shareholders
may only receive approximately $10.41 per share and the RMG III Warrants will expire worthless.
|
•
|
You will not have any rights or interests in funds from the Trust Account, except under certain limited circumstances. To
liquidate your investment, therefore, you may be forced to sell your Public Shares and/or RMG III Public Warrants, potentially at a loss.
|
•
|
If RMG III has not completed an initial business combination by the Completion Window or a valid extension thereof, Public
Shareholders may be forced to wait until such time redemption from the Trust Account is possible.
|
•
|
If the net proceeds of the Initial Public Offering not being held in the Trust Account are insufficient to allow RMG III to
operate through and the Completion Window RMG III is unable to obtain additional capital, RMG III may be unable to complete an initial business combination, in which case Public Shareholders may only receive $10.41 per share, and
the RMG III Warrants will expire worthless.
|
TABLE OF CONTENTS
Risks related to taxation, including that:
•
|
The Domestication may result in adverse tax consequences for holders of RMG III Class A Ordinary Shares and RMG III Warrants.
|
Information about RMG III
RMG Acquisition Corp. III is a blank check company formed for the
purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or other similar business combination with one or more businesses. The RMG III Units, Public Shares and RMG III Public Warrants are
currently listed on Nasdaq under the symbols “RMGCU,” “RMGC” and “RMGCW,” respectively. The mailing address of RMG III’s principal executive office is 57 Ocean, Suite 403, 5775 Collins Avenue, Miami Beach, Florida 33140 and its telephone
number is (786) 359-4103.
Information about H2B2
H2B2 is a global green hydrogen platform that provides bespoke
integrated solutions to its customers across the whole hydrogen value chain. H2B2’s customer-centric, one-stop shop offering enables seamless and effective support through the entire lifecycle of a hydrogen production facility (including the
identification of the opportunity, R&D, design, engineering, procurement and construction, and operation and maintenance services for the hydrogen facility), and complete solutions for transportation, storage, and sale of green hydrogen.
H2B2’s global strategy aims to offer its products and services in
regulated markets where hydrogen is expected to play a key role in decarbonizing mobility and industrial activities, among other sectors of the economy, and for hydrogen storage solutions to secure energy independence. H2B2’s target markets
include EMEA, the Americas and APAC, where it has built a robust and diversified project pipeline and identified significant growth opportunities. In light of its proprietary technologies and successful track record in delivering large-scale
projects, H2B2’s believe it is positioned to continue providing curated solutions that satisfy its customers’ needs and expectations while being at the forefront of green hydrogen’s growth, OEM, project developer, EPC provider, O&M
provider and producer in the green hydrogen sector.
The mailing address of H2B2’s principal executive office is 300
Delaware Ave Ste 210-A, Wilmington, DE 19801. H2B2 can be reached by phone at +34 912 811 058, and by e-mail at info@h2b2.es. Its website is https://www.h2b2.es/.
Summary Historical Financial Data For RMG III
The summary historical financial information of RMG III for (i) the
three-month periods ended March 31, 2023 and March 31, 2022, and (ii) the years ended December 31, 2022 and December 31, 2021 was derived from (i) the unaudited financial statements of RMG III and (ii) the audited consolidated financial
statements of RMG III, respectively, included elsewhere in this proxy statement/prospectus. You should read the following summary financial information in conjunction with the sections entitled “Selected
Historical Financial Information of RMG III” and “RMG III Management’s Discussion and Analysis of Financial Condition and Results of Operations” and RMG III’s financial statements and related
notes appearing elsewhere in this proxy statement/prospectus.
TABLE OF CONTENTS
RMG ACQUISITION CORP. III CONDENSED BALANCE SHEETS AS OF MARCH 31, 2023 AND
DECEMBER 31, 2022
|
|
|
Unaudited
|
|
|
|
Assets:
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
Cash
|
|
|
$15,055
|
|
|
$22,339
|
Prepaid expenses
|
|
|
118,317
|
|
|
50,892
|
Total current assets
|
|
|
133,372
|
|
|
73,231
|
Cash and investments held in Trust Account
|
|
|
10,683,049
|
|
|
487,268,822
|
Total Assets
|
|
|
$10,816,421
|
|
|
$487,342,053
|
Liabilities, Class A Ordinary Shares
Subject to Possible Redemption and Shareholders’ Deficit:
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
Accounts payable
|
|
|
$350,547
|
|
|
$153,571
|
Accrued expenses
|
|
|
2,595,834
|
|
|
899,845
|
Accrued expenses - related party
|
|
|
180,000
|
|
|
120,000
|
Total current liabilities
|
|
|
3,126,381
|
|
|
1,173,416
|
Deferred legal fees
|
|
|
250,000
|
|
|
250,000
|
Deferred underwriting commissions
|
|
|
16,905,000
|
|
|
16,905,000
|
Convertible working capital loan - related party
|
|
|
750,000
|
|
|
500,000
|
Derivative warrant liabilities
|
|
|
2,592,068
|
|
|
536,300
|
Total liabilities
|
|
|
23,623,449
|
|
|
19,364,716
|
Commitments and Contingencies
|
|
|
|
|
|
|
Class A ordinary shares; 918,402 and 48,300,000 shares
subject to possible redemption at $11.52 and $10.09 per share at March 31, 2023 and December 31, 2022, respectively
|
|
|
10,583,049
|
|
|
487,168,822
|
Shareholders’ Deficit:
|
|
|
|
|
|
|
Preference shares, $0.0001 par value; 5,000,000 shares
authorized; none issued and outstanding at March 31, 2023 and December 31, 2022, respectively
|
|
|
—
|
|
|
—
|
Class A ordinary shares, $0.0001 par value; 500,000,000
shares authorized at March 31, 2023 and December 31, 2022, respectively
|
|
|
—
|
|
|
—
|
Class B ordinary shares, $0.0001 par value; 50,000,000
shares authorized; 12,075,000 shares issued and outstanding at March 31, 2023 and December 31, 2022, respectively
|
|
|
1,208
|
|
|
1,208
|
Additional paid-in capital
|
|
|
—
|
|
|
—
|
Accumulated deficit
|
|
|
(23,391,285)
|
|
|
(19,192,693)
|
Total shareholders’ deficit
|
|
|
(23,390,077)
|
|
|
(19,191,485)
|
Total Liabilities, Class A Ordinary
Shares Subject to Possible Redemption and Shareholders’ Deficit
|
|
|
$10,816,421
|
|
|
$487,342,053
|
TABLE OF CONTENTS
RMG ACQUISITION CORP. III UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS FOR THE
THREE MONTHS ENDED MARCH 31, 2023 AND MARCH 31, 2022
Cash Flows from Operating Activities:
|
|
|
|
|
|
|
Net (loss) income
|
|
|
$(2,780,733)
|
|
|
$5,775,190
|
Adjustments to reconcile net (loss) income to net cash
used in operating activities:
|
|
|
|
|
|
|
Change in fair value of derivative liabilities
|
|
|
2,055,768
|
|
|
(6,418,128)
|
Interest expense
|
|
|
—
|
|
|
1,761
|
Investment income earned on cash and investments held in Trust Account
|
|
|
(1,417,859)
|
|
|
(48,436)
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
Prepaid expenses
|
|
|
(67,425)
|
|
|
72,999
|
Accounts payable
|
|
|
196,976
|
|
|
52,103
|
Accrued expenses - related party
|
|
|
60,000
|
|
|
—
|
Accrued expenses
|
|
|
1,695,989
|
|
|
329,840
|
Net cash used in operating activities
|
|
|
(257,284)
|
|
|
(234,671)
|
Cash Flows from Investing Activities:
|
|
|
|
|
|
|
Cash withdrawn from Trust Account in connection with redemption
|
|
|
478,003,632
|
|
|
—
|
Net cash provided by investing activities
|
|
|
478,003,632
|
|
|
—
|
Cash Flows from Financing Activities:
|
|
|
|
|
|
|
Proceeds from convertible promissory note - related party
|
|
|
250,000
|
|
|
—
|
Proceeds from promissory note
|
|
|
—
|
|
|
375,000
|
Redemption of common stock
|
|
|
(478,003,632)
|
|
|
—
|
Net cash (used in) provided by financing activities
|
|
|
(477,753,632)
|
|
|
375,000
|
Net (decrease) increase in cash
|
|
|
(7,284)
|
|
|
140,329
|
Cash - beginning of the period
|
|
|
22,339
|
|
|
93,599
|
Cash - end of the period
|
|
|
$15,055
|
|
|
$233,928
|
Supplemental disclosure of noncash investing and financing
activities:
|
|
|
|
|
|
|
Change Increase in value of Class A common stock subject
to possible redemption
|
|
|
$1,417,859
|
|
|
$—
|
Summary Historical Financial Data For H2B2
The information presented below is derived from the Q1-2023
Unaudited Interim Condensed Consolidated Financial Statements of H2B2 and the 2022 Audited Consolidated Financial Statements of H2B2 included elsewhere in this proxy statement/prospectus.
H2B2’s historical results are not necessarily indicative of the
results that may be expected for any other period in the future. The selected financial information set out below is a summary only. It may not contain all the information that is important to prospective investors and, accordingly, should be
read in conjunction with “Risk Factors”, “H2B2 Management’s Discussion and Analysis of Financial Condition and Results of Operations”, the Q1-2023 Unaudited
Interim Condensed Consolidated Financial Statements of H2B2 and the 2022 Audited Consolidated Financial Statements of H2B2, included in this proxy statement/prospectus.
TABLE OF CONTENTS
Consolidated Statements of Operations for the periods indicated
below
Product sales
|
|
|
$866,913
|
|
|
$100,130
|
|
|
$3,491,673
|
|
|
$961,607
|
Cost of sales
|
|
|
974,046
|
|
|
83,997
|
|
|
3,042,412
|
|
|
815,956
|
Gross (loss) profit
|
|
|
(107,133)
|
|
|
16,133
|
|
|
449,261
|
|
|
145,651
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development
|
|
|
542,773
|
|
|
196,201
|
|
|
1,333,961
|
|
|
588,281
|
Selling, general and administrative
|
|
|
1,105,019
|
|
|
981,238
|
|
|
3,904,132
|
|
|
3,220,510
|
Depreciation of long-lived assets
|
|
|
40,581
|
|
|
5,803
|
|
|
88,257
|
|
|
24,178
|
Income from grants
|
|
|
350,127
|
|
|
90,007
|
|
|
801,991
|
|
|
242,170
|
Losses from unconsolidated investments
|
|
|
(7,032)
|
|
|
—
|
|
|
—
|
|
|
—
|
Loss from operations
|
|
|
(1,452,411)
|
|
|
(1,077,102)
|
|
|
(4,075,098)
|
|
|
(3,445,148)
|
Other income (expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income
|
|
|
326,204
|
|
|
411,878
|
|
|
411,878
|
|
|
105,979
|
Interest and other income (expense), net
|
|
|
207,175
|
|
|
(98,121)
|
|
|
(557,112)
|
|
|
(757,444)
|
Total other expense, net
|
|
|
533,379
|
|
|
313,757
|
|
|
(145,233)
|
|
|
(651,465)
|
Loss before tax expense
|
|
|
(919,032)
|
|
|
(763,345)
|
|
|
(4,220,331)
|
|
|
(4,096,613)
|
Income tax expense
|
|
|
23,635
|
|
|
10,349
|
|
|
76,128
|
|
|
34,391
|
Net loss
|
|
|
(942,667)
|
|
|
(773,694)
|
|
|
(4,296,459)
|
|
|
(4,131,004)
|
Less: Net loss attributable to non-controlling interests
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(253)
|
Net loss attributable to Stockholders
|
|
|
$(942,667)
|
|
|
$(773,694)
|
|
|
$(4,296,459)
|
|
|
$(4,130,751)
|
Net loss per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per share – basic
|
|
|
$(0.10)
|
|
|
$(0.08)
|
|
|
$(0.44)
|
|
|
$(0.50)
|
Net loss per share – diluted
|
|
|
$(0.10)
|
|
|
$(0.08)
|
|
|
$(0.44)
|
|
|
$(0.50)
|
Weighted average shares outstanding – basic
|
|
|
9,708,341
|
|
|
9,734,728
|
|
|
9,726,763
|
|
|
8,321,904
|
Weighted average shares outstanding – diluted
|
|
|
9,708,341
|
|
|
9,734,728
|
|
|
9,726,763
|
|
|
8,321,904
|
Consolidated Balance Sheets as of March 31, 2023 and December 31,
2022 and 2021
Total assets
|
|
|
$29,117,281
|
|
|
$25,185,188
|
|
|
$17,446,766
|
Total liabilities
|
|
|
21,572,000
|
|
|
16,702,754
|
|
|
4,607,604
|
Total equity
|
|
|
7,545,281
|
|
|
8,482,434
|
|
|
12,839,162
|
Total liabilities and equity
|
|
|
$29,117,281
|
|
|
$25,185,188
|
|
|
$17,446,766
|
Consolidated Statements of Cash Flows for the periods indicated
below
Net cash (used in)/provided by:
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating activities
|
|
|
$1,764,841
|
|
|
$(649,569)
|
|
|
$(4,712,637)
|
|
|
$(5,411,020)
|
Investing activities
|
|
|
(1,902,945)
|
|
|
(13,673)
|
|
|
(1,240,429)
|
|
|
(1,736,570)
|
Financing activities
|
|
|
108
|
|
|
(12,310)
|
|
|
(20,230)
|
|
|
9,014,233
|
Effect of exchange rate changes on cash and cash equivalents
|
|
|
212,840
|
|
|
(80,031)
|
|
|
(526,836)
|
|
|
(650,253)
|
(Decrease) increase in cash and cash equivalents
|
|
|
$74,844
|
|
|
$(755,583)
|
|
|
$(6,500,132)
|
|
|
$1,216,390
|
TABLE OF CONTENTS
SUMMARY UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
The following summary unaudited pro forma condensed combined
financial information (the “Summary Pro Forma Information”) gives effect to the transactions contemplated by the Business Combination and related transactions. The Business Combination will be accounted for as a reverse capitalization in
accordance with GAAP. Under this method of accounting, RMG III will be treated as the acquired company for accounting purposes, whereas H2B2 will be treated as the accounting acquirer. In accordance with this method of accounting, the
Business Combination will be treated as the equivalent of H2B2 issuing shares for the net assets of RMG, accompanied by a recapitalization. The net assets of H2B2 will be stated at historical cost, with no goodwill or other intangible assets
recorded, and operations prior to the Business Combination will be those of H2B2. See “Business Combination Proposal” for further detail.
The summary unaudited pro forma condensed combined balance sheet as
of March 31, 2023 combines the historical consolidated condensed balance sheet of RMG III as of March 31, 2023 and the historical condensed balance sheet of H2B2 as of March 31, 2023, and gives pro forma effect to the Business Combination as
if it had been consummated as of that date. The summary unaudited pro forma condensed combined statements of operations for the three months ended March 31, 2023 and the twelve months ended December 31, 2022 combine the historical condensed
statements of operations of RMG III as of March 31, 2023 and as of December 31, 2022 and the historical condensed statements of operations of H2B2 as of March 31, 2023 and as of December 31, 2022, and gives pro forma effect to the Business
Combination as if it had occurred as of January 1, 2022. This information should be read together with the Unaudited Quarterly Report on Form 10-Q for the quarter ended March 31, 2023 of H2B2 and RMG III and the 2022 Audited Consolidated
Financial Statements of H2B2 and 2022 Audited Financial Statements of RMG III and related notes, “H2B2 Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “RMG III Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Selected Historical Financial Information of H2B2,” “Selected Historical
Financial Information of RMG III” and other financial information included elsewhere in this proxy statement/prospectus.
The Summary Pro Forma Information has been presented for
informational purposes only and is not necessarily indicative of what the post-Business Combination company’s financial position or results of operations would have been had the Business Combination and related transactions been completed as
of the dates indicated. In addition, the Summary Unaudited Pro Forma Condensed Combined Information does not purport to project the future financial position or operating results of the post-Business Combination company following the Business
Combination.
The unaudited pro forma condensed combined financial information
has been prepared using the two alternatives below with respect to the potential redemption into cash of Public Shares:
•
|
Scenario 1 — Assuming No Redemptions: This presentation assumes that no Public
Shareholders exercise redemption rights with respect to their remaining RMG III Class A Ordinary Shares upon consummation of the Business Combination; and
|
•
|
Scenario 2 — Assuming Maximum Redemptions: This presentation assumes that
Public Shareholders exercise their redemption rights with respect to the remaining of 635,778 shares of Public Shares upon consummation of the Business Combination at a redemption price of approximately $10.41 per share, based on
the amount held in the Trust Account as of August 7, 2023. Scenario 2 includes all adjustments contained in Scenario 1 and presents additional adjustments to reflect the effect of maximum redemptions.
|
TABLE OF CONTENTS
Summary Unaudited Pro Forma Condensed Combined Statement of
Operations Data
Net loss
|
|
|
$(3,851,793)
|
|
|
$(3,851,793)
|
|
|
$(17,439,030)
|
|
|
$(17,439,030)
|
Weighted average shares outstanding, basic and
diluted
|
|
|
103,288,440
|
|
|
102,652,662
|
|
|
103,288,440
|
|
|
102,652,662
|
Basic and diluted earnings per share attributable to
equity holders of the parent
|
|
|
(0.04)
|
|
|
(0.04)
|
|
|
(0.17)
|
|
|
(0.17)
|
Summary Unaudited Pro Forma Condensed Combined Balance Sheet Data
Total assets
|
|
|
$119,814,347
|
|
|
$112,073,414
|
Total liabilities
|
|
|
$21,849,802
|
|
|
$21,849,802
|
Total Shareholder’s Equity
|
|
|
$97,964,545
|
|
|
$90,223,612
|
TABLE OF CONTENTS
MARKET PRICE AND DIVIDEND INFORMATION
RMG III
The RMG III Units, Public Shares and RMG III Public Warrants are
listed on Nasdaq under the symbols “RMGCU”, “RMGC” and “RMGCW” respectively.
The closing price of the RMG III Units, Public Shares and RMG III
Public Warrants on May 9, 2023, the last trading day before announcement of the execution of the Merger Agreement, was $10.05, $10.07 and $0.07, respectively. As of the RMG III Record Date, the closing price of the RMG III Units, Public Shares
and RMG III Public Warrants was $ , $ and $ , respectively.
Holders of the RMG III Units, Public Shares and RMG III Public
Warrants should obtain current market quotations for their securities. The market price of RMG III’s securities could vary at any time before the Business Combination.
Holders
As of the date of this proxy statement/prospectus, there was one
holder of record of RMG III Units, one holder of record of RMG III Class A Ordinary Shares, one holder of record of RMG III Class B Ordinary Shares and two holders of record of RMG III Warrants. See the section entitled “Beneficial Ownership of Securities” for additional information.
Dividend Policy
RMG III has not paid any cash dividends on its Public Shares to date
and does not intend to pay cash dividends prior to the completion of the Business Combination. The payment of cash dividends in the future will be dependent upon the revenues and earnings, if any, capital requirements and general financial
condition of the Surviving Corporation subsequent to completion of the Business Combination. The payment of any cash dividends subsequent to the Business Combination will be within the discretion of the Surviving Corporation Board. The RMG III
Board is not currently contemplating and does not anticipate declaring dividends nor is it currently expected that the Surviving Corporation Board will declare any dividends in the foreseeable future. Further, the ability of the Surviving
Corporation to declare dividends may be limited by the terms of financing or other agreements entered into by the Surviving Corporation or its subsidiaries from time to time.
Price range of H2B2’s securities
Historical market price information regarding H2B2 is not provided
because there is no public market for H2B2’s securities. For information regarding H2B2’s liquidity and capital resources, see the section entitled “H2B2’s Management’s Discussion and Analysis of Financial
Condition and Results of Operations – Liquidity and Capital Resources.”
TABLE OF CONTENTS
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This proxy statement/prospectus contains forward-looking
statements within the meaning of the United States Private Securities Litigation Reform Act of 1995 and forward-looking information within the meaning of applicable Canadian securities laws. In addition, any statements that refer to
projections (including Adjusted EBITDA and cash flow), forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. When used in this proxy statement/prospectus,
words such as “plan,” “believe,” “expect,” “anticipate,” “intend,” “outlook,” “estimate,” “forecast,” “project,” “continue,” “could,” “may,” “might,” “possible,” “potential,” “predict,” “should,” “would” and other similar words and
expressions, but the absence of these words does not mean that a statement is not forward-looking. When RMG III and H2B2 discuss strategies or plans, including as they relate to the potential Business Combination, RMG III and H2B2 are making
projections, forecasts or forward-looking statements. Such statements are based on the beliefs of, as well as assumptions made by and information currently available to, RMG III and H2B2’s management. Unless otherwise specified or the context
otherwise requires, all references in this section to “H2B2” are to H2B2 prior to the Business Combination and to the Surviving Corporation following the Business Combination.
Forward-looking statements may include, but are not limited to:
•
|
Statements about the parties’ ability to consummate the Business Combination, including RMG III and H2B2 being able to receive
all required regulatory, third-party and shareholder approvals for the Business Combination, including RMG III warrant holder approval for the Warrant Amendment;
|
•
|
the anticipated benefits of the Business Combination, including the potential amount of cash that may be available to the
Surviving Corporation upon consummation of the proposed Business Combination and the use of the net proceeds following the Redemptions;
|
•
|
the anticipated timing of the Business Combination;
|
•
|
H2B2’s expectation that Surviving Corporation Common Stock will be accepted for listing on Nasdaq following the completion of
the proposed Business Combination;
|
•
|
H2B2’s history of losses and expectation to incur significant expenses and continuing losses for the foreseeable future;
|
•
|
H2B2’s limited operating history;
|
•
|
H2B2’s financial and business results depend on the level of development and production activity in the hydrogen industry;
|
•
|
H2B2’s ability to source new projects and its ability to continue to take pipeline projects to completion;
|
•
|
H2B2’s ability to develop and produce electrolyzers of sufficient quality, on a schedule and at scale;
|
•
|
the green hydrogen market’s growth, including the development of a commercialized market for green hydrogen, broad
decarbonization efforts, an increase of renewable energy production and development of end-user applications of green hydrogen;
|
•
|
public and private support for the green hydrogen market;
|
•
|
risks and uncertainties in developing green hydrogen projects, including failing to successfully deliver electrolyzers and other
services;
|
•
|
H2B2’s business, expansion plans and opportunities, including its ability to scale its operations and manage its future growth
effectively;
|
•
|
H2B2’s ability to secure governmental and other regulatory approvals and permits, including environmental approvals and permits;
|
•
|
construction, development, maintenance and operation of H2B2’s projects involves significant risks and hazards;
|
•
|
H2B2’s future capital requirements and sources and uses of cash;
|
•
|
risks associated with H2B2’s EPC operations, including warranties and production guarantees;
|
TABLE OF CONTENTS
•
|
risks related to challenges H2B2 faces as pioneer into the highly-competitive and rapidly-evolving green hydrogen industry;
|
•
|
the ability of H2B2 to keep up with technological advancements and develop new electrolyzer technologies;
|
•
|
operational challenges related to H2B2’s services;
|
•
|
H2B2’s ability to establish critical industrial partnerships with other electrolysis industry and green hydrogen market
stakeholders;
|
•
|
risks associated with offtake agreements, including sign offtake agreements with attractive offtake terms and offtakers
unwilling to fulfil their contractual obligations;
|
•
|
H2B2’s ability to attract and retain key personnel;
|
•
|
H2B2’s reliance on third-party service providers and suppliers;
|
•
|
disruptions in H2B2’s supply chain;
|
•
|
H2B2’s expectations regarding its ability to obtain and maintain intellectual property protection and not infringe on the rights
of others;
|
•
|
potential harm caused by misappropriation of H2B2’s data and compromises in cybersecurity;
|
•
|
litigation, regulatory proceedings, complaints, product liability claims and/or adverse publicity;
|
•
|
risk associated with H2B2 being subject to Spanish laws and regulations;
|
•
|
the possibility that H2B2 may be adversely affected by other economic, business and/or competitive factors;
|
•
|
the stability of the financial and capital markets;
|
•
|
RMG III and H2B2 being able to receive all required regulatory, third-party and shareholder approvals for the proposed Business
Combination;
|
•
|
the amount of Redemptions by Public Shareholders;
|
•
|
other current estimates and assumptions regarding the Business Combination and its benefits. Such expectations and assumptions
are inherently subject to uncertainties and contingencies regarding future events and, as such, are subject to change;
|
•
|
the amount of any Redemptions by existing holders of Public Shares being greater than expected, which may reduce the cash in
Trust Account available to H2B2 upon the consummation of the Business Combination;
|
•
|
the occurrence of any event, change or other circumstances that could give rise to the termination of the Merger Agreement
and/or payment of the termination fees;
|
•
|
the outcome of any legal proceedings that may be instituted against H2B2 or RMG III following announcement of the Merger
Agreement;
|
•
|
the inability to consummate the Business Combination due to, among other things, the failure to obtain the RMG III Shareholder
Approval;
|
•
|
the risk that the announcement and consummation of the Business Combination disrupts H2B2’s current plans;
|
•
|
the ability to recognize the anticipated benefits of the Business Combination;
|
•
|
unexpected costs related to the Business Combination;
|
•
|
the risks that the consummation of the Business Combination is substantially delayed or does not occur, including prior to the
date on which RMG III is required to liquidate under the terms of the RMG III Governing Documents;
|
TABLE OF CONTENTS
•
|
the effects of COVID-19 or other global health crises on H2B2’s business plans, financial condition and liquidity;
|
•
|
changes or disruptions in the securities markets;
|
•
|
legislative, political or economic developments;
|
•
|
the need to obtain permits and comply with laws and regulations and other regulatory requirements;
|
•
|
risks of accidents, equipment breakdowns, and labor disputes or other unanticipated difficulties or interruptions;
|
•
|
the possibility of cost overruns or unanticipated expenses in development programs;
|
•
|
potential future litigation; and
|
•
|
other factors detailed in the section titled “Risk Factors.”
|
The forward-looking statements are based on the current expectations
of the management of RMG III and H2B2, as applicable, and are inherently subject to uncertainties and changes in circumstances and their potential effects and speak only as of the date of such statement. There can be no assurance that future
developments will be those that have been anticipated.
Should one or more of these risks or uncertainties materialize or
should any of the assumptions made by the management of H2B2 and RMG III prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements.
All subsequent written and oral forward-looking statements concerning
the Business Combination or other matters addressed herein and attributable to H2B2, RMG III or any person acting on their behalf are expressly qualified in their entirety by the cautionary statements contained or referred to herein. Except to
the extent required by applicable law or regulation, each of H2B2 and RMG III undertake no obligation to update these forward-looking statements to reflect events or circumstances after the date hereof to reflect the occurrence of unanticipated
events.
TABLE OF CONTENTS
In addition to the other information contained in
this proxy statement/prospectus, including the matters addressed under the heading “Forward-Looking Statements,” you should carefully consider the following risk factors in deciding how to vote on the Proposals presented in this proxy
statement/prospectus.
Risks Related to H2B2
Throughout this section, unless otherwise
indicated or the context otherwise requires, references to “H2B2,” “we,” “us,” “our” and other similar terms refer to H2B2, prior to and/or after giving effect to the Business Combination.
Risks Related to Our Business
We are an early-stage company with a history of
losses and expect to incur significant expenses and continuing losses for several years. We have yet to achieve positive operating cash flow and, given our projected funding needs, our ability to generate positive cash flow is uncertain.
We have incurred net losses since our inception, including net losses
of $4.3 million and $4.1 million for the years ended December 31, 2022 and 2021, respectively, and $0.9 million and $0.8 million for the three months ended March 31, 2023 and March 31, 2022. We believe that we will continue to incur operating
and net losses in the future until at least the time we begin significant deliveries of our electrolyzers, grow our EPC projects and expand our hydrogen production facilities, which may occur later than we expect or not at all. We do not expect
to be profitable for the foreseeable future as we invest in our business, build capacity and ramp-up operations, and we cannot assure you that we will ever achieve or be able to maintain profitability in the future. Even if we are able to
successfully sell our electrolyzers, grow our EPC projects and expand our hydrogen production facilities, there can be no assurance that we will be financially successful. For example, as we develop new electrolysis technology, including the
development of SOEC and AEM electrolysis technologies, and continue to expand internationally with additional projects, we will require significant amounts of capital and need to manage costs effectively to sell those products or develop
additional projects at our expected margins. Failure to become profitable and generate cash flow could materially and adversely affect the value of your investment. If we are ever to achieve profitability, it will be dependent upon the
successful development and commercial acceptance of our electrolyzers, green hydrogen and other products and services, which may not occur. Our inability to generate positive results and cash flow for the near term may adversely affect our
ability to raise needed capital for our business on reasonable terms or at all, diminish supplier or customer willingness to enter into transactions with us, and have other adverse effects that may decrease our long-term viability. There can be
no assurance that we will achieve positive results or cash flow in the near future or at all.
Our limited operating history makes evaluating
our business and future prospects difficult and may increase the risk of your investment.
We have a limited operating history in a rapidly evolving
industry. We were founded in 2016, and in that same year we obtained our first PEM electrolyzer contract and began developing our first Integrated Product. As of the date of this proxy statement/prospectus, our only installed Integrated
Product project is Phase I of the SoHyCal production facility, which has started production as part of commissioning, with a current capacity of 3 MW. While our business has grown rapidly, and much of that growth has occurred in recent
periods, the markets for electrolyzers and green hydrogen and related services may not continue to develop in a manner that we expect or that otherwise would be favorable to our business.
Given our limited operating history and that the green hydrogen
market is nascent and rapidly changing, there is no historical basis for effectively assessing the demand for our electrolyzers, our projects, or our profitability in the future. It is difficult and highly uncertain to predict our future
revenues and appropriately budget for our expenses, and trends that may emerge in this quickly evolving industry that may be outside our visibility and may affect our business. You should consider our business and prospects in light of the
risks and challenges we face as a pioneer in a quickly evolving industry, including with respect to our ability to continuously advance our electrolyzer technologies; develop safe, reliable and quality electrolyzers; procure, deliver, operate
and service additional projects; turn profitable; build a globally recognized and respected brand cost-effectively; develop our SOEC and AEM electrolyzers; navigate the evolving regulatory environment; improve and maintain our operational
efficiency; manage supply chain effectively; adapt to changing market conditions, including technological developments and changes in competitive landscape; and manage our growth effectively.
TABLE OF CONTENTS
While we currently focus on PEM electrolyzers, we expect our
product roadmap to expand beyond PEM electrolyzers and introduce SOEC and AEM electrolyzers, with which we have less experience, and we may adjust our strategies and plans from time to time to remain competitive as a pioneer in a quickly
evolving industry. There can be no assurance that such strategies will be successful or that we will be able to correctly implement them, in which case our profitability and results of operation may be adversely affected.
If we fail to address any or all of these risks and challenges, our
business may be materially and adversely affected.
Our business, financial condition, results of
operations, cash flow and prospects depend on the level of development and production activity in the hydrogen industry.
Demand for hydrogen and thus the interest in acquiring our services
may be volatile and we expect it to be affected by numerous factors beyond our control, including, but not limited to, the following:
•
|
the cost of producing and delivering hydrogen;
|
•
|
expectations regarding future energy prices;
|
•
|
level of world-wide production of hydrogen;
|
•
|
laws and regulations, including environmental protection laws and regulations and policies of governments pertaining to
hydrogen;
|
•
|
the development and exploitation of alternative products with similar capabilities, and the competitive, social and political
position of hydrogen;
|
•
|
local and international political and economic conditions;
|
•
|
technological change and development of energy sources that could potentially affect hydrogen’s relevance as an energy carrier;
and
|
•
|
political measures in response to climate change, including, but not limited to, subsidies on alternative energy sources,
taxation on emissions or limitations on the use of water for hydrogen production.
|
The demand for our electrolyzers and end-to-end hydrogen solutions
depends on the level of activity and expenditure in the hydrogen industry, which are directly affected by trends in demand for energy and hydrogen. Any prolonged reduction in hydrogen demand could lead to reduced levels of development,
investment and production activity, which may in turn have a material adverse effect on our business, financial condition, results of operations, cash flow and prospects.
The growth of our business depends upon
sourcing new projects and our ability to continue to take pipeline projects to completion.
Our business depends in large part on our ability to secure
contracts with customers. Our potential pipeline includes installed projects, projects under construction, award projects and potential pipeline projects. See “Information About H2B2 -
Our Projects and Pipeline” for additional information. Only installed projects (approximately 3 MW corresponding to Phase I of SoHyCal and PowiDian), projects under construction (15 MW corresponding to GP Joule, Redexis,
Serveo, Ecopetrol and Puerto de Vigo), and awarded projects (63 MW including projects with Dynamis Energy, Greenstat and Phase II of SoHyCal) are highly visible. Other projects identified in our potential pipeline projects are at early stages
and their realization is highly uncertain.
Bids, contract proposals and negotiations are complex and frequently
involve lengthy discussions and challenging selection processes, all of which is affected by a number of factors. These factors include market conditions, us being successful in demonstrating to potential customers that our solutions work for
them, satisfying technical and economic requirements to submit bids, securing financing arrangements, and any required governmental approvals. In addition, our projects are frequently awarded only after competitive bidding processes, which are
often protracted.
We have a systematic bid evaluation framework based on various
parameters to optimize for execution capacity and cash flows. In order to maintain the growth of our business, we intend to continue deploying a prudent approach, backed by thorough diligence and data analysis. We believe that we are well
positioned to enhance our committed capacity at attractive internal rates of return and be competitive in our bids. However, we
TABLE OF CONTENTS
may not be awarded contracts for which we bid or in respect for which we have sent a
RFQ, which could have a material adverse effect on our business, financial condition, results of operations, cash flow and prospects.
Additionally, our engagements involve complex projects, and we may
not be successful in converting awarded projects into completed projects. The completion of renewable energy projects involves numerous risks and uncertainties, including the risks set forth elsewhere in this “Risk
Factors” section. These risks may include, but are not limited to, the following:
•
|
obtaining financeable land rights, including land rights for project sites that allow for eventual construction and operation
without undue burden, cost or interruption;
|
•
|
receiving required environmental, land-use, and construction and operation permits and approvals from government entities in a
timely manner and on reasonable terms;
|
•
|
avoiding or mitigating impacts to protected or endangered species or habitats, migratory birds, wetlands or other water
resources, and/or archaeological, historical or cultural resources;
|
•
|
securing necessary rights-of-way for access, as well as water rights and other necessary utilities for project construction and
operation;
|
•
|
completing construction on budget and on time.
|
These risks and uncertainties may prevent some projects from
progressing to construction and/or operational phases altogether, in a timely manner and on acceptable terms. For example, our SoHyCal green hydrogen production project in Fresno County, California is currently awaiting land use and other
approvals that will be necessary to receive prior to operation of the facility. Phase I of the project has secured necessary approvals, and we recently completed environmental review and received a conditional use permit to develop Phase II of
SoHyCal, which involves the installation of a 15 MW solar plant to power the hydrogen production facility. However, conditions imposed on Phase II require us to secure additional agreements with Fresno County, complete a final site plan review,
and obtain permits and approvals. There is a risk that we will not obtain these final approvals for Phase II or that conditions imposed on Phase II would make this component of the project infeasible. Additionally, there is a risk that,
interested parties could challenge the Phase II approvals in litigation, which may result in significant delays in project development.
These risks and uncertainties may prevent some projects from
progressing to construction and/or operational phases altogether, in a timely manner and on acceptable terms. In addition, for a variety of reasons, we may elect not to proceed with the development or construction of a project currently in our
pipeline. Particularly, the competitive pressures arising from the bidding processes may make certain projects unattractive for us due to our costs and operating structures, which would in turn reduce the number of projects in which we are able
to be involved. Our growth depends on our continued ability to progress projects to the operational phase, and our results in the future may not be consistent with our expectations or historical results. If we are not successful in doing so, we
will not continue to grow our portfolio and cash flows.
We may be unable to develop and produce
electrolyzers of sufficient quality, on a schedule and at scale.
Our business depends in large part on our ability to develop, market,
produce and sell our electrolyzers. The continued development of and the ability to sell our electrolyzers at scale, including PEM electrolyzers and future SOEC and AEM electrolyzers are and will be subject to risks, including with respect to:
•
|
our ability to secure necessary funding;
|
•
|
our ability to develop SOEC and AEM electrolyzers at scale and at attractive profit margins for our business;
|
•
|
our ability to negotiate and execute definitive agreements, and maintain arrangements on reasonable terms, with our various
suppliers for hardware, software or services necessary to engineer or manufacture parts or components of our electrolyzers;
|
•
|
securing necessary components, services or licenses on acceptable terms and in a timely manner;
|
•
|
delays by us in delivering final component designs to our suppliers;
|
•
|
quality controls, including within our production operations, which prove to be ineffective or inefficient;
|
TABLE OF CONTENTS
•
|
defects in design and/or manufacture that cause our electrolyzers not to perform as expected or that require repair, recalls or
design changes;
|
•
|
delays, disruptions or increased costs in our, third-party outsourcing partners’ and our third-party suppliers’ supply chain,
including raw material supplies;
|
•
|
other delays, backlog in manufacturing and cost overruns in research and development of SOEC and AEM electrolyzers;
|
•
|
obtaining required regulatory approvals and certifications;
|
•
|
compliance with environmental, safety and similar regulations, as well as environmental and social governance obligations; and
|
•
|
our ability to attract, recruit, hire, retain and train skilled employees.
|
As a pioneer in an evolving industry, we inherently have limited
experience, as a company, designing, testing, manufacturing, marketing and selling our electrolyzers and therefore cannot assure you that we will be able to meet customer expectations or to do it in a profitable way. Any of the foregoing could
have a material adverse effect on our business, financial condition, results of operations, cash flow and prospects.
The market for electrolysis solutions is an
emerging market and its growth is dependent on the development of a commercialized market for green hydrogen, broad decarbonization efforts, an increase of renewable energy production and technological development of end-user applications of
green hydrogen.
From both a global perspective and across our focus markets, the
market for green hydrogen and, by implication, the market for electrolysis solutions, is at a nascent stage. We expect that the green hydrogen market and the market for electrolysis solutions will grow considerably towards 2030 and beyond.
However, there can be no guarantee that the development of the green hydrogen market will occur at the pace that we are expecting, and it is possible that it may not occur at all. This could result in the demand for electrolyzers decreasing or
the expected increase in demand for electrolyzers or our end-to-end hydrogen solutions not materializing. Any such delay or failure to develop a commercialized green hydrogen market could, accordingly, significantly harm our expected revenues
and we may be unable to recover any losses or expenses incurred, or which we expect to continue to incur, in the development of our electrolyzers and our end-to-end hydrogen solutions.
The green hydrogen market is dependent on the continuous development
of technologies for end-use applications, including, but not limited to, fuel cell technologies and synthesis technologies for making e-fuels. If such technologies are not sufficiently developed to reach parity in terms of both costs and ease
of use with existing fossil fuel-based solutions, the end-markets for green hydrogen may not become sufficiently tangible and transparent to justify large-scale investments in electrolyzers and electrolysis technologies.
In our opinion, the demand for electrolyzers and end-to-end hydrogen
solutions will be strongly correlated to the downstream demand for green hydrogen in various industries and end-user applications. Building up a hydrogen economy in our focus markets requires a full value chain approach. In addition to
upscaling production and supply of green hydrogen and establishing a hydrogen infrastructure, there must be a parallel effort to create markets for green hydrogen. The creation of such markets partly relies on green hydrogen becoming
cost-competitive with other energy carriers; however, a decarbonization effort across different industries is also a prerequisite for increasing demand for green hydrogen. Significant investments on an EU and member state level, United States
and international level, as well as investments from private investors and long-term commitments of businesses, are required to support current and potential green hydrogen end-markets in their transition towards a hydrogen economy.
Aside from cost aspects of using green hydrogen, the demand for green
hydrogen in these end-use sectors is sensitive to, aside from cost aspects of using green hydrogen, technological progress that facilitates the application of green hydrogen in industrial and everyday usage. Such technological progress and
willingness to join a transition towards a hydrogen economy requires a committed decarbonization effort across different industries where hydrogen is or has a potential to be used. Additionally, there is a risk that technologies do not develop
as expected or at all, making the transition of potential end-use sectors towards green hydrogen more difficult than currently anticipated. If existing and potential end-use sectors do not develop sufficiently in parallel
TABLE OF CONTENTS
with electrolysis technologies and hydrogen infrastructure, demand for and
consumption of green hydrogen may be inadequate for the successful commercialization of green hydrogen, which could have a material adverse effect on the electrolysis industry, and thereby in turn on our business, financial condition, results
of operations, cash flow and prospects.
The green hydrogen market is dependent on
specific changes to regulations and policies that have not yet been developed. Political support for green hydrogen may fade and new policies and regulations that purport to support the green hydrogen market and industries may be inadequate,
may not have the desired impact or be impaired by other regulations or may not be developed at all.
The market for green hydrogen and the market for electrolyzers and
end-to-end hydrogen solutions is at a nascent stage. For the green hydrogen market to become commercially sustainable, significant investments, enabling regulatory frameworks, new lead markets, sustained research and innovation efforts in
existing and new hydrogen technologies, development of end-use applications and end-markets for green hydrogen and a large-scale infrastructure network are necessary, among others.
The satisfaction of these prerequisites for a commercially viable
green hydrogen market that can sustain an upstream market for electrolyzers and end-to-end hydrogen solutions is contingent on a long-term coordinated effort by public and private actors. The overarching political regime that underpins this
regulatory and political effort is comprised by international conventions and treaties, communications, political agreements, and regulatory initiatives as well as a variety of national plans and strategies designed to foster domestic hydrogen
economies. Many of these instruments and policies are not by themselves legally binding or enforceable on relevant stakeholders and policymakers. As long as these early regulatory measures have not materialized into hard law policies, the
sustained long-term effort required to build a hydrogen economy is hinging on a continued political and private willingness, and not an obligation, to drive forward the market for green hydrogen. Political support may never materialize to
tangible regulatory support and such lacking regulatory support could potentially halt the development of the market for green hydrogen, and in turn have a material adverse effect on our business, financial condition, results of operations,
cash flow and prospects.
Policies supporting the commercialization of the green hydrogen
market may be changed or not come into existence at all due to any number of reasons, including an absence of political will, political focus shifting towards other alternatives, escalation of political opposition to hydrogen solutions and/or a
lack of public funding. This could cause the development and growth of clean power technologies, including electrolysis technologies, to cease and the market for electrolyzers and end-to-end hydrogen solutions could be materially impaired. The
occurrence of any of the foregoing could have a material adverse effect on our business, financial condition, results of operations, cash flow and prospects.
Our products have not been on the market for
the full length of their expected lifetime and our products may not maintain the performance standards that we and our customers are expecting.
Our current PEM electrolyzers have not been in on-site operation for
the full duration of their expected system lifetime of approximately 20 years, with assumed cell stack replacement of approximately 10 years, and, given the nascent nature of the technology, we do not have experience with prior similar
technologies. There are long-term quality aspects of our products that we cannot adequately test for in our own testing facilities, and which may not surface until after extended on-site operation. Such quality aspects include the electrolyzers
maintaining their expected performance levels, continued scalability and ability to be serviced and maintained, upgraded with new components, and linked up with renewable energy plants. Moreover, extended usage may reveal fundamental design
defects or defects in other fundamental assembly and production processes that we are currently not aware of.
Our products may turn out to be less durable and less efficient in
the long-term, or more prone to errors, than we and our customers are expecting. We may incur significant costs in identifying the cause of the unexpected deterioration of product quality over time, in addition to the servicing, maintenance and
repairment costs. We may in addition incur substantial costs for redesigning or reengineering products and product platforms if any fundamental design defects should surface.
Over time, our products may show inherent flaws or levels of quality
depreciation that we are not currently anticipating or able to identify, and we may incur significant costs as a result thereof or lose current and potential customers.
TABLE OF CONTENTS
In order to gain a competitive advantage vis-à-vis our
competitors, the contracts we sign currently guarantee, and we intend to continue guaranteeing, a certain level of performance for our products. As a consequence, if our products do not meet such performance guarantees and we are not able to
fix any issues within the terms established in each applicable agreement, we may have to indemnify our customers for the breach of such guarantees through the payment of the penalties established in each case.
Should any of these events materialize, they could have a material
adverse effect on our business, financial condition, results of operations, cash flow and prospects.
We face risks and uncertainties when developing
green hydrogen projects. We may fail to successfully deliver electrolyzers and other services to our customers which may result in delayed or canceled payments, increased costs, termination of customer contracts, reputational damage and
deteriorating customer relationships.
Typically, we expect the projects that we are involved in with and
for our customers to have the potential to generate significant revenue and attention for us, as well as allow us to generate future business opportunities. Consequently, failure to deliver on such projects poses a significant reputational risk
for us, as well as the risk of potentially losing revenue. In particular, large-scale green hydrogen projects entail a significant risk of us suffering lasting reputational damage if the project fails to succeed.
The successful delivery and implementation of these projects on our
account is dependent on several factors, including, but not limited to, the timely delivery of materials, components and services from suppliers and contractors, the demand for our products and services from other customers, which may restrict
our availability for one given project and the availability of skilled and experienced personnel for us to carry on our business. Failure to successfully deliver major projects in the early stages of the green hydrogen market, regardless of
whether we or whomever bears responsibility for such failure, could have a detrimental effect on our reputation, brand and products.
As we deliver products and build an increasingly large installed base
of electrolyzers and develop additional projects, we expect to increase the share of our revenue derived from operations and maintenance (“O&M”) activities. O&M activities already constitute a tangible revenue source for us; however,
our failure to satisfy our customers with our preliminary delivery of end-to-end hydrogen solutions may result in customers not opting to entering into and/or prolonging O&M agreements with us.
Should any of the foregoing events materialize and result in or
contribute to a delay in our deliveries or services to a customer, such failure may result in delayed, reduced or canceled payments from the customer, increased costs due to contractual penalties, loss of future revenue from O&M activates
and/or the customer terminating its contract with us. Ultimately such events may result in our loss of a long-term customer as well as a general deterioration of our reputation and brand in the market, or even provoke backlash from regulators
or governments and may have a material adverse effect on our business, financial condition, results of operations, cash flow and prospects.
As we continue to grow, we may not be able to
effectively manage our growth, which could negatively impact our brand and financial performance.
Given the size of our project pipeline, the rate at which it has
grown since 2016 is considerable, but we may not be able to grow at similar rates in the future. Although we intend to continue to expand our business significantly with a number of new projects in both existing and new geographies, we may not
be able to sustain our historical growth rate for various reasons. Success in executing our growth strategy is contingent upon, among others:
•
|
accurately prioritizing geographic markets for entry, including by making accurate estimates of addressable market demand;
|
•
|
identifying suitable projects;
|
•
|
participating in and winning hydrogen production facility or electrolyzer auctions on acceptable terms;
|
•
|
developing our projects on time, within budget and in compliance with regulatory requirements;
|
•
|
effectively tracking bid policies and bid updates;
|
•
|
obtaining cost effective financing needed to develop and construct projects;
|
•
|
efficiently sourcing components that meet our design specifications on schedule;
|
TABLE OF CONTENTS
•
|
negotiating favorable payment terms with suppliers and contractors;
|
•
|
establishing or expanding design and manufacturing facilities;
|
•
|
managing regulatory requirements, permits and labor issues and controlling costs in connection with the construction of
additional projects or the expansion of existing projects;
|
•
|
continued availability of economic incentives and government investment initiatives along expected lines; and
|
•
|
signing PPAs or other offtake arrangements on commercially acceptable terms.
|
Our existing operations, personnel and systems may not be adequate to
support our growth and expansion plans and we may make additional investments in our business systems, operational procedures and business processes, and manage our employee base in order to expand our project development efforts. As we grow,
we also may encounter additional challenges in relation to project selection, construction management and capital commitment processes, as well as our project financing capabilities. These factors may restrict our ability to take advantage of
market opportunities, execute our business strategies successfully, respond to competitive pressures and maintain our historical growth rates.
Our revenue, expenses, and operating results
may fluctuate significantly.
Our revenue, expenses, and operating results may fluctuate
significantly because of numerous factors, some of which may contribute to more pronounced fluctuations in an uncertain global economic environment. In addition to the other risks described in this “Risk
Factors” section, the following factors could cause our operating results to fluctuate:
•
|
the level of development and production activity in the hydrogen industry;
|
•
|
our ability to source and develop new projects;
|
•
|
delays, increased costs or other unanticipated changes in contract performance that may affect profitability;
|
•
|
the number, type and significance of contracts commenced and completed during a quarter;
|
•
|
upfront investment cost in projects;
|
•
|
reductions in the prices of the solutions offered by our competitors; and
|
•
|
legislative and regulatory enforcement policy changes that may affect demand for our solutions.
|
As a consequence, operating results for any future periods are
difficult to predict and, therefore, prior results are not necessarily indicative of results to be expected in future periods. Any of the foregoing factors, or any other factors discussed elsewhere herein, could have a material adverse effect
on our business, financial condition, results of operations, cash flow and prospects.
The development, construction, maintenance and
operation of our projects require governmental and other regulatory approvals and permits, including environmental approvals and permits.
The development, construction, maintenance and operation of our
projects, as well as the transmission and sale of hydrogen and associated products, are highly regulated, require various governmental licenses, approvals, concessions, and permits, including environmental approvals and permits and water
concessions, and may be subject to the imposition of related conditions that vary by regulator and jurisdiction. In some cases, these licenses, approvals, concessions and permits require periodic renewal and the terms of a subsequently issued
permit may not be consistent with the terms of the permit initially issued. In addition, some permits and approvals require ongoing compliance with terms and conditions, some of which can change over time. We cannot predict whether all
licenses, approvals, concessions and permits required for a given project will be granted, or granted on a timely basis, or whether the conditions associated with them will be achievable, as such conditions may change over time.
Failure to comply with such conditions, our inability to obtain and
maintain existing or newly imposed licenses, approvals, concessions and permits, or the imposition of impractical or burdensome conditions upon issuance, renewal or over time, could impair our ability to develop, construct, service or operate a
project. In addition, we cannot predict whether seeking any permit will attract significant opposition or whether the process for obtaining any permit will
TABLE OF CONTENTS
become more expensive or lengthened due to complexities, legal claims or appeals.
Delay in the review and process for obtaining any licenses, approvals, concessions and permits for a project can impair or delay the ability to develop, construct, service or operate a project or increase the cost such that the project is no
longer profitable for us. There is no assurance that we will obtain and maintain these governmental licenses, approvals, concessions and permits or that we will be able to obtain them in a timely manner and on reasonable terms. Any impediment
could have a material adverse effect on our business, financial condition, results of operations, cash flow and prospects.
Construction, development, maintenance and
operation of our projects involves significant risks and hazards, and our ability to recover our investments may be impaired if our project construction activities do not commence or proceed as scheduled.
The construction of our projects involves numerous risks. Success in
constructing a particular project is contingent upon or may be affected by, among other things:
•
|
timely implementation and satisfactory completion of construction;
|
•
|
obtaining and maintaining required governmental permits and approvals, including making appeals of, and satisfying obligations
in connection with, approvals obtained;
|
•
|
permit and litigation challenges from project stakeholders, including local residents, environmental organizations, labor
organizations, tribes and others who may oppose the project;
|
•
|
grants of injunctive relief to stop or prevent construction of a project in connection with any permit or litigation challenges
or noncompliance;
|
•
|
delivery of components related to the production of stacks, purification, dispensing, and hydrogen compressors, as well as
electrolyzers or energy storage systems on-budget and on-time;
|
•
|
discovery of unknown impacts to protected or endangered species or habitats, migratory birds, wetlands or other jurisdictional
water resources, and/or cultural resources at project sites;
|
•
|
discovery of title defects or environmental conditions that are not currently known, unforeseen engineering problems,
construction delays, contract performance shortfalls and work stoppages;
|
•
|
limited number of suppliers and material supply shortages, failures or disruptions of labor, equipment or supplies;
|
•
|
increases to labor costs beyond our expectation upon entering into construction agreements as a result of enhanced local or
national requirements regarding the use of union labor on-site, commercial pressures or settlements or the recently enacted IRA’s prevailing wage and apprenticeship requirements;
|
•
|
insolvency or financial distress on the part of our service providers, contractors or suppliers;
|
•
|
cost overruns and change orders;
|
•
|
cost or schedule impacts arising from changes in federal, state or local land-use or regulatory policies;
|
•
|
changes in electric utility procurement practices;
|
•
|
project delays that could adversely affect our ability to secure or maintain interconnection and transmission rights;
|
•
|
unfavorable tax treatment or adverse changes to tax policy;
|
•
|
adverse changes to government investment initiatives;
|
•
|
adverse environmental and geological or weather conditions, including water shortages and climate change, which may in some
cases limit our ability to produce hydrogen or force work stoppages due to the risk of heat, fire or other extreme weather events;
|
•
|
force majeure and other events outside of our control;
|
•
|
changes in laws affecting the project;
|
•
|
accidents on constructions sites; and
|
•
|
damage to consumers triggered by blackouts caused by damage to transmission infrastructure during construction.
|
TABLE OF CONTENTS
If we fail to complete the construction of a project, fail to meet
one or more agreed target construction milestone dates or fail to perform other contract terms, there may be a delay in, reduction or cancellation of payments from the customer, increased costs due to contractual penalties, loss of future
revenue from O&M activities, termination of a contract by a customer, payment obligations under significant letters of credit required to be maintained under offtake contracts or interconnection agreements or termination of such agreements,
significant liquidated damages, penalties and/or other obligations under other project-related agreements, and we may not be able to recover our investment in the project. If we are unable to complete the construction of a project, we may
impair some or all of the capitalized investments we have made relating to the project, which could have an adverse effect on our results of operations in the period in which the loss is recognized.
The construction, maintenance and operation of a project also involve
hazardous activities, such as handling pressurized parts, operating large pieces of equipment and delivering our green hydrogen to interconnection and transmission systems. Hazards such as fire, explosion, structural collapse and machinery
failure are inherent risks in our operations. These and other hazards can cause significant personal injury or loss of life, severe damage to and destruction of property, plant and equipment and contamination of or damage to, the environment.
The occurrence of any one of these hazards may result in curtailment or termination of our operations or liability to third parties for damages, environmental cleanup costs, personal injury, property damage and fines and/or penalties, any of
which could be substantial.
Our projects may be targets of terrorist activities, as well as
events occurring in response to or in connection with them, that could result in full or partial disruption of the construction or operation of a project. Strategic targets, such as energy-related facilities, may be at greater risk of future
terrorist activities than other domestic targets. Hostile cyber intrusions, including those targeting information systems, as well as electronic control systems used at the generating plants and for the related distribution systems, could
severely disrupt our business operations and result in loss of service to our counterparties, as well as create significant expense to repair security breaches or system damage.
Furthermore, some of our projects are located in areas prone to
extreme weather conditions, such as California. The occurrence of natural disasters such as tornados, earthquakes, droughts, floods, wildfires or localized extended outages of critical utilities or transportation systems or any critical
resource shortages, affecting us could cause a significant interruption in our business or damage or destroy our projects.
We also rely on warranties from vendors and obligate contractors and
vendors to meet certain performance levels, but the proceeds from such warranties or performance guarantees may not cover lost revenues, increased expenses or liquidated damages payments, should we experience equipment breakdown or
non-performance by our contractors or vendors.
Implementing our growth strategy requires
significant expenditure and will depend on our ability to maintain access to multiple funding sources on acceptable terms.
We require significant capital for the installation and development
of our projects and to grow our business. Particularly, at the early stages of the business, we will require significant amounts of working capital to fund additional projects and support the development of SOEC and AEM electrolysis
technologies. Our capital requirements will depend on many factors, including timing and quantity of product orders and O&M services; attaining and expanding positive gross margins across all projects; the timing and amount of our operating
expenses; the timing and costs of working capital needs; the timing and costs of developing marketing and distribution channels; our ability to obtain financing arrangements to support the sale of our products and services to customers, and the
terms of such agreements that may require us to pledge or restrict substantial amounts of our cash to support these financing arrangements; the timing and costs of product service requirements; the timing and costs of hiring and training
product staff; the timing and costs of product development and introductions; the extent of our ongoing and new R&D programs; and changes in our strategy or our planned activities. We believe that we have benefitted primarily from equity
financing, public grants and subsidies that have contributed to the rapid growth of our business. We might not be able to continue financing or refinancing our projects with an effective combination of equity and project financing as we have
done in the past and the interest rates and the other terms of available financing might not remain attractive, particularly in a high interest rate environment, or may not be available at all.
Any changes to our growth strategy could impair our ability to grow
our pipeline of green hydrogen projects. We expect that some of our projects for customers will typically be financed by third parties. For
TABLE OF CONTENTS
certain other projects, we expect to often rely on a combination of our balance sheet
and project-finance debt and public grants to fund installation costs. If we are unable to secure public grants or raise funds on acceptable terms or at all when needed, we may be unable to secure customer contracts, the size of contracts we
obtain may be smaller or we may need to delay the development and installation of projects, reduce the scope of those projects or otherwise restrict our operations.
In addition, rising interest rates could adversely affect our ability
to secure financing on favorable terms and increase our cost of capital. Our ability to obtain external financing on favorable terms or at all is subject to a number of uncertainties, including, our financial condition, results of operations
and cash flows, interest rates, our ability to comply with financial covenants in other financing arrangements, our credit rating and those of our project subsidiaries, the general conditions of the global equity and debt capital markets and
the liquidity in the market. If we are unable to obtain funds necessary to finance or projects or operate our business on attractive terms or at all or sustain the funding flexibility we have enjoyed in the past, our business, financial
condition, results of operations, cash flow and prospects may be materially and adversely affected.
We currently own or have interests in, and in
the future may acquire or develop, certain projects and assets in which we have limited control over management decisions, including through joint ventures, and our interests in such projects and assets may be subject to transfer or other
related restrictions.
We own or have interests in, and in the future may acquire or
develop, certain projects through joint ventures, including our joint ventures in India and Mexico. In the future, we may invest in other projects with a joint venture or strategic partner, as is common within the infrastructure and energy
sectors. Joint ventures inherently involve a lesser degree of control over business operations, which could result in an increase in the financial, legal, operational or compliance risks associated with a project, including, but not limited to,
variances in accounting internal control requirements, risks associated with sharing proprietary information and non-performance by the joint venture partner. Our co-venture partners may not have the level of experience, technical expertise,
human resources management and other attributes necessary to operate these assets optimally and there is no guarantee that our corporate culture will not conflict with our co-venture partners. To the extent we do not have a controlling interest
in a project, our joint venture partners could take actions that decrease the value of our investment and lower our overall return. In addition, conflicts of interest may arise in the future with our joint venture partners, where our joint
venture partners’ business interests are inconsistent with our and our stockholders’ interests. Further, disagreements or disputes with our joint venture partners could result in litigation, resulting in increase of expenses incurred and
potentially limit the time and effort our officers and directors are able to devote to remaining aspects of our business, all of which could have a material adverse effect on our business, financial condition, results of operations, cash flow
and prospects. The approval of our joint venture partners also may be required for us to receive distributions of funds from assets or to sell, pledge, transfer, assign or otherwise convey our interest in such assets. Alternatively, our joint
venture partners may have rights of first refusal, rights of first offer or other similar rights in the event of a proposed sale or transfer of our interests in such projects or assets. In addition, we may have, and correspondingly our joint
venture partners may have, rights to force the sale of the joint venture upon the occurrence of certain defaults or breaches by the other partner or other circumstances, and there may be circumstances in which our joint venture partner can
replace our affiliated entities that provide operation and maintenance and asset management services if they default in the performance of their obligations to the joint venture. Pursuant to such joint venture agreements, we may also be
required to comply with exclusivity, non-compete and non-solicitation obligations. These restrictions, obligations and other provisions may limit the price or interest level for our interests in such projects or assets, in the event we want to
sell such interests and limit or condition our ability to conduct business in certain jurisdictions.
Errors may occur in our assembly and
production processes, as well as in connection with installation, operation and maintenance, which could cause our electrolyzers to be defective or flawed or impact our hydrogen product facilities.
Errors may occur in our assembly and production processes, as well as
in the on-site installation process, whether due to human errors or general inadequacies of our assembly and production line. Moreover, the electrolyzer components that we source from third-party suppliers may also be defective and we may not
be able to fully test and inspect all components prior to assembly. Consequently, our electrolyzers and other components may contain defects or other types of quality deficiencies (and some of our early PEM electrolyzer installations have
contained such defects) that may go undetected prior to delivery to our customers, or such deficiencies may
TABLE OF CONTENTS
arise due to faulty installations of electrolyzers or other components. Additionally,
any defect or error in the production process or maintenance and operations at any of our hydrogen production facilities could lead to lower production outputs than expected and we may not be able to fully test and inspect these facilities in
a timely fashion.
Any such defects could cause us to incur significant replacement
costs or re-engineering or re-designing costs, including by diverting critical personnel towards remediation of such defects, which may exceed the warranty provisions we have made. Similarly, the delivery of defective products may significantly
affect our customer relations and business reputation. Further, defects in electrolyzers that are linked up on larger renewable energy plants may have a systemic effect on an entire project and disrupt operations and green hydrogen production,
leading to a breach in any performance guarantees that we may have given to any certain customer, and may cause physical damage to persons, property, and the environment, which could result in significant financial and reputational liability
for us.
If we deliver defective products or if there is a perception in the
market that our products are defective or not sufficiently sustainable, our credibility, brand, reputation, and market recognition as well as our sales could be adversely affected. If any of these events were to occur, they could have a
materially adverse effect on our business, financial condition, results of operations, cash flow and prospects.
Our EPC operations, as well as our warranties
and guarantees, expose us to certain risks.
We undertake EPC-related services for certain projects, which exposes
us to certain risks. For example, in connection with certain projects, we enter into fixed priced EPC contracts. As a result, we are exposed to construction cost risks that could be caused by various factors, including:
•
|
increases in the price and availability of labor, equipment and materials;
|
•
|
inaccuracies of drawings and technical information;
|
•
|
delays in the delivery of equipment and materials to project sites;
|
•
|
unanticipated increases in equipment costs;
|
•
|
delays caused by local and seasonal weather conditions; and
|
•
|
any other unforeseen design and engineering issues, or physical, site and geological conditions that may result in delays.
|
We are primarily responsible for all equipment and construction
defects, potentially adding to the cost of construction of our projects. Although we generally obtain warranties from our equipment suppliers, such warranties cannot assure that we will be successful with any warranty claims against our
suppliers.
We also provide warranties to our customers, usually in the form of a
one- or two-year warranty period, as well as production, cost and delay guarantees to our customers. Our warranties and guarantees are negotiated with each customer on a case-by-case basis and are designed to cover, to the fullest extent
possible, similar warranties and guarantees that we receive from our suppliers. However, there may be gaps in coverage between the warranties and guaranties that we offer to our customers and those that we receive from our suppliers and we
currently do not possess gap insurance to fully cover these differences. In the event that we are liable for certain warranties or guaranties provided to customers that cannot be satisfied by a corresponding warranty or guarantee from our
suppliers, such event could have a materially adverse effect on our business, financial condition, results of operations, cash flow and prospects.
We face growing competition from traditional
and renewable energy companies in developing hydrogen energy projects.
The green hydrogen market, and in turn the electrolysis industry, is
generally exposed to competition from other technologies providing decarbonization solutions that are not necessarily derived from the currently established electrolysis technologies. Technological development may spur on any number of new
technologies or refinement of existing technologies that could potentially outcompete the established electrolysis technologies or render hydrogen as an energy carrier obsolete.
For example, conventional battery technologies may be improved upon
or existing electricity infrastructure and grids may be altered to more efficiently contain, conserve, stabilize and regulate energy distribution and consumption
TABLE OF CONTENTS
to match the electrical power output from renewable energy sources, which could
render green hydrogen as an energy carrier obsolete or less advantageous compared to alternative means of conserving and carrying electrical power. Likewise, the potential improvement of existing power grids and investments towards that purpose
give rise to the risk that other opportunities to stabilize power grids enabling a more efficient conservation and distribution of excess renewable energy are revealed, reducing the need for green hydrogen as an energy carrier and in turn the
need for electrolyzers to produce green hydrogen. Moreover, other hydrogen production processes, such as steam methane reforming of renewable natural hydrogen with carbon capture and sequestration, may produce hydrogen with a negative carbon
intensity that could outcompete electrolytic green hydrogen.
The materialization of any such new technology or technological
development in industries that are currently not in direct competition with the electrolysis industry, but which could increase the competitive scope of the electrolysis industry, could have a material adverse effect on our business, financial
condition, results of operations, cash flow and prospects.
The green hydrogen market is subject to
global competition from both established multinational conglomerates and low-cost electrolyzer producers.
We operate in a highly competitive electrolysis industry with several
competitors offering electrolyzers and related solutions. The market for electrolyzers across our current focus markets primarily consists of international and local competitors, some of which may have longer operating histories, benefit from a
larger organization and generally greater research and development, manufacturing, sales, marketing, distribution, technical and financial resources than us. Moreover, we expect that in the future, the electrolysis industry will see new market
entrants representing both established and emerging technologies with differing levels of resources.
Some competitors may already be internationally recognized and
established businesses with larger financial resources at their disposal enabling them to potentially outcompete us on price by, for example, pushing down profit margins or selling their products at a loss to protect or win market shares, be
more able to pursue and deliver multi-MW scale projects, to scale their production capacity faster and to pursue research and development programs at a larger scale. They may also have established partnerships or exclusive collaborations with
owners and operators of renewable energy plants or turnkey service providers, including, for example, by forming part of a conglomerate where such capacities are also held. Our larger competitors may have greater resources which could allow
them to better withstand industry downturns, compete more effectively on the basis of technology and geographic scope and retain skilled personnel.
Consequently, our competitors may be in a better position to invest
in technologies, to allocate resources towards the exploration of potential new technologies, and they may have product portfolios of established income generating products which allows them to absorb costs and risks that we are unable to
commit to. Such competitors, whether new market entrants or already established in the electrolysis industry, may consequently also be better positioned to bid on large-scale green hydrogen projects and thus acquire valuable operational
experience during the early stages of development of the green hydrogen market. They may also currently have a more wide-reaching international presence, enabling them to be better positioned to participate in larger international green
hydrogen projects, which, in turn, may generate more future business opportunities for such competitors compared to us.
There is a risk that our competitors may adopt and utilize
technological changes to improve their products, or launch new products, that are more efficient than our products and at more competitive prices. Such technological changes may be patented or otherwise protected or by other means legally or
practically unavailable for us to utilize and we may not be able to exploit potential synergies from such new products.
Additionally, there is a risk that low-cost producers of
electrolyzers and electrolysis solutions benefitting from economies of scale, automation, and vast competitive labor forces may be able to provide electrolyzers at considerably lower costs. We may not be able to offer electrolyzers at current
quality standards at the same price as such low-cost competitors. This could also facilitate an expedited development and quality improvement of their electrolysis technologies and electrolyzers, making them more competitive across multiple
aspects in addition to price.
If any of the preceding circumstances materialize, they may have a
material adverse effect on our business, financial condition, results of operations, cash flow and prospects.
TABLE OF CONTENTS
Changes in technology may render our
technologies obsolete and there is no guarantee that newly developed technologies in which we invest will perform as anticipated.
Although we attempt to maintain the latest international technology
standards, the technology requirements for businesses in the green hydrogen sector are subject to continuing change and development. Some of our existing technologies and processes in the green hydrogen business may become obsolete or perform
less efficiently compared to newer and better technologies and processes.
The cost of upgrading or implementing new technologies, upgrading our
existing equipment or expanding capacity could be significant and may adversely affect its results of operations if we are unable to pass on such costs to its offtakers. Failure to respond to technological changes effectively and timely may
adversely affect our business and results of operations.
Blue hydrogen and associated technologies may
change the green hydrogen market to become a low-carbon hydrogen market where electrolysis is not the primary method for producing low-carbon hydrogen.
Blue hydrogen represents a relatively low-carbon hydrogen alternative
to the near zero-carbon green hydrogen. While carbon capture and storage (“CCS”) and carbon capture and usage (“CCU”) technologies are at an emerging stage and
only account for negligible volumes of global hydrogen production, research efforts into blue hydrogen technologies may increase significantly as demand for low-carbon hydrogen increases. Currently, costs remain a primary barrier for the growth
of blue hydrogen along with current levels of political will to support carbon storing.
However, blue hydrogen may gain recognition as a viable low-carbon
hydrogen alternative to green hydrogen. CCS and CCU technologies could evolve to enable blue hydrogen to be competitive with green hydrogen in regard to costs, purity and overall availability. Moreover, blue hydrogen technologies may benefit
from substantial private investments and lobbyist support; for example, from organizations representing the oil and natural gas industries, which could result in the political emphasis on green hydrogen shifting towards blue hydrogen.
There is a risk that political focus on blue hydrogen increases and
technological developments of CCS and CCU technologies allow for more efficient and cheaper carbon capturing, which could result in green hydrogen losing momentum and in a general low-carbon hydrogen market developing as opposed to a green
hydrogen dominant market. Should this risk materialize, it could have a material adverse effect on our business, financial condition, results of operations, cash flow and prospects.
Green hydrogen has not yet reached price
parity with fossil fuels and derived energy carriers, which is critical for the commercialization of green hydrogen and it may not reach price parity in the foreseeable future or at all.
Fundamentally, the green hydrogen market globally is exposed to the
risk of green hydrogen not becoming a cost competitive alternative to conventional energy sources and carriers, specifically those derived from fossil fuels (e.g., grey hydrogen and blue hydrogen), or such price parity not being obtained at the
rate that the actors in the green hydrogen market, including us, expect. Significant demand for green hydrogen may not materialize if green hydrogen is not cost-competitive with fossil-based alternatives, which in turn will also reduce the
demand for electrolyzers and end-to-end hydrogen solutions.
The direct pricing of green hydrogen is linked to several factors,
including, without limitation:
•
|
costs of renewable electricity, including tariffs and taxes on renewable electricity;
|
•
|
costs of investments in electrolyzers;
|
•
|
the availability of tax credits;
|
•
|
operating expenses of electrolysis systems; and
|
•
|
scarcity of water sources.
|
Moreover, the relative pricing of green hydrogen compared to
fossil-based alternatives is highly exposed to fluctuations in oil, coal, and natural gas prices as well as the imposition of taxes and CO2 quotas on fossil fuels and derived energy carriers, as well as on grey hydrogen and blue hydrogen. The
development of the price of oil and natural gasses is strongly affected by global macroeconomic and geopolitical conditions as well as the
TABLE OF CONTENTS
volume of (known) oil and natural gas reserves and their accessibility. In addition,
the pricing of green hydrogen may be dependent on our customers’ ability to obtain tax credits related to the production of green hydrogen, including under the IRA.
The cost of green hydrogen may also be affected by our ability to
comply with requirements that are a condition for federal and state financial incentives. For example, the $3.00/kg hydrogen production tax credit available under the IRA to green hydrogen producers is tied to certain wage, apprenticeship,
carbon intensity and other requirements. Failure to satisfy these requirements may cause the tax credit to become unavailable to us, and therefore increase the cost of producing hydrogen.
There is a risk that, for any number of reasons, including lack of
technological advances, the lack of tax credits available in jurisdictions outside the United States, the inability of our customers to qualify for tax credits under the IRA or the reduction in tax credit available in the future, failure to
upscale production of renewable energy and electrolyzers and decreasing prices of fossil fuels, green hydrogen may not become a cost competitive alternative to fossil fuels and derived energy carriers, or that reaching a stage of cost
competitiveness is delayed beyond what we are currently expecting. Should this risk materialize, the green hydrogen market may not develop and grow at the same rate as current projections show, and this could in turn have a material adverse
effect on our business, financial condition, results of operations, cash flow and prospects.
The market for green hydrogen is highly
dependent on continuous and long-term outside investments and is consequently dependent on general macroeconomic conditions.
The market for green hydrogen relies strongly on continuous and
long-term outside investments until and if it becomes financially self-sustainable. These investments are necessary both for manufacturers of electrolyzers and components thereof, but also for establishing the necessary hydrogen infrastructure
as well as investments in end-use applications and for the downstream use of green hydrogen. Similarly, the scale-up of the electrolysis industry may require a corresponding scale-up of renewable energy plants such as wind farms and solar
energy plants, which are funded through private and public investments. Accordingly, the green hydrogen market is highly sensitive to any macroeconomic trends that may slow down investment activity.
The electrolysis industry is further characterized by relatively long
go-to-market timeframes for products and may not generate any returns on investments in R&D for many years after the commencement of development of new products. Accordingly, the electrolysis industry is directly and indirectly dependent on
the long-term commitment of investors with willingness and financial ability to maintain their investment positions in the longer term, both regarding investments in downstream markets from the green hydrogen market and directly in the
electrolysis industry.
Any global recession or economic downturn could have a detrimental
effect on the financial capacities and investment capabilities of institutional investors, which could have a disruptive effect on the green hydrogen market as a whole and the electrolysis industry. Additionally, end-users may in the event of a
recession become more price sensitive towards the energy they consume (and, consequently, less focused on the CO2 emitted in the production and processing of that energy). That risk becomes more pronounced if green hydrogen has not reached
price parity with fossil fuel alternatives, whereby demand for green hydrogen and electrolyzers could decrease and expectations as to the future growth of the green hydrogen market may not materialize. Likewise, in a macroeconomic
downturn-scenario, policymakers could potentially shift their attention and priorities away from the ongoing green transition. Should any of these events materialize, each of them may have a material adverse effect on our business, financial
condition, results of operations, cash flow and prospects.
Our estimates of market opportunity and
forecasts of market growth may prove to be inaccurate.
Market opportunity estimates and growth forecasts, whether obtained
from third-party sources or developed internally, are subject to significant uncertainty and are based on assumptions and estimates that may prove to be inaccurate. The estimates and forecasts included in this proxy statement/prospectus
relating to the size and expected growth of the target market and market demand may also prove to be inaccurate. The estimated global addressable market is based on assumptions that may prove to be inaccurate or incorrect. In addition, the
estimated global market may not materialize in the timeframe we expect, if ever, and even if the markets meet the estimates presented in this proxy statement/prospectus, this should not be taken as indicative of our future growth or prospects.
TABLE OF CONTENTS
We may incur unexpected warranty and
production guarantee claims that could have a material adverse effect on our business, financial condition, results of operations, cash flow and prospects.
In connection with our electrolyzers and hydrogen production
facilities, we have provided, and may in the future provide various warranties and/or cost, production and availability guarantees. While we generally are able to pass through warranties we receive from our suppliers or contractors to our
customers, in some circumstances, our warranty period may exceed the supplier’s or contractor’s warranty period or the supplier or contractor warranties may not otherwise fully compensate for losses associated with customer claims pursuant to
the warranty or guarantee we provided, and we currently do not possess gap insurance to fully cover these differences. For example, most supplier or contractor warranties exclude many losses that may result from a component’s failure or defect,
such as the cost of de-installation, re-installation, shipping, lost production, lost renewable energy credits or other incentives, personal injury, property damage, and other losses. In addition, in the event we seek recourse through supplier
or contractor warranties, we will also be dependent on the creditworthiness and continued existence of these suppliers or contractors. As a result, warranty or other guarantee claims against us could cause us to incur substantial expense to
repair defects in our electrolyzers or hydrogen production facilities. Significant repair and replacement costs could have a material adverse effect on our business, financial condition, results of operations, cash flow and prospects. In
addition, quality issues can have various other ramifications, including delays in the recognition of revenue, loss of revenue, loss of future project opportunities, increased costs associated with repairing electrolyzers or hydrogen production
facilities, and a negative impact on our reputation, any of which could also adversely affect our business or operating results.
During the interim period, we are prohibited
from entering into certain transactions that might otherwise be beneficial to us or our stockholders.
Until the earlier of consummation of the Business Combination or
termination of the Business Combination Agreement, we are subject to certain limitations on the operations of our business, as summarized under the section entitled “The Business Combination Proposal—The Merger
Agreement.” The limitations on our business conduct during this period could have the effect of delaying or preventing other strategic transactions and may, in some cases, make it impossible to pursue business opportunities that are
available only for a limited time.
We have entered into a number of related party
transactions and may continue to enter into related party transactions in the future.
In the ordinary course of our business, we have entered into
transactions with related parties. There can be no assurance that we could not have achieved more favorable terms if such transactions had not been entered into with related parties. Furthermore, it is likely that we will continue to enter into
related party transactions in the future. There can be no assurance that these or any future related party transactions that we may enter into, individually or in the aggregate, will not have an adverse effect on our business, financial
condition, results of operations, cash flow and prospects. Further, the transactions with our related parties may potentially involve conflicts of interest. Additionally, there can be no assurance that any dispute that may arise between us and
any of these related parties will be resolved in our favor. See “Certain Relationships and Related Party Transactions—Certain Relationships and Related Party Transactions—H2B2.”
We are exposed to interest rate risk.
Our activities are, and are expected to continue to be, financed
through a well-balanced mix of equity and project financing and, as such, we are exposed to risk resulting from changes in the base interest rate of loans in the various markets in which we operate. We may in the future incur debt that accrues
interest at fixed rates in connection with the financing of future projects. Moreover, as a result of widespread inflation in the global economy, certain governmental authorities responsible for administering monetary policy have recently
increased, and are likely to continue to increase, applicable central bank interest rates, which could increase the costs required to obtain debt financing in the future or refinance current indebtedness.
We are dependent on contractual arrangement
with, and the cooperation of, owners and operators of certain projects where access to and operations at these projects may be more limited than we anticipate.
We do not own the majority of the projects or sites from which we and
our customers produce hydrogen or on which we operate and manage our projects, and therefore we depend on contractual relationships with, and the cooperation of, our partners and site owners for our operations. The invalidity of, or any default
or
TABLE OF CONTENTS
termination under, any of our land use and production rights agreements, leases,
easements, licenses and rights-of-way may interfere with our ability to use and operate all or a portion of certain of our projects, which may have an adverse impact on our business, financial condition, results of operations, cash flow and
prospects While we have generally been successful in renewing such rights and in securing the additional rights necessary in connection with hydrogen production on specific projects, we cannot guarantee that this success will continue in the
future on commercial terms that are attractive to us or at all, and any failure to do so, or any other disruption in the relationship with any of the project owners and operators or for whom we provide O&M and other services to may have a
material adverse effect on our business, financial condition, results of operations, cash flow and prospects.
In addition, the ownership interests in the land subject to these
licenses, easements, leases and rights-of-way may be subject to mortgages securing loans or other liens (such as tax liens) and other easements, lease rights and rights-of-way of third parties (such as leases of mineral rights). As a result,
certain of our projects’ rights under these licenses, easements, leases or rights-of-way may be subject, and subordinate, to the rights of those third parties in certain instances. We may not be able to protect our operating projects against
all risks of loss of our rights to use the land on which our projects are located, and any such loss or curtailment of our rights to use the land on which our projects are located and any increase in rent due on such lands could adversely
affect our business, financial condition, results of operations, cash flow and prospects.
We from time to time may face disputes or
disagreements with owners and operators of hydrogen production facilities which could materially impact our ability to continue to develop and/or operate an existing project on our current basis, or at all, and could materially delay or
eliminate our ability to identify and successfully secure the rights to construct, operate and maintain other future projects.
The success of our business depends, in part, on maintaining good
relationships with project owners and operators. As a result, our business may be adversely affected if we are unable to maintain these relationships. Our economic interests in projects are not always aligned with the economic interests of such
owners and operators. We may disagree with such owners and operators about a number of concerns, including, without limitation, the operations of the project, easement and access rights, the renewal of land use and operation rights on favorable
terms, and temporary shutdowns for routine maintenance or equipment upgrades. Such project owners and operators may make unilateral decisions beneficial to them to address business concerns. They may or may not consult with us, including in
circumstances where they have a contractual obligation to do so, and unilateral decisions made by such owners and operators regarding the operations or management of their business could impact our ability to operate and maintain such projects
and offtake hydrogen from such projects. If we have a favorable relationship with site owners and operators, we may be able to mitigate certain risks if given the opportunity to provide input into the owners’ and operators’ decision-making
process.
In addition, the financial condition of projects may be affected in
large part by conditions and events that are beyond our control. Significant deterioration in the financial condition of any project could cause the owners and operators to unilaterally decide to shut down or reduce their operations. Any such
closure or reduction of operations could impact our revenue from O&M services we provide to the project.
If we are unable to maintain good relationships with these site
owners and operators, or if they take any actions that disrupt or halt production of hydrogen, our business, financial condition, results of operations, cash flow and prospects could be materially and adversely affected.
Our projects may face operational challenges,
including, among other things, the breakdown or failure of equipment or processes or performance below expected levels of output or efficiency due to wear and tear of the equipment, latent defects, design or operator errors, force majeure
events, or lack of transmission capacity or other problems with third-party interconnection and transmission facilities.
The ongoing operation of our projects involves risks that include the
breakdown or failure of equipment or processes or performance below expected levels of output or efficiency due to wear and tear of our equipment, latent defects, design or operator errors or force majeure events, among other factors. Operation
of our projects also involves risks that the facility will be unable to transport the product to its counterparties in an efficient manner due to a lack of capacity or other problems with third-party interconnection and transmission facilities.
Unplanned outages of equipment, including extensions of scheduled outages due to mechanical failures or other problems, occur from time to time and are an inherent risk of our business. Unplanned outages typically increase O&M expenses and
may reduce our revenue. Certain project owners and operators can also impact our
TABLE OF CONTENTS
production if, in the course of ongoing operations, they damage the site’s
electrolyzers, storage systems and other hydrogen production systems. Our inability to operate facilities efficiently, manage capital expenditures and costs and generate earnings and cash flow could have a material adverse effect on our
business, financial condition, results of operations, cash flow and prospects.
We are exposed to potential product liability
or other claims and to the risk of the occurrence of major incidents involving hydrogen.
Our hydrogen production equipment, including electrolyzers, whether
due to defects, malfunctioning, improper installations, mishandling, or for other reasons, may inflict personal injury and property damage, which exposes us to the general risk of product liability or other claims, including claims under
environmental, health and safety laws. Incidents involving hydrogen may also occur without our direct or indirect involvement but where we in any event indirectly suffer the potential detrimental effect of such incidents on the green hydrogen
market.
There are several risks relating to hydrogen-associated products
given the chemical properties of hydrogen being highly flammable. Even in small amounts, hydrogen mixed with ordinary air may ignite at low volumetric ratio from hydrogen to air. The storage, processing, distribution and use of hydrogen pose a
variety of logistical and safety challenges due to leakage risks, low-energy ignition potential, wide range of combustible fuel-air mixtures, buoyancy and hydrogen’s ability to embrittle metals. Liquid hydrogen poses additional dangers to
persons and property due to its increased density and the extremely low temperatures required for proper storage of liquid hydrogen.
We are unable to predict when, or if, any product liability claims
could be brought against us, and similarly cannot predict the potential publicity, reputational and financial impact any such claim might have. For example, we could be met with claims both for immediate damages to property and persons if such
damages were deemed to be caused by our products or services, but derived losses due to loss of income, sales, etc. may also have a financial impact on us. There is a risk that we will not have sufficient funds or insurance coverage to absorb a
product liability claim, and we may incur significant legal costs in connection with such product liability claims. Similarly, we may incur significant legal costs in connection with such proceedings, and management resources may be diverted
away from operational activities towards administrative and coordinating tasks relating to legal proceedings. Any successful assertion of product liability claims against us could result in significant monetary damages payable by us and a
derived loss of credibility, market reputation and income, and our insurances may not be adequate to fully cover such claims for damages. More generally, a major incident involving hydrogen, for example if such incidents results in injuries to
persons and/or damage to property, may result in governmental authorities and investors becoming reluctant to invest in green hydrogen, which could have a general adverse effect on the green hydrogen market. The occurrence of any of the
foregoing events could have a material adverse effect on our business, financial condition, results of operations, cash flow and prospects.
We may fail to establish critical industrial
partnerships with other electrolysis industry and green hydrogen market stakeholders, which could adversely affect our market position.
While the eventual dynamics of a commercialized green hydrogen market
and its relationship with the market for electrolyzers and end-to-end hydrogen solutions are not yet known, there is, in our experience, a developing tendency towards industrial partnerships between, for example, electrolyzer producers, EPC
service providers and developers of renewable energy projects. The role and importance of such partnerships in the long-term is uncertain, however, in our opinion, strategic partnerships with certain industrial actors who provide complementary
or supplementary services and products to our services and solutions – or vice versa – may yield various commercial benefits. Such benefits include, without limitation, a potential strengthening of our supply chain as well as our
competitiveness when bidding for large-scale projects.
However, we may fail to establish such partnerships, which could
become a strategic disadvantage for us and limit our ability to generate and land business opportunities, or we may develop partnerships with certain actors that prove less beneficial than anticipated. If the market for green hydrogen and the
electrolyzer market evolves towards a partnership model, and we have not been able to develop partnerships that enable us to compete within that framework, we may lose out on income generating business opportunities, which could have a material
adverse effect on our business, financial condition, results of operations, cash flow and prospects.
TABLE OF CONTENTS
We may not be able to benefit from synergies
from localized green hydrogen “hubs” or “Hydrogen Valleys” to the same extent as our competitors.
Significant research projects into the production and application of
green hydrogen are increasingly undertaken at U.S. and European universities as well as other international institutions. Often, green hydrogen research and projects are clustered in local hubs with increased activity in the electrolysis
industry, for instance, due to parallel development of regional green hydrogen ecosystems in the form of larger renewable energy plants with adjacent electrolysis systems. Such ecosystems may also develop from a concentration of demand-side
green hydrogen market actors. Examples of current hubs or hubs in development include the Alliance for Renewable Clean Hydrogen Energy System (California) and the Clean Energy Hub (Valencia, Spain).
Green hydrogen hubs may pose significant advantages and opportunities
for electrolyzer manufacturers located nearby to collaborate with research teams and other businesses to develop new green hydrogen solutions and to scale their production and products for large-scale renewable energy projects. In our opinion,
such hubs could be conducive to the growth and development of green hydrogen technologies and individual businesses.
There is a risk that a hub comparable in scale to other hubs will not
develop around our current geographic area or that our current hub will cease operations and development and, consequently, that we will not be able to engage with other parties to collaborate on green hydrogen projects. If we are unable to
achieve a symbiosis with our local environment compared to our competitors in their respective local environments, we may miss out on significant business and growth opportunities, which could commercially and technologically disadvantage us
and thereby have a material adverse effect on our business, financial condition, results of operations, cash flow and prospects.
A major loss of or disruption in our
manufacturing or operations could adversely affect our business, financial condition or results of operations.
A disruption in operations at one or more of our manufacturing
facilities, or those of our suppliers, could have an adverse effect on our business or operations. Disruptions could occur for many reasons, including fire, natural disasters, weather, unplanned maintenance or other manufacturing problems,
outbreaks of infectious diseases, strikes or other labor unrest, transportation interruption, government regulation, contractual disputes, political unrest or terrorism. For example, our manufacturing facility is located in Seville, Spain, and
we lease an additional manufacturing facility in Fresno, California. If we are unable to renew our leases at existing facilities on favorable terms or to relocate our operations to nearby facilities in an orderly fashion upon the expiration of
those leases, we could suffer interruptions in our manufacturing or operations, resulting in significant increases in costs and delays which could have a material adverse effect on our business, financial condition, results of operations, cash
flow and prospects.
Furthermore, alternative facilities with sufficient capacity or
capabilities may not be available, may cost substantially more or may take a significant time to start operations, each of which could negatively affect our business and financial performance. If one of our manufacturing facilities is unable to
operate for an extended period of time, our net revenue may be reduced by the shortfall caused by the disruption and we may not be able to meet our customers’ needs, which could have a material adverse effect on our business, financial
condition, results of operations, cash flow and prospects.
Attractive offtake terms may become
unavailable, which would adversely affect our business and growth.
Intense competition for offtake contracts may result in downward
pressure on offtake pricing. Downward pressure on equipment pricing over the long term, may also create downward pressure on offtake pricing. If falling offtake pricing results in forecasted project revenue that is insufficient to generate
returns higher than our cost of capital, our business, financial condition, results of operations, cash flow and prospects could be adversely affected.
Alternatively, if we pursue offtake contracts with pricing that we
assume will be attractive based on expectations of falling equipment or construction pricing or other cost or revenue expectations that ultimately prove to be inaccurate, or the value of a project is less than expected at the time of execution
of the related offtake contract, our business, financial condition, results of operations, cash flow and prospects could be adversely affected, including through payment obligations to issuing banks in connection with any posted letters of
credit.
TABLE OF CONTENTS
In addition, the availability of offtake contracts depends on
utility and corporate energy procurement practices that may change over time. Offtake contract availability and terms are a function of a number of economic, regulatory, tax and public policy factors, each of which is also subject to change.
Our offtakers could become unwilling or unable
to fulfil or renew their contractual obligations to us or they may otherwise terminate their agreements with us.
We intend to generate portions of our revenue from the sale of
hydrogen contracted under offtake agreements. Once we enter into offtake contracts or other long-term contracts, we are exposed to the risk that our counterparties will become unwilling or unable to fulfil or renew their contractual obligations
and, if any such agreement is terminated, we cannot guarantee that we will enter into a replacement agreement on substantially similar terms or at all. Any or all of our offtakers may fail to fulfil or renew their obligations to us under their
contracts or otherwise, including as a result of the occurrence of any of the following factors:
•
|
Events beyond our control or the control of an offtaker that may temporarily or permanently excuse the offtaker from its
obligation to accept and pay for delivery of energy generated by a project. These events could include a system emergency, a transmission failure or curtailment, adverse weather condition, a change in law, a change in permitting
requirements or conditions, or a labor dispute.
|
•
|
The ability of our offtakers to fulfil their contractual obligations to us depends on their creditworthiness. Due to the
long-term nature of our offtake contracts, we are exposed to the credit risk of our offtakers over an extended period of time. Any of these counterparties could become subject to insolvency or liquidation proceedings or otherwise suffer
a deterioration of its creditworthiness, including when it has not yet paid for energy delivered, any of which could result in a default under their agreements with us, and an insolvency or liquidation of any of these counterparties
could result in the termination of any applicable agreements with such counterparty.
|
•
|
The ability of any of our offtakers to extend, renew or replace its existing offtake contract with us depends on a number of
factors beyond our control, including: (i) whether the offtaker has a continued need for energy or capacity at the time of expiration, which could be affected by, among other things, the presence or absence of governmental incentives or
mandates, prevailing market prices or the availability of other energy sources; (ii) the satisfactory performance of our delivery obligations under such offtake contracts; (iii) the regulatory environment applicable to our offtakers at
the time; and (iv) macroeconomic factors present at the time, such as population, business trends and related energy demand.
|
If our offtakers are unwilling or unable to fulfil or renew their
contractual obligations to us, or if they otherwise terminate such agreements prior to their expiration, we may not be able to recover contractual payments and commitments due to us. Since the number of counterparties that purchase wholesale
bulk energy is limited, we may be unable to find a new energy purchaser on terms similar to or at least as favorable as those in our current agreements or at all. Any interruption in or termination of payments by any of our counterparties could
adversely affect our ability to pay project lenders and tax equity investors, could cause a default under the applicable project debt and tax equity financing arrangements, and could trigger cross-defaults under our other financing
arrangements. In such a case, the cash flows we receive could be adversely affected. In addition, our ability to finance additional projects with offtake contracts from such counterparties would be adversely affected, undermining our ability to
grow our business. The loss of or a reduction in sales to any of our offtakers could have a material adverse effect on our business, financial condition, results of operations, cash flow and prospects.
The delay between making significant upfront
investments in our projects and receiving revenue could materially and adversely affect our business, financial condition, results of operations, cash flow and prospects.
There are generally many months or even years between our initial bid
in renewable energy auctions to build green hydrogen projects and the date on which we begin to recognize revenue from the completion of such projects. Our initial investments include, without limitation, legal, accounting and other third-party
fees, costs associated with project analysis and feasibility studies, payments for land rights, payments for interconnection and grid connectivity arrangements, government permits, engineering and procurement of electrolysis components, balance
of system costs or other payments, which may be non-refundable. As such, projects may not be fully monetized for many years from commencement of commercial operations given the typical length of
TABLE OF CONTENTS
the projects, but we bear the costs of its initial investment upfront. Furthermore,
we have historically relied on our own equity contribution to pay for costs and expenses incurred during project development. We typically recognize revenue over the course of a contract, such as when the performance of a contract results in
the creation of a product for which we do not have an alternative use and when the contract includes an enforceable right to payment in an amount that corresponds directly with the value of the performance completed. There may be long delays
from the initial bid to projects becoming shovel-ready, due to the timing of auctions, permits and the grid connectivity process. Between our initial investment in the development of permits for a project and their connection to the
transmission grid, there may be adverse developments. Furthermore, we may not be able to obtain all permits as anticipated, permits that were obtained may expire or become ineffective and we may not be able to obtain project level debt
financing as anticipated. In addition, the timing gap between our upfront investments and actual generation of revenue, or any added delay in between due to unforeseen events, could put strains on our liquidity and resources, and materially and
adversely affect our profitability, results of operations and cash flows.
Our results of operations could be adversely
affected by strikes, work stoppages or increased wage demands by our employees or any other kind of disputes with our employees.
As of the date of this proxy statement/prospectus, we had 74
full-time employees. While we have not had any instances of strikes or lock-outs since we commenced operations, we may experience disruptions in its operations due to disputes or other problems with our workforce, and efforts by our employees
to modify compensation and other terms of employment may divert management’s attention and increase operating expenses. From time to time, we also enter into contracts with independent contractors to complete specific assignments and these
contractors are required to provide the labor necessary to complete such assignments. Although we do not engage these laborers directly, it may be held responsible for wage payments to laborers engaged by contractors should the contractors
default on wage payments. The occurrence of such events could materially adversely affect our business, financial condition, results of operations, cash flow and prospects.
We have determined that our continuing
operating losses and negative cash flows from operations raises substantial doubt about our ability to continue as a “going concern.”
We have determined that substantial doubt exists about our ability to
continue as a going concern as a result of continuing operating losses and negative cash flows from operations. We are in the development stage and have incurred net losses and negative operating cash flows including a net loss of $4.3 million
and cash used in operating activities of $4.7 million for the year ended December 31, 2022. We cannot assure you that our plan to mitigate these conditions, including raising additional capital, securing grant funding and developing profitable
operations through the implementation of our current business initiatives, will be successful. These factors, among others, raise substantial doubt about our ability to continue as a going concern. The financial statements contained elsewhere
in this annual report do not include any adjustments that might result from our inability to consummate the initial public offering or its inability to continue as a going concern.
We identified a material weakness in our
internal control over financial reporting. If we are unable to develop and maintain an effective system of internal controls and procedures required by Section 404(a) of the Sarbanes-Oxley Act, we may not be able to accurately report our
financial results in a timely manner, which may adversely affect investor confidence in us and materially and adversely affect our stock price, business and operating results.
Our management review controls did not detect certain errors related
to the overall presentation of the financial statements, which we concluded constitutes a material weakness in internal controls over financial reporting. A material weakness is a deficiency, or a combination of deficiencies, in internal
controls over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.
Effective internal controls are necessary for us to provide reliable
financial reports and prevent fraud. Management continues to evaluate steps to remediate the material weakness. These remediation measures may be time consuming and costly and there is no assurance that these initiatives will ultimately have
the intended effects. In the future, management may not be able to effectively and timely implement controls and procedures that adequately respond to the increased regulatory and compliance and reporting requirements.
In addition, we will be required to provide management's attestation
on internal controls. The standard required for a public company under Section 404(a) of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley
TABLE OF CONTENTS
Act”) are significantly more stringent than those that were required of us as a
privately held company. If we are not able to implement the additional requirements of Section 404(a) in a timely manner or with adequate compliance, we may not be able to assess whether our internal controls over financial reporting are
effective, which may subject us to adverse regulatory consequences and could harm investor confidence and market price of our securities.
If we identify any new material weaknesses in the future, any such
newly identified material weakness could limit our ability to prevent or detect misstatements of our accounts or disclosures that could result in a material misstatement of our annual or interim financial statements. In such case, if we are
unable to maintain compliance with securities law requirements regarding timely filing of periodic reports or applicable stock exchange listing requirements, investors may lose confidence in our financial reporting and our stock price may
decline as a result and we could become subject to litigation or investigations by the SEC or other regulatory authorities, which could require additional financial and management resources. We cannot assure you that the measures we have taken
to date, or any measures we may take in the future, will be sufficient to avoid potential future material weakness.
We may in the future use forward-sale and
hedging arrangements to mitigate certain risks but the use of such arrangements could have a material adverse effect on our business, financial condition, results of operations, cash flow and prospects.
We intend to sell a portion of the hydrogen we and our customers
produce on the open market at spot-market prices and other select markets in future. In order to stabilize a portion of the revenue from such sales, we intend to enter into hedging arrangements through a wide range of product types, including,
but not limited to forward sales and purchases of electricity. Hedging products may consist of physical power, financial swaps and options or structured transactions. If a project does not generate the volume of electricity covered by
associated hedging arrangements, we could incur significant losses if electricity prices in the market rise substantially above the fixed price provided for in the hedging arrangement. If a project generates more electricity than is contracted
in the hedging arrangement, the excess production will not be hedged and the related revenues will be exposed to market price fluctuations.
We guarantee certain of the obligations of our
projects and other subsidiaries, and a requirement to make a payment under such guarantee may have a material adverse effect on our financial condition or liquidity.
Our subsidiaries incur various types of debt and other obligations.
Project non-recourse debt or obligations are repayable solely from the applicable project’s or entity’s future revenues and, in some cases, are secured by the project’s or entity’s physical assets, major contracts, cash accounts and our
ownership interests in other entities. While we seek to secure project non-recourse debt for our projects, in certain cases we are unable to do so or unable to do so on favorable terms, and thus may be liable for some or all of our
subsidiaries’ obligations on a recourse basis. To satisfy these obligations, we may be required to use amounts distributed by our other subsidiaries, as well as other sources of available cash, reducing the cash available to execute our
business plan. In addition, if our subsidiaries default on their obligations under non-recourse financing or other agreements, we may decide to make payments to prevent the creditors of these subsidiaries from foreclosing on the relevant
collateral (which foreclosure would result in a loss of our ownership interest in the subsidiary or in some or all of its assets). Such payments or losses could have a material adverse effect on our business, financial condition, results of
operations, cash flow and prospects.
Fluctuations in foreign currency exchange rates
may negatively affect our capital expenditures and could result in exchange losses.
Our reporting currency is the U.S. dollar, and our revenue and
operating expenses are denominated primarily in U.S. dollars. However, some of our capital expenditures, particularly those for equipment imported from international suppliers, are denominated in foreign currencies, particularly the Euro, and
some of our other obligations, including our external commercial borrowings, are also denominated in Euros. To the extent that we are unable to match revenue received in our functional currency with costs paid in foreign currencies, exchange
rate fluctuations could adversely affect our profitability. A majority all of our cash flows are generated in U.S. dollars and, therefore, significant changes in the value of the U.S. dollar relative to foreign currencies could adversely affect
our financial condition. We expect our capital expenditures for proposed expansion plans to include significant expenditure in foreign currencies for imported equipment and machinery.
TABLE OF CONTENTS
While we have hedged our external commercial borrowings and our
capital expenditure costs denominated in U.S. dollars against foreign currency fluctuations, changes in exchange rates may still adversely affect our results of operations and financial condition. Any amounts spent to hedge the risks to our
business due to fluctuations in currencies may not adequately hedge against any losses we incur due to such fluctuations. There is no assurance that we will be able to reduce our foreign currency risk exposure, through the hedging transactions
we have already entered into or will enter into, in an effective manner, at reasonable costs, or at all.
We may be unable to complete environmental,
social and governance, or ESG initiatives, in whole or in part, which could lead to less opportunity for us to have ESG investors and partners and could negatively impact ESG-focused investors when evaluating us.
We are increasingly facing more stringent ESG standards, policies and
expectations, and expect to continue to do so as a listed company following the Closing with growing operations. We generally experience a strong ESG emphasis among our customers, partners and competitors in the electrolysis industry and the
renewable energy sector generally. These standards regard environmental matters (e.g., climate change and sustainability), social matters (e.g., diversity and human rights) and corporate governance matters (e.g., taking into account employee
relations when making business and investment decisions, ethical matters and the composition of the board of directors and various committees). There is no guarantee that we will be able to comply with applicable ESG standards, policies and
expectations, or that we will from the perspective of other stakeholders and the public appear to be complying with such ESG matters.
While we may at times engage in voluntary initiatives and disclosures
to improve our ESG profile or to respond to stakeholder expectations, such initiatives and disclosures may be costly and may not have the desired effect. Expectations our management of ESG matters continues to evolve rapidly, in many instances
due to factors that are out of our control. For example, we may ultimately be unable to complete certain initiatives or targets, either on the timelines initially announced or at all, due to technological, cost, or other constraints, which may
be within or outside of our control. Moreover, our ESG actions or statements may be on based on expectations, assumptions, or third-party information that we currently believe to be reasonable, but which may subsequently be determined to be
erroneous or be subject to misinterpretation. If we fail to, or are perceived to fail to, comply with certain ESG initiatives, we may be subject to various adverse impacts, including reputational damage and potential stakeholder engagement
and/or litigation, even if such initiatives are currently voluntary. Certain market participants, including major institutional investors and capital providers, use third-party benchmarks and scores to assess companies’ ESG profiles in making
investment or voting decisions. Unfavorable ESG ratings could lead to increased negative investor sentiment towards us, which could negatively impact our share price as well as our access to and cost of capital.
Moreover, because of the industry we are in any of our operational or
strategic efforts may be viewed as relating to our ESG initiatives and, even if those initiatives are undertaken voluntarily, they may still be viewed as relating to our operational and strategic efforts. This means that if we fail, or are
perceived to fail, to comply with certain ESG initiatives it could have a disproportionately negative impact on our business.
As an actor in the green transition, actual or perceived failure to
comply with ESG standards may detrimentally affect our business in a variety of ways. Among others, we could face challenges with procuring investments and financing, whether for general business purposes of for specific projects, we could be
limited in our ability to participate in large-scale green hydrogen projects, particularly where the other participants in such projects adhere to strict ESG principles and apply such principles to their partners as well and we could have
difficulty attracting or retaining employees. Accordingly, failure to establish a sufficiently strong ESG profile relative to our peers, could limit our ability to generate and successfully utilize business opportunities. We also note that
divergent views regarding ESG principles are emerging in the U.S., and in particular, in U.S. state-level regulation and enforcement efforts. In the future, various U.S. regulators, state actors and other stakeholders may have views on ESG
matters, the renewable energy industry, the energy transition or our business that are less favorable to our business or operations, or such stakeholders may seek to impose additional regulation and restrictions on us or our business. Any such
events could have material adverse effects on our business, financial condition, results of operations, cash flow and prospects.
We also expect there will likely be increasing levels of regulation,
disclosure-related and otherwise, with respect to ESG matters. We may be subject to ESG or sustainability-related regulation in multiple jurisdictions, including the U.S. and EU, and complying with these regulations in multiple jurisdictions
may exponentially increase the complexity and cost of our compliance efforts. Moreover, increased regulation and increased
TABLE OF CONTENTS
stakeholder expectations will likely lead to increased costs as well as scrutiny that
could heighten all of the risks identified in this risk factor. Additionally, many of our customers and suppliers may be subject to similar expectations, which may augment or create additional risks, including risks that may not be known to us.
Our ability to realize projects in the electrolysis industry and
generally in the green hydrogen market may be impaired should we fail to adhere to the common ESG standards in our industry. Moreover, such failure could result in reputational damage for us among both potential customers and investors. Any of
the foregoing could have a material adverse effect on our business, financial condition, results of operations, cash flow and prospects.
We may face challenges in expanding our
business and operations internationally and our ability to conduct business in international markets may be adversely affected by legal, regulatory, political and economic risks.
Our business plan includes operations in international markets,
including EMEA, the Americas and the APAC as well as prioritizing the eventual expansion into other international markets, such as Japan and South Korea. We will face risks associated with any potential international operations, including
possible unfavorable legal, regulatory, political and economic risks, which could harm our business. We anticipate having international operations and subsidiaries that are subject to the legal, political, regulatory and social requirements and
economic conditions in these jurisdictions. Furthermore, conducting and launching operations on an international scale requires close coordination of activities across multiple jurisdictions and time zones and consumes significant management
resources. We will be subject to a number of risks associated with international business activities that may increase our costs, impact our ability to design, develop, construct, operate and maintain projects and require significant management
attention. These risks include:
•
|
conforming our electrolyzers and projects to various international regulatory requirements where our projects are designed,
developed, constructed, operated and maintained, which requirements may change over time;
|
•
|
expenditures related to foreign lawsuits and liability;
|
•
|
difficulties in staffing and managing foreign operations;
|
•
|
difficulties establishing relationships with, or disruption in the supply chain from, international suppliers;
|
•
|
difficulties attracting customers in new jurisdictions;
|
•
|
difficulties in attracting effective distributors, dealers or sales agents, as the case may be;
|
•
|
foreign government taxes, regulations and permit requirements, including foreign taxes that we may not be able to offset against
taxes imposed upon us in the United States, and foreign tax and other laws limiting our ability to repatriate funds to the United States;
|
•
|
fluctuations in foreign currency exchange rates and interest rates, including risks related to any foreign currency swap or
other hedging activities we undertake;
|
•
|
United States and foreign government trade restrictions, tariffs and price or exchange controls;
|
•
|
foreign labor laws, regulations and restrictions;
|
•
|
changes in diplomatic and trade relationships;
|
•
|
laws and business practices favoring local companies;
|
•
|
difficulties protecting or procuring intellectual property;
|
•
|
the adoption of our brand versus competitive foreign brands;
|
•
|
political instability, natural disasters, war or events of terrorism and health epidemics, such as COVID-19 or the conflict in
Ukraine; and
|
•
|
the strength of international economies.
|
If we fail to successfully address these risks, our business,
financial condition, results of operations, cash flow and prospects could be materially harmed.
TABLE OF CONTENTS
We may seek to obtain future financing
through the issuance of debt or equity, which may have an adverse effect on our shareholders or may otherwise adversely affect our business.
If we raise funds through the issuance of additional equity or debt,
including convertible debt or debt secured by some or all of our assets, holders of any debt securities or preferred shares issued will have rights, preferences and privileges senior to those of holders of our ordinary shares in the event of
liquidation. If additional debt is issued, there is a possibility that once all senior claims are settled, there may be no assets remaining to pay out to the holders of ordinary shares. In addition, if we raise funds through the issuance of
additional equity, whether through private placements or public offerings, such an issuance would dilute ownership of our current shareholders that do not participate in the issuance. If we are unable to obtain any needed additional funding, we
may be required to reduce the scope of, delay or eliminate some or all of, our planned research, development, production and marketing activities, any of which could materially harm our business.
Furthermore, the terms of any additional debt securities we may issue
in the future may impose restrictions on our operations, which may include limiting our ability to incur additional indebtedness, pay dividends on or repurchase our share capital or make certain acquisitions or investments. In addition, we may
be subject to covenants requiring us to satisfy certain financial tests and ratios, and our ability to satisfy such covenants may be affected by events outside of our control.
We are subject to organizational and legal
risks associated with our complex corporate structure and global operations.
Our corporate structure and operating model require coordination of
business activities with multiple subsidiaries, joint ventures and partnerships across various jurisdictions as described elsewhere in this proxy statement/prospectus. Failure to properly manage such business activities could have a material
adverse effect on our business, financial condition, results of operations, cash flow and prospects.
In addition, our operations are subject to risks inherent in
conducting business globally. In addition to the cross-border regulatory and legal risks described elsewhere in this proxy statement/prospectus, our business is subject to risks associated with management communication and integration problems
resulting from cultural and geographic dispersion. Compliance with laws and regulations applicable to our global operations also substantially increases our cost of doing business in foreign jurisdictions. If we invest substantial time and
resources to expand our international operations and are unable to do so successfully and in a timely manner, our business, financial condition, results of operations, cash flow and prospects may suffer. We may be unable to comply with changes
in government requirements and regulations, which could harm our business. In many countries, it is common for others to engage in business practices that are prohibited by our internal policies and procedures or other regulations applicable to
us. Although we have implemented policies and procedures designed to ensure compliance with these laws and policies, there can be no assurance that all of our employees, contractors, partners and agents will comply with these laws and policies.
Violations of laws or key control policies by our employees, contractors, partners or agents could result in delays in revenue recognition, financial reporting misstatements, investigations and enforcement actions, reputational harm,
disgorgement of profits, fines, civil and criminal penalties, damages, injunctions, other collateral consequences or the prohibition of the importation or exportation of our platform and could harm our business, results of operations and
financial condition.
Inflation could adversely affect our business
and results of operations.
The renewable energy industry has seen long periods of declining
equipment costs, which may not continue, or may reverse. Inflation or the absence of cost decreases could adversely affect us by increasing the actual or expected costs of land, raw materials and labor, and other goods and services needed to
construct our projects, potentially reducing project profitability. Future increases in actual or expected costs may have an adverse impact on our business, financial condition and results of operations.
The loss of any of our senior management or key
employees or a decrease in the labor force available to us may adversely affect our ability to conduct business and implement our strategy.
We depend on our management team and the loss of any key executives
could negatively impact our business. We also depend on our ability to retain and motivate key employees and attract qualified new employees. Because the green hydrogen industry is relatively new, there is a scarcity of skilled personnel with
TABLE OF CONTENTS
experience in the industry. However, the industry is rapidly expanding, so attracting
qualified new employees is difficult. If we lose a member of our management team or a key employee, we may not be able to replace them. Integrating new executives into our management team and training new employees with no prior experience in
the green hydrogen industry could prove disruptive to our operations, require a disproportionate amount of resources and management attention and may ultimately prove unsuccessful. An inability to attract and retain sufficient technical and
managerial personnel could limit our ability to effectively manage our operational projects and complete our under-development projects on schedule and within budget, which may adversely affect our business and strategy implementation.
A number of factors might adversely affect the labor force available
to us in one or more of our markets, including high employment levels, federal unemployment subsidies, and other government regulations, which include laws and regulations related to workers’ health and safety, wage and hour practices and
immigration, and such factors can also impact the cost of labor. For example, the recently enacted IRA includes certain prevailing wage and apprenticeship requirements related to tax credit availability which may impact our labor and our
contractors and subcontractors going forward. An increase in labor costs and the unavailability of skilled labor (including apprentices) or increased turnover could have a material adverse effect on our results of operations. Our inability to
hire qualified personnel on a timely basis, or the departure of key employees, could materially and adversely affect our development and profitable commercialization plans and, therefore, our business prospects, results of operations and
financial condition.
Climate change, including the increased
frequency or severity of natural and catastrophic events, and climate change policies, as well as terrorist attacks may reduce energy production below our expectations.
A natural disaster, or severe weather conditions, including in
connection with climate change, or an accident that damages or otherwise adversely affects any of our operations, assets or third-party infrastructure could materially and adversely affect our business, financial condition and results of
operations. Severe floods, droughts, lightning strikes, earthquakes, extreme wind conditions, severe storms, heatwaves, wildfires, adverse monsoons and other unfavorable weather conditions (including those from climate change) or natural
disasters could damage our property and assets, or those of third parties on whom we rely, or require us to shut down our projects or related equipment and facilities, impeding our ability to operate and maintain our projects and decreasing
hydrogen production levels and revenues from operations. Climate change may also contribute to various chronic changes in the physical environment, such as sea-level rise or changes in ambient temperature or precipitation patterns, which may
also adversely impact our or our suppliers’ operations. While we may take various actions to mitigate our business risks associated with climate change and other natural and catastrophic events, this may require us to incur substantial costs
and may not be successful, due to, among other things, the uncertainty associated with the longer-term projections associated with managing climate risk. For example, to the extent catastrophic events become more frequent, it may adversely
impact the availability or cost of insurance.
Additionally, we expect to be subject to risks associated with
societal efforts to mitigate or otherwise respond to climate change, including but not limited to increased regulations, evolving stakeholder expectations, and changes in market demand. Changing market dynamics, global and domestic policy
developments, and the increasing frequency and impact of meteorological phenomena have the potential to disrupt our business, the business of our suppliers and/or customers, or otherwise adversely impact our business, financial condition, or
results of operations.
In addition, catastrophic events such as explosions, terrorist acts
or other similar occurrences could result in similar consequences or in personal injury, loss of life, environmental danger or severe damage to or destruction of the projects or suspension of operations, in each case, adversely affecting our
ability to operate and maintain the projects and decreasing hydrogen production levels and revenues from operations. Any of these events could adversely affect our business, financial condition, results of operations and prospects.
Adverse developments affecting the financial
services industry, such as actual events or concerns involving liquidity, defaults, or non-performance by financial institutions or transactional counterparties, could adversely affect our business, financial condition and results of
operations.
Actual events involving limited liquidity, defaults, non-performance
or other adverse developments that affect financial institutions, transactional counterparties or other companies in the financial services industry generally, or concerns or rumors about any events of these kinds or other similar risks, have
in the past and may
TABLE OF CONTENTS
in the future lead to market-wide liquidity problems. For example, the recent
closures of Silicon Valley Bank, Signature Bank and Silvergate Capital Corp. led to disruption and volatility, and erosion of customer confidence in the banking system, including deposit outflows, at many mid-size banks, increasing the need for
liquidity. Further, uncertainty remains over liquidity concerns in the broader financial services industry. For example, Credit Suisse recently agreed to be acquired by UBS following the intervention of the Swiss Federal Department of Finance,
the Swiss National Bank and the Swiss Financial Market Supervisory Authority, and it was recently announced that JPMorgan Chase Bank, National Association would assume all of First Republic Bank's deposits and substantially all of its assets.
Although a statement by the Department of the Treasury, the Federal
Reserve and the FDIC indicated that all depositors of SVB would have access to all of their money after only one business day of closure, including funds held in uninsured deposit accounts, it not clear that the Federal Reserve or the FDIC will
treat future bank failures similarly. We maintain deposits at financial institutions as part of doing business that could be at risk if another similar event were to occur. Our ongoing cash management strategy is to maintain the majority of our
deposit accounts in large financial institutions, but there can be no assurance that this strategy will be successful. In addition, bank failures and bailouts and their potential broader effect and potential systemic risk on the global banking
sector generally and its participants may affect our business more generally. If any of our customers, suppliers or other parties with whom we conduct business are unable to access funds pursuant to instruments or lending arrangements with such
financial institution or if any of our customers, suppliers or other parties with whom we conduct business declare bankruptcy or insolvency, such parties' ability to pay their obligations to us or enter into new commercial arrangements
requiring additional payments to us could be adversely affected. For example, a leaseholder bank for one of our sale leaseback transactions was recently placed into receivership and, whilst this did not have a material impact on our financial
condition or results of operations, It could limit our access to proceeds from the transaction.
In addition, any decline in available funding or access to our cash
and liquidity resource could, among other risks, limit our ability to meet our capital needs and fund future growth or fulfil our other obligations, or result in breaches of our financial and/or contractual obligations. Investor concerns
regarding the U.S. or internal financial system could result in less favorable commercial financing terms, including higher interest rates or costs and tighter financial and operating covenants, or systemic limitations on access to credit and
liquidity sources, including the corporate bond markets, thereby making it more difficult for us to acquire financing on acceptable terms or at all. Any of these impacts, or any other impacts resulting from the factors described above or other
related or similar factors not described above, could have material adverse impacts on our business, financial condition and results of operations.
We are not able to insure against all potential
risks, and we may become subject to higher insurance premiums or may not obtain insurance at all.
We are exposed to numerous risks inherent in the operation of
renewable energy projects, including equipment failure, manufacturing defects, natural disasters, pandemics, terrorist attacks, cyber-attacks, sabotage, theft, vandalism, political risks in developing markets and environmental risks. Further,
with respect to any projects that are under construction or development, we are, or will be, exposed to risks inherent in the construction and development of these projects. The occurrence of any one of these events may result in us being named
as a defendant in lawsuits or in regulatory actions asserting claims for substantial monetary damages and/or other forms of relief, including those associated with environmental clean-up or other remediation or compliance costs, personal
injury, property damage, fines and penalties.
Some of the risks to which we are exposed may not be insurable,
including some risks related to terrorism. Even if the risks are generally insurable, we may not maintain or obtain insurance of the type and amount we desire at reasonable rates or at all, and we may elect to self-insure a portion of our
portfolio. The insurance coverage we do obtain may contain large deductibles or insufficient coverage or fail to cover all risks or potential losses across our global footprint. For example, we may face increased insurance premiums and
increased difficulty obtaining coverage for our assets in California, as certain insurers have stopped offering insurance coverage for certain categories of real estate holdings in California altogether. Further, we often cannot obtain full
coverage at economic rates and are instead limited to probable maximum loss coverage subject to commercially reasonable limits. In addition, our insurance policies are subject to annual review by our insurers and may not be renewed on similar
or favorable terms, including with respect to coverage, deductibles or premiums, or at all.
TABLE OF CONTENTS
As the hydrogen industry and renewable energy sector grows,
insurance providers may reassess the risks associated with our projects and we may experience higher insurance costs, including as the result of industry-wide increases in insurance premiums. Industry-wide increases in insurance premiums have
recently and may in the future arise as the result of cost spreading efforts from major insurance providers following major natural disasters such as hurricanes or widespread wildfires. Finally, even if we believe that insurance should cover
any particular claim, there may be litigation with insurance companies or others regarding the claim, and we may not prevail. The occurrence of any such natural disaster may result in our being named as a defendant in lawsuits asserting claims
for substantial monetary damages, including those associated with environmental cleanup costs, personal injury, property damage, fines and penalties. If a significant accident or event occurs for which we are not fully insured, or if we are
unable to obtain or retain a sufficient level of insurance, which could constitute a breach under our offtake contracts, we may experience a material adverse effect on our business, financial condition, results of operations, cash flow and
prospects.
Risks Related to Our Vendors and Suppliers
Our projects depend, and will depend, on
third-party service providers to deliver high-quality products at prices similar to historical levels.
Our electrolyzers contain various components manufactured by highly
specialized third-party suppliers. There are some components where we only have one supplier who, to our knowledge, is also the sole or primary supplier to other electrolyzer manufacturers in the electrolysis industry. An increased demand by us
for certain electrolyzer components from third-party suppliers may, in the event of a market-wide surge in demand for electrolyzers, collide with demand from our competitors across the electrolysis industry, which may result in increased prices
and limited availability of a steady supply of the necessary machinery, equipment and components, including PEM stacks.
We depend on one key supplier, Plug Power, to provide a majority
of our PEM stacks for our electrolyzers. Our success is dependent on, among other things, our continuing ability to offer our services and products at prices similar to historical levels. We currently have a framework agreement in place with
Plug Power. Our suppliers, including Plug Power, have been and may continue to be adversely impacted by economic weakness and uncertainty and supply chain constraints, such as increased commodity prices, increased fuel costs, tight credit
markets and various other factors. In such an environment, our suppliers, including Plug Power, may seek to change the terms on which they do business with us in order to lessen the impact of any current and future economic challenges on
their businesses or may cease or suspend operations. If we are forced to renegotiate the terms upon which we conduct business with our suppliers or find alternative suppliers to provide key products or services, it could adversely impact our
profit margins, which in turn could materially and adversely affect our business and results of operations. Additionally, a disruption with any one supplier in our supply chain, including Plug Power, could have an adverse effect on our
ability to effectively produce and timely deliver our electrolyzers. While we have not experienced any delays to date due to supply chain issues, including related to our PEM stacks, we may have limited flexibility to immediately change
suppliers in the event of any disruption in the supply of our stacks or other electrolyzer components, which could then disrupt production of our electrolyzers.
Likewise, we (and our suppliers) are dependent on access to certain
raw materials, in particular copper, nickel, and steel. Increased prices for such raw materials or lack of accessibility, whether for us or our suppliers who use copper, nickel, and steel in their components, could impair our production
capability.
Moreover, if any critical third-party suppliers should cease
operations, dissolve their businesses, become the subject of insolvency proceedings, be acquired by a competitor of ours and cease dealings with us, terminate their relationship with us or, for any reason, not be able or willing to deliver
critical electrolyzer components to us, the occurrence of any such event or circumstance could limit, delay or halt our production of electrolyzers and we may not be able to immediately engage with new suppliers and deliveries from such new
suppliers may be at higher prices than we anticipated. As a consequence, such events could result in us not being able to deliver electrolyzers to our customers at the agreed time or at all, or our delivery of electrolyzers could be less
profitable, if at all profitable, than we would otherwise anticipate.
Our efforts to find a suitable alternative supplier or in-source
production of certain key components to mitigate this risk may not be successful or economically viable. If any of the foregoing events or circumstances were to materialize, they could have a material adverse effect on our business, financial
condition, results of operations, cash flow and prospects.
TABLE OF CONTENTS
Furthermore, we may become increasingly subject to domestic
content sourcing requirements and Buy America preferences, as required by federal infrastructure funding and various tax incentives in the United States, and we may become subject in the future to domestic sourcing requirements that may become
relevant to the European Union. Domestic content preferences potentially mandate that we source certain components and materials from United States-based suppliers and manufacturers. Conformity with these provisions potentially depends upon our
ability to increasingly source components or materials from within the United States. An inability to meet these requirements could have a material adverse effect on our ability to successfully leverage tax incentives or certain federal
infrastructure funding sources imposing such mandates.
Failure of third parties to manufacture quality
products or provide reliable services in a timely manner could cause delays in developing and operating our projects, which could adversely affect our partner relationships or adversely affect our growth.
Our success depends on our ability to design, develop, construct,
operate and maintain our projects in a timely manner, which depends in part on the ability of third parties to provide us with timely and reliable products and services. In developing and operating our projects, we rely on products meeting our
design specifications and components manufactured and supplied by third parties, and on services performed by our subcontractors. We also rely on subcontractors to perform some of the construction and installation work related to our projects,
with whom we may have no prior experience in connection with these matters.
If our subcontractors are unable to provide services that meet or
exceed our counterparties’ expectations or satisfy our contractual commitments, our reputation, business and operating results could be harmed. In addition, if we are unable to avail ourselves of warranties and other contractual protections
with our suppliers and service providers, we may incur liability to our counterparties or additional costs related to the affected products and services, which could adversely affect our business, financial condition, results of operations,
cash flow and prospects. Moreover, any delays, malfunctions, inefficiencies or interruptions in these products or services could adversely affect our ability to timely bring a project online, the quality and performance of our electrolyzers and
storage systems, and may require considerable expense to find replacement products and to maintain and repair these projects. These circumstances could cause us to experience a delay in the design, development, construction, operation and
maintenance of our projects or issues maintaining current relationships and attracting new relationships, in each case, potentially harming our brand, reputation and growth prospects.
We often deliver electrolysis solutions to
certain projects where such projects are dependent on several other deliveries as well as compatibility of various technologies.
While we do not have one specific type of customer, for our
electrolyzers and offerings, we are often engaged by a developer or project owner responsible for the overall development of a renewable energy project who sources EPC services and electrolysis solutions in parallel. In some cases, our services
to projects are made in the capacity as an original equipment manufacturer (“OEM”) where we primarily-or only-assume responsibility for its electrolysis solution, e.g., the delivery and installation of electrolyzers.
Consequently, we do not have control over the performance of the
project as a whole in these cases, whereas the success of the project may still affect the perception of our products and services. For example, we may at some point in the future deliver electrolyzers to a project, but we will not be involved
in the set-up of the project and linking the electrolysis system to the project itself. Any malfunctions, inconsistent power supply, mishandling of equipment, errors with installations or any other factor that may detrimentally affect the
project may in turn also affect the performance of our electrolysis systems. Similarly, our electrolysis solution may have to be compatible with other systems installed at a given site where incompatibility may be a product of any number of
factors which we may be unable to address.
The commercial failure of a large-scale project that we are
contributing to, operationally and/or strategically, may, whether or not we in actuality bear any fault or responsibility for such failure, have a negative impact on the perception and recognition of our products and on our relationship with
our customers. Any such negative impact or non-payment for our products and services could have a material adverse effect on our business, financial condition, results of operations, cash flow and prospects.
Disruptions in our supply chain or shortage of
materials and components and the resulting increase in electrolyzers, equipment and logistics costs could adversely affect our financial performance.
We are subject to risk from fluctuating market prices of certain raw
materials, particularly copper, nickel and steel, which are used in the construction and maintenance of our electrolyzers and projects, and there have
TABLE OF CONTENTS
been very sizable increases in recent months in the cost of these key metals, with
volatility in pricing expected to persist for the foreseeable future. Prices of these raw materials may be affected by supply restrictions or interruptions, shortages or other market factors from time to time, any of which could result in a
cost increase which could materially and negatively impact our business, financial condition results of operations, cash flow and prospects. Some of the components and materials related to the equipment we purchase are sourced from outside of
markets where we operate through arrangements with various vendors, and we have faced delays in obtaining these components and materials as a result of the COVID-19 pandemic, shipping and transportation constraints, the Russia-Ukraine conflict
and other supply chain disruptions.
We cannot predict whether the countries in which the components and
materials are sourced, or may be sourced in the future, will be subject to new or additional trade restrictions imposed by the governments of countries in which our projects are located, including the likelihood, type or effect of any such
restrictions. Trade restrictions, including embargoes, safeguards and customs restrictions against certain components and materials, as well as labor strikes and work stoppages or boycotts, could increase the cost or reduce or delay the supply
of components and materials available to us and our vendors, which could delay or adversely affect the scope of our projects under development or construction and adversely affect our business, financial condition, results of operations, cash
flow and prospects.
Additionally, our hydrogen production facilities rely on reliable
sources of water, which is generally fresh water, recycled produced water or salt water. There is competition for fresh water from municipalities, farmers, ranchers and industrial users. In addition, the availability of fresh water can also be
reduced directly by droughts. Prolonged drought conditions increase the intensity of competition for fresh water. Additionally, any limitations on access to fresh water for the production of hydrogen may adversely affect our business, financial
condition, results of operations, cash flow and prospects.
Furthermore, fluctuations or shortages in petroleum and other
economic conditions may cause us to experience significant increases in freight charges and material costs. Substantial increases in the prices for our materials or prices charged to us, such as those charged by resin and catalyzer suppliers,
would increase our operating costs and could reduce our margins. For example, due to the recent supply chain issues including COVID-19, the conflict in Ukraine, and the current inflationary environment in the United States, the cost of input
materials, components and processes required to produce electrolyzers or hydrogen production facilities is expected to increase, and we may need to increase the price of designing, developing, operating and maintaining our electrolyzers or
projects in response to these cost pressures. Price increases and other measures taken by us to offset higher costs could materially and adversely affect our reputation and brand, result in negative publicity and loss of customers and sales,
and adversely affect our business, financial condition, results of operations, cash flow and prospects.
Moreover, there are increasing expectations in various jurisdictions
that companies monitor the environmental and social performance of their suppliers, including compliance with a variety of labor practices, as well as consider a wider range of potential environmental and social matters, including the
end-of-life considerations for products. Compliance can be costly, require us to establish or augment programs to diligence or monitor our suppliers, or to design supply chains to avoid certain regions altogether. Failure to comply with such
regulations can result in fines, reputational damage, or import ineligibility for our products or product components, or otherwise adversely impact our business.
We, our outsourcing partners, and our suppliers
are subject to numerous regulations. Unfavorable changes to, or failure by us, our outsourcing partners or our suppliers to comply with these regulations could substantially harm our business, financial condition, results of operations, cash
flow and prospects.
We and our projects, as well as our customers, third-party
outsourcing partners and our suppliers are or will be subject to substantial regulation under foreign, federal, state and local laws. We continue to evaluate requirements for licenses, approvals, certificates and governmental authorizations
necessary to design, develop, construct, operate and maintain our projects in the jurisdictions in which we plan to operate and, to the extent we have not already, intend to take such actions necessary to comply. We may experience difficulties
in obtaining or complying with various licenses, approvals, certifications and other governmental authorizations necessary to design, develop, construct, operate and maintain our projects in any of these jurisdictions. If we, our customers,
third-party outsourcing partners or our suppliers are unable to obtain or comply with any of the licenses, approvals, certifications or other governmental authorizations necessary to carry out our operations in the jurisdictions in which we or
they currently operate, or those jurisdictions in which we or they plan to operate in the future, our business, financial condition, results of operations, cash flow and prospects could be materially
TABLE OF CONTENTS
adversely affected. We expect to incur significant costs in complying with these
regulations. Regulations related to the green hydrogen industry and renewable energy sector generally are evolving and we face risks associated with changes to these regulations.
To the extent the laws change, our projects may not comply with or be
positioned to take advantage of applicable foreign, federal, state or local laws, which may have an adverse effect on our business. Compliance with changing regulations could be burdensome, time consuming and expensive. To the extent compliance
with new regulations is cost prohibitive, our business, financial condition, results of operations, cash flow and prospects could be adversely affected.
Risks Related to Other Legal, Regulatory and Tax Matters
Our projects and the industry in which we
operate are highly regulated and may be adversely affected by legislative or regulatory changes or a failure to comply with energy regulations.
Our projects and the industry in which we operate are highly
regulated, and the scope and nature of regulation may vary depending on jurisdiction. The sale of hydrogen energy from our projects, either at wholesale or retail, and the transport of hydrogen therefrom, may be subject to varying levels of
regulation. In addition, our processing of information about individuals is subject to a patchwork of complex and ever-evolving data privacy and security laws and frameworks. Therefore, we may need certain authorizations, exemptions or waivers
prior to making any sales from our projects, transmitting hydrogen from our projects, and issuing securities. We may be required to file updates and comply with certain requirements relating to, among other things, ownership, affiliation and
market power, including changes thereto, to maintain such authorizations, exemptions or waivers, and failure to do so may result in our projects losing such authorization, exemptions or waivers. The loss or impairment of such authorizations,
exemptions or waivers could have a material adverse effect on our business, financial condition, results of operations, cash flow and prospects.
Our projects and certain upstream owners may be subject to books and
records requirements and accounting and recordkeeping requirements. Our projects may also be subject to certain reliability standards, administrative compliance obligations, reporting requirements and burdens. We and our projects could be
exposed to criminal and civil penalties, sanctions, disgorgement of profits and substantial monetary penalties for failure to comply with any such regulatory requirements.
A failure by us, our subsidiaries or projects to comply with
applicable energy laws, regulations and rules could have a material adverse effect on our business, financial condition, results of operations, cash flow and prospects, including any existing or future financing arrangements. In addition,
changes in law, policy, regulation or rule could adversely affect the rates, terms and conditions of services from our projects and, therefore, our revenues.
Green hydrogen markets may face a rapidly
evolving regulatory framework, which replaces or alters existing regulatory frameworks, and the dynamics of green hydrogen markets and electrolyzer markets may be changed significantly as a result thereof.
Green hydrogen represents an emerging market with regulatory and
political attention only beginning to gain traction over the last few years. We expect that this traction will materialize into concrete regulatory initiatives tailored to address specific features and risks relating to the green hydrogen
market across its focus markets. This could lead to significant changes to, among other areas, the regulation of energy and gas distribution, access to power infrastructure, safety standards for hydrogen production and distribution, and
certification and guarantee of origin instruments. Regulatory changes may also extend to the production, installation and testing of electrolyzers.
Accordingly, we may at some point in the future have to adapt to a
drastically different regulatory landscape relative to the one that it is currently operating in.
It cannot be guaranteed that we will be able to adapt to a rapidly
evolving regulatory landscape and, hence, may miss out on business opportunities or for any other reasons be unable to compete in a green hydrogen market with new regulations and rules affecting market structures and dynamics, which could have
a material adverse effect on our business, financial condition, results of operations, cash flow and prospects.
TABLE OF CONTENTS
Existing, and future changes to, federal,
state and local regulations and policies, including permitting requirements applicable to us, and enactment of new regulations and policies, may present technical, regulatory and economic barriers to the generation, purchase and use of hydrogen
and may adversely affect the market for the hydrogen. A failure on our part to comply with any laws, regulations or rules, applicable to us may adversely affect our business, financial condition, results of operations, cash flow and prospects.
The green hydrogen market is in a development phase and is not
currently subject to industry specific and uniform government regulations in all regions, including laws and regulations relating to matters such as production, design and installation of electrolyzers, hydrogen infrastructure or the handling,
transportation, certification and storage of green hydrogen, and other general safety aspects related to our business and the green hydrogen market, including rules relating to the assessment of the environmental impact of green hydrogen. We
expect that industry specific laws, regulations and guidelines will ultimately be developed, however, the regulatory and policy environment for hydrogen generation, purchase and use will continue to evolve and be subject to periodic change.
Depending on these changes, business and financial performance could
be adversely affected by any unfavorable changes in or interpretations of existing laws and regulations, or implementation of new laws, regulations, or other requirements. There can be no assurance that federal, state, and local governments
will not implement new laws and regulations that will require us to obtain additional permits, certifications, licenses, or other approvals from applicable agencies or impose onerous requirements and conditions on their operations, which could
result in increased compliance costs and divert significant management time and other resources. It may be difficult for us to foresee regulatory or legal changes impacting our business, and any actions required in order to respond to, or
prepare for, such changes could be costly and/or may negatively impact our operations. Changing laws and regulations could also hinder or delay our operations, increase operating costs, and reduce demand for its services.
Furthermore, although the political climate as a whole is currently
deemed positive for green hydrogen, there can be no guarantee that this sentiment will prevail or result in beneficial regulation for us. Any negative governmental actions such as changes to tax laws, compliance rules, technical standards,
duties or permit requirements could have an adverse effect on our business, financial condition, results of operations, cash flow and prospects, such as the ability to generate and monetize the zero or low carbon intensity environmental
attributes of green hydrogen. Further, changes in the hydrogen regulatory environment may give rise to new or increased compliance risks. For example, it may become more complex and costly to ensure compliance, and the level of sanctions in the
event of non-compliance may rise. Noncompliance with laws and regulations could result in penalties, sanctions, or other restrictions that could have a material adverse effect on our operations.
Our project site owners and operators are
also subject to extensive federal, state and local regulations and policies, including permitting requirements, on account of their separate operations. Any failure on their part to comply with any laws, regulations, rules or permits,
applicable to them may also adversely affect our business, financial condition, results of operations, cash flow and prospects.
As a project developer, we rely on close cooperation with project
site owners and independent operators that may be subject to additional federal, state and local regulations and policies. Like us, the industry in which our project site owners and operators operate is highly regulated, and the scope and
nature of regulation may vary depending on jurisdiction. For example, site owners may need to obtain permits from local agencies before project development can occur or may need to complete robust environmental review of a project before it can
move forward. A failure by our project site owners and operators to comply with applicable energy, development, and environmental laws, regulations and rules could have a material adverse effect on the operation of our projects, operations,
financial condition, and cash flow and prospects, including any existing or future financing arrangements. Additionally, there can be no assurance that federal, state, and local governments will not implement new laws and regulations that will
require our project site owners and operators to obtain additional permits, certifications, licenses, or other approvals from applicable agencies or impose onerous requirements and conditions on their operations, which could adversely affect
the operation of our projects.
TABLE OF CONTENTS
Our contracts with government entities may be
subject to unique risks, including possible termination of or reduction in the governmental programs under which we operate, instances in which our contract provisions allow the government entity to terminate, amend or change terms at their
convenience, and competitive bidding processes for the award of contracts.
We rely on government incentives and policies that support green
hydrogen and enhance the economic feasibility of developing hydrogen production projects. In some cases, we rely on contracts, grants, and other agreements with government entities in order to fund and develop our projects. If any of these
incentives or policies are adversely amended, eliminated or not extended beyond their current expiration dates, or if funding for these incentives is reduced, or if governmental support of renewable energy development, particularly green
hydrogen, is discontinued or reduced, it could adversely affect our ability to obtain financing, the viability of new hydrogen projects, and cost assumptions or the profitability of our existing projects. Additionally, there can be no assurance
that these government entities will not implement new regulations and policies that will impose onerous requirements and conditions as part of the contracts, grants, and other agreements that support hydrogen.
We are exposed to tariffs and changes in tariff
regulation and may be negatively affected by trade relations between the United States, China, the European Union, Spain and other countries.
We may be negatively affected by tariffs or adverse developments in
trade relations between the United States, China, the European Union, Spain and other countries, including any actions that may be taken by other countries in retaliation. Tariffs, the adoption and expansion of trade restrictions, the
occurrence or exacerbation of a trade war, or other governmental action related to tariffs, trade agreements or related policies could adversely affect our supply chain, access to equipment, costs and ability to economically serve certain
markets. We have no control over the trade policies of the United States or other countries and we may be negatively affected by additional restrictive economic measures, such as tariffs or other changes to U.S. trade policies. Additional
tariffs and extensions of existing tariffs are currently being considered by the U.S. government. Any further cost increases or decreases in availability caused by trade policies could slow our growth and cause our financial results and
performance metrics to suffer.
Restrictions on electrolyzer equipment imports,
and other factors affecting the price or availability of electrolyzer equipment, may increase our business costs.
A substantial portion of our equipment is imported from the United
Stated, Europe, and China and certain other countries. Any restrictions or additional duties imposed by the governments of the United States, Europe, or China, or of any other exporting countries could adversely affect our business, financial
condition, results of operations, cash flow and prospects.
Our cross-border operations require us to
comply with anti-bribery and anti-corruption laws.
Our international business requires us to comply with
anti-corruption, anti-bribery and other similar laws, including, but not limited to, the U.S. Foreign Corrupt Practices Act of 1977, as amended (the “FCPA”), the U.K. Bribery Act 2010, Chapter 9
(sub-chapter 5) of the Israeli Penal Law, 1977, and other anti-corruption and anti-bribery laws in countries in which we (or third parties acting on our behalf) conduct activities. These laws generally prohibit companies and their officers,
directors, employees, agents and anyone else acting on their behalf, from offering, promising, authorizing or providing anything of value to government officials for the purposes of influencing official decisions or otherwise securing an
improper advantage to obtain or retain business. The FCPA also requires U.S. issuers to make and keep books, records and accounts that accurately and fairly reflect transactions and dispositions of assets and to maintain a system of adequate
internal accounting controls. The U.K. Bribery Act 2010 also prohibits “commercial” bribery not involving government officials, the receipt of bribes, and requires companies to implement adequate procedures to prevent bribery.
We currently have interactions with government entities around the
world that expose us to potential risks under anti-corruption and anti-bribery laws. As we increase our international sales and business, our risks under these laws may increase. In addition, we may participate in relationships with third
parties whose conduct could potentially subject us to liability under the FCPA or other anti-corruption laws even if we do not explicitly authorize or have actual knowledge of such activities. We have established policies and procedures
designed to assist us and personnel acting on our behalf in complying with applicable anti-bribery laws and regulations; however, these policies and procedures may not prevent violation of these legal requirements, inadvertent or otherwise. Any
actual or alleged violation of the FCPA or other applicable anti-corruption and anti-bribery laws
TABLE OF CONTENTS
could result in whistleblower complaints, sanctions, settlements, prosecution,
enforcement actions, fines, damages, adverse media coverage, investigations, loss of export privileges, severe criminal or civil sanctions, or in the case of the FCPA, suspension or debarment from U.S. government contracts, any of which could
have a material adverse effect on our reputation, as well as our business, financial condition, results of operations and prospects.
Our cross-border operations expose us to
risks from sanctions and export control laws.
Our business must be conducted in compliance with applicable economic
sanctions and other trade controls, laws and regulations, such as those administered and enforced by the U.S. Department of Treasury’s Office of Foreign Assets Control, the U.S. Department of State, the U.S. Department of Commerce, the United
Nations Security Council, the European Union (including European Union member states), His Majesty’s Treasury of the United Kingdom or other relevant sanctions authorities, which may restrict our transactions in certain markets, and with
certain customers, business partners and other persons and entities. Our global operations expose us to the risk of violating, or being accused of violating, trade controls, laws and regulations. Our failure to comply with these laws and
regulations may expose us to reputational harm as well as significant penalties, including criminal fines, imprisonment, civil fines, disgorgement of profits, injunctions and debarment from government contracts, as well as other remedial
measures. Investigations of alleged violations can be expensive and disruptive. While we believe we have been in compliance with sanctions requirements and strive to maintain such compliance, any such violation could materially adversely affect
our reputation, business, financial condition, results of operations, cash flow and prospects.
The reduction or elimination of government
subsidies and economic incentives, including tax credits, for green hydrogen, or the failure to renew such subsidies and incentives, could reduce demand for our products, lead to a reduction in our revenues, and adversely impact our operating
results and liquidity.
Regionally and nationally, the green hydrogen market and the
electrolysis industry is exposed to the political and regulatory framework surrounding renewable energy, hydrogen, and the general energy transition. We believe that the near-term growth of green hydrogen is affected by the availability and
size of government and economic incentives. Specific regulatory initiatives that directly affect the green hydrogen market generally comprise various government subsidies, CO2 abatement requirements and the tariff and tax credits applicable to
renewable energy and hydrogen which can also have significant impact on the electrolysis industry. Various regulatory efforts have been made, and are in the making, to support the energy transition and, by implication, the commercialization of
green hydrogen. These efforts also extend to the electrolysis industry. However, many regulatory efforts remain in their early stages and have not been implemented. Often, their exact contents and scope remain subject to ongoing political
debate and adjustments, with consequential uncertainties, including that future subsidies or tax credits may apply only to other alternative energy sources and not green hydrogen.
We, as a provider of electrolysis solutions, as well as owners and
operators of renewable energy plants which are producing green hydrogen via water electrolysis, are often relying on access to subsidies and tax credits to finance projects and we expect to continue to be reliant on such subsidies and tax
credits for the foreseeable future. We are therefore highly sensitive to any adverse changes to current subsidies from which we or our customers are benefitting. Generally, the development of the green hydrogen market may slow down if subsidies
are reduced or otherwise made wholly or partly unavailable. New policies supporting the commercialization of the green hydrogen market may be changed or not come into existence at all due to any number of reasons, including an absence of
political will, political focus shifting towards other alternatives, and/or a lack of public funding. This could cause the development and growth of clean power technologies, including electrolysis technologies, to cease and the market for
electrolyzers and electrolysis solutions could be materially impaired. The occurrence of any of the foregoing could have a material adverse effect on our business, financial condition, results of operations, cash flow and prospects.
Furthermore, changes or amendments to clean energy tax credits might
result in a reduction of the green hydrogen tax credits currently available or be more favorable to other technologies. Many of the current tax credits for green hydrogen expire, phase out over time, may exhaust the allocated funding, or
require renewal by the applicable authority. In addition, these incentive programs could be reduced or discontinued for other reasons. The IRA contains a number of tax incentive provisions including an extension and amendment of the Section 48
investment tax credit (“ITC”) for projects that “begin construction” before 2025 and a new Section 45V Clean Hydrogen PTC, among other items. In many instances, the relevant taxpayer will have to comply
with prevailing
TABLE OF CONTENTS
wage and apprenticeship requirements to maximize the value of these new clean energy
tax credits. We believe the tax credits available under the IRA are likely to have a positive impact on the demand for green hydrogen and our products; however, this legislation was adopted in August 2022, and forthcoming interagency guidance
processes are still ongoing. We have not yet seen the impact these IRA-related incentives may have on our business and operations and cannot guarantee we will realize anticipated benefits of incentives under the IRA, particularly as we adapt to
an ongoing and nascent regulatory guidance process regarding the detailed requirements of various new energy provisions. Any reduction, elimination, or discriminatory application of expiration of the ITC, PTC or other government subsidies and
economic incentives, or the failure to renew such tax credit, governmental subsidies, or economic incentives, may result in the diminished economic competitiveness of our products to our customers and could materially and adversely affect the
growth of green hydrogen, including our products, as well as our future operating results and liquidity.
We may not be able to obtain, or agree on,
acceptable terms and conditions for grants, loans and other incentives for which we may apply.
We anticipate applying for federal loans, and, where applicable,
grants and tax incentives under government programs designed to support the production of renewable energy and related technologies, as well as the sale of hydrogen. We anticipate that in the future there will be new opportunities for us to
apply for grants, loans and other incentives from various federal, state and foreign governments, including the United States and the European Union. Our ability to obtain funds or incentives from government sources is subject to the
availability of funds under applicable government programs and approval of its applications to participate in such programs. The application process for these funds and other incentives will likely be highly competitive. We cannot assure you
that we will be successful in obtaining any of these additional grants, loans and other incentives. If we are not successful in obtaining any of these additional incentives and we are unable to find alternative sources of funding to meet our
planned capital needs, our business, financial condition, results of operations, cash flow and prospects could be materially adversely affected.
Our business is subject to liabilities and
operating restrictions arising from environmental, health and safety laws, regulations, and permits.
Our projects are subject to various environmental, health and safety
(“EHS”) laws, regulations, guidelines, policies, directives, permits, and other requirements governing or relating to, among other things:
•
|
the protection of wildlife, including migratory birds, bats, and threatened and endangered species, such as desert tortoises, or
protected species such as eagles, and other protected plants or animals whose presence or movements often cannot be anticipated or controlled;
|
•
|
water use, and discharges of silt-containing or otherwise polluted waters into nearby wetlands or navigable waters;
|
•
|
hazardous or toxic substances or wastes and other regulated substances, materials or chemicals, including those existing on a
project site prior to our use of the site or the releases thereof into the environment;
|
•
|
land use, zoning, building, and transportation laws and requirements, which may mandate conformance with sound levels, radar and
communications interference, hazards to aviation or navigation, or other potential nuisances such as the flickering effect, known as shadow flicker, caused when rotating wind turbine blades periodically cast shadows through openings
such as the windows of neighboring properties;
|
•
|
the presence or discovery of archaeological, historical, religious, or cultural artifacts at or near our projects;
|
•
|
the protection of workers’ health and safety; and
|
•
|
the proper decommissioning of the site at the end of its useful life.
|
If our projects do not comply with such laws, regulations,
requirements or permits, each of which may vary across the jurisdictions in which we operate projects, we may be required to pay penalties or fines, curtail or cease operations of the affected projects, make costly modifications to such
projects or seek new or amended permits for our projects. Violations of environmental and other laws, regulations, and permit requirements,
TABLE OF CONTENTS
including certain violations of laws protecting wetlands, migratory birds, and
threatened or endangered species, may also result in criminal sanctions or injunctions. The global EHS regulatory environment continues to change, and significant changes in the legislative or regulatory EHS environment in jurisdictions in
which we operate may have a material impact on our business.
Our projects also carry inherent EHS risks, including the potential
for related civil litigation, regulatory compliance, remediation orders, fines, and other penalties. For instance, equipment or machinery at our projects could malfunction or experience other unplanned events that cause spills that exceed
permitted levels, resulting in personal injury, fines, or property damage. EHS laws and regulations have generally become more stringent over time, and we expect this trend to continue. We may need to incur significant capital and operating
costs to keep our projects in compliance with EHS laws and regulations. If it is not economical to make those expenditures, or if we violate any of these laws and regulations, it may be necessary to retire or suspend operations of our projects
or restrict or modify our operations to obtain or maintain compliance, either of which could have a material adverse effect on our business, financial condition, results of operations, cash flow and prospects.
Additionally, we may be held liable for related investigatory and
clean-up costs for any property where there has been a release or potential release of a hazardous substance, regardless of whether we knew of or caused the release or potential release, even in the absence of negligence. We could also be
liable for other costs, including fines, personal injury, property damage or damage to natural resources. In addition, some environmental laws place a lien on a contaminated site in favor of the government as security for damages and costs it
may incur relating to contamination and clean-up. Contained or uncontained hazardous substances on, under, or near our projects, regardless of whether we own or lease the property, or the inability to remove or otherwise remediate such
substances may restrict or eliminate our ability to operate our projects.
Our projects are designed specifically for the landscape of each
project site and cover a large area. Despite the fact that we conduct studies of project sites prior to construction, problems may arise, such as the discovery of archaeological, historical or cultural artifacts, threatened or endangered
species or their habitat, or hazardous materials at our project sites. Such discoveries could result in the restriction or elimination of our ability to operate our business at a particular project site or, if during construction, could result
in delays, cost overruns or termination of construction. Landscape-scale projects and operations may also cause effects to certain landscape views, trails or traditional cultural activities. Such effects may trigger claims from members of local
communities alleging that our projects are infringing upon their legal rights or other claims, which could result in the restriction or elimination of our ability to operate our business at a particular project site.
Furthermore, federal, state, and local governments are increasingly
regulating and restricting the use of certain chemicals, substances, and materials. Some of these policy initiatives could foreseeably be impactful to our business. For example, laws, regulations, or other policy initiatives might address
substances found within component parts to our products, in which event our Company would be required to comply with such requirements.
Violations of environmental and other laws, regulations and permit
requirements, the discovery of archaeological, historical or cultural artifacts, threatened or endangered species or their habitat, or hazardous materials at our project sites, or adverse effects on public or private lands could also result in
negative publicity for us, which could, in turn, limit our ability to develop our solar energy and wind energy projects and acquire interests in additional renewable energy projects on favorable terms or at all.
Climate change and climate change policies
might affect our business, our industry, and the global economy.
We acknowledge the significant challenge presented by climate change,
and see our work in developing cost-effective, clean, renewable green hydrogen as part of the solution. However, we acknowledge that climate change will potentially have wide-ranging impacts, including potential impacts to our Company.
Unanticipated environmental, societal, economic, or geopolitical effects of climate change might affect business operations. For example, increasingly severe and frequent weather events might disrupt our supply chain or adversely affect our
customers. Relatedly, government policies addressing climate change could similarly impact our business operations. We believe that many of these policies will be favorable for our hydrogen solutions. However, there is no guarantee that such
potential changes in laws, regulations, or policies will be favorable to our Company, to existing or future customers, or to large-scale economic, environmental, or geopolitical conditions.
TABLE OF CONTENTS
We are, and may in the future be, subject to
legal proceedings in the ordinary course of our business. If the outcomes of these proceedings are adverse to us, it could have a material adverse effect on our business, financial condition, results of operations, cash flow and prospects.
We are subject to various litigation matters from time to time, the
outcome of which could have a material adverse effect on our business, financial condition, results of operations, cash flow and prospects. Claims arising out of actual or alleged violations of law could be asserted against us by individuals,
either individually or through class actions, by governmental entities in civil or criminal investigations and proceedings or by other entities. These claims could be asserted under a variety of laws, including, but not limited to, consumer
finance laws, consumer protection laws, tort laws, environmental laws, intellectual property laws, privacy laws, labor and employment laws, securities laws and employee benefit laws. We may also become subject to allegations of discrimination
or other similar misconduct, which, regardless of the ultimate outcome, may result in adverse publicity that could harm our brand, reputation and operations. Claims may also arise out of actual or alleged breaches of contract or other actual or
alleged acts or omissions by or on behalf of us. These actions could expose us to adverse publicity and to substantial monetary damages and legal defense costs, injunctive relief and criminal and civil fines and penalties, including, but not
limited to, suspension or revocation of licenses to conduct business. Even if we are successful in defending against legal claims, litigation could result in substantial costs and demand on management resources.
Our corporate structure and intercompany
arrangements are subject to the tax laws of various jurisdictions, and we could be obligated to pay additional taxes.
We are subject to income taxes in the United States, the European
Union, including Spain, and various foreign jurisdictions. A number of factors may adversely affect our future effective tax rates, such as the jurisdictions in which our profits are determined to be earned and taxed; changes in the valuation
of our deferred tax assets and liabilities; adjustments to estimated taxes upon finalization of various tax returns; changes in available tax credits, grants and other incentives; changes in stock-based compensation expense; the availability of
loss or credit carryforwards to offset taxable income; changes in tax laws, regulations, accounting principles or interpretations thereof; or examinations by U.S. federal, state or foreign jurisdictions that disagree with interpretations of tax
rules and regulations in regard to positions taken on tax filings. A change in our effective tax rate due to any of these factors may adversely affect the carrying value of our tax assets and our future results from operations.
Governments in the United States, in the European Union and/or any
other jurisdiction where we are established or operate (or may operate in the future) continue to review, reform and modify tax laws, regulations, treaties, interpretations, policy initiatives and tax authority practices, and the applicable
treatment for tax purposes is subject to changes. It is not possible to predict whether a tax reform may be proposed or enacted in the future (including with retroactive effect) or whether such changes could have a significant impact on the
Company’s businesses, resulting in material changes to the taxes that the Company and its subsidiaries are required to provide for and pay.
For instance, there are a number of international tax developments,
including at the level of the Organisation for Economic Co-operation and Development (“OECD”) or at the EU level, aimed at achieving a greater tax transparency within multinational groups and
implementing effective anti-tax avoidance measures, including the Base Erosion and Profit Shifting project developed by the OECD, which includes 15 actions that are still currently being developed and may lead to additional initiatives at the
OECD, EU or national levels (such as the very recent approval of the Multilateral Convention to Implement Tax Treaty Measures to Prevent Base Erosion and Profit Shifting) or the EU Anti-Tax Avoidance Directives adopted by the EU Council.
When tax laws and regulations change, or when new tax laws and
regulations are introduced and implemented, such changes or new laws and regulations may be unclear in certain respects and could be subject to further potential amendments and technical corrections, and may be subject to interpretations and
implementing regulations by the relevant governmental authorities, any of which could mitigate or increase certain adverse effects of the tax changes or of the new tax laws and regulations. Existing tax laws and regulations could also be
interpreted or applied in a manner adverse to the Company or other group companies.
We are subject to tax in the U.S. and in multiple jurisdictions as we
expand internationally, which requires additional expertise to ensure compliance with various domestic and international tax laws. Therefore, the development of our global tax footprint and compliance with these laws may impact how we conduct
our
TABLE OF CONTENTS
business and affect our financial position, operating results, and cash flows. In
addition, as our business grows and we engage in more sophisticated transactions, we are required to comply with increasingly complex taxation rules and practices, and the applicability of special tax regimes to the transactions we are a party
to (including the Business Combination) may be reviewed or challenged by the relevant tax authorities, based on a different interpretation of the applicable law.
We may also be subject to general reviews or audits by tax
authorities in the various jurisdictions in which we operate, and although we believe our tax policies are reasonable, if the applicable taxing authorities disagree with the positions taken on our tax returns with respect to the source or the
amount of the income we report in the various jurisdictions in which we are established or otherwise operate, or if they deem us not be otherwise compliant with all applicable tax laws and regulations, tax authorities may carry out enforcement
actions against us. Enforcement actions may be administrative, civil or criminal in nature, and could result in litigation, payments of additional taxes, penalties, interest or other sanctions. Any such non-compliance with applicable tax laws
and regulations and their consequences to us may impact our operations, or even our ability to operate in such jurisdictions, and may adversely affect our business, prospects, financial condition and results of operations.
Risks Related to Information Technology, Intellectual Property,
Data Security and Privacy
If we are unable to maintain, protect or
enforce our rights in our proprietary technology, brands or other intellectual property, our competitive advantage, business, financial condition, results of operations, cash flow and prospects could be adversely affected.
We attempt to protect our intellectual property and proprietary
technology through a combination of patent, trademark, copyright and trade secret laws, as well as licensing agreements and third-party nondisclosure and assignment agreements. Our failure to obtain or maintain adequate protection of our
intellectual property rights for any reason could have a material adverse effect on our business, financial condition, results of operations, cash flow and prospects.
We are seeking patent protection for certain technologies relating
to our business, including technologies relating to hydrogen generators, electrolysis stacks and a solid oxide electrolysis cells, and expect to file additional patent applications in the future. While we generally apply for patents in
countries which might be desirable for the commercialization of our technologies, we may not accurately predict all the countries where patent protection will ultimately be desirable. If we fail to timely file a patent application in any such
country, we may be precluded from doing so at a later date. In addition, we cannot assure you that any of our patent applications will be granted or will issue as patents. The scope of patent protection could be narrowed during the
application process, and accordingly we cannot assure you that the resulting patents would be of sufficient scope to provide us with any meaningful protection or commercial advantage. Furthermore, any patents that we do obtain could be
challenged, invalidated or circumvented by others, and our competitors could infringe our patents; however, we cannot assure you that we will learn of all instances of infringement, and even if we become aware of infringement, we cannot
assure you that we will have adequate resources to enforce our patents.
We also rely on unpatented proprietary technology in the conduct of
our business. For example, such technology is embodied in the plants that we design, build and sell. It is possible that others will independently develop the same or similar technology, attempt to discover our technology through illegal or
improper means, or reverse engineer, replicate or otherwise access our technology. To protect our unpatented technology, trade secrets and other proprietary information, we generally require employees and other persons whom we grant access to
such information to enter into confidentiality agreements and to relinquish any right in favor of the Company for any work produced in relation to the Company. We cannot assure you that these agreements will provide meaningful protection or
that we have included confidentiality provisions in every agreement with persons who receive access to our proprietary information. There is also a risk that our confidentiality agreements will be breached. If we are unable to maintain the
proprietary nature of our technologies, our business could be materially adversely affected.
We rely on our trademarks and trade name to distinguish our products
and services from the products and services of our competitors. Third parties may seek to cancel our trademark registrations, or otherwise challenge our use of trademarks. In the event that our trademarks are successfully challenged, we could
be forced to
TABLE OF CONTENTS
rebrand our products and services, which could result in loss of brand recognition,
and could require us to devote resources advertising and marketing new brands. Further, we cannot assure you that competitors will not infringe our trademarks, or that we will have adequate resources to enforce our trademark rights if they are
infringed or otherwise violated.
Patent, trademark, trade secret and other intellectual property laws
vary significantly throughout the world. A number of foreign countries do not protect intellectual property rights to the same extent as they are protected in the United States. Therefore, our intellectual property rights may not be as strong
or as easily enforced outside of the United States. Failure to adequately protect our intellectual property rights could result in our competitors offering similar products, potentially resulting in the loss of some of our competitive advantage
and a decrease in our revenue, which would adversely affect our business, financial condition, results of operations, cash flow and prospects.
Our inability to develop effective new
technologies, and obtain and retain licenses to intellectual property owned by third parties for the commercialization of our products, may negatively impact our prospects and financial results.
In order to commercialize certain of our products, we license
third-party patents and unpatented technology, in exchange for royalty payments and our performance of other obligations. These licenses may be terminated by the licensors in certain circumstances, including for uncured material breaches. Our
breach of any of these licenses may expose us to financial liability or legal claims, and the termination of any of the licenses could require us to cease making, using or selling products that exploit the patented technology. In the future, we
may not be able to secure rights, on reasonable terms, or at all, to any improvements to the patented inventions that we license. Our existing patent licenses grant us exclusive rights, which protects us from having our competitors being able
to use the patented technology. Although our licensors are generally contractually obligated to assist us in enforcing the licensed rights against infringers, we cannot guarantee that they will do so. Any of the foregoing may result in a loss
of competitive advantage, decrease in our revenue, or increase in our operating expenses, or otherwise adversely affect our business, financial condition, results of operations, cash flow and prospects.
We also collaborate with universities and publicly-funded research
organizations to research and develop certain technologies for possible commercialization in the future. We cannot guarantee that these collaborations will result in any meaningful developments or otherwise generate value for our business.
Moreover, we cannot guarantee that we will own or be able to license (on the terms we desire, or at all) the intellectual property that may arise from these collaborations. Other companies, including our current and future competitors, may also
pursue strategies to collaborate with universities and research organizations, and otherwise develop, license or acquire intellectual property rights that we may consider attractive or necessary to maintain or improve our competitive position,
thereby preventing us from obtaining the rights to use such intellectual property ourselves. Any of the foregoing could harm our business, financial condition, results of operations, cash flow and prospects.
If third parties claim that we infringe upon
their intellectual property rights, our operating profits could be adversely affected.
We face the risk of claims that we have infringed, misappropriated,
diluted or otherwise violated third parties’ intellectual property rights. For example, third parties own patents for electrolysis technology used in our industry. Our competitors, some of which have greater resources, longer operating
histories, and have made substantial investments in competing technologies, may have applied for or obtained, or may in the future apply for and obtain, patents that will prevent, limit or otherwise interfere with our ability to make, use and
sell our products. We have not conducted a comprehensive, independent review of patents granted or issued to third parties. The large number of existing patents covering technologies in our field, together with the rapid rate of new patent
issuances, as well as the complexities of the technology involved and the uncertainty of the scope of patents that have issued, make it difficult to ascertain whether or not we infringe third-party patents in conducting our business. In
addition, the proposed offering may increase the risk of third parties asserting claims that our technologies or the conduct of our business infringes their intellectual property rights. Any claims of patent or other intellectual property
infringement, even those without merit, could:
•
|
be expensive and time consuming to defend;
|
•
|
cause us to cease manufacturing, using or selling products that incorporate or otherwise use the asserted intellectual property;
|
TABLE OF CONTENTS
•
|
require us to redesign, reengineer, or rebrand our products, if feasible;
|
•
|
divert management’s attention and resources;
|
•
|
impair our ability to retain customers or attract prospects; and
|
•
|
require us to license third-party intellectual property.
|
Any licensing agreements, if required, may not be available to us on
acceptable terms or at all. A successful claim of infringement against us, or the settlement of an infringement claim, could result in our being required to pay significant damages, enter into costly license agreements, or cease making, using,
or selling certain products, any of which could have a negative impact on our business and harm our future prospects.
If we or our third-party service providers
suffer a security incident or breach, our reputation may be harmed, we may lose customers or prospects, and we may incur significant liabilities, any of which would harm our business and results of operations.
Security incidents, in particular, cyberattacks, computer malware,
viruses, social engineering (including phishing attacks), ransomware attacks and hacking are becoming more prevalent. We are at risk of security incidents, including with respect to our IT systems, the projects that are built, operated or
maintained by us or third parties, and the customer data that we process. A security incident could be caused by disasters, insiders or third parties, including through inadvertent acts or omissions, negligence, or malicious acts such as
hacking or the use of viruses, ransomware, or malware. In addition, third parties may use phishing, fraud or other forms of deception to induce our employees, suppliers, research partners, or other third parties with whom we do business to
disclose information, or to obtain access to our IT systems, facilities, data, or confidential and proprietary information and technologies. We have taken and we intend to continue to take steps to monitor and improve the data security of our
IT systems, facilities, and confidential and proprietary information and technologies, including devoting financial and personnel resources to implement and maintain technical, administrative, and organizational security measures. Currently,
our data security program is managed by our senior management. In addition to the technical security measures that we have implemented to mitigate the risk of security breaches and manage data security risks, our senior management briefs our
board on our ongoing efforts to update and improve our data security program. Additionally, our board is alerted to and provided information about any material suspected or actual security breaches, which includes any severe threats or
vulnerabilities to our internal protocols. Although we have systems and measures in place that are designed to protect us against intellectual property theft, data security and other security incidents, techniques used to perform cyberattacks
and compromise data and systems change frequently. As such, we cannot guarantee that our systems and measures will be adequate to prevent, detect, or mitigate the effects of these attacks, now or in the future. Further, we may be unable to
detect a security incident for an extended period of time, or to adequately react in a timely manner. In addition, any failure to timely, accurately, or fully report security risks to our board could result in inadequate investment of
resources into our security program, which could make us susceptible to security breaches or other cybersecurity threats. Failure to alert our board of any actual or suspected security breaches or other cybersecurity threats could also result
in inaccurate or incomplete reporting to regulators or insufficient remediation efforts for such breaches or threats, which could result in substantial increased costs and could lead to litigation, investigation, fines and reputational damage
which would adversely affect our business. As cybersecurity threats develop, evolve and grow more complex over time, we expect to make further investments to protect our business against security incidents in future.
A security breach suffered by us or our third-party service providers
or any unauthorized, accidental or unlawful access or loss of data, or the perception that any such event has occurred, could result in a disruption to our operations, litigation, an obligation to notify regulators and affected individuals, the
triggering of indemnification and other contractual obligations to our customers, regulatory investigations, government fines and penalties, reputational damage, loss of sales, customers and prospects, expenses related to mitigation and
remediation, and other significant costs and liabilities. In addition, we may incur significant costs and operational consequences in relation to investigating, remediating, and addressing actual or perceived security incidents, as well as the
costs to comply with any notification or other obligations resulting from any such incidents. Any of the foregoing could materially affect our business, financial condition, results of operations, cash flow and prospects. In addition, we do not
currently have insurance coverage for cybersecurity incidents.
TABLE OF CONTENTS
The actual or perceived failure to comply
with data privacy and data security laws, regulations and industry standards could have a material adverse effect on our reputation, results of operations or financial condition or have other adverse consequences.
We are subject to various laws, related regulations, and industry
standards involving data privacy and security. Such laws and regulations relating to data privacy and security are continuously evolving and subject to potentially differing interpretations. These requirements may be interpreted and applied in
a manner that is inconsistent from one jurisdiction to another or may conflict with other rules or our practices. As a result, our practices may not have complied in the past or may not comply now or in the future with all such laws,
regulations, requirements and obligations.
Risks Related to Spain and Europe
Economic conditions in the European Union and
Spain could have a material adverse effect on our business, financial condition, results of operations, cash flow and prospects.
Economic conditions in the European Union and Spain, where we have
significant operations, are influenced by economic developments and volatility in economic conditions in other countries and macroeconomic factors. Investors’ reactions to developments in one country may adversely affect the economic conditions
of companies located in other countries, including Spain. For instance, the economic downturn in the U.S. and several European countries during 2008 and 2009, and in 2020 and 2021, adversely affected prices in the global markets, including
Spain. Negative economic developments, such as rising fiscal or trade deficits, rising inflation rates or a default on national debt, in other emerging market countries may also affect investor confidence and cause increased volatility in
Spanish markets and indirectly affect the Spanish economy in general. Furthermore, global events like COVID-19 or the Russia-Ukraine conflict can materially impact the global economic conditions and reduce the flow of funds through equity or
debt in the European Union and Spain. Any worldwide financial instability could also have a negative impact on the European and Spanish economies, including the movement of exchange rates and interest rates, which could then adversely affect
our business and financial performance. Any other global economic developments or the perception that any of them could occur may adversely affect global economic conditions and the stability of global financial markets, and may significantly
reduce global market liquidity and restrict the ability of key market participants to operate in certain financial markets. Any of these factors could depress economic activity and restrict our access to capital, which could have an adverse
effect on our business, financial condition, results of operations, cash flow and prospects.
Slowdown in the growth of the European and Spanish economies could
adversely affect our business and growth plans. The growth rate of the European Union’s and Spain’s GDP was 1.7% and 2.7%, respectively, in 2022, compared to 2.6% and 4.8%, respectively, in 2021. The European Union’s and Spain’s GDP growth in
2022 was adversely affected by COVID-19, the Russian-Ukraine conflict and rising inflation rates. Further, as a result of rising inflation rates, the European Central Bank has increased interest rates and has signaled an initiative to combat
rising inflation through increased interest rates in line with other central banks globally. The performance and growth of our business are necessarily dependent on economic conditions prevalent in the European Union and Spain, which may be
adversely affected by such economic slowdown and global crisis. Notwithstanding the European Central Bank’s and the Bank of Spain’s policy initiatives, the course of market interest rates continues to be uncertain due to the high inflation and
the increase in the fiscal deficits. Any continued or future inflation because of increases in prices of commodities, may result in a continued tightening of monetary policy and could materially and adversely affect our business, financial
condition, results of operations, cash flow and prospects. Further increases in interest rates or reduction in liquidity could restrict our access to capital and could adversely impact our business, financial condition, results of operations,
cash flow and prospects.
A substantial portion of our business and
operations is located in Spain and we are subject to regulatory, economic, social and political uncertainties in Spain.
A substantial portion of our business and employees is located in
Spain, and we intend to continue to develop and expand our business in Spain. Consequently, our financial performance and the price of the Surviving Corporation Common Stock will be affected by changes in exchange rates and controls, interest
rates, changes in government policies, including taxation policies, social and civil unrest and other political, social and economic developments in or affecting Spain.
TABLE OF CONTENTS
The government of Spain has exercised and continues to exercise
significant influence over many aspects of the Spanish economy. Spain has a mixed economy with a large public sector and an extensively regulated private sector. The government of Spain and the state governments play a significant role in the
Spanish economy and the effect on producers, consumers, service providers and regulators over the years. The government of Spain has in the past, among other things, imposed controls on the prices of a broad range of goods and services,
restricted the ability of businesses to expand existing capacity and reduce the number of their employees and determined the allocation to businesses of raw materials and foreign exchange. We may not be able to react to such changes promptly or
in a cost-effective manner. Increased regulation or changes in existing regulations may require us to change our business policies and practices and may increase the cost of providing services to our customers which would have an adverse effect
on our operations and our financial condition and results of operations.
There is no assurance that we would be able to comply with any new
measures on a timely and cost-effective basis and we may be subjected to regulatory actions for not adhering to all of the preventive measures. The rate of regulation could change, and specific laws and policies affecting renewable energy or
hydrogen production, foreign investments, currency exchange rates and other matters affecting investments in Spain or our business could change as well. A significant change in Spain’s regulatory policies or any social or political
uncertainties could adversely affect business and economic conditions in Spain generally and our business and prospects.
We are subject to various labor laws,
regulations and standards in Spain. Non-compliance with and changes in such laws may adversely affect our business, financial condition, results of operations, cash flow and prospects.
We are required to comply with various labor and industrial laws in
Spain, which vary from time to time. The last major labor reform was approved by the Spanish Congress on February 3, 2022 and entailed key changes with respect to, amongst others, fixed-term employment, collective furloughs and labor sanctions.
Labor reforms and consultative procedures with employee representative bodies could limit our flexibility in terms of hiring, implementing changes in terms and conditions of employment or for rationalizing our workforce in the event of poor
market conditions. There is no assurance that our costs of complying with current and future labor laws and other regulations will not adversely affect our business, financial condition, results of operations, cash flow and prospects. There is
a risk that we may fail to comply with such regulations, which could result in us being exposed to sanctions and fines, and may lead us to stop operations which could have an adverse impact on our operations.
Changes in the taxation system in Spain could
adversely affect our business.
Our operations, profitability and cash flows could be adversely
affected by any developments in Spanish central, state or local-level statutory or regulatory requirements in connection with direct and indirect taxes and duties, including, among others corporate income tax, value added tax or excise duties
(or any new taxes or duties that may be imposed in the future), or by any unfavorable interpretation of the applicability of current and future taxes and duties taken by the relevant taxation authorities or courts in Spain. In addition, some of
H2B2’s subsidiaries are incorporated in Spain, and as such are considered resident of Spain for Spanish tax purposes.
In addition, in December 2022 the Spanish Government imposed a
specific extraordinary and temporary tax over the revenues of the Spanish energy generators that qualify as “Key Energy Operators” (the “Windfall Tax”). The definition of Key Energy Operators include
(i) operators listed by the Spanish Competition Commission (“Listed Operators”) (unless they have a net turnover in 2019 lower than €1 billion or have a net turnover derived from their energy activity
that represent less than 50% of their total net turnover in 2017, 2018 and 2019, with their net turnover being assessed by reference to the fiscal unity to which they belong, if applicable) and (ii) other companies engaged in the production of
oil, gas, coil and refining activities in Spain, having at least 75% of their turnover in their preceding year derived from such activities.
Key Energy Operators, as described above, are currently subject to
the Windfall Tax in Spain, payable in years 2023 and 2024 (subject to eventual extensions, which cannot be ruled out, or that the Windfall Tax becomes a permanent tax). The Windfall Tax rate is 1.2% and is levied over the amount of the net
turnover derived from the activities carried out by the Key Energy Operator in Spain in years 2022 and 2023, as per the taxpayer’s profit and loss account subject to certain adjustments.
Based on the above, Windfall Tax is not currently applicable to us as
we do not fall within any of the limbs of the definition of Key Energy Operators. In particular, we are not Listed Operators nor are we engaged in the
TABLE OF CONTENTS
activities referred to under limb (ii) above (i.e. production of oil, gas, coil and
refining), as we are engaged in other type of energy-producing activities. That said, there is no assurance that the current drafting of the Spanish tax law may be amended so that we could be included within the scope of the Windfall Tax in the
future, which would adversely affect our cash flow and prospects
For additional information, please see the risk factor “Our corporate structure and intercompany arrangements are subject to the tax laws of various jurisdictions, and we could be obligated to pay additional taxes.”
Risks Related to Being a Public Company
The market price of the Surviving Corporation
Common Stock may be volatile or may decline regardless of the Surviving Corporation’s operating performance. You may lose some or all of your investment.
The trading price of the Surviving Corporation Common Stock following
completion of the Business Combination is likely to be volatile. The stock market recently has experienced extreme volatility. This volatility often has been unrelated or disproportionate to the operating performance of particular companies.
You may not be able to resell your shares of Surviving Corporation Common Stock at an attractive price due to a number of factors such as the following:
•
|
the impact of COVID-19 on the Surviving Corporation’s financial condition and the results of operations;
|
•
|
the Surviving Corporation’s operating and financial performance and prospects;
|
•
|
the Surviving Corporation’s quarterly or annual earnings or those of other companies in its industry compared to market
expectations;
|
•
|
conditions that impact demand for the Surviving Corporation’s products and/or services;
|
•
|
future announcements concerning the Surviving Corporation’s business, its clients’ businesses or its competitors’ businesses;
|
•
|
the public’s reaction to the Surviving Corporation’s press releases or other public announcements and filings with the SEC;
|
•
|
the market’s reaction to the Surviving Corporation’s reduced disclosure and other requirements as a result of being an “emerging
growth company” under the JOBS Act;
|
•
|
the size of RMG III’s public float;
|
•
|
coverage by or changes in financial estimates by securities analysts or failure to meet their expectations;
|
•
|
market and industry perception of the Surviving Corporation’s success, or lack thereof, in pursuing its growth strategy;
|
•
|
strategic actions by the Surviving Corporation or its competitors, such as acquisitions or restructurings;
|
•
|
changes in laws or regulations which adversely affect the Surviving Corporation’s industry or the Surviving Corporation;
|
•
|
privacy and data protection laws, privacy or data breaches, or the loss of data;
|
•
|
changes in accounting standards, policies, guidance, interpretations or principles;
|
•
|
changes in senior management or key personnel;
|
•
|
issuances, exchanges or sales, or expected issuances, exchanges or sales of the Surviving Corporation capital stock;
|
•
|
changes in the Surviving Corporation’s dividend policy;
|
•
|
the impact of COVID-19 on the Surviving Corporation’s financial condition and the results of operations;
|
•
|
adverse resolution of new or pending litigation against the Surviving Corporation; and
|
TABLE OF CONTENTS
•
|
changes in general market, economic and political conditions in the United States and global economies or financial markets,
including those resulting from inflation, natural disasters, terrorist attacks, acts of war and responses to such events.
|
These broad market and industry factors may materially reduce the
market price of Surviving Corporation Common Stock, regardless of the Surviving Corporation’s operating performance. In addition, price volatility may be greater if the public float and trading volume of Surviving Corporation Common Stock is
low. As a result, you may suffer a loss on your investment.
In the past, following periods of market volatility, stockholders
have instituted securities class action litigation. If the Surviving Corporation was involved in securities litigation, it could have a substantial cost and divert resources and the attention of management from the Surviving Corporation’s
business regardless of the outcome of such litigation.
The Surviving Corporation’s stock price may be exposed to additional
risks because our business will become a public company through a “de-SPAC” transaction. There has been increased focus by government agencies on such transactions, and the Surviving Corporation expects that increased focus to continue, and the
Surviving Corporation may be subject to increased scrutiny by the SEC and other government agencies on holders of the Surviving Corporation securities as a result, which could adversely affect the price of Surviving Corporation Common Stock.
The Surviving Corporation does not intend to
pay dividends on Surviving Corporation Common Stock for the foreseeable future.
The Surviving Corporation currently intends to retain all available
funds and any future earnings to fund the development and growth of its business. As a result, the Surviving Corporation does not anticipate declaring or paying any cash dividends on Surviving Corporation Common Stock in the foreseeable future.
Any decision to declare and pay dividends in the future will be made at the discretion of the Surviving Corporation Board and will depend on, among other things, the Surviving Corporation’s business prospects, results of operations, financial
condition, cash requirements and availability, certain restrictions related to the Surviving Corporation indebtedness, industry trends and other factors that the Surviving Corporation Board may deem relevant. Any such decision will also be
subject to compliance with contractual restrictions and covenants in the agreements governing the Surviving Corporation’s current and future indebtedness. In addition, the Surviving Corporation may incur additional indebtedness, the terms of
which may further restrict or prevent it from paying dividends on Surviving Corporation Common Stock. As a result, you may have to sell some or all of your Surviving Corporation Common Stock after price appreciation in order to generate cash
flow from your investment, which you may not be able to do. The Surviving Corporation’s inability or decision not to pay dividends could also adversely affect the market price of Surviving Corporation Common Stock.
If securities or industry analysts do not
publish research or reports about the Surviving Corporation’s business or the Business Combination or publish negative reports, the market price of Surviving Corporation Common Stock could decline.
The trading market for the Surviving Corporation Common Stock will be
influenced by the research and reports that industry or securities analysts publish about the Surviving Corporation, the Surviving Corporation’s business or the Business Combination. The Surviving Corporation may be unable or slow to attract
research coverage and if one or more analysts cease coverage of the Surviving Corporation, the price and trading volume of the Surviving Corporation’s securities would likely be negatively impacted. If any of the analysts that may cover the
Surviving Corporation change their recommendation regarding the Surviving Corporation’s securities adversely, or provide more favorable relative recommendations about the Surviving Corporation’s competitors, the price of the Surviving
Corporation’s securities would likely decline. If any analyst that may cover the Surviving Corporation ceases covering the Surviving Corporation or fails to regularly publish reports on the Surviving Corporation, it could lose visibility in the
financial markets, which could cause the price or trading volume of the Surviving Corporation’s securities to decline. If one or more of the analysts who cover the Surviving Corporation downgrades Surviving Corporation Common Stock or if the
Surviving Corporation’s reporting results do not meet their expectations, the market price of Surviving Corporation Common Stock could decline. Moreover, the market price of Surviving Corporation Common Stock may decline as a result of the
Business Combination if the Surviving Corporation does not achieve the perceived benefits of the Business
TABLE OF CONTENTS
Combination as rapidly or to the extent anticipated by financial analysts, or the
effect of the Business Combination on the Surviving Corporation’s financial results is not consistent with the expectations of financial analysts. Accordingly, holders of Surviving Corporation Common Stock following the consummation of the
Business Combination may experience a loss as a result of a decline in the market price of Surviving Corporation Common Stock. In addition, a decline in the market price of Surviving Corporation Common Stock following the consummation of the
Business Combination could adversely affect the Surviving Corporation’s ability to issue additional securities and to obtain additional financing in the future.
The Surviving Corporation’s ability to timely
raise capital in the future may be limited, or may be unavailable on acceptable terms, if at all. The Surviving Corporation’s failure to raise capital when needed could harm its business, operating results and financial condition. Debt issued
to raise additional capital may reduce the value of Surviving Corporation Common Stock.
The Surviving Corporation cannot be certain when or if its operations
will generate sufficient cash to fund its ongoing operations or the growth of its business.
The Surviving Corporation intends to make investments to support the
Surviving Corporation’s business and may require additional funds. Additional financing may not be available on favorable terms, if at all. If adequate funds are not available on acceptable terms, the Surviving Corporation may be unable to
invest in future growth opportunities, which could harm the Surviving Corporation’s business, operating results and financial condition. If the Surviving Corporation incurs debt, the debt holders could have rights senior to holders of Surviving
Corporation Common Stock to make claims on the Surviving Corporation’s assets. The terms of any debt could restrict the Surviving Corporation’s operations, including its ability to pay dividends on Surviving Corporation Common Stock. As a
result, the Surviving Corporation shareholders bear the risk of future issuances of debt securities reducing the value of Surviving Corporation Common Stock.
The issuance of additional shares of Surviving
Corporation Common Stock or convertible securities could make it difficult for another company to acquire the Surviving Corporation, may dilute your ownership of the Surviving Corporation and could adversely affect the price of Surviving
Corporation Common Stock.
In the future, the Surviving Corporation expects to obtain financing
or to further increase its capital resources by issuing additional shares of Surviving Corporation Common Stock or offering debt or other equity securities, including senior or subordinated notes, debt securities convertible into equity, or
shares of preferred stock. Issuing additional shares of Surviving Corporation Common Stock, other equity securities, or securities convertible into equity may dilute the economic and voting rights of the Surviving Corporation’s existing
stockholders, reduce the market price of outstanding Surviving Corporation Common Stock, or both. Debt securities convertible into equity could be subject to adjustments in the conversion ratio pursuant to which certain events may increase the
number of equity securities issuable upon conversion. Preferred stock, if issued, could have a preference with respect to liquidating distributions or a preference with respect to dividend payments that could limit the Surviving Corporation’s
ability to pay dividends to the holders of Surviving Corporation Common Stock. The Surviving Corporation’s decision to issue securities in any future offering will depend on market conditions and other factors beyond its control, which may
adversely affect the amount, timing or nature of its future offerings. As a result, holders of Surviving Corporation Common Stock bear the risk that the Surviving Corporation’s future offerings may reduce the market price of Surviving
Corporation Common Stock and dilute their percentage ownership. See the section entitled “Description of Securities of the Surviving Corporation.”
Future resales of Surviving Corporation Common
Stock after the consummation of the Business Combination may cause the market price of the Surviving Corporation’s securities to drop significantly, even if the Surviving Corporation’s business is doing well.
Pursuant to the Lock-Up Agreement, after the consummation of the
Business Combination and subject to certain exceptions, the Sponsor, and certain of H2B2’s Stockholders will be contractually restricted from selling or transferring any of their shares of Surviving Corporation Common Stock. Such restrictions
begin at Closing and end on the earlier of (i) the date that is 180 days after Closing, (ii) the closing of a merger, liquidation, stock exchange, reorganization or other similar transaction after the Closing Date of the Merger that results in
all of the public stockholders of the Surviving Corporation having the right to exchange their shares of Surviving Corporation Common Stock for cash securities or other property or (iii) the liquidation of the Surviving Corporation.
TABLE OF CONTENTS
However, following the expiration of such lockup, the Sponsor,
certain directors and officers of RMG III and certain former stockholders of H2B2 will not be restricted from selling shares of Surviving Corporation’s Common Stock held by them, other than by applicable securities laws. Upon completion of
the Business Combination and assuming that no Public Shares are redeemed in connection with the Business Combination, the Sponsor, certain directors and officers of RMG III and the H2B2 Stockholders will collectively beneficially own
approximately 98.66% ownership of the outstanding shares of Surviving Corporation Common Stock, assuming that no additional Public Shareholders redeem their Public Shares in connection with the Business Combination. Assuming maximum
redemption of 635,778 Public Shares in connection with the Business Combination, in the aggregate, the ownership of the Sponsor, certain directors and officers of RMG III and certain former stockholders of H2B2 would rise to 99.27% ownership
of the outstanding shares of Surviving Corporation Common Stock.
The shares held by the Sponsor, certain directors and officers of RMG
III and certain former stockholders of H2B2 may be sold after the expiration of the applicable lock-up period under the Lock-Up Agreement. As restrictions on resale end and registration statements (filed after the Closing to provide for the
resale of such shares from time to time) are available for use, the sale or possibility of sale of these shares could have the effect of increasing the volatility in the Surviving Corporation’s share price or the market price of Surviving
Corporation Common Stock could decline if the holders of currently restricted shares sell them or are perceived by the market as intending to sell them.
A market for the Surviving Corporation’s shares
may not develop, which could adversely affect the liquidity and price of its shares.
The price of the Surviving Corporation’s securities may fluctuate
significantly due to the market’s reaction to the Business Combination and general market and economic conditions. An active trading market for the Surviving Corporation’s securities may never develop or, if developed, it may not be sustained.
In addition, the price of the Surviving Corporation’s securities can vary due to general economic conditions and forecasts, its general business condition and the release of its financial reports. Additionally, if the Surviving Corporation’s
securities are not listed on, or become delisted from, the Nasdaq for any reason, and are quoted on the OTC Bulletin Board, an inter-dealer automated quotation system for equity securities that is not a national securities exchange, the
liquidity and price of its securities may be more limited than if it were quoted or listed on the Nasdaq or another national securities exchange. You may be unable to sell your securities unless a market can be established or sustained.
The Surviving Corporation will be an “emerging
growth company.” The reduced public company reporting requirements applicable to emerging growth companies may make Surviving Corporation Common Stock less attractive to investors.
The Surviving Corporation qualifies as an “emerging growth company,”
as defined in the JOBS Act. While the Surviving Corporation remains an emerging growth company, it is permitted to and plans to rely on exemptions from certain disclosure requirements that are applicable to other public companies that are not
emerging growth companies. These provisions include: (i) an exemption from compliance with the auditor attestation requirement in the assessment of the Surviving Corporation’s internal control over financial reporting pursuant to Section 404 of
Sarbanes-Oxley, (ii) not being required to comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional
information about the audit and the financial statements, (iii) reduced disclosure obligations regarding executive compensation arrangements in the Surviving Corporation’s periodic reports, registration statements, and proxy statements, and
(iv) exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. As a result, the information the Surviving Corporation
provides will be different than the information that is available with respect to other public companies that are not emerging growth companies.
In addition, Section 107 of the JOBS Act provides that an emerging
growth company can take advantage of the exemption from complying with new or revised accounting standards provided in Section 7(a)(2)(B) of the Securities Act as long as the Surviving Corporation is an emerging growth company. An emerging
growth company can therefore delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. The JOBS Act provides that a company can elect to opt out of the extended
TABLE OF CONTENTS
transition period and comply with the requirements that apply to non-emerging growth
companies, but any such election to opt out is irrevocable. The Surviving Corporation has elected to irrevocably opt out of such extended transition period, which means that when a standard is issued or revised and it has different application
dates for public or private companies, the Surviving Corporation will adopt the new or revised standard at the time public companies adopt the new or revised standard. This may make comparison of the Surviving Corporation’s financial statements
with another emerging growth company that has not opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.
The Surviving Corporation cannot predict whether investors will find
Surviving Corporation Common Stock less attractive if it relies on these exemptions. If some investors find Surviving Corporation Common Stock less attractive as a result, there may be a less active trading market for the Surviving Corporation
Common Stock. The market price of Surviving Corporation Common Stock may be more volatile.
The Surviving Corporation will remain an emerging growth company
until the earlier of (i) the last day of the fiscal year (1) following the fifth anniversary of the completion of the Initial Public Offering, (2) in which the Surviving Corporation has total annual gross revenue of at least $1.235 billion, or
(3) in which the Surviving Corporation is deemed to be a large accelerated filer, which means the market value of Surviving Corporation Common Stock that is held by non-affiliates equaled or exceeded $700 million as of the end of that year’s
second fiscal quarter, and (ii) the date on which the Surviving Corporation has issued more than $1.00 billion in non-convertible debt securities during the prior three-year period.
The Surviving Corporation’s management has
limited experience in operating a public company.
The Surviving Corporation executive officers have limited experience
in the management of a U.S. publicly traded company. The Surviving Corporation management team may not successfully or effectively manage its transition to a public company that will be subject to significant regulatory oversight and reporting
obligations under federal securities laws. Their limited experience in dealing with the increasingly complex laws pertaining to public companies could be a disadvantage in that it is likely that an increasing amount of their time may be devoted
to these activities which will result in less time being devoted to the management and growth of the Surviving Corporation. The Surviving Corporation may not have adequate personnel with the appropriate level of knowledge, experience, and
training in the accounting policies, practices or internal controls over financial reporting required of public companies in the United States. The development and implementation of the standards and controls necessary for the Surviving
Corporation to achieve the level of accounting standards required of a public company in the United States may require costs greater than expected. It is possible that the Surviving Corporation will be required to expand its employee base and
hire additional employees to support its operations as a public company which will increase its operating costs in future periods.
If the Surviving Corporation is unable to
maintain an effective system of internal controls and compliances, its business and reputation could be adversely affected.
While the Surviving Corporation manages regulatory compliance by
monitoring and evaluating its internal controls to ensure that it is in compliance with all relevant statutory and regulatory requirements, there can be no assurance that deficiencies in its internal controls and compliances will not arise, or
that it will be able to implement, and continue to maintain, adequate measures to rectify or mitigate any such deficiencies in its internal controls, in a timely manner or at all. As the Surviving Corporation continues to grow, there can be no
assurance that there will be no other instances of such inadvertent non-compliances with statutory requirements, which may subject it to regulatory action, including monetary penalties, which may adversely affect its business and reputation.
The Surviving Corporation’s failure to timely
and effectively implement controls and procedures required by Section 404(a) of the Sarbanes-Oxley Act that will be applicable to it following consummation of the Business Combination could have a material adverse effect on its business,
financial condition, results of operations, cash flow and prospects.
Section 404 of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”) will require the Surviving Corporation to evaluate the effectiveness of its internal control over financial reporting as of the end of each fiscal year, including a management report
assessing the effectiveness of its internal control over financial reporting beginning with its Annual Report on Form 10-K for the year ending December 31, 2023. Additionally, once the Surviving Corporation ceases to be an emerging growth
company, its independent registered accounting
TABLE OF CONTENTS
firm will also be required to attest to the effectiveness of its internal controls
over financial reporting in each Annual Report on Form 10-K to be filed with the SEC. The Surviving Corporation may in the future identify material weaknesses or significant deficiencies that it may be unable to remedy before the requisite
deadline for those reports. The Surviving Corporation’s ability to comply with the annual internal control reporting requirements will depend on the effectiveness of its financial reporting and data systems and controls across its company. The
Surviving Corporation expects these systems and controls to involve significant expenditures and to become increasingly complex as its business grows. To effectively manage this complexity, the Surviving Corporation will need to continue to
improve its operational, financial and management controls and its reporting systems and procedures. Any weaknesses or deficiencies or any failure to implement required new or improved controls, or difficulties encountered in the implementation
or operation of these controls, could harm its operating results and cause it to fail to meet its financial reporting obligations or result in material misstatements in its financial statements, which could adversely affect our business and
reduce its stock price.
Risks Related to the Business Combination
The market price of shares of Surviving
Corporation Common Stock after the Business Combination may be affected by factors different from those currently affecting the prices of Public Shares.
Upon completion of the Business Combination, holders of H2B2 Common
Stock, H2B2 Options, RMG III Ordinary Shares and RMG III Warrants will become holders of shares of Surviving Corporation Common Stock and holders of H2B2 Options will become holders of options covering Surviving Corporation Common Stock. Prior
to the Business Combination, RMG III has had limited operations. Upon completion of the Business Combination, the Surviving Corporation’s results of operations will depend upon the performance of H2B2’s business, which are affected by factors
that are different from those currently affecting the results of operations of RMG III.
There can be no assurance that Surviving
Corporation Common Stock will be approved for listing on Nasdaq or that Surviving Corporation Common Stock will be able to comply with the continued listing standards of Nasdaq.
In connection with the closing of the Business Combination, RMG III
intends to list Surviving Corporation Common Stock on Nasdaq under the symbol “HHBB.” The Surviving Corporation’s continued eligibility for listing may depend on the number of RMG III Ordinary Shares that are converted into Surviving
Corporation Common Stock. If, after the Business Combination, Nasdaq delists Surviving Corporation Common Stock from trading on its exchange for failure to meet the listing standards, the Surviving Corporation and its stockholders could face
significant material adverse consequences, including:
•
|
a limited availability of market quotations for the Surviving Corporation Common Stock;
|
•
|
reduced liquidity for the Surviving Corporation Common Stock;
|
•
|
a determination that Surviving Corporation Common Stock is a “penny stock” which will require brokers trading in Surviving
Corporation Common Stock to adhere to more stringent rules, possibly resulting in a reduced level of trading activity in the secondary trading market for the Surviving Corporation Common Stock;
|
•
|
a limited amount of analyst coverage; and
|
•
|
a decreased ability to issue additional securities or obtain additional financing in the future.
|
The consummation of the Business Combination is
subject to a number of conditions and if those conditions are not satisfied or waived, the Merger Agreement may be terminated in accordance with its terms and the Business Combination may not be completed.
The Merger Agreement is subject to a number of conditions which must
be fulfilled in order to complete the Business Combination. Those conditions include: approval of the Business Combination and related agreements and transactions by the respective RMG III shareholders, Approval of the Warrant Amendment and
transactions contemplated thereby by RMG III warrant holders, the absence of any legal restraints on the Closing, RMG III having at least $5,000,001 of net tangible assets upon the Closing, and receipt of conditional approval for listing on
Nasdaq the shares of Surviving Corporation Common Stock to be issued in connection with the Merger. These conditions to the Closing may not be fulfilled in a timely manner or at all, and, accordingly, the Business
TABLE OF CONTENTS
Combination may not be completed. In addition, the parties can mutually decide to
terminate the Merger Agreement at any time, before or after shareholder approval, or RMG III or H2B2 may elect to terminate the Merger Agreement in certain other circumstances. See the section entitled “The
Merger Agreement—Termination” for more information.
The consummation of the Business Combination is
contingent on the consummation of the Capital Raise Transaction resulting in proceeds of at least $40 million, which is subject to the approval of our board of directors and certain of H2B2 Stockholders
Because the Merger Agreement is conditioned on the consummation of
the Capital Raise Transaction of H2B2 resulting in proceeds of at least $40 million, and the Capital Raise Transaction is subject to the approval of H2B2’s board of directors and certain of H2B2 Stockholders, there is a possibility that the
Business Combination will not be completed. H2B2 does not know if the Capital Raise Transaction will ultimately be successful, or if it will be approved by the requisite number of H2B2 Stockholders, who are not obligated to approve any such
Capital Raise Transaction.
Foreign direct investment restrictions in Spain
may be applicable if any foreign investor holds directly or indirectly 10% or more of the share capital of H2B2.
The Spanish government has enacted restrictions regarding foreign
direct investment (“FDI”) in Spain, which, depending on, among other factors, the amount of Redemptions that are exercised in respect of Public Shares, as well the number of shares of Surviving
Corporation Common Stock issued to Public Shareholders, might be triggered by the Business Combination. As a general rule, if a foreign investor (i.e., a non-EU or non-EFTA investor, or a EU and EFTA investor that is deemed to be beneficially
owned by a non-EU or non-EFTA investor) acquires, directly or indirectly, 10% or more of a Spanish entity’s share capital (including, potentially, H2B2’s Spanish subsidiaries), or otherwise acquires control of such entity, such investment needs
to be pre-approved by the relevant Spanish authorities if the Spanish entity operates in one of the sectors that according to article 7.bis of Spanish Law 19/2003, of 4 July, have an impact on public security, public order or public health or
if such foreign investor is either (i) controlled directly or indirectly by a foreign government (including federal governments, governmental agencies, armed forces and equivalent public entities); (ii) has invested in other EU member states in
sectors which may have an impact on public security, public order or public health of such member state; and (iii) there is a risk that such investor carries out illegal activities which affect public order, public security and/or public health
of Spain. Failure to obtain such prior approval, where required, will render an acquisition null and void. In addition, sanctions could be imposed in an amount equivalent to the restricted investment.
RMG III’s ability to complete the Business
Combination may be impacted if the Business Combination is subject to U.S. foreign investment regulations and review by a U.S. government entity, such as the CFIUS, and ultimately prohibited.
The Sponsor is a Delaware limited liability company. RMG III does
not believe the Sponsor would be considered a foreign person because it is organized in a U.S. jurisdiction, is controlled and majority-owned by U.S. nationals and does not have substantial ties with a non-U.S. person. In the event the
Sponsor is considered a foreign person, however, RMG III could also be considered a foreign person and would continue to be considered as such in the future for so long as the Sponsor has the ability to exercise control over RMG III for
purposes of CFIUS’s regulations. RMG III could likewise be considered a foreign person if a foreign investor acquires a significant interest in RMG III and is viewed as having the ability to exercise control over RMG III. As such, the
Business Combination could be subject to CFIUS review, the scope of which includes controlling investments as well as certain non-passive, non-controlling investments in sensitive U.S. businesses and certain acquisitions of real estate even
with no underlying U.S. business.
If the Business Combination falls within CFIUS’s jurisdiction, RMG
III may determine that it is required to make a mandatory filing or that it will submit a voluntary filing to CFIUS, or to proceed with the Business Combination without notifying CFIUS and risk CFIUS intervention, before or after the Closing.
CFIUS may decide to delay the Business Combination, impose conditions to mitigate national security concerns with respect to the Business Combination or recommend that the U.S. president block the Business Combination or order the divestiture
of all or a portion of a U.S. business of the Surviving Corporation.
If RMG III does not complete the Business Combination, the pool of
potential targets with which RMG III could complete an initial business combination may be impacted. Moreover, the process of government review,
TABLE OF CONTENTS
whether by the CFIUS or otherwise, could be lengthy and RMG III has limited time
to complete the Business Combination. If RMG III cannot complete the Business Combination by February 9, 2024, or such later date that may be approved by RMG III shareholders, because the review process extends beyond such timeframe or
because the Business Combination is ultimately prohibited by CFIUS or another U.S. government entity, RMG III may be required to liquidate. If RMG III liquidates, the Public Shareholders may only receive a pro rata amount of the funds in the
Trust Account, and the RMG III Public Warrants will expire worthless. This will also cause you to lose the investment opportunity in H2B2 and the chance of realizing future gains on your investment through any price appreciation in the
Surviving Corporation.
H2B2 will be subject to business uncertainties
and contractual restrictions while the Business Combination is pending.
Uncertainty about the effect of the Business Combination on H2B2’s
employees and customers may have an adverse effect on H2B2 and consequently on RMG III. These uncertainties may impair H2B2’s ability to attract, retain and motivate key personnel until the Business Combination is completed and could cause
customers and others that deal with H2B2 to seek to change existing business relationships with H2B2. Retention of certain employees may be challenging during the pendency of the Business Combination as certain employees may experience
uncertainty about their future roles. If key employees depart because of issues relating to the uncertainty and difficulty of integration or a desire not to remain with the business, the Surviving Corporation’s business following completion of
the Business Combination could be negatively impacted. In addition, the Merger Agreement restricts H2B2 from making certain expenditures and taking other specified actions without the consent of RMG III until the Business Combination occurs.
These restrictions may prevent H2B2 from pursuing attractive business opportunities that may arise prior to the completion of the Business Combination. See the section entitled “The Merger Agreement—Covenants.”
RMG III directors and officers and the Sponsor
and its affiliates may have interests in the Business Combination different from the interests of Public Shareholders and Public Warrant holders.
Executive officers of RMG III negotiated the terms of the Merger
Agreement with their counterparts at H2B2, and the RMG III Board determined that entering into the Merger Agreement and Warrant Amendment was in the best interests of RMG III and RMG III shareholders and RMG III warrant holders, declared the
Merger Agreement and Warrant Amendment advisable and recommended that RMG III shareholders and RMG III warrant holders approve the Condition Precedent Proposals and the Warrant Amendment Proposal, respectively. In considering these facts and
the other information contained in this proxy statement/prospectus, you should be aware that RMG III’s executive officers and directors, as well as the Sponsor and its affiliates, may have financial interests in the Business Combination that
may be different from, or in addition to, the interests of Public Shareholders and Public Warrant Holders. The RMG III Board was aware of and considered these interests, among other matters, in reaching the determination to approve the terms of
the Business Combination and in recommending to RMG III shareholders and RMG III warrant holders that they vote to approve the Business Combination. These interests include, among other things:
•
|
The Sponsor paid an aggregate of $12,349,495 for its purchases of the Founder Shares and the RMG III Private Placement Warrants.
Prior to the Initial Public Offering, the Sponsor purchased 10,062,500 Founder Shares for an aggregate purchase price of $25,000. Subsequently, RMG III effectuated a 5-for-6 share split of the RMG III Class B Ordinary Shares, resulting
in an aggregate outstanding amount of 12,075,000 Founder Shares outstanding. Simultaneously with the consummation of the Initial Public Offering, the Sponsor purchased 8,216,330 RMG III Private Placement Warrants for an aggregate
purchase price of $12,324,495 in a private placement. A portion of the proceeds from the sale of the RMG III Private Placement Warrants were added to the net proceeds from the Initial Public Offering held in the Trust Account. If the
Business Combination with H2B2 or another business combination is not consummated within the Completion Window, RMG III will cease all operations except for the purpose of winding up, redeeming the outstanding Public Shares for cash
and, subject to the approval of its remaining RMG III shareholders and the RMG III Board, dissolving and liquidating. In such event, the 12,075,000 Founder Shares held by the Initial Shareholders would be worthless because the Initial
Shareholders are not entitled to participate in any redemption or distribution with respect to such shares. Additionally, in such event, the 8,216,330 Private Placement Warrants will also expire worthless. The Founder Shares had an
|
TABLE OF CONTENTS
aggregate market value of $ based upon the closing price of $ per share of RMG
III Class A Ordinary Shares on Nasdaq on the RMG III Record Date. The RMG III Private Placement Warrants had an aggregate market value of approximately $ based upon the closing price of $ per Public Warrant on the Nasdaq on the RMG III
Record Date.
•
|
In order to finance transaction costs in connection with a business combination, the Sponsor, members of the RMG III founding
team or any of their affiliates may, but are not obligated to (other than pursuant to the January 2022 Note and the July 2022 Note), make certain working capital loans as may be required. On January 19, 2022, RMG Acquisition
Management, agreed to lend RMG III up to an aggregate of $500,000 for working capital purposes, pursuant to the January 2022 Note. The January 2022 Note is due and payable in full by RMG III upon the consummation of a business
combination. On July 27, 2022, RMG Acquisition Management agreed to lend RMG III up to $475,000 for working capital purposes, pursuant to the July 2022 Note. The July 2022 Note is due and payable in full by RMG III upon the
consummation of a business combination. In the event that the Business Combination does not close, RMG III may use a portion of proceeds held outside the Trust Account to repay the January 2022 Note and the July 2022 Note, but no
proceeds held in the Trust Account would be used to repay the January 2022 Note or the July 2022 Note. The January 2022 Note and the July 2022 Note will be repaid in cash upon consummation of the Business Combination. As of the date
hereof, RMG III has borrowed $500,000 under the January 2022 Note and $350,000 under the July 2022 Note. If RMG III does not complete a business combination by the Completion Window, there will not be sufficient assets to repay the
outstanding balance under the January 2022 Note and the July 2022 Note, and the January 2022 Note and the July 2022 Note will be worthless.
|
•
|
There will be no finder’s fees, reimbursements or cash payments made by RMG III to the Sponsor or RMG III’s officers or
directors, or RMG III’s or any of their affiliates, for services rendered to RMG III prior to or in connection with the completion of the Business Combination, other than payment of the amount for office space, utilities,
administrative and support services and repayments of any outstanding balance of the January 2022 Note and the July 2022 Note, as described below. RMG III’s directors and officers and their affiliates are entitled to reimbursement of
out-of-pocket expenses incurred by them in connection with certain activities on RMG III’s behalf, such as identifying and investigating possible business targets and business combinations. There is no cap or ceiling on the
reimbursement of out-of-pocket expenses incurred by such persons in connection with activities on RMG III’s behalf. However, if RMG III fails to consummate a business combination by the Completion Window, RMG III’s directors and
officers will not have any claim against the Trust Account for reimbursement. Accordingly, RMG III may not be able to reimburse these expenses if the Business Combination or another business combination is not consummated within the
Completion Window. As of , 2023, $ was outstanding in out-of-pocket expense reimbursements. Additionally, under the Administrative Services Agreement, RMG Acquisition Management is entitled to $20,000 per month for office
space, utilities, administrative and support services provided to RMG III’s management team, which commenced on February 4, 2021 and will continue through the earlier of consummation of a business combination and RMG III’s
liquidation. For the three months ended March 31, 2023 and 2022 $60,000 of administrative support expenses were incurred. As of March 31, 2023 and December 31, 2022, respectively the Company had $180,000 and $120,000, related to the
Administrative Services Agreement was recorded in accounts payable — related party.
|
•
|
RMG III’s existing directors and officers will be eligible for continued indemnification and continued coverage under RMG III’s
directors’ and officers’ liability insurance following completion of the Business Combination pursuant to the Merger Agreement.
|
•
|
In the event of the liquidation of the Trust Account, the Sponsor has agreed, under the Letter Agreement, dated February 4,
2021, among RMG III, the Sponsor and RMG III’s officers and directors, to indemnify and hold harmless RMG III against any and all losses, liabilities, claims, damages and expenses to which RMG III may become subject as a result of any
claim by (i) any third party for services rendered or products sold to RMG III or (ii) a prospective target business with which RMG III has entered into an acquisition agreement; provided that such indemnification of RMG III by the
Sponsor will apply only to the extent necessary to ensure that such claims by a third party for services rendered or products sold to RMG III or a target do not reduce the amount of funds in the
|
TABLE OF CONTENTS
Trust Account to below (i) $10.00 per share of RMG III Class A Ordinary Shares or
(ii) such lesser amount per RMG III Class A Ordinary Share held in the Trust Account due to reductions in the value of the trust assets as of the date of the liquidation of the Trust Account, in each case, net of the amount of interest earned
on the property in the Trust Account, which may be withdrawn to pay taxes, expenses related to the administration of the Trust Account and limited withdrawals for working capital, except as to any claims by a third party (including a target)
who executed a waiver of any and all rights to seek access to the Trust Account and except as to any claims under RMG III’s indemnity of the IPO Underwriters against certain liabilities, including liabilities under the Securities Act. If RMG
III consummates the Business Combination, on the other hand, RMG III will be liable for all such claims.
•
|
Pursuant to the Sponsor Support Agreement, the Sponsor has agreed to, subject to certain exceptions, among other things, vote in
favor of the Merger Agreement and the transactions contemplated thereby, in each case, subject to the terms and conditions contemplated by the Sponsor Support Agreement.
|
•
|
Subject to certain limited exceptions, the Surviving Corporation Common Stock will not be transferrable following the Closing
until the date that is 180 days after the Closing.
|
•
|
The Sponsor (including RMG III’s directors, officers and Initial Shareholders and their permitted transferees) owns RMG III
Private Placement Warrants which, in the event the Warrant Amendment Proposal is approved prior to the Effective Time, will be converted into the right to receive 0.075 shares of Surviving Corporation Common Stock per RMG III Private
Placement Warrant.
|
•
|
Certain of RMG III’s officers and directors presently have, and any of them in the future may have additional, fiduciary or
contractual obligations to other entities pursuant to which such officer or director is or will be required to present business combination opportunities to such entity. Accordingly, in the future, if any of RMG III’s officers or
directors becomes aware of a business combination opportunity which is suitable for an entity to which he or she has then-current fiduciary or contractual obligations, he or she will honor his or her fiduciary or contractual obligations
to present such opportunity to such entity. RMG III does not believe, however, that any fiduciary duties or contractual obligations of its officers or directors would materially undermine RMG III’s ability to complete a business
combination. The Existing Articles provide that RMG III’s directors and officers renounces any interest or expectancy in, or in being offered, any corporate opportunity offered to any director or officer, but no director or officer of
RMG III has any duty, except and to the extent expressly assumed by contract, to communicate or offer any such corporate opportunity to RMG III’s directors and officers and shall not be in breach of any fiduciary duty as a director or
officer, solely by reason of fact that such party pursues or acquires such corporate opportunity for itself, himself or herself, directs such corporate opportunity to another person, or does not communicate information regarding such
corporate opportunity to RMG III’s. This waiver allows the Sponsor and its affiliates to allocate opportunities based on a combination of the objectives and fundraising needs of the target, as well as the investment objectives of the
entity. However, RMG III does not believe that the waiver of the corporate opportunities doctrine otherwise had a material impact on its search for an acquisition target.
|
Given the interests described above, the Sponsor and its affiliates
may earn a positive rate of return on their investment even if the Surviving Corporation Common Stock trades below the price initially paid for the RMG III Units in the Initial Public Offering and the Public Shareholders and Public Warrant
holders experience a negative rate of return following the completion of the Business Combination. As such, the Sponsor and its affiliates may have more of an economic incentive for RMG III to, rather than liquidate if it fails to complete our
initial business combination by the Completion Window, enter into an initial business combination on potentially less favorable terms with a potentially less favorable, riskier, weaker-performing or financially unstable business, or an entity
lacking an established record of revenues or earnings, than would be the case if such parties had paid the full offering price for their Founder Shares.
The RMG III Board was aware of and considered these interests to the
extent such interests existed at the time, among other matters, in approving the Merger Agreement and in recommending that the Business Combination and the Warrant Amendment be approved by RMG III shareholders and RMG III warrant holders. See
the section entitled “The Business Combination—Interests of RMG III’s Directors and Executive Officers and the Sponsor and its Affiliates in the Business Combination.” The RMG III Board concluded that
the Merger
TABLE OF CONTENTS
Agreement and the Business combination are fair from a financial point of view to and
in the best interests of RMG III and RMG III shareholders. In view of the wide variety of factors considered by the RMG III Board in connection with its evaluation, negotiation and recommendation of the business combination and related
transactions and the complexity of these matters, the RMG III Board did not consider it practical to, nor did it attempt to, quantify, rank or otherwise assign relative weights to the specific factors that it considered in reaching its
decision. Rather, the RMG III Board based its evaluation, negotiation and recommendation of the Business Combination and the Warrant Amendment on the totality of the information presented to and considered by it. The RMG III Board evaluated the
reasons described above with the assistance of RMG III’s outside advisors. In considering the factors described above and any other factors, individual members of the RMG III Board may have viewed factors differently or given different weights
to other or different factors.
After careful consideration, the RMG III Board unanimously
(i) declared the advisability of the Business Combination and the other transactions contemplated by the Merger Agreement and (ii) determined that the Business Combination and the other transactions contemplated by the Merger Agreement are in
the best interests of RMG III shareholders. The RMG III Board further unanimously (i) declared the advisability of the Warrant Amendment and the other transactions contemplated thereby and (ii) determined that the Warrant Amendment and the
other transactions contemplated thereby are in the best interests of RMG III and its RMG III warrant holders.
The Sponsor has interests in the Business
Combination that are different from the interests of Public Shareholders and Public Warrant holders.
When considering the RMG III Board’s recommendation that RMG III
shareholders vote in favor of the approval of the Condition Precedent Proposals and RMG III warrant holders vote in favor of the approval of the Warrant Amendment Proposal described in this proxy statement/prospectus, RMG III shareholders and
RMG III warrant holders should be aware that the Sponsor has interests in the Business Combination that may be different from, in addition to, or conflict with the interests of RMG III shareholders and RMG III warrant holders in general. For
instance, the 12,075,000 Founder Shares held by the Initial Shareholders which were acquired for an aggregate purchase price of $25,000 prior to the completion of the Initial Public Offering and the 8,216,330 RMG III Private Placement
Warrants the Sponsor purchased from RMG III for an aggregate purchase price of $12,324,495 (or $1.50 per warrant) purchased concurrently with the closing of the Initial Public Offering will expire worthless if RMG III does not consummate a
business combination. For a more complete description of these interests, see the section entitled “The Business Combination—Interests of RMG III’s Directors and Executive Officers and the
Sponsor and its Affiliates in the Business Combination.”
RMG III has not obtained a third-party
valuation or a fairness opinion from an independent investment banking firm or another independent firm, and consequently, you may have no assurance from an independent source that the terms of the Business Combination are fair to RMG III or
the RMG III shareholders from a financial point of view.
The RMG III Board did not obtain a third-party valuation or
fairness opinion in connection with its determination to approve the Business Combination and recommend that the RMG III shareholders vote to approve the Business Combination. RMG III is not required to obtain an opinion from an independent
investment banking firm that is a member of FINRA or from another independent firm that the price it is paying for H2B2 is fair to RMG III or the RMG III shareholders from a financial point of view. In analyzing the Business Combination, the
RMG III Board and its management conducted due diligence on H2B2 and researched the industry in which H2B2 operates and concluded that the Business Combination was in the best interest of RMG III and the RMG III shareholders. Accordingly, RMG
III shareholders will be relying solely on the judgment of the RMG III Board in determining the value of H2B2, and the RMG III Board may not have properly valued such business. The lack of third-party valuation or fairness opinion may
increase the number of RMG III shareholders that vote against the Business Combination or demand redemption of the RMG III Class A Ordinary Shares, which could adversely impact our ability to consummate the Business Combination and/or the
ability of the Surviving Corporation to operate and meet its financial obligations as they become due.
In April 2023, the IPO Underwriters notified
RMG III that they had determined to waive their entitlement to the payment of any deferred compensation in connection with their role as underwriters in the Initial Public Offering that would otherwise become due upon the consummation of the
Business Combination.
In connection with their role as underwriters in the Initial
Public Offering, the IPO Underwriters were entitled to payment of a deferred underwriting commission upon consummation of an initial business
TABLE OF CONTENTS
combination by RMG III. As the IPO underwriters were not performing any services
in connection with the Business Combination, RMG III requested that the IPO Underwriters waive any entitlement to such fees in connection with the consummation of the Business Combination, and in April 2023, the IPO Underwriters notified RMG
III that they waived their entitlement to the payment of any such deferred fees. Because the IPO Underwriters have not been involved in the preparation and review of this proxy statement/prospectus, RMG III’s investors will not have the
benefit of the IPO Underwriters’ review and investigation of the disclosures provided in the proxy statement/prospectus.
Because H2B2 will become a publicly traded
company through the Business Combination rather than an underwritten initial public offering, the scope of due diligence conducted may be different from that conducted by an underwriter in an underwritten initial public offering.
H2B2 will effectively become a publicly listed company upon the
completion of the Business Combination. The Business Combination and the transactions described in this proxy statement/prospectus differ from an underwritten initial public offering. In a traditional underwritten initial public offering,
underwriters typically conduct a certain amount of due diligence on the company being taken public in order to establish a due diligence defense against liability claims under federal securities laws. Because RMG III is already a publicly
listed company, an underwriter has not been engaged. The due diligence conducted by management and the RMG III Board may be different than the due diligence undertaken by an underwriter in a traditional initial public offering. The Sponsor
may have an inherent conflict of interest because its shares and warrants will be worthless if an initial business combination is not completed with H2B2 or another company before February 9, 2024 (or such later time as the RMG III
shareholders may approve in accordance with the RMG III Governing Documents). Therefore, there could be a heightened risk of an incorrect valuation of H2B2’s business, which could cause potential harm to investors.
The Merger Agreement contains provisions that
limit RMG III from seeking an alternative business combination.
The Merger Agreement contains provisions that prohibit RMG III from
seeking alternative business combinations during the pendency of the Business Combination. Further, if RMG III is unable to obtain the requisite approval of RMG III shareholders, either party may terminate the Merger Agreement. See the section
entitled “The Merger Agreement—Termination.”
The unaudited pro forma condensed combined
financial information included in this proxy statement/prospectus is preliminary and the actual financial condition and results of operations after the Business Combination may differ materially.
The unaudited pro forma financial information included in this proxy
statement/prospectus is presented for illustrative purposes only and is not necessarily indicative of what the Surviving Corporation’s actual financial position or results of operations would have been had the Business Combination been
completed on the date(s) indicated. The preparation of the pro forma financial information is based upon available information and certain assumptions and estimates that RMG III and H2B2 currently believe are reasonable. However, the final
reverse recapitalization accounting adjustments may differ materially from the pro forma adjustments reflected in this proxy statement/prospectus. Accordingly, the Surviving Corporation’s business, assets, cash flows, results of operations and
financial condition may differ significantly from those indicated by the unaudited pro forma condensed combined financial statements included in this proxy statement/prospectus. See the section entitled “Unaudited
Pro Forma Condensed Combined Financial Information.”
RMG III and H2B2 will incur transaction costs
in connection with the Business Combination.
Each of RMG III and H2B2 has incurred and expects that it will
incur significant, non-recurring costs in connection with consummating the Business Combination. RMG III and H2B2 may also incur additional costs to retain key employees. RMG III and H2B2 will also incur significant legal, financial advisor,
accounting, banking and consulting fees, fees relating to regulatory filings and notices, SEC filing fees, printing and mailing fees and other costs associated with the Business Combination. RMG III and H2B2 estimate that they will incur
$22.2 million in aggregate transaction costs (this excludes any deferred underwriting commissions of the IPO Underwriters, as the IPO Underwriters agreed to waive their respective deferred underwriting commissions). Some of the transaction
costs are payable regardless of whether the Business Combination is completed. See the section entitled “The Business Combination—Terms of the Business Combination.”
TABLE OF CONTENTS
RMG III shareholders and RMG III warrant
holders will have their rights as shareholders and warrant holders, respectively governed by the Proposed Organizational Documents.
As a result of the completion of the Business Combination, holders of
shares of RMG III Ordinary Shares and RMG III Warrants will become holders of shares of Surviving Corporation Common Stock, which are expected to be governed by the Proposed Organizational Documents. As a result, there will be differences
between the rights currently enjoyed by RMG III shareholders and RMG III warrant holders and the rights of RMG III shareholders who become stockholders of the Surviving Corporation.
The Sponsor has agreed to vote in favor of each
of the Proposals presented at the Special Meeting, regardless of how Public Shareholders vote.
Pursuant to the Sponsor Support Agreement, the Sponsor has agreed to
vote any RMG III Ordinary Shares they hold in favor of each of the Proposals presented at the Special Meeting, regardless of how Public Shareholders vote. Accordingly, the agreement by the Sponsor to vote in favor of the Proposals presented at
the Special Meeting will increase the likelihood that RMG III will receive the requisite RMG III shareholder approval for the Condition Precedent Proposals and the transactions contemplated thereby.
RMG III’s and H2B2’s ability to consummate the
Business Combination, and the operations of the Surviving Corporation following the Business Combination, may be materially adversely affected by COVID-19.
COVID-19 has resulted, and other infectious diseases could result, in
a widespread health crisis that has and could continue to adversely affect the economies and financial markets worldwide, which may delay or prevent the consummation of the Business Combination, and the business of H2B2 or the Surviving
Corporation following the Business Combination could be materially and adversely affected. The extent of such impact will depend on future developments, which are highly uncertain and cannot be predicted.
The parties will be required to consummate the Business Combination
even if H2B2, their business, financial condition and results of operations are materially affected by COVID-19. The disruptions posed by COVID-19 have continued, and other matters of global concern may continue, for an extensive period of
time, and if H2B2 is unable to recover from business disruptions due to COVID-19 or other matters of global concern on a timely basis, H2B2’s ability to consummate the Business Combination and the Surviving Corporation’s financial condition and
results of operations following the Business Combination may be materially adversely affected. H2B2 and the Surviving Corporation may also incur additional costs due to delays caused by COVID-19, which could adversely affect the Surviving
Corporation’s financial condition and results of operations.
Risks Related to RMG III
RMG III has identified a material weakness in
its internal control over financial reporting as of December 31, 2022. If RMG III is unable to develop and maintain an effective system of internal control over financial reporting, RMG III may not be able to accurately report its financial
results in a timely manner, which may adversely affect investor confidence in RMG III and materially and adversely affect its business and operating results.
Following this issuance of the SEC Statement, after consultation with
its independent registered public accounting firm, RMG III’s management concluded that, in light of the SEC Statement, it identified a material weakness in its internal controls over financial reporting.
A material weakness is a deficiency, or a combination of
deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of RMG III’s annual or interim financial statements will not be prevented, or detected and corrected on a timely
basis.
Effective internal controls are necessary for us to provide reliable
financial reports and prevent fraud. RMG III continues to evaluate steps to remediate the material weakness. These remediation measures may be time consuming and costly and there is no assurance that these initiatives will ultimately have the
intended effects.
If RMG III identifies any new material weaknesses in the future, any
such newly identified material weakness could limit its ability to prevent or detect a misstatement of our accounts or disclosures that could result in a material misstatement of its annual or interim financial statements. In such case, RMG III
may be
TABLE OF CONTENTS
unable to maintain compliance with securities law requirements regarding timely
filing of periodic reports in addition to applicable stock exchange listing requirements, investors may lose confidence in RMG III’s financial reporting and its stock price may decline as a result. RMG III cannot assure you that the measures it
has taken to date, or any measures it may take in the future, will be sufficient to avoid potential future material weaknesses.
Management of RMG III has determined that the
liquidity condition and date for mandatory liquidation and subsequent dissolution raises substantial doubt about its ability to continue as a “going concern.”
As of March 31, 2023, RMG III had cash outside the Trust Account of
$15,055, available for working capital needs, and a working capital deficit of approximately $3 million. Further, RMG III has incurred and expects to continue to incur significant costs in pursuit of the Business Combination. RMG III plans to
address this need for capital through working capital loans from the Sponsor or an affiliate of the Sponsor see the section entitled “The Business Combination—Interests of RMG III’s Directors and Executive
Officers and the Sponsor and its Affiliates in the Business Combination.” RMG III cannot assure you that its plans to raise capital or to consummate the Business Combination will be successful. These factors, among others, raise
substantial doubt about its ability to continue as a going concern. The financial statements contained elsewhere in this annual report do not include any adjustments that might result from our inability to consummate the initial public offering
or its inability to continue as a going concern.
Risks Related to Redemptions
Throughout this section, unless otherwise
indicated or the context otherwise requires, references to “RMG III,” “we,” “us,” “our” and other similar terms refer to RMG III, prior to and/or after giving effect to the Business Combination.
If third parties bring claims against RMG III,
the proceeds held in the Trust Account could be reduced and the per share redemption amount received by Public Shareholders may be less than $10.00 per share.
Our placing of funds in the Trust Account may not protect those funds
from third-party claims against us. Although we will seek to have all vendors, service providers (other than our independent auditors), prospective target businesses and other entities with which we do business execute agreements with us
waiving any right, title, interest or claim of any kind in or to any monies held in the Trust Account for the benefit of our Public Shareholders, such parties may not execute such agreements, or even if they execute such agreements they may not
be prevented from bringing claims against the Trust Account, including, but not limited to, fraudulent inducement, breach of fiduciary responsibility or other similar claims, as well as claims challenging the enforceability of the waiver, in
each case in order to gain advantage with respect to a claim against our assets, including the funds held in the Trust Account. If any third party refuses to execute an agreement waiving such claims to the monies held in the Trust Account, our
management will perform an analysis of the alternatives available to it and will enter into an agreement with a third party that has not executed a waiver only if management believes that such third party’s engagement would be significantly
more beneficial to us than any alternative.
Examples of possible instances where we may engage a third party that
refuses to execute a waiver include the engagement of a third-party consultant whose particular expertise or skills are believed by management to be significantly superior to those of other consultants that would agree to execute a waiver or in
cases where we are unable to find a service provider willing to execute a waiver. In addition, there is no guarantee that such entities will agree to waive any claims they may have in the future as a result of, or arising out of, any
negotiations, contracts or agreements with us and will not seek recourse against the Trust Account for any reason. Upon redemption of our public shares, if we have not completed our initial business combination within the required time period,
or upon the exercise of a redemption right in connection with our initial business combination, we will be required to provide for payment of claims of creditors that were not waived that may be brought against us within the 10 years following
redemption. Accordingly, the per-share redemption amount received by Public Shareholders could be less than the $10.00 per public share initially held in the Trust Account, due to claims of such creditors.
Our Sponsor has agreed that it will be liable to us if and to the
extent any claims by a third party (other than our independent auditors) for services rendered or products sold to us, or a prospective target business with which we have discussed entering into a transaction agreement, reduce the amount of
funds in the Trust Account to below (1) $10.00 per public share or (2) such lesser amount per public share held in the Trust Account as of
TABLE OF CONTENTS
the date of the liquidation of the Trust Account due to reductions in the value of
the trust assets, in each case net of the interest which may be withdrawn to pay taxes, expenses relating to the administration of the Trust Account and limited withdrawals for working capital, except as to any claims by a third party who
executed a waiver of any and all rights to seek access to the Trust Account and except as to any claims under our indemnity of the underwriters of the Initial Public Offering against certain liabilities, including liabilities under the
Securities Act. Moreover, in the event that an executed waiver is deemed to be unenforceable against a third party, our Sponsor will not be responsible to the extent of any liability for such third-party claims. We have not independently
verified whether our Sponsor has sufficient funds to satisfy its indemnity obligations and believe that our Sponsor’s only assets are securities of our company. Our Sponsor may not have sufficient funds available to satisfy those obligations.
We have not asked our Sponsor to reserve for such obligations, and therefore, no funds are currently set aside to cover any such obligations. As a result, if any such claims were successfully made against the Trust Account, the funds available
for our initial business combination and redemptions could be reduced to less than $10.00 per public share. In such event, we may not be able to complete our initial business combination, and you would receive such lesser amount per share in
connection with any redemption of your public shares. None of our directors or officers will indemnify us for claims by third parties including, without limitation, claims by vendors and prospective target businesses.
Public Shareholders who redeem their RMG III
Class A Ordinary Shares may continue to hold any RMG III Public Warrants they own, which would result in additional dilution to non-redeeming holders upon exercise of the RMG III Public Warrants.
Public Shareholders who redeem their RMG III Class A Ordinary
Shares may continue to hold any RMG III Public Warrants they owned prior to redemption, which results in additional dilution to non-redeeming holders upon exercise of such RMG III Public Warrants. Assuming (i) all redeeming Public
Shareholders acquired RMG III Units in the Initial Public Offering and continue to hold the RMG III Public Warrants that were included in the RMG III Units, and (ii) maximum redemption of the RMG III Class A Ordinary Shares held by the
redeeming Public Shareholders, 9,660,000 RMG III Public Warrants would be retained by redeeming Public Shareholders with a value of $ , based on the market price of $ of the RMG III Public Warrants as of , 2023. As a result, the
redeeming Public Shareholders would recoup their entire investment and continue to hold RMG III Public Warrants with an aggregate market value of $ , while non-redeeming Public Shareholders would suffer additional dilution in their
percentage ownership and voting interest of the Company upon exercise of the RMG III Public Warrants held by redeeming Public Shareholders.
RMG III’s independent directors may decide not
to enforce the indemnification obligations of the Sponsor, resulting in a reduction in the amount of funds in the Trust Account available for distribution to Public Shareholders.
In the event that the proceeds in the Trust Account are reduced below
the lesser of (i) $10.00 per Public Share or (ii) such lesser amount per share held in the Trust Account as of the date of the liquidation of the Trust Account due to reductions in the value of the trust assets, in each case net of the interest
which may be withdrawn to pay taxes, expenses relating to the administration of the trust account and limited withdrawals for working capital, and the Sponsor asserts that it is unable to satisfy its obligations or that it has no
indemnification obligations related to a particular claim, RMG III’s independent directors would determine whether to take legal action against the Sponsor to enforce its indemnification obligations.
While RMG III currently expect that its independent directors would
take legal action on its behalf against the Sponsor to enforce its indemnification obligations to RMG III, it is possible that RMG III’s independent directors in exercising their business judgment may choose not to do so if, for example, the
cost of such legal action is deemed by the independent directors to be too high relative to the amount recoverable or if the independent directors determine that a favorable outcome is not likely. If RMG III’s independent directors choose not
to enforce these indemnification obligations, the amount of funds in the Trust Account available for distribution to RMG III’s Public Shareholders may be reduced below $10.00 per share.
There is no guarantee that a Public
Shareholder’s decision whether to redeem their Public Shares for a pro rata portion of the Trust Account will put such Public Shareholder in a better future economic position.
No assurance can be given as to the price at which a Public
Shareholder may be able to sell his, her or its Public Shares in the future following the completion of the Business Combination. Certain events following the consummation of any business combination, including the Business Combination, may
cause an increase in
TABLE OF CONTENTS
RMG III’s stock price, and may result in a lower value realized now than a Public
Shareholder might realize in the future had the Public Shareholder not elected to redeem such Public Shareholder’s Public Shares. Similarly, if a Public Shareholder does not redeem his, her or its shares, such Public Shareholder will bear the
risk of ownership of Public Shares after the consummation of the Business Combination, and there can be no assurance that a Public Shareholder can sell his, her or its Public Shares in the future for a greater amount than the redemption price
set forth in this proxy statement/prospectus. A Public Shareholder should consult his, her or its own tax and/or financial advisor for assistance on how this may affect its individual situation.
If Public Shareholders fail to comply with the
redemption requirements specified in this proxy statement/prospectus, they will not be entitled to redeem their Public Shares for a pro rata portion of the funds held in the Trust Account.
To exercise their redemption rights, holders are required to tender
or deliver their shares (and share certificates (if any) and other redemption forms), either physically or electronically using the Depository Trust Company’s DWAC System, to RMG III’s transfer agent two business days prior to the vote at the
Special Meeting. If a holder properly seeks redemption as described in this proxy statement/prospectus and the Business Combination with H2B2 is approved and proceeds RMG III will redeem these Public Shares for a pro rata portion of funds
deposited in the Trust Account and the holder will no longer own such Public Shares. See the section entitled “RMG III Special Meeting of Shareholders—Redemption Rights” for additional information on how
to exercise your redemption rights.
If, before distributing the proceeds in the
Trust Account to our Public Shareholders, we file a winding-up petition or a winding-up petition is filed against us that is not dismissed, the claims of creditors in such proceeding may have priority over the claims of RMG III shareholders and
the per-share amount that would otherwise be received by our shareholders in connection with RMG III liquidation may be reduced.
If, before distributing the proceeds in the Trust Account to the
Public Shareholders, we file a winding-up petition or a winding-up petition is filed against us that is not dismissed, the proceeds held in the Trust Account could be subject to applicable insolvency law, and may be included in our liquidation
estate and subject to the claims of third parties with priority over the claims of RMG III shareholders. To the extent any liquidation claims deplete the Trust Account, the per-share amount that would otherwise be received by RMG III
shareholders in connection with our liquidation would be reduced.
If, after RMG III distributes the proceeds in
the Trust Account to Public Shareholders, RMG III files a bankruptcy petition or an involuntary bankruptcy petition is filed against RMG III that is not dismissed, a bankruptcy court may seek to recover such proceeds, and RMG III and the RMG
III Board may be exposed to claims of punitive damages.
If, after RMG III distributes the proceeds in the Trust Account to
the Public Shareholders, RMG III files a bankruptcy petition or an involuntary bankruptcy petition is filed against RMG III that is not dismissed, any distributions received by Public Shareholders could be viewed under applicable
debtor/creditor and/or bankruptcy laws as either a “preferential transfer” or a “fraudulent conveyance.” As a result, a bankruptcy court could seek to recover all amounts received by RMG III shareholders. In addition, the RMG III Board may be
viewed as having breached its fiduciary duty to its creditors and/or having acted in bad faith, thereby exposing itself and RMG III to claims of punitive damages, by paying Public Shareholders from the Trust Account prior to addressing the
claims of creditors.
RMG III has a specified maximum redemption
threshold. This redemption threshold may make it more difficult for RMG III to complete the Business Combination as contemplated.
The Merger Agreement provides that the obligations of RMG III and
H2B2 to consummate the Merger are conditioned on, among other things, in no event will RMG III redeem Public Shares in an amount that would cause the Surviving Corporation’s net tangible assets (as determined in accordance with Rule
3a51-1(g)(1) of the Exchange Act) to be less than $5,000,001.
If this condition is not met, and such condition is not or cannot
be waived under the terms of the Merger Agreement, then the Merger Agreement could terminate and the proposed Business Combination may not be consummated.
TABLE OF CONTENTS
Risks Related to Ownership of the Surviving Corporation’s Common
Stock Following the Business Combination
Following the consummation of the Business
Combination, the Surviving Corporation may be required to take write-downs or write-offs, or the Surviving Corporation may be subject to restructuring, impairment or other charges that could have a significant negative effect on the Surviving
Corporation’s financial condition, results of operations and the price of the Surviving Corporation’s securities, which could cause you to lose some or all of your investment.
Although RMG III has conducted due diligence on H2B2, this diligence
may not surface all material issues that may be present with H2B2’s business. Factors outside of H2B2’s and outside of H2B2’s control may, at any time, arise. As a result of these factors, the Surviving Corporation may be forced to later
write-down or write-off assets, restructure its operations, or incur impairment or other charges that could result in the Surviving Corporation reporting losses. Even if RMG III’s due diligence successfully identified certain risks, unexpected
risks may arise, and previously known risks may materialize in a manner not consistent with RMG III’s preliminary risk analysis. Even though these charges may be non-cash items and therefore not have an immediate impact on the Surviving
Corporation’s liquidity, the fact that the Surviving Corporation reports charges of this nature could contribute to negative market perceptions about the Surviving Corporation or its securities. In addition, charges of this nature may cause the
Surviving Corporation to be unable to obtain future financing on favorable terms or at all.
Delaware law and the Proposed Organizational
Documents contain certain provisions, including anti-takeover provisions, that limit the ability of stockholders to take certain actions and could delay or discourage takeover attempts that stockholders may consider favorable.
The Proposed Organizational Documents that will be in effect upon
consummation of the Business Combination, and the DGCL, contain provisions that could have the effect of rendering more difficult, delaying, or preventing an acquisition that stockholders may consider favorable, including transactions in which
stockholders might otherwise receive a premium for their shares of Surviving Corporation Common Stock. These provisions could also limit the price that investors might be willing to pay in the future for shares of the Surviving Corporation
Common Stock, and therefore depress the trading price of the Surviving Corporation Common Stock. These provisions could also make it difficult for stockholders to take certain actions, including electing directors who are not nominated by the
current members of the Surviving Corporation Board or taking other corporate actions, including effecting changes in the Surviving Corporation’s management. Among other things, the Proposed Organizational Documents include provisions regarding:
•
|
the ability of the Surviving Corporation Board to issue shares of preferred stock, including “blank check” preferred stock and
to determine the terms of those shares, including preferences and voting rights, without stockholder approval, which could be used to significantly dilute the ownership of a hostile acquirer;
|
•
|
the Proposed Certificate of Incorporation does not provide for cumulative voting in the election of directors, which limits the
ability of minority stockholders to elect director candidates;
|
•
|
the limitation of the liability of, and the indemnification of, the Surviving Corporation’s directors and officers;
|
•
|
the ability of the Surviving Corporation Board to amend the Proposed Bylaws, which may allow the Surviving Corporation Board to
take additional actions to prevent an unsolicited takeover and inhibit the ability of an acquirer to amend the Proposed Bylaws to facilitate an unsolicited takeover attempt; and
|
•
|
advance notice procedures with which stockholders must comply to nominate candidates to the Surviving Corporation Board or to
propose matters to be acted upon at a stockholders’ meeting, which could preclude stockholders from bringing matters before annual or special meetings of stockholders and delay changes in the Surviving Corporation Board and also may
discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to obtain control of the Surviving Corporation.
|
These provisions, alone or together, could delay or prevent hostile
takeovers and changes in control or changes in the Surviving Corporation Board or management.
TABLE OF CONTENTS
Risks if the Domestication and Business Combination are Not
Consummated
If RMG III is not able to complete the
Business Combination with H2B2 by February 9, 2024, as such date may be further extended pursuant to the RMG III Governing Documents, RMG III would cease all operations except for the purpose of winding up, redeem 100% of the Public Shares
and liquidate the Trust Account, in which case the Public Shareholders may only receive approximately $10.41 per share and the RMG III Warrants will expire worthless.
If RMG III is not able to complete the Business Combination with
H2B2 by February 9, 2024 as such date may be extended pursuant to the RMG III Governing Documents RMG III will: (1) cease all operations except for the purpose of winding up; (2) as promptly as reasonably possible but not more than
10 business days thereafter, redeem the Public Shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest (less up to $100,000 of interest to pay dissolution expenses
and which interest shall be net of taxes payable), divided by the number of then issued and outstanding Public Shares, which redemption will completely extinguish the Public Shareholders’ rights as RMG III shareholders (including the right to
receive further liquidating distributions, if any), subject to applicable law; and (3) as promptly as reasonably possible following such redemption, subject to the approval of RMG III’s remaining shareholders and the RMG III Board, dissolve
and liquidate, subject in each case to its obligations under Cayman Islands law to provide for claims of creditors and the requirements of other applicable law. In such case, based on the amount held in the Trust Account as of August 7, 2023,
the Public Shareholders may only receive approximately $10.41 per share and the RMG III Warrants will expire worthless.
You do not have any rights or interests in
funds from the Trust Account, except under certain limited circumstances. To liquidate your investment, therefore, you may be forced to sell your Public Shares and/or warrants, potentially at a loss.
Our Public Shareholders will be entitled to receive funds from the
Trust Account only upon the earliest to occur of: (1) our completion of an initial business combination, and then only in connection with those RMG III Class A Ordinary Shares that such RMG III shareholder properly elected to redeem, subject
to the limitations described herein; (2) the redemption of any Public Shares properly submitted in connection with a RMG III shareholder vote to amend our amended and restated memorandum and articles of association (A) to modify the substance
or timing of our obligation to allow redemption in connection with our initial business combination or to redeem 100% of our Public Shares if we do not complete our initial business combination by February 9, 2024, or (B) with respect to any
other provision relating to RMG III shareholders’ rights or pre-initial business combination activity; and (3) the redemption of our Public Shares if we have not completed an initial business combination by February 9, 2024, subject to
applicable law. In no other circumstances will a RMG III shareholder have any right or interest of any kind to or in the Trust Account. Holders of warrants will not have any right to the proceeds held in the Trust Account with respect to the
warrants. Accordingly, to liquidate your investment, you may be forced to sell your Public Shares and/or warrants, potentially at a loss.
If RMG III has not completed an initial
business combination by the Completion Window, Public Shareholders may be forced to wait until after February 9, 2024, before redemption from the Trust Account is possible.
If RMG III has not completed an initial business combination by the
end of the Completion Window and does not obtain an additional extension, RMG III will distribute the aggregate amount then on deposit in the Trust Account (less up to $100,000 of the net interest to pay dissolution expenses and which interest
shall be net of taxes payable), pro rata to the Public Shareholders by way of redemption and cease all operations except for the purposes of winding up of its affairs, as further described in this proxy statement/prospectus. Any redemption of
Public Shares from the Trust Account shall be affected automatically by function of the RMG III Governing Documents prior to any voluntary winding up. If RMG III is required to wind-up, liquidate the Trust Account and distribute such amount
therein, pro rata, to the Public Shareholders, as part of any liquidation process, such winding up, liquidation and distribution must comply with the applicable provisions of the Cayman Islands Companies Act. In that case, Public Shareholders
may be forced to wait beyond the Completion Window (or if such date is further extended at a duly called extraordinary general meeting, such later date) before the redemption proceeds of the Trust Account become available to them, and they
receive the return of their pro rata portion of the proceeds therefrom. RMG III has no obligation to return funds to Public Shareholders prior to the date of its redemption or liquidation unless, prior thereto, RMG III consummates an initial
business combination or amends certain provisions of the RMG III Governing
TABLE OF CONTENTS
Documents and only then in cases where Public Shareholders have properly sought to
redeem their Public Shares. Only upon RMG III’s redemption or liquidation will Public Shareholders be entitled to distributions if RMG III has not completed an initial business combination within the Completion Window.
If our working capital is insufficient to
allow us to operate until at least the end of the Combination Period, we may be unable to complete the Business Combination.
On January 19, 2022, the Sponsor agreed to lend us up to $500,000
pursuant to an unsecured, non-interest bearing promissory note to be used for a portion of the expenses of RMG III. On July 27, 2022, the Sponsor agreed to lend us up to $475,000 pursuant to an unsecured, non-interest bearing promissory note.
The notes are due upon consummation of our Business Combination, without interest. In the event that an initial Business Combination does not close, we may use a portion of the working capital held outside the Trust Account to repay such loaned
amounts, but no proceeds from our Trust Account would be used for such repayment. We expect to incur additional indebtedness to the Sponsor, on substantially similar terms, to finance our operating costs until the completion of our initial
business combination. We expect to incur significant costs in pursuit of our acquisition plans. Management’s plans to address this need for capital through potential loans from certain of our affiliates are discussed in “Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Our affiliates are not obligated to make additional loans to us in the future, and we may not be able to raise
additional financing from unaffiliated parties necessary to fund our expenses.
Of the funds available to us, we could use a portion of the funds
available to us to pay fees to consultants to assist us with our search for a target business. We could also use a portion of the funds as a down payment or to fund a “no-shop” provision (a provision in letters of intent designed to keep
target businesses from “shopping” around for transactions with other companies or investors on terms more favorable to such target businesses) with respect to a particular proposed business combination, although we do not have any current
intention to do so. If we enter into a letter of intent where we paid for the right to receive exclusivity from a target business and were subsequently required to forfeit such funds (whether as a result of our breach or otherwise), we might
not have sufficient funds to continue searching for, or conduct due diligence with respect to, a target business. If we have not completed our initial business combination within the required time period, based on the amount held in the Trust
Account as of August 7, 2023, our Public Shareholders may receive only approximately $10.41 per share, or less in certain circumstances, on the liquidation of our Trust Account and our warrants will expire worthless. See “— If third parties bring claims against us, the proceeds held in the Trust Account could be reduced and the per-share redemption amount received by RMG III shareholders may be less than
$10.00 per share” and other risk factors herein.
If the net proceeds of the Initial Public
Offering not being held in the Trust Account are insufficient to allow RMG III to operate through the Completion Window (or if such date is further extended at a duly called extraordinary general meeting, such later date) and RMG III is
unable to obtain additional capital, RMG III may be unable to complete an initial business combination, in which case, based on the amount held in the Trust Account as of August 7, 2023, Public Shareholders may only receive $10.41 per share,
and the RMG III Warrants will expire worthless.
As of March 31, 2023, RMG III had cash of $15,055 held outside the
Trust Account, which is available for use by RMG III to cover the costs associated with identifying a target business and negotiating a business combination and other general corporate uses. Additionally, in order to finance transaction costs
in connection with a business combination, the Sponsor, members of the RMG III founding team or any of their affiliates may, but are not obligated to (other than pursuant to the January 2022 Note and the July 2022 Note), make certain working
capital loans as may be required. On January 19, 2022, RMG Acquisition Management agreed to lend RMG III up to an aggregate of $500,000 for working capital purposes, pursuant to the January 2022 Note. The January 2022 Note is due and payable in
full by RMG III upon the consummation of a business combination. On July 27, 2022, RMG Acquisition Management agreed to lend RMG III up to an aggregate of $475,000 for working capital purposes, pursuant to the July 2022 Note. The July 2022 Note
is due and payable in full by RMG III upon the consummation of the Business Combination. In the event that a Business Combination does not close, RMG III may use a portion of proceeds held outside the Trust Account to repay the January 2022
Note and the July 2022 Note, but no proceeds held in the Trust Account would be used to repay the January 2022 Note or the July 2022 Note. The January 2022 Note and the July 2022 Note will be repaid in cash upon consummation of a business
combination. As of the date hereof, RMG III
TABLE OF CONTENTS
has borrowed $500,000 under the January 2022 Note and $350,000 under the July 2022
Note. If RMG III does not complete a business combination by the Completion Window, there will not be sufficient assets to repay the outstanding balance under the January 2022 Note and the July 2022 Note, and the January 2022 Note and the
July 2022 Note will be worthless.
The funds available to RMG III outside of the Trust Account may not
be sufficient to allow it to operate through the Completion Window (or if such date is further extended at a duly called extraordinary general meeting, such later date), assuming that an initial business combination is not completed during that
time. Of the funds available to RMG III, it could use a portion of the funds available to pay fees to consultants to assist with its search for a target business. RMG III could also use a portion of the funds as a down payment or to fund a
“no-shop” provision (a provision in letters of intent designed to keep target businesses from “shopping” around for transactions with other companies on terms more favorable to such target businesses) with respect to a particular proposed
business combination, although RMG III does not have any current intention to do so. If RMG III entered into a letter of intent where it paid for the right to receive exclusivity from a target business and were subsequently required to forfeit
such funds (whether as a result of its breach or otherwise), RMG III might not have sufficient funds to continue searching for, or conduct due diligence with respect to, a target business.
If RMG III is required to seek additional capital, it would need
to borrow funds from the Sponsor, members of its management team or other third parties to operate or may be forced to liquidate. Neither the members of RMG III’s management team nor any of its affiliates are under any further obligation
(other than pursuant to the January 2022 Note and the July 2022 Note) to advance funds to RMG III in such circumstances. Any such advances would be repaid only from funds held outside the Trust Account or from funds released to RMG III upon
completion of an initial business combination. If RMG III is unable to obtain additional financing, it may be unable to complete an initial business combination. If RMG III is unable to complete an initial business combination because it does
not have sufficient funds available to it, RMG III will be forced to cease operations and liquidate the Trust Account. Consequently, based on the amount held in the Trust Account as of August 7, 2023, the Public Shareholders may only receive
approximately $10.41 per Public Share and the RMG III Public Warrants will expire worthless.
Risks Related to Taxation
The Domestication may result in adverse tax
consequences for holders of RMG III Class A Ordinary Shares and RMG III Warrants.
U.S. Holders (as defined in “U.S.
Federal Income Tax Considerations” below) may be subject to U.S. federal income tax as a result of the Domestication. Additionally, non-U.S. Holders (as defined in “U.S. Federal Income Tax
Considerations” below) may become subject to withholding tax on any amounts treated as dividends paid on Surviving Corporation Common Stock after the Domestication.
A U.S. Holder who on the day of the Domestication beneficially owns
(actually or constructively) RMG III Class A Ordinary shares with a fair market value of less than $50,000 on the date of the Domestication will generally not be required to include any part of RMG III’s earnings in income and, subject to the
application of the PFIC rules described below, will generally not recognize any gain or loss. A U.S. Holder who on the day of the Domestication beneficially owns (actually or constructively) RMG III Class A Ordinary Shares with a fair market
value of $50,000 or more, but less than 10% of the total combined voting power of all classes of RMG III Ordinary Shares entitled to vote and less than 10% or more of the total value of all classes of RMG III Ordinary Shares, will generally
recognize gain (but not loss) in respect of the Domestication as if such U.S. Holder exchanged its RMG III Class A Ordinary shares for shares of Domesticated RMG III Class A Stock in a taxable transaction, unless such U.S. Holder elects in
accordance with applicable Treasury Regulations to include in income as a deemed dividend the “all earnings and profits amount” (as defined in the Treasury Regulations under Section 367 of the Code) attributable to the RMG III Class A Ordinary
Shares held directly by such U.S. Holder. A U.S. Holder who on the day of the Domestication beneficially owns (actually or constructively) 10% or more of the total combined voting power of all classes of RMG III Ordinary Shares entitled to vote
or 10% or more of the total value of all classes of RMG III Ordinary Shares, will generally be required to include in income as a deemed dividend the “all earnings and profits amount” (as defined in the Treasury Regulations) attributable to the
RMG III Class A Ordinary Shares held directly by such U.S. Holder.
Additionally, proposed Treasury Regulations with a retroactive
effective date have been promulgated under Section 1291(f) of the Code which generally require that, a U.S. person who disposes of stock of a PFIC (including
TABLE OF CONTENTS
for this purpose exchanging warrants for newly issued warrants in the Domestication)
must recognize gain equal to the excess of the fair market value of such PFIC stock over its adjusted tax basis, notwithstanding any other provision of the Code. Because RMG III is a blank check company with no current active business, RMG III
believes that it is likely that RMG III is classified as a PFIC for U.S. federal income tax purposes. As a result, these proposed Treasury Regulations, if finalized in their current form, would generally require a U.S. Holder of RMG III Class A
Ordinary Shares to recognize gain on the exchange of RMG III Class A Ordinary Shares for shares of Domesticated RMG III Class A Stock pursuant to the Domestication unless such U.S. Holder has made certain tax elections with respect to such U.S.
Holder’s RMG III Class A Ordinary Shares. Proposed Treasury Regulations, if finalized in their current form would also apply to a U.S. Holder who exchanges RMG III Warrants for Domesticated RMG III Warrants; currently, however, the election
mentioned above does not apply to RMG III Warrants (for discussion regarding the unclear application of the PFIC rules to RMG III Warrants, see the section entitled “U.S. Federal Income Tax Considerations —
PFIC Considerations”). Any gain recognized from the application of the PFIC rules described above would be taxable income with no corresponding receipt of cash. The tax on any such gain would be imposed at the rate applicable to
ordinary income and an interest charge would apply based on complex rules designed to offset the tax deferral to such U.S. Holder on the undistributed earnings, if any, of RMG III. It is not possible to determine at this time whether, in what
form, and with what effective date, final Treasury Regulations under Section 1291(f) of the Code may be adopted or how any such Treasury Regulations would apply.
TABLE OF CONTENTS
UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION
Introduction
The following unaudited pro forma combined financial information is
being provided to aid you in your analysis of the financial aspects of the Business Combination. The unaudited pro forma combined financial information is prepared in accordance with Article 11 of Regulation S-X as amended by the final rule,
Release No. 33-10786 “Amendments to Financial Disclosures about Acquired and Disposed Businesses” to depict the accounting for the transaction (“Transaction Accounting Adjustments”) and present the
reasonably estimable synergies and other transaction effects that have occurred or are reasonably expected to occur (“Management’s Adjustments”). H2B2 has elected not to present Management’s Adjustments
and will only be presenting Transaction Accounting Adjustments in this unaudited pro forma combined financial information.
The unaudited pro forma combined balance sheet as of March 31, 2023
combines the historical consolidated condensed balance sheet of RMG III as of March 31, 2023 and the historical condensed balance sheet of H2B2 as of March 31, 2023, and gives pro forma effect to the Business Combination as if it had been
consummated as of that date. The unaudited pro forma combined statements of operations for the three months ended March 31, 2023 and the twelve months ended December 31, 2022 combines the historical condensed statements of operations of RMG III
as of March 31, 2023 and as of December 31, 2022 and the historical condensed statements of operations of H2B2 as of March 31, 2023 and as of December 31, 2022, and gives pro forma effect to the Business Combination as if it had occurred as of
January 1, 2022. This information should be read together with the Unaudited Quarterly Report for the quarter ended March 31, 2023 of H2B2 and RMG III and the 2022 Audited Consolidated Financial Statements of H2B2 and 2022 Audited Financial
Statements of RMG III and related notes, “H2B2 Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “RMG III Management’s Discussion
and Analysis of Financial Condition and Results of Operations,” “Selected Historical Financial Information of H2B2,” “Selected Historical Financial Information of RMG III” and other financial
information included elsewhere in this proxy statement/prospectus.
Description of the Business Combination
For more information about the Business Combination, please see “The Merger Agreement.”
Other Related Events in connection with the
Business Combination
Redemption
On August 4, 2023, RMG III held an extraordinary general meeting
of the RMG III shareholders to approve the Second Extension Amendment, at which certain Public Shareholders elected to redeem an aggregate of 282,624 Public Shares in cash, representing approximately 30.77% of the issued and outstanding
Public Shares. After exercising their redemption rights at a redemption price of approximately $10.41 per share, $6.6 million of cash remained in the Trust Account, representing 635,778 Class A Ordinary Shares outstanding.
Ardachon
Ardachon owns as of the date of this proxy statement/prospectus a
total of 1,806,667 shares of H2B2 Common Stock. On May 30, 2023, H2B2 purchased 193,333 shares of H2B2 Common Stock from Ardachon for a total consideration of EUR 14,500,000 ($15.6 million) and H2B2 has the option to purchase 73,334
additional shares of H2B2 Common Stock from Ardachon for EUR 5,500,000 ($5.9 million) (the “Ardachon Option Shares”), subject to the payment of the purchase price prior to July
31, 2023. On July 28, 2023, H2B2 and the insolvency administration agreed to extend the date by which H2B2 could purchase the Ardachon Option Shares from July 31, 2023 to December 31, 2023. In the event a Capital Raise Transaction is
consummated at a price per share higher or lower than EUR 75 per share, Ardachon and/or Blanca de Porres Guardiola will deliver shares of H2B2 Common Stock (and vice versa) to ensure that the acquisition of the shares by H2B2 is made at the
same price per share as the price per share of the Capital Raise Transaction.
Warrant Agreement
Pursuant to the Warrant Amendment, the Warrant Agreement shall be
amended to provide that, at Closing (x) each of the then outstanding RMG III Public Warrants will be canceled and exchanged for the right to receive 0.075 shares of Surviving Corporation Common Stock, and (y) each of the then outstanding RMG
III
TABLE OF CONTENTS
Private Placement Warrants will be canceled and exchanged for the right to receive
0.075 shares of Surviving Corporation Common Stock. In this unaudited pro forma combined financial information, all of the 17,876,330 RMG III Warrants issued and outstanding, including 9,660,000 RMG III Public Warrants and 8,216,330 RMG III
Private Placement Warrants to purchase RMG Class A Ordinary Shares have been considered canceled and exchanged for the right to receive 0.075 shares of the Surviving Corporation Common Stock per RMG III Warrant.
The following table summarizes the pro forma number of shares of
Surviving Corporation Common Stock outstanding following the consummation of the Business Combination under two separate scenarios, discussed further in the sections below, excluding the potential dilutive effect of the exercising or vesting of
the Surviving Corporation Options.
H2B2 Stockholders(1)
|
|
|
96,470,002
|
|
|
93.40%
|
|
|
96,470,002
|
|
|
93.98%
|
Holders of RMG III Private Placement Warrants
|
|
|
616,225
|
|
|
0.60%
|
|
|
616,225
|
|
|
0.60%
|
Holders of RMG III Public Warrants
|
|
|
724,500
|
|
|
0.70%
|
|
|
724,500
|
|
|
0.71%
|
Public Shareholders
|
|
|
635,778
|
|
|
0.62%
|
|
|
—
|
|
|
—
|
Sponsor(2)
|
|
|
4,816,935
|
|
|
4.66%
|
|
|
4,816,935
|
|
|
4.69%
|
Other Stockholders(3)
|
|
|
25,000
|
|
|
0.02%
|
|
|
25,000
|
|
|
0.02%
|
Total Shares Outstanding
|
|
|
103,288,440
|
|
|
100%
|
|
|
102,652,662
|
|
|
100%
|
(1)
|
The H2B2 Stockholders shares assumes a pre-money valuation of H2B2 of $750 million together with the consideration of a Capital
Raise Transaction of $125 million (post money valuation of $875 million) and the subsequent conversion of the AVR Option Amount plus a premium of 10%.
|
(2)
|
The 4.66%-4.69% ownership of the Sponsor does not incorporate the effect of the Warrant Amendment explained above.
|
(3)
|
RMG III and Cohen, the capital markets division of J.V.B.Financial Group, LLC, entered into an Engagement Letter, dated as of
December 5, 2022, pursuant to which RMG III will pay to Cohen, in exchange for services rendered by Cohen in connection with seeking the Extension and the Extension Amendment, an advisory fee amounting to (i) $500,000 paid in cash and
due to Cohen at the Closing and (ii) $250,000 paid in equivalent dollar amount of Surviving Corporation Common Stock which will be delivered to Cohen at any time prior to sixty (60) days following the Closing.
|
All of the relative percentages above are for illustrative purposes
only and are based upon certain assumptions as described in the section entitled “Summary—Ownership of the Surviving Corporation.” Additionally, the relative percentages above assume the Business
Combination was consummated on March 31, 2023. Should one or more of the assumptions prove incorrect, actual ownership percentages may vary materially from those described in this proxy statement as anticipated, believed, estimated, expected or
intended.
Accounting for the transaction
The Business Combination will be accounted for as a reverse
recapitalization in accordance with U.S. GAAP. Under this method of accounting, RMG III will be treated as the acquired company for accounting purposes, whereas H2B2 will be treated as the accounting acquirer. In accordance with this method of
accounting, the Business Combination will be treated as the equivalent of H2B2 issuing shares for the net assets of RMG III, accompanied by a recapitalization. The net assets of H2B2 will be stated at historical cost, with no goodwill or other
intangible assets recorded, and operations prior to the Business Combination will be those of H2B2. H2B2 has been determined to be the accounting acquirer for purposes of the Business Combination based on the following:
•
|
H2B2’s existing stockholders will have the greatest voting interest in the Surviving Corporation;
|
•
|
H2B2’s existing stockholders will have the ability to control decisions regarding election and removal of directors and officers
of the Surviving Corporation;
|
•
|
H2B2 is significantly larger than RMG III by total assets and total cash and cash equivalents;
|
•
|
The senior management team of H2B2 will continue to serve in such positions with substantially similar responsibilities and
duties at the Surviving Corporation following consummation of the Business Combination; and
|
TABLE OF CONTENTS
•
|
The purpose and intent of the Business Combination is to create an operating public company, with H2B2’s management continuing
to use its know-how to grow the business.
|
The unaudited pro forma combined financial information has been
prepared assuming two alternative levels of redemption into cash of Public Shares:
•
|
Scenario 1 — Assuming No Redemptions: This presentation assumes that no Public
Shareholders exercise redemption rights with respect to their remaining RMG III Class A Ordinary Shares upon consummation of the Business Combination; and
|
•
|
Scenario 2 — Assuming Maximum Redemptions: This presentation assumes that
Public Shareholders exercise their redemption rights with respect to the remaining 635,778 shares of Public Shares upon consummation of the Business Combination at a redemption price of approximately $10.41 per share, based on the
amount held in the Trust Account as of August 7, 2023. Scenario 2 includes all adjustments contained in Scenario 1 and presents additional adjustments to reflect the effect of maximum redemptions.
|
TABLE OF CONTENTS
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
AS OF MARCH 31, 2023
Current assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
$5,119,793
|
|
|
$15,055
|
|
|
$(6,376,564)
|
|
|
|
|
|
$109,421,200
|
|
|
|
|
|
$(12,480,942)
|
|
|
|
|
|
$95,698,542
|
|
|
$(7,740,933)
|
|
|
(12)
|
|
|
$87,957,609
|
|
|
|
|
|
|
|
|
|
15,111,436
|
|
|
(3)
|
|
|
125,000,000
|
|
|
(6)
|
|
|
7,740,933
|
|
|
(2)
|
|
|
—
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
(21,488,000)
|
|
|
(3)
|
|
|
(15,578,800)
|
|
|
(6)
|
|
|
2,000,014
|
|
|
(4)
|
|
|
—
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
(22,221,889)
|
|
|
(11)
|
|
|
—
|
|
|
—
|
|
|
|
|
|
—
|
Accounts receivable
|
|
|
3,968,220
|
|
|
—
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
3,968,220
|
|
|
—
|
|
|
|
|
|
3,968,220
|
Inventory
|
|
|
6,175,000
|
|
|
—
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
6,175,000
|
|
|
—
|
|
|
|
|
|
6,175,000
|
Prepaid expenses and other current assets
|
|
|
2,094,443
|
|
|
118,317
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
2,212,760
|
|
|
—
|
|
|
|
|
|
2,212,760
|
Grants receivable
|
|
|
890,827
|
|
|
—
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
890,827
|
|
|
—
|
|
|
|
|
|
890,827
|
Contract assets
|
|
|
303,391
|
|
|
—
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
303,391
|
|
|
—
|
|
|
|
|
|
303,391
|
Total Current Assets
|
|
|
18,551,674
|
|
|
133,372
|
|
|
(6,376,564)
|
|
|
|
|
|
109,421,200
|
|
|
|
|
|
(12,480,942)
|
|
|
|
|
|
109,248,740
|
|
|
(7,740,933)
|
|
|
|
|
|
101,507,807
|
Non-Current assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property, plant, and equipment, net
|
|
|
8,178,246
|
|
|
—
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
8,178,246
|
|
|
—
|
|
|
|
|
|
8,178,246
|
Operating lease - Right of use asset, net
|
|
|
1,990,015
|
|
|
—
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
1,990,015
|
|
|
—
|
|
|
|
|
|
1,990,015
|
Intangible assets, net
|
|
|
104,648
|
|
|
—
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
104,648
|
|
|
—
|
|
|
|
|
|
104,648
|
Equity methods investments
|
|
|
119,544
|
|
|
—
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
119,544
|
|
|
—
|
|
|
|
|
|
119,544
|
Other assets
|
|
|
173,154
|
|
|
—
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
173,154
|
|
|
—
|
|
|
|
|
|
173,154
|
Investments held in Trust Account
|
|
|
—
|
|
|
10,683,049
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
(10,683,049)
|
|
|
|
|
|
—
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
(2,942,116)
|
|
|
(1)
|
|
|
—
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
(7,740,933)
|
|
|
(2)
|
|
|
—
|
|
|
—
|
|
|
|
|
|
—
|
Total Non-Current Assets
|
|
|
10,565,607
|
|
|
10,683,049
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
(10,683,049)
|
|
|
|
|
|
10,565,607
|
|
|
—
|
|
|
|
|
|
10,565,607
|
Total Assets
|
|
|
$29,117,281
|
|
|
$10,816,421
|
|
|
$(6,376,564)
|
|
|
|
|
|
$109,421,200
|
|
|
|
|
|
$(23,163,991)
|
|
|
|
|
|
$119,814,347
|
|
|
$(7,740,933)
|
|
|
|
|
|
$112,073,414
|
Liabilities and Shareholders'
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
|
$9,675,171
|
|
|
$350,547
|
|
|
$—
|
|
|
|
|
|
$—
|
|
|
|
|
|
$—
|
|
|
|
|
|
$10,025,718
|
|
|
$—
|
|
|
|
|
|
$10,025,718
|
Current maturities of long-term debt
|
|
|
10,872
|
|
|
—
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
10,872
|
|
|
—
|
|
|
|
|
|
10,872
|
Current maturities of operating lease liabilities
|
|
|
230,645
|
|
|
—
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
230,645
|
|
|
—
|
|
|
|
|
|
230,645
|
Contract liabilities
|
|
|
4,995,692
|
|
|
—
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
4,995,692
|
|
|
—
|
|
|
|
|
|
4,995,692
|
Current provisions
|
|
|
84,480
|
|
|
—
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
84,480
|
|
|
—
|
|
|
|
|
|
84,480
|
Other current liabilities
|
|
|
21,979
|
|
|
—
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
21,979
|
|
|
—
|
|
|
|
|
|
21,979
|
Accrued expenses
|
|
|
—
|
|
|
2,775,834
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
(2,775,834)
|
|
|
(11)
|
|
|
—
|
|
|
—
|
|
|
|
|
|
—
|
Total Current Liabilities
|
|
|
15,018,839
|
|
|
3,126,381
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
(2,775,834)
|
|
|
|
|
|
15,369,386
|
|
|
—
|
|
|
|
|
|
15,369,386
|
Non-Current Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unearned grants
|
|
|
2,553,092
|
|
|
—
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
2,553,092
|
|
|
—
|
|
|
|
|
|
2,553,092
|
Long-term operating lease liabilities
|
|
|
1,912,823
|
|
|
—
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
1,912,823
|
|
|
—
|
|
|
|
|
|
1,912,823
|
Income taxes payable
|
|
|
1,811,603
|
|
|
—
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
1,811,603
|
|
|
—
|
|
|
|
|
|
1,811,603
|
Long-term debt, less current maturities
|
|
|
12,373
|
|
|
—
|
|
|
15,111,436
|
|
|
(3)
|
|
|
(15,111,436)
|
|
|
(6)
|
|
|
—
|
|
|
|
|
|
12,373
|
|
|
—
|
|
|
|
|
|
12,373
|
Other liabilities
|
|
|
263,270
|
|
|
—
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
(72,745)
|
|
|
(5)
|
|
|
190,525
|
|
|
—
|
|
|
|
|
|
190,525
|
Deferred legal fees
|
|
|
—
|
|
|
250,000
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
(250,000)
|
|
|
(11)
|
|
|
—
|
|
|
—
|
|
|
|
|
|
—
|
Deferred underwriting commissions
|
|
|
—
|
|
|
16,905,000
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
(16,905,000)
|
|
|
(10)
|
|
|
—
|
|
|
—
|
|
|
|
|
|
—
|
Convertible Working Capital Loan - related party
|
|
|
—
|
|
|
750,000
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
(750,000)
|
|
|
(11)
|
|
|
—
|
|
|
—
|
|
|
|
|
|
—
|
Derivative warrant liabilities
|
|
|
—
|
|
|
2,592,068
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
(2,592,068)
|
|
|
|
|
|
—
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
12,870,958
|
|
|
(7)
|
|
|
—
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
(15,463,026)
|
|
|
(7)
|
|
|
—
|
|
|
—
|
|
|
|
|
|
—
|
TABLE OF CONTENTS
Total Liabilities
|
|
|
21,572,000
|
|
|
23,623,449
|
|
|
15,111,436
|
|
|
|
|
|
(15,111,436)
|
|
|
|
|
|
(23,345,647)
|
|
|
|
|
|
21,849,802
|
|
|
—
|
|
|
|
|
|
21,849,802
|
Class A Ordinary shares subject to possible
redemption
|
|
|
—
|
|
|
10,583,049
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
(10,583,049)
|
|
|
|
|
|
—
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
(2,942,116)
|
|
|
(1)
|
|
|
—
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
(7,640,933)
|
|
|
(2)
|
|
|
—
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders' Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock
|
|
|
103
|
|
|
—
|
|
|
—
|
|
|
|
|
|
1,250
|
|
|
(6)
|
|
|
8,976
|
|
|
|
|
|
10,329
|
|
|
—
|
|
|
|
|
|
10,329
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
764
|
|
|
(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
134
|
|
|
(7)
|
|
|
—
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
8,075
|
|
|
(8)
|
|
|
—
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
3
|
|
|
(11)
|
|
|
—
|
|
|
—
|
|
|
|
|
|
—
|
Class B Ordinary shares
|
|
|
—
|
|
|
1,208
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
(1,208)
|
|
|
(8)
|
|
|
—
|
|
|
—
|
|
|
|
|
|
—
|
Additional paid-in capital
|
|
|
16,856,969
|
|
|
—
|
|
|
(21,487,998)
|
|
|
(3)
|
|
|
124,998,750
|
|
|
(6)
|
|
|
(6,356,712)
|
|
|
|
|
|
114,011,009
|
|
|
(7,740,933)
|
|
|
(12)
|
|
|
106,270,075
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
7,640,169
|
|
|
(2)
|
|
|
—
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,000,013
|
|
|
(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
72,745
|
|
|
(5)
|
|
|
—
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
15,462,892
|
|
|
(7)
|
|
|
—
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
(44,769,118)
|
|
|
(8)
|
|
|
—
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
6,896,715
|
|
|
(9)
|
|
|
—
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
16,905,000
|
|
|
(10)
|
|
|
—
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
(10,565,129)
|
|
|
(11)
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated other comprehensive loss
|
|
|
(3,842)
|
|
|
—
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
(3,842)
|
|
|
—
|
|
|
|
|
|
(3,842)
|
Retained earnings (Accumulated deficit)
|
|
|
(9,307,942)
|
|
|
(23,391,285)
|
|
|
—
|
|
|
|
|
|
(467,364)
|
|
|
(6)
|
|
|
17,113,641
|
|
|
|
|
|
(16,052,950)
|
|
|
—
|
|
|
|
|
|
(16,052,950)
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
(12,870,958)
|
|
|
(7)
|
|
|
—
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
44,762,243
|
|
|
(8)
|
|
|
—
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
(6,896,715)
|
|
|
(9)
|
|
|
—
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
(7,880,929)
|
|
|
(11)
|
|
|
—
|
|
|
—
|
|
|
|
|
|
—
|
(Less) common stock in treasury
|
|
|
(7)
|
|
|
—
|
|
|
(2)
|
|
|
(3)
|
|
|
—
|
|
|
|
|
|
9
|
|
|
|
|
|
—
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
1
|
|
|
(4)
|
|
|
—
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
8
|
|
|
(8)
|
|
|
—
|
|
|
—
|
|
|
|
|
|
—
|
Total Shareholders' Equity
|
|
|
7,545,281
|
|
|
(23,390,077)
|
|
|
(21,488,000)
|
|
|
|
|
|
124,532,636
|
|
|
|
|
|
10,764,705
|
|
|
|
|
|
97,964,545
|
|
|
(7,740,933)
|
|
|
|
|
|
90,223,612
|
Total Liabilities and
Shareholders' Equity
|
|
|
$29,117,281
|
|
|
$10,816,421
|
|
|
$(6,376,564)
|
|
|
|
|
|
$109,421,200
|
|
|
|
|
|
$(23,163,991)
|
|
|
|
|
|
$119,814,347
|
|
|
$(7,740,933)
|
|
|
|
|
|
$112,073,414
|
TABLE OF CONTENTS
Adjustments to the unaudited Pro forma Combined Balance Sheet
The adjustments included in the unaudited pro forma combined
balance sheet as of March 31, 2023 are as follows:
(1)
|
To reflect the release of cash from marketable securities held in the Trust Account and the subsequent $2.9 million cash
distribution to Public Shareholders as a result of the redemptions in connection with the extraordinary general meeting of RMG III shareholders of August 4, 2023. This $2.9 million cash distribution is reflected as a reduction in
Investment held in Trust Account and a corresponding reduction to equity, equivalent to 282,624 Public Shares at a redemption price of $10.41 per share.
|
(2)
|
To reflect the release of cash from marketable securities held in the Trust Account and the conversion of the RMG III
Ordinary shares subject to possible redemption.
|
(3)
|
This reflects the receipt of cash of $15.6 million (EUR 14.5 million) net of an origination fee of $0.5 million to fund the
initial repurchase of 193,333 shares from Ardachon. Although the cash borrowed has a maturity of three years (May 30, 2026) the debt agreement contains a mandatory redemption clause which requires repayment after the Capital Raise
Transaction. This also reflects, the repurchase of shares from Ardachon for the initial shares purchased on May 30, 2023 plus the 73,334 Ardachon Option Shares expected to be repurchased resulting in a total share repurchase of $21.8
million (EUR 20.0 million). After the repurchase of the shares from Ardachon, this $21.8 million cash payment is reflected as a decrease in Cash and Cash Equivalents and a corresponding reduction to Equity.
|
(4)
|
Reflects the conversion of the option agreement entered into by Mr. Jose Antonio Vázquez Romero and H2B2 on December 15, 2022
pursuant to which Mr. Vázquez is entitled to acquire up to 68,966 shares of H2B2. The option has been exercised and the shares will be delivered to Mr. Vázquez at the time of the completion of the Business Combination, but after the
Capital Raise Transaction of H2B2 has been consummated. The issuance of the 68,966 shares will represent the receipt of $2.0 million cash and a corresponding increase to Additional paid in capital.
|
(5)
|
Reflects the cancellation of the liability related to the incentive plan awarded by H2B2 to nine of its executives. H2B2
executed in 2021 stock-based compensation awards that entitled the executives to purchase up to 555,000 shares for a purchase price of $1.00 per employee award. The awards become fully vested between January 1, 2026, and March 31,
2026, upon satisfaction of both of the following: (a) H2B2’s stock is publicly traded prior to January 1, 2026 and, (b) the executive maintains employment with the Company until March 31, 2026. In the event the conditions were not
met, the awards shall be terminated on December 31, 2025 and the executives shall be entitled to receive a cash bonus. Prior to the Business Combination, H2B2 had recorded a liability associated with the cash bonus component of the
awards as it determined that the conditions were not probable. Pursuant to the Business Combination the liability associated with the cash bonus component of H2B2’s incentive plan that is then outstanding will be canceled with the
corresponding effect on Additional paid in capital. The conditions of the incentive plan would then be probable, and it will be converted into the right to receive an option to purchase shares of Surviving Corporation Common Stock
upon substantially the same terms and conditions as the original H2B2 incentive plan, adjusted by the exchange ratio. Thus, the initial 555,000 options will be converted to 4,563,756 options (x 8.2 times) to purchase shares of
Surviving Corporation Common Stock. See footnote 9 for the accounting associated with the expense of the options in conjunction with the Business Combination.
|
(6)
|
Reflects the $125.0 million cash received through the primary issuance of shares of H2B2 to certain private investors in the
Capital Raise Transaction of H2B2. This $125.0 million cash receipt is reflected as an increase in Cash and Cash Equivalent and a corresponding increase to equity of H2B2. Simultaneously, as indicated in footnote 2, $15.6 million of
this cash has been used to cancel the Liability with the third party that funded a portion of the cash to H2B2 for the payment to Ardachon. In connection with the repayment of the debt, the outstanding origination fees were written
off.
|
(7)
|
Reflects the cancellation and exchange exercise of both the RMG III Public Warrants and RMG III Private Placement Warrants by
RMG III for Surviving Company Common Stock. The quotation of RMG III Warrants has increased from $0.03 per warrant as of December 31, 2022 to $0.75 per warrant, before the Merger. Thus, the fair value warrant liability has been
increased for the purpose of this unaudited pro forma combined balance sheet from $2.6 million to $15.5 million (net impact of
|
TABLE OF CONTENTS
$12.9 million) and immediately after it has been exercised, eliminating the
revaluated liability with the corresponding effect on Additional paid in capital.
(8)
|
Reflects the recapitalization of the combined company as the Business Combination will be treated as the equivalent of a
capital transaction in which H2B2 is issuing stock for the net assets of RMG III. Additionally, the remaining cash held in the Trust Account is transferred to Cash and Cash Equivalent.
|
(9)
|
Reflects $3.1 million charge associated with the Incentive Plan of H2B2 executives on the date of the Business Combination as
a cumulative catch up, plus stock-based compensation expense for the year ended December 31, 2022 and for the three months period ended March 31, 2023 of $3.1 million and $0.8 million, respectively, to recognize the expense over the
remaining service period.
|
(10)
|
Reflects that BofA Securities Inc. and Barclays Capital Inc. have waived their entitlement to the payment by RMG III of the
$16.9 million Deferred Discount under the terms of the Underwriting Agreement. BofA Securities Inc. and Barclays Capital Inc. do not have any role with respect to the Business Combination. The deferred underwriting commission
recognized by RMG III has been waived with the corresponding effect on Additional paid in capital.
|
(11)
|
Reflects the payment in cash for transaction costs and other related costs of approximately $22.2 million, both previously
incurred and expected to be incurred related to the repayment of $3.0 million of RMG III expenses incurred prior to the Business Combination for deferred legal fees and other accrued expenses; $0.8 million to be paid by RMG III as
repayment of the related party working capital debt; $6.2 million to be paid by H2B2 for fees associated with the Capital Raise Transaction; and $12.2 million of aggregated transaction costs associated with the closing of the Business
Combination.
|
From the $12.2 million, $6.1 million has been allocated to RMG III and reflected as an
increase in Accumulated Deficit; $4.5 million has been allocated to H2B2 and reflected as a reduction in Additional paid in capital since these costs relate to the Capital Raise Transaction and the Business Combination; and $1.6 million
reflected as an increase in Accumulated Deficit allocated to H2B2.
Moreover, $0.1 million corresponding to H2B2 were incurred prior to the Business
Combination as of March 31, 2023 and have been reflected as a reduction in Accumulated Deficit and as a reduction in Additional Paid in Capital since these costs were related to the Capital Raise Transaction and the Business Combination.
Additionally, it reflects the payment of $0.25 million of transaction costs in shares
of the Surviving Corporation. This has been reflected in the capitalization table above as Other Stockholders represented as 25,000 shares with a nominal value of $0.0001 per share.
So, the unaudited pro forma combined statement of operations reflects a net increase
in Accumulated deficit of $7.9 million.
The $12.4 million of aggregated transaction costs associated with the closing of
the Business Combination ($12.2 million to be paid in cash and $0.25 million to be paid in shares of Surviving Corporation Common Stock) in Scenario 1 – Assuming No Redemptions and in Scenario 2 – Assuming Maximum Redemptions represents the
best estimate of these transaction expenses, paid in cash and in shares, as established in section 11.06 of the Merger Agreement. Any final expense over the $12.4 million would be assumed by the Surviving Corporation.
(12)
|
In Scenario 1 - Assuming No Redemptions, which assumes the same facts as described in Items 1 to 11 above, but also assumes
no additional Public Shareholders exercise their redemption rights, the Public Shares subject to redemption for cash amounting to $7.7 million of the total $7.7 million held in the Trust Account would be transferred to the Surviving
Corporation.
|
In Scenario 2 – Assuming Maximum Redemptions, which assumes the same facts as
described in Items 1 to 11 above, but also assumes the maximum number of Public Shares are redeemed for cash by the Public Shareholders, thus $7.7 million would be paid out in cash. The $7.7 million, represents the maximum redemption amount
and would result in $0 cash held either in or outside of the Trust Account without including the aggregate amount of any proceeds from the Capital Raise Transaction that has been considered as Cash and Cash Equivalent.
TABLE OF CONTENTS
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS FOR THE
THREE MONTHS ENDED MARCH 31, 2023
Product sales
|
|
|
$866,913
|
|
|
$—
|
|
|
$—
|
|
|
|
|
|
$866,913
|
|
|
$—
|
|
|
|
|
|
$866,913
|
Cost of sales
|
|
|
974,046
|
|
|
—
|
|
|
—
|
|
|
|
|
|
974,046
|
|
|
—
|
|
|
|
|
|
974,046
|
Gross profit
|
|
|
(107,133)
|
|
|
—
|
|
|
—
|
|
|
|
|
|
(107,133)
|
|
|
—
|
|
|
|
|
|
(107,133)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development
|
|
|
542,773
|
|
|
—
|
|
|
—
|
|
|
|
|
|
542,773
|
|
|
—
|
|
|
|
|
|
542,773
|
Selling, general and administrative
|
|
|
1,105,019
|
|
|
2,142,881
|
|
|
766,302
|
|
|
(14)
|
|
|
4,014,202
|
|
|
—
|
|
|
|
|
|
4,014,202
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation of long-lived assets
|
|
|
40,581
|
|
|
—
|
|
|
—
|
|
|
|
|
|
40,581
|
|
|
—
|
|
|
|
|
|
40,581
|
Income from grants
|
|
|
350,127
|
|
|
—
|
|
|
—
|
|
|
|
|
|
350,127
|
|
|
—
|
|
|
|
|
|
350,127
|
Losses from our unconsolidated investments
|
|
|
(7,032)
|
|
|
—
|
|
|
—
|
|
|
|
|
|
(7,032)
|
|
|
—
|
|
|
|
|
|
(7,032)
|
Loss from operations
|
|
|
(1,452,411)
|
|
|
(2,142,881)
|
|
|
(766,302)
|
|
|
|
|
|
(4,361,594)
|
|
|
—
|
|
|
|
|
|
(4,361,594)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other non-operating income
|
|
|
326,204
|
|
|
—
|
|
|
—
|
|
|
|
|
|
326,204
|
|
|
—
|
|
|
|
|
|
326,204
|
Interest and other income (expense), net
|
|
|
207,175
|
|
|
57
|
|
|
—
|
|
|
|
|
|
207,232
|
|
|
—
|
|
|
|
|
|
207,232
|
Change in fair value of derivative liability
|
|
|
—
|
|
|
(2,055,768)
|
|
|
2,055,768
|
|
|
(15)
|
|
|
—
|
|
|
—
|
|
|
|
|
|
—
|
Unrealized gain on marketable securities held in trust
account
|
|
|
—
|
|
|
1,417,859
|
|
|
(1,417,859)
|
|
|
(15)
|
|
|
—
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss before tax
|
|
|
(919,032)
|
|
|
(2,780,733)
|
|
|
(128,393)
|
|
|
|
|
|
(3,828,158)
|
|
|
—
|
|
|
|
|
|
(3,828,158)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense
|
|
|
23,635
|
|
|
—
|
|
|
—
|
|
|
|
|
|
23,635
|
|
|
—
|
|
|
|
|
|
23,635
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
(942,667)
|
|
|
(2,780,733)
|
|
|
(128,393)
|
|
|
|
|
|
(3,851,793)
|
|
|
—
|
|
|
|
|
|
(3,851,793)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding, basic and diluted
|
|
|
9,708,341
|
|
|
18,784,486
|
|
|
|
|
|
|
|
|
103,288,440
|
|
|
|
|
|
|
|
|
102,652,662
|
Basic and diluted loss per share attributable to equity
holders of the parent
|
|
|
$(0.10)
|
|
|
(0.15)
|
|
|
|
|
|
|
|
|
(0.04)
|
|
|
|
|
|
|
|
|
(0.04)
|
TABLE OF CONTENTS
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS FOR THE
TWELVE MONTHS ENDED DECEMBER 31, 2022
Product sales
|
|
|
$3,491,673
|
|
|
$—
|
|
|
$—
|
|
|
|
|
|
$3,491,673
|
|
|
$—
|
|
|
|
|
|
$3,491,673
|
Cost of sales
|
|
|
3,042,412
|
|
|
—
|
|
|
—
|
|
|
|
|
|
3,042,412
|
|
|
—
|
|
|
|
|
|
3,042,412
|
Gross profit
|
|
|
449,261
|
|
|
—
|
|
|
—
|
|
|
|
|
|
449,261
|
|
|
—
|
|
|
|
|
|
449,261
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development
|
|
|
1,333,961
|
|
|
—
|
|
|
—
|
|
|
|
|
|
1,333,961
|
|
|
—
|
|
|
|
|
|
1,333,961
|
Selling, general and administrative
|
|
|
3,904,132
|
|
|
2,188,743
|
|
|
10,946,136
|
|
|
|
|
|
17,039,011
|
|
|
—
|
|
|
|
|
|
17,039,011
|
|
|
|
|
|
|
|
|
|
7,880,929
|
|
|
(13)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,065,207
|
|
|
(14)
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation of long-lived assets
|
|
|
88,257
|
|
|
—
|
|
|
—
|
|
|
|
|
|
88,257
|
|
|
—
|
|
|
|
|
|
88,257
|
Income from grants
|
|
|
801,991
|
|
|
—
|
|
|
—
|
|
|
|
|
|
801,991
|
|
|
—
|
|
|
|
|
|
801,991
|
Loss from operations
|
|
|
(4,075,098)
|
|
|
(2,188,743)
|
|
|
(10,946,136)
|
|
|
|
|
|
(17,209,977)
|
|
|
—
|
|
|
|
|
|
(17,209,977)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other non-operating income
|
|
|
411,879
|
|
|
—
|
|
|
—
|
|
|
|
|
|
411,879
|
|
|
—
|
|
|
|
|
|
411,879
|
Interest and other expense, net
|
|
|
(557,112)
|
|
|
(7,692)
|
|
|
—
|
|
|
|
|
|
(564,804)
|
|
|
—
|
|
|
|
|
|
(564,804)
|
Change in fair value of derivative liability
|
|
|
—
|
|
|
13,772,685
|
|
|
(13,772,685)
|
|
|
(15)
|
|
|
—
|
|
|
—
|
|
|
|
|
|
—
|
Unrealized gain on marketable securities held in trust
account
|
|
|
—
|
|
|
4,299,827
|
|
|
(4,299,827)
|
|
|
(15)
|
|
|
—
|
|
|
—
|
|
|
|
|
|
—
|
Net (loss)/income before tax
|
|
|
(4,220,331)
|
|
|
15,876,077
|
|
|
(18,072,512)
|
|
|
|
|
|
(17,362,902)
|
|
|
—
|
|
|
|
|
|
(17,362,902)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense
|
|
|
76,128
|
|
|
—
|
|
|
—
|
|
|
|
|
|
76,128
|
|
|
—
|
|
|
|
|
|
76,128
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income
|
|
|
$(4,296,459)
|
|
|
$15,876,077
|
|
|
$(18,072,512)
|
|
|
|
|
|
$(17,439,030)
|
|
|
$—
|
|
|
|
|
|
$(17,439,030)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding, basic and diluted
|
|
|
9,727,939
|
|
|
60,375,000
|
|
|
|
|
|
|
|
|
103,288,440
|
|
|
|
|
|
|
|
|
102,652,662
|
Basic and diluted (loss) earnings per share
attributable to equity holders of the parent
|
|
|
$(0.44)
|
|
|
0.26
|
|
|
|
|
|
|
|
|
(0.17)
|
|
|
|
|
|
|
|
|
(0.17)
|
TABLE OF CONTENTS
Adjustments to the unaudited Pro forma Combined Statements of Operations
The adjustments included in the unaudited pro forma combined
statements of operations from January 1, 2022 through March 31, 2023 are as follows:
(13)
|
To reflect the effect of the estimated transaction costs corresponding to RMG III and H2B2 ($7.9 million) as explained in
footnote 11. The transaction costs have been reflected in the unaudited pro forma combined income statement of the combined entities, exclusively, for the twelve months ended December 31, 2022.
|
(14)
|
To reflect the effect of the Incentive Plan explained in footnotes 5 and 9.
|
(15)
|
Represents an adjustment to eliminate interest income on marketable securities in the amount of $4.3 million for the twelve
months ended December 31, 2022 and $1.4 million for the period ended March 31, 2023, respectively held in the Trust Account and to eliminate the effect of the fair value change of RMG III Warrants for the twelve months ended December
31, 2022 ($13.8 million) and for the three months period ended March 31, 2023 ($2.1 million), as they are all non-recurring items in nature. As explained in footnote 7, the revaluation of the warrant liability of $12.9 million has not
been included in the unaudited pro forma combined income statement as it is the results of the revaluation of the warrants issued by RMG III before the Merger.
|
Loss per share
The calculation of weighted average shares outstanding for basic
and diluted net loss per share assumes that the Initial Public Offering occurred as of the beginning of the earliest period presented. In addition, as the Business Combination is being reflected as if it had occurred at the beginning of the
periods presented, the calculation of weighted average shares outstanding for basic and diluted net loss per share assumes that the shares have been outstanding for the entire periods presented. This calculation is retroactively adjusted to
eliminate the number of shares redeemed for the entire period. The loss per share computation performed below excludes the effect of the Incentive Plan (refer to footnote 5) because the inclusion of any of these securities would be
anti-dilutive in a loss per share scenario.
|
|
|
|
|
|
|
Twelve Months Ended December 31, 2022
|
|
|
|
|
|
|
Loss for the year attributable to shareholders of the parent
|
|
|
$(17,439,030)
|
|
|
$(17,439,030)
|
|
|
|
|
|
|
|
Basic attributable loss per share
|
|
|
$(0.17)
|
|
|
$(0.17)
|
Diluted attributable loss per share
|
|
|
$(0.17)
|
|
|
$(0.17)
|
|
|
|
|
|
|
|
Three Months Ended March 31, 2023
|
|
|
|
|
|
|
Loss for the period attributable to shareholders of the parent
|
|
|
$(3,851,793)
|
|
|
$(3,851,793)
|
|
|
|
|
|
|
|
Basic attributable loss per share
|
|
|
$(0.04)
|
|
|
$(0.04)
|
Diluted attributable loss per share
|
|
|
$(0.04)
|
|
|
$(0.04)
|
|
|
|
|
|
|
|
Pro forma weighted average number of shares outstanding
|
|
|
103,288,440
|
|
|
102,652,662
|
Basic pro forma weighted average number of shares
outstanding
|
|
|
103,288,440
|
|
|
102,652,662
|
Diluted pro forma weighted average number of shares
outstanding
|
|
|
103,288,440
|
|
|
102,652,662
|
TABLE OF CONTENTS
NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION
The Business Combination will be accounted for as a reverse
recapitalization in accordance with U.S. GAAP. Under this method of accounting, RMG III, will be treated as the acquired company for accounting purposes, whereas H2B2 will be treated as the accounting acquirer. In accordance with this method of
accounting, the Business Combination will be treated as the equivalent of H2B2 issuing shares for the net assets of RMG, accompanied by a recapitalization. The net assets of H2B2 will be stated at historical cost, with no goodwill or other
intangible assets recorded, and operations prior to the Business Combination will be those of H2B2.
The unaudited pro forma combined balance sheet as of March 31, 2023
assumes that the Business Combination and related transactions occurred on March 31, 2023. The unaudited pro forma combined statements of operations for the quarter ended March 31, 2023 and year ended December 31, 2022 presents pro forma effect
to the Business Combination as if it had been completed on January 1, 2022.
The unaudited pro forma combined balance sheet as of March 31, 2023
has been prepared using the following:
•
|
H2B2’s unaudited condensed consolidated balance sheet as of March 31, 2023, as included elsewhere in this proxy
statement/prospectus; and
|
•
|
RMG III’s unaudited condensed balance sheet as of March 31, 2023, as included elsewhere in this proxy statement/prospectus.
|
The unaudited pro forma combined statements of operations for the
quarter ended March 31, 2023 has been prepared using the following:
•
|
H2B2’s unaudited condensed consolidated statement of operations for the three months ended March 31, 2023, as included elsewhere
in this proxy statement/prospectus; and
|
•
|
RMG III’s unaudited condensed statement of operations for the year ended March 31, 2023, as included elsewhere in this proxy
statement/prospectus.
|
The unaudited pro forma combined statements of operations for the
year ended December 31, 2022 has been prepared using the following:
•
|
H2B2’s audited consolidated statement of operations for the year ended December 31, 2022, as included elsewhere in this proxy
statement/prospectus; and
|
•
|
RMG III’s audited statement of operations for the year ended December 31, 2022, as included elsewhere in this proxy
statement/prospectus.
|
The unaudited Q1 2023 and the 2022 Audited Consolidated Financial
Statements of H2B2 have been prepared in accordance with GAAP and in its presentation currency of U.S. dollars. The unaudited Q1 2023 and the 2022 Audited Financial Statements of RMG have been also prepared in accordance with GAAP in its
presentation currency of U.S. dollars. See “Financial Statement Presentation” for further information.
Additionally, the unaudited pro forma combined financial information
has been prepared assuming two alternative levels of redemption into cash of RMG III Class A Ordinary Shares:
•
|
Scenario 1 — Assuming No Redemptions: This presentation assumes that no Public
Shareholders exercise redemption rights with respect to their remaining RMG III Class A Ordinary Shares upon consummation of the Business Combination; and
|
•
|
Scenario 2 — Assuming Maximum Redemptions: This presentation assumes that
Public Shareholders exercise their redemption rights with respect to the remaining of 635,778 RMG III Class A Ordinary Shares upon consummation of the Business Combination at a redemption price of approximately $10.41 per share, based
on the amount held in the Trust Account as of August 7, 2023. Scenario 2 – Assuming Maximum Redemptions includes all adjustments contained in Scenario 1 – Assuming No Redemptions and presents additional adjustments to reflect the
effect of maximum redemptions.
|
As the unaudited pro forma combined financial information has been
prepared based on these preliminary estimates, the final amounts recorded may differ materially from the information presented.
TABLE OF CONTENTS
The unaudited pro forma combined financial information does not
give effect to any anticipated synergies, operating efficiencies, tax savings or cost savings that may be associated with the Business Combination.
The pro forma adjustments reflecting the consummation of the Business
Combination are based on certain currently available information and certain assumptions and methodologies that has been considered reasonable under the circumstances. The unaudited pro forma adjustments, which are described in the accompanying
notes, may be revised as additional information becomes available and is evaluated. Therefore, it is likely that the actual adjustments will differ from the pro forma adjustments, and it is possible the difference may be material.
It has been considered that assumptions and methodologies provided
are reasonable for presenting all of the significant effects of the Business Combination based on information available to management at this time and that the pro forma adjustments give appropriate effect to those assumptions and are properly
applied in the unaudited pro forma combined financial information.
The unaudited pro forma combined financial information is not
necessarily indicative of what the actual results of operations and financial position would have been had the Business Combination taken place on the dates indicated, nor are they indicative of the future consolidated results of operations or
financial position of the combined entity. They should be read in conjunction with the historical financial statements and notes thereto of RMG III and H2B2.
Upon consummation of the Business Combination, management will
perform a comprehensive review of the two entities’ accounting policies. As a result of the review, management may identify differences between the accounting policies of the two entities which, when conformed, could have a material impact on
the financial statements of the combined entity. Based on its initial analysis, management did not identify any differences that would have a material impact on the unaudited pro forma combined financial information. As a result, the unaudited
pro forma combined financial information does not assume any differences in accounting policies.
3.
|
Adjustments to Unaudited Pro Forma Condensed Combined Financial Information
|
The adjustments presented on the unaudited pro forma combined
financial statements have been identified and presented to provide an understanding of the combined companies upon consummation of the aforementioned transaction for illustrative purposes.
The following unaudited pro forma financial information has been
prepared in accordance with Article 11 of Regulation S-X as amended by the final rule, Release No. 33-10786 “Amendments to Financial Disclosures about Acquired and Disposed Businesses.” Release No. 33-10786 replaces the existing pro forma
adjustment criteria with simplified requirements to depict the Transaction Accounting Adjustments and present the Management’s Adjustments. H2B2 has elected not to present Management’s Adjustments and is only presenting Transaction Accounting
Adjustments in the unaudited pro forma financial information. The adjustments presented in the unaudited pro forma combined financial information have been identified and presented to provide relevant information necessary for an understanding
of the Company upon consummation of the transaction.
TABLE OF CONTENTS
EXTRAORDINARY GENERAL MEETING OF RMG III
GENERAL
RMG III is furnishing this proxy statement/prospectus to RMG III
shareholders as part of the solicitation of proxies by the RMG III Board for use at the Special Meeting to be held on , 2023, and at any adjournment thereof. This proxy statement/prospectus is first being furnished to RMG III shareholders
on or about , 2023 in connection with the vote on the Proposals described in this proxy statement/prospectus. This proxy statement/prospectus provides RMG III shareholders with information they need to know to be able to vote or instruct
their vote to be cast at the Special Meeting.
DATE, TIME AND PLACE OF THE SPECIAL MEETING
The Special Meeting will be held in person or by proxy, on ,
2023, at , at the offices of Skadden, Arps, Slate, Meagher & Flom LLP located at One Manhattan West, New York, New York 10001, or in virtual format via live web cast at https://www.cstproxy.com/ .
VOTING POWER; RECORD DATE
Only RMG III shareholders of record of RMG III as of the close of
business on , 2023, are entitled to notice of, and to vote at, the Special Meeting or any adjournment or postponement thereof. Each RMG III Ordinary Share entitles the holder thereof to one vote. Holders of shares held in “street name” or
in a margin or similar account should contact such RMG III shareholder’s broker to ensure that votes related to the shares beneficially owned are properly counted. RMG III Warrants do not have voting rights in connection with the Proposals. As
of the close of business on the RMG III Record Date, there were RMG III Ordinary Shares issued and outstanding, including Public Shares and Founder Shares.
PURPOSE OF THE SPECIAL MEETING
At the Special Meeting, RMG III is asking holders of RMG III Ordinary
Shares to:
•
|
consider and vote upon a proposal to approve by ordinary resolution and adopt the Merger Agreement attached to this proxy
statement/prospectus as Annex A, pursuant to which, among other things, following the Domestication of RMG III to Delaware, the Merger of H2B2 with and into RMG III, with RMG III surviving the Merger in accordance with the terms
and subject to the conditions of the Merger Agreement as more fully described elsewhere in this proxy statement/prospectus (the “Business Combination Proposal”);
|
•
|
consider and vote upon a proposal to approve by special resolution, assuming the Business Combination Proposal is approved and
adopted, the change of RMG III’s jurisdiction of incorporation by deregistering as an exempted company in the Cayman Islands and continuing and domesticating as a corporation incorporated under the laws of the State of Delaware (the “Domestication Proposal”);
|
•
|
consider and vote upon the following four separate proposals (collectively, the “Organizational
Documents Proposals”) to approve by special resolution, assuming the Business Combination Proposal and the Domestication Proposal are approved and adopted, the following material differences between the RMG III Governing
Documents and the Proposed Organizational Documents, each to be effective at the Effective Time:
|
•
|
to authorize the change in authorized share capital of RMG III from 500,000,000 Class A Ordinary Shares, 50,000,000 Class B
Ordinary Shares and 5,000,000 preference shares, par value $0.0001 per share, to shares of Surviving Corporation Common Stock (“Organizational Documents Proposal A”);
|
•
|
to authorize the Surviving Corporation Board to issue any or all shares of Surviving Corporation Preferred Stock in one or more
classes or series, with such terms and conditions as may be expressly determined by the Surviving Corporation Board and as may be permitted by the DGCL (“Organizational Documents Proposal B”);
|
•
|
to approve that the Surviving Corporation Board will not be classified (“Organizational
Documentation Proposal C”);
|
TABLE OF CONTENTS
•
|
to authorize all other changes in connection with the replacement of the RMG III Governing Documents with the Proposed
Certificate of Incorporation and Proposed Bylaws in connection with the consummation of the Business Combination (copies of which are attached to this proxy statement/prospectus as Annex F, Annex G and Annex
H, respectively), including (i) changing the corporate name from “RMG Acquisition Corp. III” to “H2B2 Electrolysis Technologies, Inc.,” (ii) making the Surviving Corporation’s corporate existence perpetual, (iii) adopting Delaware
as the exclusive forum for certain stockholder litigation, and (iv) removing certain provisions related to RMG III’s status as a blank check company that will no longer be applicable upon consummation of the Business Combination, all of
which the RMG III Board believes is necessary to adequately address the needs of RMG III and the Surviving Corporation after the Business Combination (collectively, “Organizational Documents Proposal D”);
|
•
|
consider and vote upon a proposal to approve by ordinary resolution of the holders of the RMG III Class B Ordinary Shares,
assuming the Business Combination Proposal, the Domestication Proposal and the Organizational Documents Proposals are approved and adopted, the election of directors who, upon consummation of the Business Combination, will be the
directors of the Surviving Corporation (the “Director Election Proposal”), to be effective as of the Closing;
|
•
|
consider and vote upon a proposal to approve by ordinary resolution for purposes of complying with the applicable provisions of
Nasdaq Listing Rule 5635 and assuming the Business Combination Proposal, the Domestication Proposal, the Organizational Documents Proposals and the Director Election Proposal are approved and adopted, the issuance of Surviving
Corporation Common Stock to the H2B2 Securityholders pursuant to the Merger Agreement (the “Stock Issuance Proposal”), to be effective prior to or substantially concurrently with the Closing;
|
•
|
consider and vote upon a proposal to approve by ordinary resolution, assuming the Business Combination Proposal, the
Domestication Proposal, the Organizational Documents Proposals, the Director Election Proposal and the Stock Issuance Proposal are approved and adopted, the Incentive Plan (the “Equity Incentive Plan
Proposal”), to be effective as of the Closing;
|
•
|
consider and vote upon a proposal to approve by ordinary resolution, the adjournment of the Special Meeting to a later date or
dates, if necessary, (i) to permit further solicitation and vote of proxies in the event that there are insufficient votes for the approval of one or more proposals at the Special Meeting or (ii) if the RMG III Board determines before
the Special Meeting that it is not necessary or no longer desirable to proceed with the proposals (the “Adjournment Proposal”), to be effective as of the date of the Special Meeting.
|
The transactions contemplated by the Merger Agreement will be
consummated only if the Condition Precedent Proposals are approved at the Special Meeting and the Warrant Amendment Proposal is approved at the Warrant Holders Meeting. Each of the Condition Precedent Proposals is cross-conditioned on the
approval of each other. The Adjournment Proposal is not conditioned upon the approval of any other Proposal set forth in this proxy statement/prospectus.
VOTE OF THE SPONSOR, DIRECTORS AND OFFICERS
As of the RMG III Record Date, the Initial Shareholders own
approximately 95.0% of the issued and outstanding RMG III Ordinary Shares. The Sponsor has agreed to, among other things, vote in favor of each of the Proposals presented at the Special Meeting, including the Merger Agreement and the
transactions contemplated thereby. Accordingly, it is expected that the RMG III Ordinary Shares held by the Initial Shareholders will be sufficient to approve each Proposal presented at the Special Meeting and the affirmative vote of
additional Public Shares will not be required to approve any of the Proposals to be presented thereat.
The Sponsor and RMG III’s directors and officers have agreed to waive
their redemption rights in connection with the consummation of the Business Combination with respect to any and all RMG III Ordinary Shares held by them, including with respect to any Public Shares purchased in the Initial Public Offering or in
the aftermarket, subject to the terms and conditions contemplated in that certain letter agreement, dated as of February 4, 2021. The Founder Shares held by the Initial Shareholders have no redemption rights upon RMG III’s liquidation and will
be worthless if RMG III does not consummate an initial business combination by the Completion Window.
TABLE OF CONTENTS
QUORUM
A quorum of RMG III shareholders is necessary to hold a valid
meeting. A quorum will be present at the Special Meeting if the holders of a majority of the issued and outstanding RMG III Ordinary Shares entitled to vote at the Special Meeting are represented in person (which would include presence at a
virtual meeting) or by proxy. As of the RMG III Record Date, 6,496,702 RMG III Ordinary Shares would be required to achieve a quorum. Accordingly, it is expected that the RMG III Ordinary Shares held by the Initial Shareholders will be
sufficient to establish a valid quorum.
ABSTENTIONS AND BROKER NON-VOTES
In general, if your shares are held in “street” name and you do not
instruct your broker, bank or other nominee or intermediary on a timely basis on how to vote your shares, your broker, bank or other nominee or intermediary, in its sole discretion, may either leave your shares unvoted or vote your shares on
routine matters, but not on any non-discretionary matters. Proxies that are marked “abstain” and proxies relating to “street name” shares that are returned to RMG III but marked by brokers as “not voted” will be treated as shares present for
purposes of determining the presence of quorum on all matters, but they will not be treated as shares voted on the matter and will, therefore, have no effect on any of the Proposals. Under applicable self-regulatory organization rules, your
broker, bank or nominee cannot vote your shares with respect to “non-discretionary” matters unless you provide instructions on how to vote in accordance with the information and procedures provided to you by your broker, bank or nominee. RMG III believes that none of the Proposals to be presented at the Special Meeting are routine matters and that each such Proposal is, therefore, a “non-discretionary” matter. As such, without your voting
instructions, your brokerage firm cannot vote your shares on any Proposal to be voted on at the Special Meeting.
VOTE REQUIRED FOR APPROVAL
The Business Combination Proposal may be approved by an ordinary
resolution under Cayman Islands law, being the affirmative vote of the holders of a majority of the RMG III Ordinary Shares represented in person or by proxy and entitled to vote thereon and who vote at the Special Meeting.
The approval of the Domestication Proposal requires a special
resolution under Cayman Islands law, being the affirmative vote of the holders of at least two-thirds of the RMG III Ordinary Shares represented in person or by proxy and entitled to vote thereon and who vote at the Special Meeting. The
Domestication Proposal is conditioned on the approval of the Business Combination Proposal. Therefore, if the Business Combination Proposal is not approved, the Domestication Proposal will have no effect, even if approved by holders of RMG III
Ordinary Shares.
The approval of the Organizational Documents Proposals requires a
special resolution under Cayman Islands law, being the affirmative vote of the holders of at least two-thirds of the RMG III Ordinary Shares represented in person or by proxy and entitled to vote thereon and who vote at the Special Meeting.
Each of the Organizational Documents Proposals is conditioned on approval of the Business Combination Proposal. Therefore, if the Business Combination Proposal and the Domestication Proposal are not approved, the Organizational Documents
Proposals will have no effect, even if approved by holders of RMG III Ordinary Shares.
The Director Election Proposal may be approved by an ordinary
resolution of the holders of the RMG III Class B Ordinary Shares under Cayman Islands law, being the affirmative vote of the holders of a majority of the RMG III Class B Ordinary Shares represented in person or by proxy and entitled to vote
thereon and who vote at the Special Meeting. The Director Election Proposal is conditioned on the approval of the Organizational Documents Proposals, and, therefore, also conditioned on approval of the Business Combination Proposal and the
Domestication Proposal. Therefore, if the Business Combination Proposal, the Domestication Proposal and the Organizational Documents Proposals are not approved, the Director Election Proposal will have no effect, even if approved by holders of
RMG III Ordinary Shares.
The Stock Issuance Proposal may be approved by an ordinary resolution
under Cayman Islands law, being the affirmative vote of the holders of a majority of the RMG III Ordinary Shares represented in person or by proxy and entitled to vote thereon and who vote at the Special Meeting. The Stock Issuance Proposal is
conditioned on the approval of the Director Election Proposal, and, therefore, also conditioned on approval of the Business Combination Proposal, the Domestication Proposal and the Organizational Documents Proposals.
TABLE OF CONTENTS
Therefore, if the Business Combination Proposal, the Domestication Proposal, the
Organizational Documents Proposals and the Director Election Proposal are not approved, the Stock Issuance Proposal will have no effect, even if approved by holders of RMG III Ordinary Shares.
The Equity Incentive Plan Proposal may be approved by an ordinary
resolution under Cayman Islands law, being the affirmative vote of a majority of the RMG III Ordinary Shares represented in person or by proxy and entitled to vote thereon and who vote at the Special Meeting. The Equity Incentive Plan Proposal
is conditioned on the approval of the Stock Issuance Proposal, and, therefore, also conditioned on approval of the Business Combination Proposal, the Domestication Proposal, the Organizational Documents Proposals and the Director Election
Proposal. Therefore, if the Business Combination Proposal, the Domestication Proposal, the Organizational Documents Proposals, the Director Election Proposal and the Stock Issuance Proposal are not approved, the Equity Incentive Plan Proposal
will have no effect, even if approved by holders of RMG III Ordinary Shares.
The Adjournment Proposal may be approved by an ordinary resolution
under Cayman Islands law, being the affirmative vote of the holders of a majority of the RMG III Ordinary Shares represented in person or by proxy and entitled to vote thereon and who vote at the Special Meeting. The Adjournment Proposal is not
conditioned upon the approval of any other Proposal.
It is important for RMG III shareholders to note that in the event
that the Business Combination Proposal, the Organizational Documents Proposals, the Director Election Proposal the Stock Issuance Proposal and the Equity Incentive Plan Proposal do not receive the requisite vote for approval, RMG III will not
consummate the Business Combination. If RMG III does not consummate the Business Combination and fails to complete an initial business combination within the Completion Window, it will be required to dissolve and liquidate the Trust Account by
returning the then-remaining funds in the Trust Account to its Public Shareholders.
RECOMMENDATION OF THE RMG III BOARD
The RMG III Board believes that the Business Combination Proposal and
the other Proposals to be presented at the Special Meeting are advisable and in the best interests of RMG III and RMG III shareholders and recommends that RMG III shareholders vote “FOR” the Business Combination Proposal, “FOR” the
Domestication Proposal, “FOR” each of the separate Organizational Documents Proposals, “FOR” the Director Election Proposal, “FOR” the Stock Issuance Proposal, “FOR” the Equity Incentive Plan Proposal and “FOR” the Adjournment Proposal, in each
case, if presented to the Special Meeting.
The existence of financial and personal interests of one or more of
RMG III’s directors may result in a conflict of interest on the part of such director(s) between what he, she or they may believe is in the best interests of RMG III’s and RMG III shareholders and what he, she or they may believe is best for
himself, herself or themselves in determining to recommend that RMG III shareholders vote for the Proposals. In addition, RMG III’s officers have interests in the Business Combination that may conflict with your interests as a RMG III
shareholder. See the section titled “Business Combination Proposal — Interests of RMG III’s Directors, Executive Officers and the Sponsor and its Affiliates in the Business Combination” for a further
discussion of these considerations.
VOTING YOUR SHARES
Each RMG III Ordinary Share entitles the holder thereof to one vote.
You can vote your shares in person (which includes virtual attendance) at the Special Meeting or by proxy. If your shares are owned directly in your name with Continental, RMG III’s transfer agent, you are considered, with respect to those
shares, the “shareholder of record.” If your shares are held in “street name” or are in a margin or similar account or by a bank or other nominee or intermediary, you are considered a “non-record (beneficial) shareholder.”
Shareholders of Record
You can vote by proxy by having one or more individuals who will
attend the Special Meeting vote your shares for you. These individuals are called “proxies” and using them to cast your ballot at the Special Meeting is called voting “by proxy.” Alternatively, you may attend and vote your shares at the Special
Meeting in person at the offices of Skadden, Arps, Slate, Meagher & Flom LLP located at One Manhattan West, New York, New York 10001, or online via live webcast at https://www.cstproxy.com/ .
TABLE OF CONTENTS
If you wish to vote by proxy, you must (i) complete the enclosed
form, called a “proxy card,” and mail it in the envelope provided or (ii) submit your proxy over the Internet in accordance with the instructions on the enclosed proxy card. If you complete the proxy card and mail it in the envelope provided or
submit your proxy over the Internet as described above, you will designate each of Philip Kassin and Robert S. Mancini or the Chairperson of the Special Meeting to act as your proxy at the Special Meeting. One of the aforementioned individuals
will then vote your shares at the Special Meeting in accordance with the instructions you provided to them in the proxy card with respect to the Proposals presented in this proxy statement/prospectus. Proxies will extend to, and be voted at,
any adjournments or postponements of the Special Meeting. If you sign and return the proxy card but do not provide instructions as to how to vote your shares, your shares will be voted, in accordance with the recommendation of the RMG III
Board, “FOR” the Business Combination Proposal, “FOR” the Domestication Proposal, “FOR” each of the separate Organizational Documents Proposals, “FOR” the Director Election Proposal, “FOR” the Stock Issuance Proposal, “FOR” the Equity Incentive
Plan Proposal and “FOR” the Adjournment Proposal.
Beneficial Owners
If your shares are held in an account through a broker, bank or other
nominee or intermediary, such broker, bank or other nominee or intermediary is considered the RMG III shareholder of record for purposes of voting at the Special Meeting and you are considered the beneficial owner of such shares held in “street
name” and this proxy statement/prospectus is being sent to you by such broker, bank or other nominee or intermediary. As a beneficial owner, you have the right to direct your broker, bank or other nominee or intermediary regarding how to vote
the shares in your account by following the instructions that the broker, bank or other nominee or intermediary provides you along with this proxy statement/prospectus. Your broker, bank or other nominee or intermediary may have an earlier
deadline by which you must provide it with instructions as to how to vote your shares, so you should read carefully the materials provided to you by your broker, bank or other nominee or intermediary.
If you wish to attend and vote your shares at the Special Meeting,
you must first obtain a legal proxy from your broker, bank or other nominee or intermediary that holds your shares and email a copy (a legible photograph is sufficient) of your legal proxy to Continental at proxy@continentalstock.com.
Beneficial owners who email a valid legal proxy will be issued a 12-digit meeting control number that will allow them to register to attend and participate in the Special Meeting. Beneficial owners who wish to attend the Special Meeting
virtually should contact Continental no later than , 2023, to obtain this information. If you wish to attend and vote your shares at the Special Meeting in person, you must bring with you a legal proxy from your broker, bank or other
nominee or intermediary authorizing you to vote those shares. That is the only way RMG III can be sure that the broker, bank or other nominee or intermediary has not already voted the RMG III Ordinary Shares beneficially owned by you.
REVOKING YOUR PROXY
If you are an RMG III shareholder of record and you give a proxy, you
may revoke it at any time before it is exercised by doing any one of the following:
•
|
you may send another proxy card with a later date;
|
•
|
you may notify RMG III’s Secretary in writing before the Special Meeting that you have revoked your proxy; or
|
•
|
you may attend the Special Meeting and vote electronically by visiting and entering the control number found on your proxy card,
instruction form or notice you previously received. Attendance at the Special Meeting will not, in and of itself, revoke a proxy.
|
If your shares are held in “street name” or are in a margin or
similar account, you should contact your broker, bank or other nominee or intermediary for information on how to change or revoke your voting instructions.
ADDITIONAL MATTERS
The RMG III Board does not know of any other matters to be presented
at the Special Meeting. The form of proxy accompanying this proxy statement/prospectus confers discretionary authority upon the named proxy holders with respect to amendments or variations to the matters identified in the accompanying Notice of
Special
TABLE OF CONTENTS
Meeting and with respect to any other matters that may properly come before the
Special Meeting. If any additional matters are properly presented at the Special Meeting, or at any adjournments or postponements of the Special Meeting, the persons named in the enclosed proxy card will have discretion to vote the shares they
represent in accordance with the recommendations of the RMG III Board with respect to any such matters. RMG III expect that the Public Shares represented by properly submitted proxies will be voted by the proxy holders in accordance with the
recommendations of the RMG III Board with respect to any such matters.
WHO CAN ANSWER YOUR QUESTIONS ABOUT VOTING YOUR SHARES
RMG III shareholders who have questions about how to vote or direct a
vote in respect of RMG III Ordinary Shares or need assistance in completing or submitting their proxy cards should contact , RMG III’s proxy solicitor, at , or banks and brokers can call collect at , or by emailing .
REDEMPTION RIGHTS
Pursuant to the RMG III Governing Documents, a Public Shareholder may
request that RMG III redeem all or a portion of its Public Shares for cash in connection with the Business Combination. As a holder of Public Shares, you will be entitled to receive cash for any Public Shares to be redeemed only if you:
•
|
(a) hold Public Shares, or (b) if you hold Public Shares through RMG III Units, you elect to separate such units into the
underlying Public Shares and RMG III Public Warrants prior to exercising your redemption rights with respect to the Public Shares;
|
•
|
submit a written request to Continental, RMG III’s transfer agent, that RMG III redeem all or a portion of your Public Shares
for cash; and
|
•
|
tender or deliver your Public Shares (and share certificates (if any) and other redemption forms) to Continental, RMG III’s
transfer agent, electronically through DTC.
|
Holders must complete the procedures for electing
to redeem their Public Shares in the manner described above prior to 5:00 p.m., Eastern Time, on , 2023 (two business days before the Special Meeting) in order for their shares to be redeemed.
Holders of RMG III Units must elect to separate the underlying Public
Shares and RMG III Public Warrants prior to exercising redemption rights with respect to the Public Shares. If holders hold their RMG III Units in an account at a brokerage firm or bank, holders must notify their broker or bank that they elect
to separate the RMG III Units into the underlying Public Shares and RMG III Public Warrants, or if a holder holds RMG III Units registered in its, his or her own name, the holder must contact Continental, RMG III’s transfer agent, directly and
instruct them to do so. Your broker, bank or other nominee or intermediary may have an earlier deadline by which you must provide instructions to separate the RMG III Units into the underlying Public Shares and RMG III Public Warrants in order
to exercise redemption rights with respect to the Public Shares, so you should contact your broker, bank or other nominee or intermediary.
Public Shareholders may elect to redeem all or a
portion of their Public Shares regardless of if or how they vote in respect of the Business Combination Proposal and the other Proposals to be presented at the Special Meeting.
If the Business Combination is not approved and does not proceed the
Public Shares will be returned to the respective Public Shareholder, broker or bank. If the Business Combination is approved and proceeds and if the Public Shareholder properly exercises its right to redeem all or a portion of the Public Shares
that it holds and timely tenders or delivers its shares (and share certificates (if any) and other redemption forms) to Continental, RMG III’s transfer agent, RMG III will redeem such Public Shares for a per-share price, payable in cash, equal
to the aggregate amount then on deposit in the Trust Account, including interest not previously released to RMG III to pay its income taxes, divided by the number of then-issued and outstanding Public Shares, calculated as of two business days
prior to the consummation of the Business Combination. If a Public Shareholder exercises its redemption rights in full, then it will be electing to exchange its Public Shares for cash and will no longer own Public Shares. The Redemption of
Public Shares will take place immediately prior to the Domestication when a redeeming Public Shareholder’s Public Shares are canceled in exchange for the right to receive the cash consideration described above. Such cash will be paid to
redeeming Public Shareholders promptly after consummation of the Business Combination.
TABLE OF CONTENTS
If you hold Public Shares in “street name,” you will have to
coordinate with your broker to have your shares certificated or delivered electronically. Public Shares that have not been tendered (either physically or electronically) in accordance with these procedures will not be redeemed for cash. There
is a nominal cost associated with this tendering process and the act of certificating the shares or delivering them through DTC’s DWAC (deposit withdrawal at custodian) system. The transfer agent will typically charge the tendering broker $80
and it would be up to the broker whether or not to pass this cost on to the redeeming RMG III shareholder. In the event the Business Combination is not approved and does not proceed this may result in an additional cost to RMG III shareholders
for the return of their shares.
Any request for redemption, once made by a holder of Public Shares,
may be withdrawn at any time up to the time the vote is taken with respect to the Business Combination Proposal at the Special Meeting only with the consent of the RMG III Board (in its sole discretion which it may do in whole or in part). If
you tender or deliver your shares (and share certificates (if any) and other redemption forms) for redemption to Continental, RMG III’s transfer agent, and later decide prior to the Special Meeting not to elect redemption, you may request that
RMG III’s transfer agent return the shares (electronically) to you. You may make such request by contacting Continental, RMG III’s transfer agent, at the phone number or address listed at the end of this section.
The Sponsor has agreed to, among other things and as applicable,
vote in favor of the Merger Agreement and the transactions contemplated thereby, subject to the terms and conditions contemplated by the Sponsor Support Agreement, and to waive their redemption rights in connection with the consummation of
the Business Combination with respect to any RMG III Ordinary Shares held by it. The RMG III Ordinary Shares held by the Sponsor (including RMG III’s directors, officers and such other parties to the letter agreement) will be excluded from
the pro rata calculation used to determine the per-share redemption price. As of the date of this proxy statement/prospectus, the Initial Shareholders own approximately 95.0% of the issued and outstanding RMG III Ordinary Shares.
If RMG III is not able to complete the Business Combination or
another initial business combination by the Completion Window, then the Initial Shareholders will be entitled to liquidating distributions from the Trust Account with respect to any Public Shares they hold.
Holders of RMG III Warrants will not have redemption rights with
respect to such warrants.
The closing price of the Public Shares on , 2023, the most recent
practicable date prior to the date of this proxy statement/prospectus, was $ . In connection with the Extension, a total of 260 RMG III shareholders elected to redeem an aggregate of 47,381,598 RMG III Class A Ordinary Shares, representing
approximately 98.10% of RMG III’s issued and outstanding RMG III Class A Ordinary Shares, for an aggregate of approximately $478,003,632 in cash.
Prior to exercising redemption rights, Public Shareholders should
verify the market price of the Public Shares as they may receive higher proceeds from the sale of their Public Shares in the public market than from exercising their redemption rights if the market price per share is higher than the redemption
price. RMG III cannot assure RMG III shareholders that they will be able to sell their Public Shares in the open market, even if the market price per share is higher than the redemption price stated above, as there may not be sufficient
liquidity in its securities when RMG III shareholders wish to sell their shares
APPRAISAL RIGHTS AND DISSENTERS’ RIGHTS
None of RMG III shareholders, RMG III unit holder or RMG III warrant
holders have appraisal rights in connection with the Business Combination or the Domestication under the DGCL. None of RMG III shareholders have dissenters’ rights in connection with the Business Combination or the Domestication under Cayman
Islands law.
PROXY SOLICITATION COSTS
RMG III is soliciting proxies on behalf of the RMG III Board. This
solicitation is being made by mail but also may be made by telephone or in person. RMG III and its directors, officers and employees may also solicit proxies in person, by telephone or by other electronic means. RMG III will bear the cost of
the solicitation.
RMG III has hired to assist in the proxy solicitation process.
RMG III will pay that firm a fee of $ plus disbursements. Such fee will be paid from non-Trust Account funds.
TABLE OF CONTENTS
RMG III will ask banks, brokers and other institutions, nominees
and fiduciaries to forward the proxy materials to their principals and to obtain their authority to execute proxies and voting instructions. RMG III will reimburse them for their reasonable expenses.
RMG III INITIAL SHAREHOLDERS
As of , 2023, the RMG III Record Date, the Initial
Shareholders of record were entitled to vote an aggregate of 12,075,000 Founder Shares that were issued prior to the Initial Public Offering. Such shares currently constitute approximately 95.0% of the issued and outstanding RMG III Ordinary
Shares. The Initial Shareholders have agreed to vote the Founder Shares, as well as any RMG III Class A Ordinary Shares acquired in the aftermarket, in favor of each of the Proposals presented at the Special Meeting. The Founder Shares have
no right to participate in any redemption distribution and will be worthless if RMG III does not consummate a business combination by the Completion Window.
Upon consummation of the Business Combination, under the Sponsor
Support Agreement, the Founder Shares (or shares of Surviving Corporation Common Stock issuable upon conversion thereof) will be subject to (i) certain lock-up restrictions and (ii) certain time-based vesting provisions. See the section
entitled “Other Agreements—Sponsor Support Agreement” for more information.
PURCHASES OF RMG III ORDINARY SHARES
At any time prior to the Special Meeting, during a period when they
are not then aware of any material nonpublic information regarding RMG III or its securities, the Sponsor, H2B2 and their respective affiliates may purchase shares from institutional and other investors who vote, or indicate an intention to
vote, against the Business Combination Proposal, or execute agreements to purchase shares from such investors in the future, or they may enter into transactions with such investors and others to provide them with incentives to acquire shares of
RMG III Ordinary Shares or vote their shares in favor of the Business Combination Proposal. The purpose of such share purchases and other transactions would be to increase the likelihood of satisfaction of the requirements to consummate the
Business Combination where it appears that such requirements would otherwise not be met. While the exact nature of any such incentives has not been determined as of the date of this proxy statement/prospectus, they might include, without
limitation, arrangements to protect such investors or holders against potential loss in value of their shares, including the granting of put options and, with H2B2’s consent, the transfer to such investors or holders of shares or warrants owned
by the Sponsor for nominal value.
Entering into any such arrangements may have a depressive effect on
RMG III Ordinary Shares. For example, as a result of these arrangements, an investor or holder may have the ability to effectively purchase shares at a price lower than market and may therefore be more likely to sell the shares he owns, either
prior to or immediately after the Special Meeting.
If such transactions are effected, the consequence could be to cause
the Business Combination to be approved in circumstances where such approval could not otherwise be obtained. Purchases of shares by the persons described above would allow them to exert more influence over the approval of the Business
Combination Proposal and other Proposals and would likely increase the chances that such Proposals would be approved.
No agreements dealing with the above arrangements or purchases have
been entered into as of the date of this proxy statement/prospectus by the Sponsor, H2B2 or any of their respective affiliates. RMG III will file a Current Report on Form 8-K to disclose arrangements entered into or significant purchases made
by any of the aforementioned persons that would affect the vote on the Business Combination Proposal or the satisfaction of any closing conditions. Any such report will include descriptions of any arrangements entered into or significant
purchases by any of the aforementioned persons.
TABLE OF CONTENTS
PROPOSAL NO. 1—THE BUSINESS COMBINATION PROPOSAL
OVERVIEW
Holders of RMG III Class A Ordinary Shares are
being asked to consider and vote upon a proposal to approve and adopt the Business Combination, including the Merger Agreement and the transactions contemplated thereby (the “Business Combination Proposal”).
RMG III shareholders should carefully read this proxy statement/prospectus in its entirety for more detailed information concerning the Merger Agreement, a copy of which is attached as Annex A to this proxy statement/prospectus. Please
see the sections entitled “The Business Combination” and “The Merger Agreement” in this proxy statement/prospectus for additional information regarding the
Business Combination and a summary of certain terms of the Merger Agreement. You are urged to carefully read the Merger Agreement in its entirety before voting on this Proposal.
VOTE REQUIRED FOR APPROVAL
The approval of this Business Combination Proposal
(and consequently, the transactions contemplated by the Merger Agreement, including the Business Combination) requires an ordinary resolution under Cayman Islands law, being the affirmative vote of the holders of a simple majority of the RMG
III Ordinary Shares who, being present in person (or represented by proxy) and entitled to vote at the Special Meeting. Abstentions and broker non-votes, while considered present for purposes of establishing quorum, will not count as a vote
cast at the Special Meeting.
Failure to submit a proxy or to vote in person or
virtually at the Special Meeting, an abstention from voting or a broker non-vote will have no effect on the Business Combination Proposal.
The Business Combination is conditioned upon the
approval of the Business Combination Proposal, subject to the terms of the Merger Agreement. The Business Combination Proposal is conditioned upon the approval and adoption of each of the other Condition Precedent Proposals. Therefore, if each
of the Condition Precedent Approvals is not approved, the Business Combination Proposal will have no effect, even if approved by holders of RMG III Ordinary Shares.
The Sponsor has agreed to vote the Founder Shares
and any RMG III Ordinary Shares owned by it in favor of the Business Combination Proposal. See the section entitled “Other Agreements – Sponsor Support Agreement” for more information.
The Initial Shareholders own approximately
95.0% of the RMG III Ordinary Shares. Accordingly, it is expected that the RMG III Ordinary Shares held by the Initial Shareholders will be sufficient to approve the Business Combination Proposal. Therefore, assuming the Initial Shareholders
all vote in favor of the Business Combination Proposal, and all outstanding RMG III Ordinary Shares held by the Initial Shareholders are represented at the Special Meeting in person or by proxy, the affirmative vote of additional Public
Shares is not required to approve the Business Combination Proposal.
RESOLUTION
The full text of the resolution to be passed is as follows:
“RESOLVED, as an ordinary resolution, that the
Agreement and Plan of Merger, dated as of May 9, 2023 (as may be amended from time to time, the “Merger Agreement”), by and between RMG Acquisition Corp. III (“RMG III”) and H2B2 Electrolysis Technologies, Inc., a Delaware corporation (“H2B2”),
a copy of which is attached to the proxy statement as Annex A and RMG III entry into the Merger Agreement and the transactions contemplated thereby be confirmed, ratified and approved in all respects.”
RECOMMENDATION OF THE RMG III BOARD
THE RMG III BOARD UNANIMOUSLY
RECOMMENDS THAT RMG III SHAREHOLDERS VOTE “FOR” THE APPROVAL OF THE BUSINESS COMBINATION PROPOSAL.
The existence of financial and
personal interests of one or more of RMG III’s directors may result in a conflict of interest on the part of such director(s) between what he, she or they may believe is in the best interests of RMG III and RMG III shareholders and what he, she
or they may believe is best for himself, herself, or themselves in determining to recommend that RMG III shareholders vote for the proposals. In addition, RMG III’s directors, executive officers and the Sponsor and its affiliates may have
interests in the Business Combination that may conflict with your interests as a RMG III shareholder. See the section titled “Business Combination Proposal — Interests of RMG III’s Directors, Executive
Officers and the Sponsor and its Affiliates in the Business Combination” for a further discussion of these considerations.
TABLE OF CONTENTS
PROPOSAL NO. 2—THE DOMESTICATION PROPOSAL
OVERVIEW
As discussed in this proxy statement, if the Business Combination
Proposal is approved, then RMG III is asking RMG III shareholders to approve the Domestication Proposal. Under the Merger Agreement, the approval of the Domestication Proposal is also a condition to the consummation of the Merger. If, however,
the Domestication Proposal is approved, but the Business Combination Proposal is not approved, then neither the Domestication nor the Merger will be consummated.
As a condition to the Closing, the RMG III Board has approved a
change of RMG III’s jurisdiction of incorporation by deregistering as an exempted company in the Cayman Islands and continuing and domesticating as a corporation incorporated under the laws of the State of Delaware. Pursuant to the Merger
Agreement, a copy of which is attached to this proxy statement as Annex A, to effect the Domestication, RMG III will file a notice of deregistration with the Cayman Islands Registrar of Companies, together with the necessary
accompanying documents, and file an interim certificate of incorporation and a certificate of corporate domestication with the Secretary of State of the State of Delaware in accordance with Section 388 of the DGCL, under which RMG III will be
domesticated and continue as a Delaware corporation.
As a result of and upon the effective time of the Domestication,
(i) each of the then issued and outstanding RMG III Class A Ordinary Shares will convert automatically, on a one-for-one basis, into a share of Domesticated RMG III Class A Stock, (ii) each of the then issued and outstanding RMG III Class B
Ordinary Shares will convert automatically, on a one-for-one basis, into a share of Domesticated RMG III Class B Stock, (iii) each then issued and outstanding RMG III Warrant will convert automatically into a Domesticated RMG III Warrant,
pursuant to the Warrant Agreement and (iv) each RMG III Unit will be canceled, entitling the holder thereof to one share of Domesticated RMG III Class A Stock and one-fifth of one Domesticated RMG III Warrant.
The Domestication Proposal, if approved, will approve a change of RMG
III's jurisdiction of incorporation from the Cayman Islands to the State of Delaware, and will result in RMG III, as a matter of law, becoming a resident of the United States for U.S. federal income tax purposes upon consummation of the
Domestication (and thus, will be a resident of the United States for U.S. federal income tax purposes at the time of the consummation of the Business Combination). Accordingly, while RMG III is currently governed by the Cayman Islands Companies
Act, upon the Domestication, the Surviving Corporation will be governed by the DGCL. RMG III encourages RMG III shareholders to carefully consult the information set forth in the section titled “Comparison of
Corporate Governance and Shareholder Rights.” Additionally, if the Domestication Proposal is approved, then RMG III will also ask RMG III shareholders to approve the Organizational Documents Proposals (discussed below), which, if
approved, will replace the RMG III Governing Documents with the Proposed Organizational Documents under the DGCL. The Proposed Organizational Documents differ in certain material respects from the RMG III Governing Documents and RMG III
encourages RMG III shareholders to carefully consult the information set out below under “Proposal No. 3 – The Organizational Documents Proposals,” the RMG III Governing Documents and the Proposed
Organizational Documents, copies of which are attached to this proxy statement as Annexes F, G and H, respectively.
REASONS FOR THE DOMESTICATION
The RMG III Board believes that there are significant advantages that
will arise as a result of a change of RMG III’s domicile to Delaware. Further, the RMG III Board believes that any direct benefit that the DGCL provides to a corporation also indirectly benefits its stockholders, who are the owners of the
corporation.
The RMG III Board believes that there are several reasons why a
reincorporation in Delaware is in the best interests of RMG III and RMG III shareholders. As explained in more detail below, these reasons can be summarized as follows:
•
|
Prominence, Predictability and Flexibility of Delaware Law. For many years, Delaware
has followed a policy of encouraging incorporation in its state and, in furtherance of that policy, has been a leader in adopting, construing, and implementing comprehensive, flexible corporate laws responsive to the legal and business
needs of corporations organized under its laws. Many corporations have chosen Delaware initially as a state of incorporation or have subsequently changed corporate domicile to Delaware.
|
TABLE OF CONTENTS
Because of Delaware’s prominence as the state of incorporation for many major
corporations, both the legislature and courts in Delaware have demonstrated the ability and a willingness to act quickly and effectively to meet changing business needs. The DGCL is frequently revised and updated to accommodate changing legal
and business needs and is more comprehensive, widely used and interpreted than other state corporate laws. This favorable corporate and regulatory environment is attractive to businesses such as the Surviving Corporation.
•
|
Well-Established Principles of Corporate Governance. There is substantial judicial
precedent in the Delaware courts as to the legal principles applicable to measures that may be taken by a corporation and to the conduct of a company’s board of directors, such as under the business judgment rule and other standards.
Because the judicial system is based largely on legal precedents, the abundance of Delaware case law provides clarity and predictability to many areas of corporate law. RMG III believes such clarity would be advantageous to the
Surviving Corporation, the Surviving Corporation Board and management to make corporate decisions and take corporate actions with greater assurance as to the validity and consequences of those decisions and actions. Further, investors
and securities professionals are generally more familiar with Delaware corporations and the laws governing such corporations, increasing their level of comfort with Delaware corporations relative to other jurisdictions. The Delaware
courts have developed considerable expertise in dealing with corporate issues, and a substantial body of case law has developed construing Delaware law and establishing public policies with respect to corporate legal affairs. Moreover,
Delaware’s vast body of law on the fiduciary duties of directors provides appropriate protection for the Surviving Corporation stockholders from possible abuses by directors and officers.
|
•
|
Increased Ability to Attract and Retain Qualified Directors. Reincorporation from the
Cayman Islands to Delaware is attractive to directors, officers, and shareholders alike. The Surviving Corporation’s incorporation in Delaware may make the Surviving Corporation more attractive to future candidates for its board of
directors, because many such candidates are already familiar with Delaware corporate law from their past business experience. To date, RMG III has not experienced difficulty in retaining directors or officers, but directors of public
companies are exposed to significant potential liability. Thus, candidates’ familiarity and comfort with Delaware laws — especially those relating to director indemnification (as discussed below) — draw such qualified candidates to
Delaware corporations. The RMG III Board, therefore, believes that providing the benefits afforded directors by Delaware law will enable the Surviving Corporation to compete more effectively with other public companies in the
recruitment of talented and experienced directors and officers.
|
The frequency of claims and litigation pursued against directors and
officers has greatly expanded the risks facing directors and officers of corporations in carrying out their respective duties. The amount of time and money required to respond to such claims and to defend such litigation can be substantial.
While both Cayman and Delaware law permit a corporation to include a provision in its governing documents to reduce or eliminate the monetary liability of directors for breaches of fiduciary duty in certain circumstances, RMG III believes that,
in general, Delaware law is more developed and provides more guidance than Cayman law on matters regarding a company’s ability to limit director liability. As a result, RMG III believes that the corporate environment afforded by Delaware will
enable the Surviving Corporation to compete more effectively with other public companies in attracting and retaining new directors.
EXPECTED ACCOUNTING TREATMENT OF THE DOMESTICATION
There will be no accounting effect or change in the carrying amount
of the consolidated assets and liabilities of RMG III as a result of the Domestication. The business, capitalization, assets and liabilities and financial statements of the Surviving Corporation immediately following the Domestication will be
the same as those of RMG III immediately prior to the Domestication.
VOTE REQUIRED FOR APPROVAL
The approval of the Domestication Proposal requires a special
resolution under Cayman Islands law, being the affirmative vote of holders of at least two-thirds of the RMG III Ordinary Shares represented in person or by proxy and entitled to vote thereon and who vote at the Special Meeting. Abstentions and
broker non-votes, while considered present for the purposes of establishing a quorum, will not count as votes cast at the Special Meeting.
TABLE OF CONTENTS
The Domestication Proposal is conditioned on the approval and
adoption of each of the other Condition Precedent Proposals. Therefore, if any Condition Precedent Proposals is not approved, the Domestication Proposal will have no effect, even if approved by holders of the RMG III Ordinary Shares.
The Initial Shareholders own approximately 95.0% of the RMG III
Ordinary Shares. Accordingly, it is expected that the RMG III Ordinary Shares held by the Initial Shareholders will be sufficient to approve the Domestication Proposal. Therefore, assuming the Initial Shareholders all vote in favor of the
Domestication Proposal, and all outstanding RMG III Ordinary Shares held by the Initial Shareholders are represented at the Special Meeting in person or by proxy, the affirmative vote of additional Public Shares is not required to approve the
Domestication Proposal.
RESOLUTION
The full text of the resolution to be passed is as follows:
“RESOLVED, as a special resolution, that RMG III be de-registered in
the Cayman Islands pursuant to Article 48 of the Amended and Restated Memorandum and Articles of Association (as amended) of RMG III and be registered by way of continuation as a corporation in the State of Delaware.”
RECOMMENDATION OF THE RMG III BOARD
THE RMG III BOARD RECOMMENDS THAT RMG III
SHAREHOLDERS VOTE “FOR” THE APPROVAL OF THE DOMESTICATION PROPOSAL.
The existence of financial and personal interests
of one or more of RMG III’s directors may result in a conflict of interest on the part of such director(s) between what he, she or they may believe is in the best interests of RMG III and RMG III shareholders and what he, she or they may
believe is best for himself, herself, or themselves in determining to recommend that RMG III shareholders vote for the proposals. In addition, RMG III’s directors, executive officers and the Sponsor and its affiliates may have interests in the
Business Combination that may conflict with your interests as a RMG III shareholder. See the section titled “Business Combination
Proposal — Interests of RMG III’s Directors, Executive Officers and the Sponsor and its Affiliates in the Business Combination” for a further discussion of these considerations.
TABLE OF CONTENTS
PROPOSAL NO. 3—THE ORGANIZATIONAL DOCUMENTS
PROPOSAL
If the Business Combination is to be consummated
and the Domestication Proposal is approved, RMG III will replace the current Amended and Restated Memorandum of Association of RMG III (the “Existing Memorandum”) and the current Amended and Restated Articles of Association of RMG III (as may
be amended from time to time) (the “Existing Articles” and, together with the Existing Memorandum, the “RMG III Governing Documents”), under the Cayman Islands Companies Act, with a proposed new certificate of incorporation (the “Proposed
Certificate of Incorporation”) and proposed new bylaws (the “Proposed Bylaws” and, together with the Proposed Certificate of Incorporation, the “Proposed Organizational Documents”) of the Surviving Corporation, in each case, under the DGCL.
RMG III shareholders are asked to consider and vote upon and to
approve by special resolution four separate proposals (collectively, the “Organizational Documents Proposals”) in connection with the replacement of the RMG III Governing Documents with the Proposed
Organizational Documents, each to be effective upon the Closing. The Organizational Documents Proposals are conditioned on the approval of the Business Combination Proposal and Domestication Proposal. Therefore, if the Business Combination
Proposal and the Domestication Proposal are not approved, the Organizational Documents Proposals will have no effect, even if approved by holders of RMG III Ordinary Shares.
The Proposed Organizational Documents differ materially from the RMG
III Governing Documents.
The following table sets forth a summary of the principal changes
proposed between the Existing Memorandum and the Existing Articles and the Proposed Certificate of Incorporation and Proposed Bylaws for the Surviving Corporation. This summary is qualified by reference to the complete text of the RMG III
Governing Documents, and the complete text of the Proposed Certificate of Incorporation, a copy of which is attached to this proxy statement as Annex G and the complete text of the Proposed Bylaws, a copy of which is attached to
this proxy statement as Annex H. All RMG III shareholders are encouraged to read each of the Proposed Organizational Documents in its entirety for a more complete description of its terms. Additionally, as the RMG III Governing
Documents are governed by the Cayman Islands Companies Act and the Proposed Organizational Documents will be governed by the DGCL, we encourage RMG III shareholders to carefully consult the information set out under the “Comparison of Corporate Governance and Shareholder Rights” section of this proxy statement for additional information.
Authorized Shares
(Proposal A)
|
|
|
The RMG III Governing Documents authorize 555,000,000 shares, consisting of
500,000,000 RMG III Class A Ordinary Shares, 50,000,000 RMG III Class B Ordinary Shares and 5,000,000 preference shares.
See paragraph 5 of the Existing Memorandum.
|
|
|
The Proposed Organizational Documents authorize shares, consisting of
shares of Surviving Corporation Common Stock and shares of Surviving Corporation Preferred Stock.
See Article IV of the Proposed Certificate of
Incorporation.
|
|
|
|
|
|
|
|
Authorize the Board of Directors to Issue Preferred Stock Without Stockholder
Consent
(Proposal B)
|
|
|
The RMG III Governing Documents authorize the issuance of 5,000,000 preference
shares with such designation, rights and preferences as may be determined from time to time by the RMG III Board. Accordingly, the RMG III Board is empowered under the RMG III Governing Documents, without RMG III shareholder approval,
to issue preferred shares with dividend, liquidation, redemption, voting or other rights which could adversely affect the voting power or other rights of the holders of RMG III Ordinary Shares
|
|
|
The Proposed Organizational Documents authorize the Surviving Corporation Board
to issue all or any shares of preferred stock in one or more series and to fix for each such series such voting powers, full or limited, and such designations, preferences and relative, participating, optional or other special rights
and such qualifications, limitations, or restrictions thereof, as the Surviving Corporation Board may determine.
See Article IV subsection (B) of the Proposed
Certificate of Incorporation.
|
TABLE OF CONTENTS
|
|
|
(except to the extent it may affect the ability of RMG III to carry out a
conversion of RMG III Class B Ordinary Shares on the Closing Date, as contemplated by the Existing Articles).
See paragraph 5 of the Existing Memorandum
and Articles 3 of the Existing Articles.
|
|
|
|
|
|
|
|
|
|
|
Classified Board
(Proposal C)
|
|
|
The RMG III Governing Documents contain a provision that provides for a
classified board.
See Article 27.2 of the Existing Memorandum.
|
|
|
The Proposed Organizational Documents do not contain a provision that
provides for a classified board.
|
Corporate Name
(Proposal D)
|
|
|
The RMG III Governing Documents provide that the name of the company is “RMG
Acquisition Corp. III.”
See paragraph 1 of the Existing Memorandum.
|
|
|
The Proposed Organizational Documents provide that the name of the
corporation will be “H2B2 Electrolysis Technologies, Inc.”
See Article I of the Proposed Certificate
of Incorporation.
|
|
|
|
|
|
|
|
Perpetual Existence
(Proposal D)
|
|
|
The RMG III Governing Documents provide that if RMG III does not consummate a
business combination (as defined in the RMG III Governing Documents) by February 9, 2024 (or such later time as the RMG III shareholders may approve in accordance with the RMG III Governing Documents), RMG III will cease all
operations except for the purposes of winding up and will redeem the Public Shares and liquidate the Trust Account.
See Article 49.7 of the Existing Articles.
|
|
|
The Proposed Organizational Documents do not include any provisions relating
to the Surviving Corporation’s ongoing existence; the default under the DGCL will make the Surviving Corporation’s existence perpetual.
Default rule under the DGCL.
|
|
|
|
|
|
|
|
Exclusive Forum
(Proposal D)
|
|
|
The RMG III Governing Documents do not contain a provision adopting an
exclusive forum for certain shareholder litigation.
|
|
|
The Proposed Organizational Documents adopt Delaware as the exclusive forum
for certain stockholder litigation.
See Article X of the Proposed Certificate
of Incorporation.
|
|
|
|
|
|
|
|
TABLE OF CONTENTS
Takeovers by Interested
Stockholders
(Proposal D)
|
|
|
The RMG III Governing Documents do not provide restrictions on takeovers of RMG
III by a related shareholder following a business combination.
|
|
|
The Proposed Organizational Documents will have the Surviving Corporation
governed by Section 203 of the DGCL relating to takeovers by interested stockholders.
Default rule under the DGCL.
|
|
|
|
|
|
|
|
Provisions Related to Status as Blank Check Company
(Proposal D)
|
|
|
The RMG III Governing Documents include various provisions related to RMG III’s
status as a blank check company prior to the consummation of a business combination.
See the RMG III Governing Documents.
|
|
|
The Proposed Organizational Documents do not include such provisions related to
RMG III’s status as a blank check company, which no longer will apply upon consummation of the Merger, as RMG III will cease to be a blank check company at such time.
|
RESOLUTION
The full text of the resolution to be passed in connection with the
replacement of the RMG III Governing Documents with the Proposed Organizational Documents is as follows:
“RESOLVED, as a special resolution, that the Amended and Restated
Memorandum and Articles of Association (as amended) of RMG III currently in effect be amended and restated by the deletion in their entirety and the substitution in their place of the Proposed Certificate of Incorporation and Proposed Bylaws
(copies of which are attached to the proxy statement as Annex G and Annex H, respectively), with such principal changes as described in Organizational Documents Proposals A-D.”
OVERVIEW
Organizational Documents
Proposal A — to authorize the change in the authorized capital stock of RMG III from (i) 500,000,000 RMG III Class A Ordinary Shares, 50,000,000 RMG III Class B Ordinary Shares and
5,000,000 preference shares, par value $0.0001 per share, of RMG III to (ii) shares of Surviving Corporation Common Stock and shares of Surviving Corporation preferred stock.
REASONS FOR THE AMENDMENT
The principal purpose of this proposal is to provide for an
authorized capital structure of the Surviving Corporation that will enable it to continue as an operating company governed by the DGCL. The RMG III Board believes that it is important for the Surviving Corporation to have available for issuance
a number of authorized shares of common stock and preferred stock sufficient to support its growth and to provide flexibility for future corporate needs.
VOTE REQUIRED FOR APPROVAL
The approval of Organizational Documents Proposal A requires a
special resolution under Cayman Islands law, being the affirmative vote of the holders of at least two-thirds of the RMG III Ordinary Shares represented in person or by proxy and entitled to vote thereon and who vote at the Special Meeting.
Abstentions and broker non-votes, while considered present for the purposes of establishing a quorum, will not count as votes cast at the Special Meeting.
Organizational Documents Proposal A is conditioned on the approval
and adoption of each of the other Condition Precedent Proposals. Therefore, if each of the Condition Precedent Approvals is not approved, the Organizational Documents Proposal A will have no effect, even if approved by holders of RMG III
Ordinary Shares.
The Initial Shareholders own approximately 95.0% of the RMG III
Ordinary Shares. Accordingly, it is expected that the RMG III Ordinary Shares held by the Initial Shareholders will be sufficient to approve the Organizational Documents Proposal A. Therefore, assuming the Initial Shareholders all vote in
favor of the
TABLE OF CONTENTS
Organizational Documents Proposal A, and all outstanding RMG III Ordinary Shares held
by the Initial Shareholders are represented at the Special Meeting in person or by proxy, the affirmative vote of additional Public Shares is not required to approve the Organizational Documents Proposal A.
RECOMMENDATION OF THE RMG III BOARD
THE RMG III BOARD RECOMMENDS THAT RMG III
SHAREHOLDERS VOTE “FOR” THE APPROVAL OF ORGANIZATIONAL DOCUMENTS PROPOSAL A.
The existence of financial and personal interests
of one or more of RMG III’s directors may result in a conflict of interest on the part of such director(s) between what he, she or they may believe is in the best interests of RMG III and RMG III shareholders and what he, she or they may
believe is best for himself, herself, or themselves in determining to recommend that RMG III shareholders vote for the proposals. In addition, RMG III’s directors, executive officers and the Sponsor and its affiliates may have interests in the
Business Combination that may conflict with your interests as a RMG III shareholder. See the section titled “Business Combination Proposal — Interests of RMG III’s Directors, Executive Officers and the Sponsor
and its Affiliates in the Business Combination” for a further discussion of these considerations.
OVERVIEW
Organizational Documents
Proposal B — to authorize the Surviving Corporation Board to issue any or all shares of Surviving Corporation preferred stock in one or more classes or series, with such terms and
conditions as may be expressly determined by the Surviving Corporation Board and as may be permitted by the DGCL.
REASONS FOR THE AMENDMENT
The RMG III Board believes that these additional shares will provide
the Surviving Corporation with needed flexibility to issue shares in the future in a timely manner and under circumstances it considers favorable without incurring the risk, delay and potential expense incident to obtaining stockholder approval
for a particular issuance.
Authorized but unissued preferred stock may enable the Surviving
Corporation Board to render it more difficult or to discourage an attempt to obtain control of the Surviving Corporation and thereby protect continuity of or entrench its management, which may adversely affect the market price of the Surviving
Corporation and its securities. If, in the due exercise of its fiduciary obligations, for example, the Surviving Corporation Board was to determine that a takeover proposal was not in the best interests of the Surviving Corporation, such
preferred stock could be issued by the Surviving Corporation Board without stockholder approval in one or more private placements or other transactions that might prevent or render more difficult or make more costly the completion of any
attempted takeover transaction by diluting voting or other rights of the proposed acquirer or insurgent stockholder group, by creating a substantial voting bloc in institutional or other hands that might support the position of the Surviving
Corporation Board, by effecting an acquisition that might complicate or preclude the takeover, or otherwise. Allowing the Surviving Corporation Board to issue the authorized preferred stock on its own volition will enable the Surviving
Corporation to have the flexibility to issue such preferred stock in the future for financing its business, for acquiring other businesses, for forming strategic partnerships and alliances and for stock dividends and stock splits. RMG III
currently has no such plans, proposals, or arrangements, written or otherwise, to issue any of the additional authorized shares for such purposes.
VOTE REQUIRED FOR APPROVAL
The approval of Organizational Documents Proposal B requires a
special resolution under Cayman Islands law, being the affirmative vote of the holders of at least two-thirds of the RMG III Ordinary Shares represented in person or by proxy and entitled to vote thereon and who vote at the Special Meeting.
Abstentions and broker non-votes, while considered present for the purposes of establishing a quorum, will not count as votes cast at the Special Meeting.
Organizational Documents Proposal B is conditioned on the approval
and adoption of each of the other Condition Precedent Proposals. Therefore, if each of the Condition Precedent Approvals is not approved, the Organizational Documents Proposal B will have no effect, even if approved by holders of RMG III
Ordinary Shares.
TABLE OF CONTENTS
The Initial Shareholders own approximately 95.0% of the RMG III
Ordinary Shares. Accordingly, it is expected that the RMG III Ordinary Shares held by the Initial Shareholders will be sufficient to approve the Organizational Documents Proposal B. Therefore, assuming the Initial Shareholders all vote in
favor of the Organizational Documents Proposal B, and all outstanding RMG III Ordinary Shares held by the Initial Shareholders are represented at the Special Meeting in person or by proxy, the affirmative vote of additional Public Shares is
not required to approve the Organizational Documents Proposal B.
RECOMMENDATION OF THE RMG III BOARD
THE RMG III BOARD RECOMMENDS THAT RMG III
SHAREHOLDERS VOTE “FOR” THE APPROVAL OF THE ORGANIZATIONAL DOCUMENTS PROPOSAL B.
The existence of financial and personal interests
of one or more of RMG III’s directors may result in a conflict of interest on the part of such director(s) between what he, she or they may believe is in the best interests of RMG III and RMG III shareholders and what he, she or they may
believe is best for himself, herself, or themselves in determining to recommend that RMG III shareholders vote for the proposals. In addition, RMG III’s directors, executive officers and the Sponsor and its affiliates may have interests in the
Business Combination that may conflict with your interests as a RMG III shareholder. See the section titled “Business Combination
Proposal — Interests of RMG III’s Directors, Executive Officers and the Sponsor and its Affiliates in the Business Combination” for a further discussion of these considerations.
Organizational Documents
Proposal C — to authorize the Surviving Corporation Board to be unclassified.
REASONS FOR THE AMENDMENT
The RMG III Board believes that it is desirable to remove the board
classification provisions because classified boards may be considered to reduce the accountability of directors to stockholders in certain circumstances as they are likely to increase the time required for stockholders to change the composition
of the board of directors and may limit the ability of stockholders to evaluate and elect each director each year. The election of directors is the primary means for stockholders to influence corporate governance policies and to hold management
accountable for implementing those policies and it is thus a better corporate governance practice to have an unclassified board following the completion of the Business Combination.
VOTE REQUIRED FOR APPROVAL
The approval of Organizational Documents Proposal C requires a
special resolution under Cayman Islands Companies Act, being the affirmative vote of holders of at least two-thirds of the RMG III Ordinary Shares represented in person or by proxy and entitled to vote thereon and who vote at the Special
Meeting. Abstentions and broker non-votes, while considered present for the purposes of establishing a quorum, will not count as votes cast at the Special Meeting.
Organizational Documents Proposal C is conditioned on the approval
and adoption of each of the other Condition Precedent Proposals. Therefore, if each of the Condition Precedent Approvals is not approved, the Organizational Documents Proposal C will have no effect, even if approved by holders of RMG III
Ordinary Shares.
The Initial Shareholders own approximately 95.0% of the RMG III
Ordinary Shares. Accordingly, it is expected that the RMG III Ordinary Shares held by the Initial Shareholders will be sufficient to approve the Organizational Documents Proposal C. Therefore, assuming the Initial Shareholders all vote in
favor of the Organizational Documents Proposal C, and all outstanding RMG III Ordinary Shares held by the Initial Shareholders are represented at the Special Meeting in person or by proxy, the affirmative vote of additional Public Shares is
not required to approve the Organizational Documents Proposal C.
RECOMMENDATION OF THE RMG III BOARD
THE RMG III BOARD RECOMMENDS THAT RMG III
SHAREHOLDERS VOTE “FOR” THE APPROVAL OF THE ORGANIZATIONAL DOCUMENTS PROPOSAL C.
The existence of financial and personal interests
of one or more of RMG III’s directors may result in a conflict of interest on the part of such director(s) between what he, she or they may believe is in the best
TABLE OF CONTENTS
interests of RMG III and RMG III shareholders and what he, she or
they may believe is best for himself, herself, or themselves in determining to recommend that RMG III shareholders vote for the proposals. In addition, RMG III’s directors, executive officers and the Sponsor and its affiliates may have
interests in the Business Combination that may conflict with your interests as a RMG III shareholder. See the section titled “Business Combination Proposal — Interests of RMG III’s Directors, Executive Officers
and the Sponsor and its Affiliates in the Business Combination” for a further discussion of these considerations.
OVERVIEW
Organizational Documents
Proposal D — to authorize all other changes in connection with the replacement of RMG III Governing Documents with the Proposed Certificate of Incorporation and Proposed Bylaws in
connection with the consummation of the Business Combination (copies of which are attached to this proxy statement as Annex G and Annex H, respectively), including (i) changing the corporate name from “RMG
Acquisition Corp. III” to “H2B2 Electrolysis Technologies, Inc.,” (ii) making the Surviving Corporation’s corporate existence perpetual, (iii) adopting Delaware as the exclusive forum for certain stockholder litigation, and (iv) removing
certain provisions related to RMG III’s status as a blank check company that will no longer be applicable upon consummation of the Business Combination, all of which the RMG III Board believes is necessary to adequately address the needs of
RMG III and the Surviving Corporation after the Business Combination.
REASONS FOR THE AMENDMENT
Corporate Name
The RMG III Board believes that changing the corporate name from “RMG
Acquisition Corp. III” to “H2B2 Electrolysis Technologies, Inc.” is desirable to reflect the Business Combination with H2B2 and to clearly identify the Surviving Corporation as the publicly traded entity.
Perpetual Existence
The RMG III Board believes that making the Surviving Corporation’s
corporate existence perpetual is desirable to reflect the Business Combination. Additionally, perpetual existence is the usual period of existence for public corporations, and the RMG III Board believes that it is the most appropriate period
for the Surviving Corporation following the Business Combination.
Exclusive Forum
Adopting Delaware as the exclusive forum for certain stockholder
litigation is intended to assist the Surviving Corporation in avoiding multiple lawsuits in multiple jurisdictions regarding the same matter. The ability to require such claims to be brought in a single forum will help to assure consistent
consideration of the issues, the application of a relatively known body of case law and level of expertise and should promote efficiency and cost-savings in the resolutions of such claims. The RMG III Board believes that the Delaware courts are
best suited to address disputes involving such matters given that after the Domestication, the Surviving Corporation will be incorporated in Delaware. Delaware law generally applies to such matters and the Delaware courts have a reputation for
expertise in corporate law matters. Delaware offers a specialized Court of Chancery to address corporate law matters, with streamlined procedures and processes, which help provide relatively quick decisions. This accelerated schedule can
minimize the time, cost and uncertainty of litigation for all parties. The Court of Chancery has developed considerable expertise with respect to corporate law issues, as well as a substantial and influential body of case law construing
Delaware’s corporate law and long-standing precedent regarding corporate governance. This provides stockholders and the Surviving Corporation with more predictability regarding the outcome of intra-corporate disputes. In the event the Court of
Chancery does not have jurisdiction, the other state courts located in Delaware would be the most appropriate forums because these courts have more expertise on matters of Delaware law compared to other jurisdictions; provided that these
exclusive forum provisions will not apply to suits brought to enforce any liability or duty created by the Securities Act or the Exchange Act, or to any claim for which the federal courts have exclusive jurisdiction. The Proposed Certificate of
Incorporation provides that, unless the Surviving Corporation consents in writing to the selection of an alternative forum, to the fullest extent permitted by law, the federal district courts of the United States of America will be the
exclusive forum for resolving any complaint asserting a cause of action arising
TABLE OF CONTENTS
under the Securities Act. However, Section 22 of the Securities Act creates
concurrent jurisdiction for federal and state courts over all suits brought to enforce any duty or liability created by the Securities Act or the rules and regulations thereunder. Accordingly, both state and federal courts have jurisdiction to
entertain such claims. Due to the concurrent jurisdiction for federal and state courts created by Section 22 of the Securities Act over all suits brought to enforce any duty or liability created by the Securities Act or the rules and
regulations thereunder, there is uncertainty as to whether a court would enforce the exclusive forum provision. Investors also cannot waive compliance with the federal securities laws and the rules and regulations thereunder.
In addition, this amendment would promote judicial fairness and avoid
conflicting results, as well as make the Surviving Corporation’s defense of applicable claims less disruptive and more economically feasible, principally by avoiding duplicative discovery.
Provisions Related to Status as Blank Check Company
The elimination of certain provisions related to RMG III’s status as
a blank check company is desirable because these provisions will serve no purpose following the Business Combination. For example, the Proposed Organizational Documents do not include the requirement to dissolve the Surviving Corporation and
the default under the DGCL allows it to continue as a corporate entity with perpetual existence following consummation of the Business Combination. In addition, certain other provisions in the Existing Articles require that proceeds from the
Initial Public Offering be held in the Trust Account until a business combination or liquidation of RMG III has occurred. These provisions cease to apply once the Business Combination is consummated and are therefore not included in the
Proposed Organizational Documents.
VOTE REQUIRED FOR APPROVAL
The approval of Organizational Documents Proposal D requires a
special resolution under Cayman Islands law, being the affirmative vote of the holders of at least two-thirds of the RMG III Ordinary Shares represented in person or by proxy and entitled to vote thereon and who vote at the Special Meeting.
Abstentions and broker non-votes, while considered present for the purposes of establishing a quorum, will not count as votes cast at the Special Meeting.
Organizational Documents Proposal D is conditioned on the approval
and adoption of each of the other Condition Precedent Proposals. Therefore, if each of the Condition Precedent Approvals is not approved, the Organizational Documents Proposal D will have no effect, even if approved by holders of RMG III
Ordinary Shares.
The Initial Shareholders own approximately 95.0% of the RMG III
Ordinary Shares. Accordingly, it is expected that the RMG III Ordinary Shares held by the Initial Shareholders will be sufficient to approve the Organizational Documents Proposal D. Therefore, assuming the Initial Shareholders all vote in
favor of the Organizational Documents Proposal D, and all outstanding RMG III Ordinary Shares held by the Initial Shareholders are represented at the Special Meeting in person or by proxy, the affirmative vote of additional Public Shares is
not required to approve the Organizational Documents Proposal D.
RECOMMENDATION OF THE RMG III BOARD
THE RMG III BOARD RECOMMENDS THAT RMG III
SHAREHOLDERS VOTE “FOR” THE APPROVAL OF THE ORGANIZATIONAL DOCUMENTS PROPOSAL D.
The existence of financial and personal interests
of one or more of RMG III’s directors may result in a conflict of interest on the part of such director(s) between what he, she or they may believe is in the best interests of RMG III and RMG III shareholders and what he, she or they may
believe is best for himself, herself, or themselves in determining to recommend that RMG III shareholders vote for the proposals. In addition, RMG III’s directors, executive officers and the Sponsor and its affiliates may have interests in the
Business Combination that may conflict with your interests as a RMG III shareholder. See the section titled “Business Combination
Proposal — Interests of RMG III’s Directors, Executive Officers and the Sponsor and its Affiliates in the Business Combination” for a further discussion of these considerations.
TABLE OF CONTENTS
PROPOSAL NO. 4—THE DIRECTOR ELECTION PROPOSAL
OVERVIEW
As discussed in this proxy statement, assuming
the Business Combination Proposal, the Domestication Proposal and the Organizational Documents Proposals are approved, then RMG III is asking RMG III shareholders to approve, by ordinary resolution of the holders of the RMG III Class B Ordinary
Shares, a proposal to elect directors who, effective at the Closing, will be the directors of the Surviving Corporation. Under the Merger Agreement, the approval of the Director Election Proposal is also a condition to the consummation of the
Business Combination.
NOMINEES
As contemplated by the Merger Agreement,
immediately following the Effective Time, the Surviving Corporation Board will consist of a total of nine (9) directors, at least five (5) of whom will be considered an “independent” director nominee for purposes of Nasdaq listing standards,
and all of whom will be designated by H2B2, such that the Surviving Corporation Board will consist of a majority of “independent” directors for such purposes, and the members of which will thereafter be designated, nominated and elected as
contemplated by the Proposed Organizational Documents. For more information on the experience of each director nominee, see the section entitled “Management of the Surviving Corporation Following the Business
Combination” of this proxy statement.
VOTE REQUIRED FOR APPROVAL
The approval of the Director Election Proposal
requires an ordinary resolution of the holders of the RMG III Class B Ordinary Shares under Cayman Islands law, being the affirmative vote of the holders of a majority of the RMG III Class B Ordinary Shares represented in person or by proxy and
entitled to vote thereon and who vote at the Special Meeting. Abstentions and broker non-votes, while considered present for the purposes of establishing a quorum, will not count as votes cast at the Special Meeting.
The Director Election Proposal is conditioned on
the approval and adoption of each of the other Condition Precedent Proposals. Therefore, if each of the Condition Precedent Proposals is not approved, the Director Election Proposal will have no effect, even if approved by holders of RMG III
Ordinary Shares.
The Initial Shareholders own approximately
95.0% of the RMG III Ordinary Shares. Accordingly, it is expected that the RMG III Ordinary Shares held by the Initial Shareholders will be sufficient to approve the Director Election Proposal. Therefore, assuming the Initial Shareholders all
vote in favor of the Director Election Proposal, and all outstanding RMG III Ordinary Shares held by the Initial Shareholders are represented at the Special Meeting in person or by proxy, the affirmative vote of additional Public Shares is
not required to approve the Director Election Proposal.
RESOLUTION
The full text of the resolution to be passed is as follows:
“RESOLVED, as an ordinary resolution of the
holders of the RMG III Class B Ordinary Shares, that the persons named below be elected to serve on the board of directors of H2B2 Electrolysis Technologies, Inc. upon, and with effect from, the consummation of the Business Combination as
contemplated by the Merger Agreement.
”
RECOMMENDATION OF THE RMG III BOARD
THE RMG III BOARD RECOMMENDS
THAT RMG III SHAREHOLDERS VOTE “FOR” THE APPROVAL OF THE DIRECTOR ELECTION PROPOSAL.
The existence of financial
and personal interests of one or more of RMG III’s directors may result in a conflict of interest on the part of such director(s) between what he, she or they may believe is in the best interests of RMG III and RMG III shareholders and what he,
she or they may believe is best for himself, herself, or themselves in determining to recommend that RMG III shareholders vote for the Proposals. In addition, RMG III’s directors, executive officers and the Sponsor and its affiliates may have
interests in the Business Combination that may conflict with your interests as a RMG III shareholder. See the section titled “Business Combination Proposal—Interests of RMG III’s Directors, Executive Officers and the Sponsor and its Affiliates in the Business Combination” for further
discussion of these considerations.
TABLE OF CONTENTS
PROPOSAL NO. 5—THE STOCK ISSUANCE PROPOSAL
OVERVIEW
As discussed in this proxy statement, assuming the Business
Combination Proposal, the Domestication Proposal, the Organizational Documents Proposals and the Director Election Proposal are approved, then RMG III is asking RMG III shareholders to approve, for purposes of complying with the applicable
provisions of Rule 5635(a) of the Nasdaq Stock Market Listing Rules, the issuance, or reservation for future issuance, the shares of Surviving Corporation Common Stock to the H2B2 Securityholders pursuant to the Merger Agreement.
REASONS FOR THE APPROVAL FOR PURPOSES OF NASDAQ LISTING RULE 5635
Under Nasdaq Listing Rule 5635(a)(1), shareholder approval is
required prior to the issuance of common stock, or of securities convertible into or exercisable for common stock, in connection with the acquisition of another company if such securities are not issued in a public offering for cash and (i) the
common stock has, or will have upon issuance, voting power equal to or in excess of 20% of the voting power outstanding before the issuance of such securities (or securities convertible into or exercisable for common stock); or (ii) the number
of shares of common stock to be issued is or will be equal to or in excess of 20% of the number of shares of common stock outstanding before the issuance of the stock or securities. Additionally, under Nasdaq Listing Rule 5635(b), shareholder
approval is required prior to the issuance of securities when the issuance or potential issuance will result in a change of control of the registrant. Although Nasdaq has not adopted any rule on what constitutes a “change of control” for
purposes of Rule 5635(b), the Nasdaq Stock Market has previously indicated that the acquisition of, or right to acquire, by a single investor or affiliated investor group, as little as 20% of the common stock (or securities convertible into or
exercisable for common stock) or voting power of an issuer could constitute a change of control.
Under Nasdaq Listing Rule 5635(d), shareholder approval is required
for a transaction other than a public offering, involving the sale, issuance or potential issuance by an issuer of common stock (or securities convertible into or exercisable for common stock) at a price that is less than the lesser of the
official Nasdaq closing price immediately before signing of the binding agreement and the average official Nasdaq closing price for the five trading days immediately preceding the signing of the binding agreement of the stock if the number of
shares of common stock to be issued is or may be equal to 20% or more of the common stock, or 20% or more of the voting power, outstanding before the issuance. If the Business Combination is completed pursuant to the Merger Agreement, RMG III
currently expects to issue an estimated shares of Surviving Corporation Common Stock (assuming no Redemptions), which includes shares of Surviving Corporation Common Stock issued to H2B2 Securityholders, in each case, pursuant to the
Merger Agreement. For further details, see “Business Combination Proposal — The Merger Agreement — Consideration — Aggregate Closing Date Merger Consideration.”
In the event that the Stock Issuance Proposal is not approved by RMG
III shareholders, the Business Combination cannot be consummated. In the event that the Stock Issuance Proposal is approved by RMG III shareholders, but the Merger Agreement is terminated (without the Business Combination being consummated)
prior to the issuance of shares of Surviving Corporation Common Stock pursuant to the Merger Agreement, such shares of Surviving Corporation Common Stock will not be issued.
VOTE REQUIRED FOR APPROVAL
The approval of the Stock Issuance Proposal requires an ordinary
resolution under Cayman Islands law, being the affirmative vote of the holders of a majority of RMG III Ordinary Shares represented in person or by proxy and entitled to vote thereon and who vote at the Special Meeting. Abstentions and broker
non-votes, while considered present for the purposes of establishing a quorum, will not count as votes cast at the Special Meeting.
The Stock Issuance Proposal is conditioned on the approval and
adoption of each of the other Condition Precedent Proposals. Therefore, if each of the Condition Precedent Proposals is not approved, the Stock Issuance Proposal will have no effect, even if approved by holders of RMG III Ordinary Shares.
The Initial Shareholders own approximately 95.0% of the RMG III
Ordinary Shares. Accordingly, it is expected that the RMG III Ordinary Shares held by the Initial Shareholders will be sufficient to approve the Stock Issuance Proposal. Therefore, assuming the Initial Shareholders all vote in favor of the
Stock Issuance
TABLE OF CONTENTS
Proposal, and all outstanding RMG III Ordinary Shares held by the Initial
Shareholders are represented at the Special Meeting in person or by proxy, the affirmative vote of additional Public Shares is not required to approve the Stock Issuance Proposal.
RESOLUTION
The full text of the resolution to be passed is as follows:
“RESOLVED, as an ordinary resolution, that, for the purposes of
complying with the applicable provisions of Rule 5635 of the Nasdaq Listing Rules, the issuance of shares of common stock, par value $0.0001 per share, of H2B2 Electrolysis Technologies, Inc. pursuant to the Merger Agreement, including the
stockholders of H2B2 and holders of options to purchase shares of common stock of H2B2, par value $0.0001 per share be approved in all respects.”
TABLE OF CONTENTS
PROPOSAL NO. 6—THE EQUITY INCENTIVE PLAN PROPOSAL
OVERVIEW
As discussed in this proxy statement/prospectus, assuming the
Business Combination Proposal, the Domestication Proposal, the Organizational Documents Proposals, the Director Election Proposal and the Stock Issuance Proposal are approved, then RMG III is asking its shareholders to approve, by ordinary
resolution, the Incentive Plan that provides for grants of awards to certain eligible service providers. The Incentive Plan will become effective as of the Closing, subject to shareholder approval.
The Incentive Plan is described in more detail below. A copy of the
Incentive Plan is attached to this proxy statement/prospectus as Annex I.
PURPOSE OF THE INCENTIVE PLAN
The purpose of the Incentive Plan is to enhance the Surviving
Corporation’s ability to attract, retain and motivate persons who make (or are expected to make) important contributions by providing these individuals with equity ownership opportunities and/or equity-linked compensatory opportunities. Equity
awards and equity-linked compensatory opportunities are intended to motivate high levels of performance and align the interests of directors, employees and consultants with those of stockholders by giving directors, employees and consultants
the perspective of an owner with an equity or equity-linked stake in the Surviving Corporation and providing a means of recognizing their contributions to the Surviving Corporation’s success. The RMG III Board believes that equity ownership
opportunities and/or equity-linked compensatory opportunities are necessary to remain competitive in its industry and are essential to recruiting and retaining the highly qualified employees who help the Surviving Corporation meet its goals.
SUMMARY OF THE INCENTIVE PLAN
The following summarizes the material terms of the Incentive Plan.
This summary is qualified in its entirety by the full text of the Incentive Plan.
Administration. The Incentive Plan will be administered by the Surviving Corporation Board, or any committee to whom the Surviving Corporation Board delegates such power or authority (subject to limitations
imposed under Section 16 of the Exchange Act of 1934, as amended, and other applicable law and regulation), will serve as the plan administrator of the Incentive Plan. The plan administrator has full authority to take all actions and to make
all determinations required or provided for under the Incentive Plan and any award granted thereunder. The plan administrator also has full authority to determine who may receive awards under the Incentive Plan, the type, terms, and
conditions of an award, the number of shares of Surviving Corporation Common Stock subject to the award or to which an award relates, and to make any other determination and take any other action that the plan administrator deems necessary or
desirable for the administration of the Incentive Plan.
Share Reserve. The aggregate number of shares of Surviving Corporation Common Stock that may be issued pursuant to awards granted under the Incentive Plan will be , subject to adjustment by the plan administrator
in the event of certain changes in our corporate structure, as described below. The maximum number of shares that may be issued pursuant to the exercise of incentive stock options (“ISOs”), under the Incentive Plan will be shares of Surviving Corporation Common Stock.
If an award (or part of an award) under the Incentive Plan is
forfeited, expires, lapses or is terminated, is exchanged for or settled for cash, surrendered, repurchased or canceled, without having been fully exercised/settled, in any case, in a manner that results in the Surviving Corporation acquiring
the shares covered by the award (at a price no greater than the price paid by the participant for such shares) or that results in H2B2 not issuing shares under the award, any unused shares subject to such award will, as applicable, become or
again be available for new grants under the Incentive Plan. In addition, shares tendered or withheld to satisfy the exercise price or tax withholding obligation for any award granted under the Incentive Plan will again be available for grants
under the Incentive Plan. The payment of dividend equivalents in cash in conjunction with any awards under the Incentive Plan will not reduce the shares available for grant under the Incentive Plan. However, the following shares may not be used
again for grant under the Incentive Plan: (i) shares subject to stock appreciation rights (“SARs”), that are not issued in connection with the stock settlement of the SAR on exercise, and (ii) shares
purchased on the open market with the cash proceeds from the exercise of options.
TABLE OF CONTENTS
Awards granted under the Incentive Plan in substitution for any
equity or equity-based awards granted by an entity before such entity’s merger or consolidation with us or our acquisition of such entity’s property or equity securities will not reduce the shares available for grant under the Incentive Plan
but will count against the maximum number of shares that may be issued upon the exercise of ISOs.
The Incentive Plan provides that the sum of any cash compensation
and the aggregate grant date fair value (determined as of the date of the grant under Financial Accounting Standards Board Accounting Standards Codification Topic 718, or any successor thereto) of all awards granted to a non-employee director
as compensation for services as a non-employee director during any fiscal year may not exceed $ .
Eligibility. The Surviving Corporation’s directors, employees and consultants, and employees and consultants of our subsidiaries, will be eligible to receive awards under the Incentive Plan; however, ISOs may only be granted
to employees of the Surviving Corporation or the Surviving Corporation’s parent or subsidiary corporations. Following the Closing, the Surviving Corporation is expected to have approximately directors,
employees and consultants who will be eligible to receive awards under the Incentive Plan.
Types of Awards. The Incentive Plan allows for the grant of awards in the form of: (i) ISOs; (ii) non-qualified stock options (“NSOs”); (iii) SARs; (iv) restricted stock; (v) restricted stock units (“RSUs”); (vi) dividend equivalents; and (vii) other stock and cash based awards.
•
|
Stock Options and SARs. The plan administrator may determine the number of shares to be
covered by each option and/or SAR, the exercise price and such other terms, conditions, and limitations, including the vesting, exercise, term and forfeiture provisions, applicable to each option and/or SAR as it deems necessary or
advisable. Stock options provide for the purchase of shares of Surviving Corporation Common Stock in the future at an exercise price set on the grant date. Options granted under the Incentive Plan may be either ISOs or NSOs. ISOs, in
contrast to NSOs, may provide tax deferral beyond exercise and favorable capital gains tax treatment to their holders if certain holding period and other requirements of the Internal Revenue Code of 1986, as amended (the “Code”). SARs entitle their holder, upon exercise, to receive from us an amount equal to the appreciation of the shares subject to the award between the grant date and the exercise date. The exercise
price of an option or SAR is determined by the plan administrator at the time of grant but shall not be less than 100% of the fair market value of the underlying shares on the grant date, or in the case of ISOs granted to an employee
who owns more than 10% of the Surviving Corporation, 110% of the fair market value of the underlying shares on the day of such grant. Stock options and SARs may have a maximum term of ten years, or, in the case of ISOs granted to an
employee who owns more than 10% of the Surviving Corporation, five years from the date of grant. No dividends or dividend equivalents will be payable with respect to stock options or SARs.
|
•
|
Restricted Stock. Restricted stock is an award of shares of Surviving Corporation
Common Stock that are subject to certain vesting conditions and other restrictions and that are nontransferable prior to vesting. The plan administrator may determine the terms and conditions of restricted stock awards, including the
number of shares awarded, the purchase price, if any, to be paid by the recipient, the applicable vesting conditions, and any rights to acceleration thereof. The Incentive Plan provides that dividends payable with respect to restricted
stock prior to the vesting of such restricted stock instead will be paid out to the participant only as and to the extent that the applicable vesting conditions of the underlying award are subsequently satisfied and the restricted stock
vests. Dividends payable with respect to the portion of a restricted stock award that fails to vest will be forfeited.
|
•
|
RSUs. RSUs are contractual promises to deliver cash or shares of Surviving Corporation
Common Stock in the future, which may also remain forfeitable unless and until specified conditions are met. The terms and conditions applicable to RSUs are determined by the plan administrator, subject to the conditions and limitations
contained in the Incentive Plan.
|
•
|
Other Stock or Cash Based Awards. Other stock or cash based awards are awards of cash,
fully vested shares of Surviving Corporation Common Stock and other awards valued wholly or partially by reference to, or otherwise based on, shares of Surviving Corporation Common Stock. Other stock or cash based awards may be granted
to participants and may also be available as a payment form in the settlement of other awards, as standalone payments and as payment in lieu of compensation to which a participant is otherwise entitled.
|
TABLE OF CONTENTS
•
|
Dividend Equivalents. Dividend equivalents represent the right to receive the
equivalent value of dividends paid on shares of Surviving Corporation Common Stock and may be granted alone or in tandem with awards other than stock options or SARs. Dividend equivalents are credited as of the dividend record dates
during the period between the date an award is granted and the date such award vests, is exercised, is distributed or expires, as determined by the plan administrator. Under the Incentive Plan, dividend equivalents payable with respect
to an award shall only be paid to a participant to the extent that the vesting conditions of the underlying award are subsequently satisfied and the award vests. Dividend equivalents payable with respect to the portion of the award that
fails to vest will be forfeited.
|
Adjustments; Corporate Transactions. In the event of certain changes in the Surviving Corporation’s corporate structure, including any dividend, distribution, combination, merger, recapitalization or other corporate transaction, the plan administrator
may make appropriate adjustments to the terms and conditions of outstanding awards under the Incentive Plan to prevent dilution or enlargement of the benefits or intended benefits under the Incentive Plan, to facilitate the transaction or
event or to give effect to applicable changes in law or accounting standards. In addition, in the event of certain non-reciprocal transactions with our stockholders known as “equity restructurings,” the plan administrator will make equitable
adjustments to the Incentive Plan and outstanding awards granted thereunder.
Effect of Non-Assumption in Change in Control. In the event a change in control (as defined in the Incentive Plan) occurs and a participant’s award is not continued, converted, assumed or replaced by the Surviving
Corporation or a successor entity with an award (which may include, without limitation, a cash-based award) with substantially the same value and vesting terms that are no less favorable than those applicable to the underlying award, in each
case, as of immediately prior to the change in control, and provided the participant remains in continuous service through such change in control, the award will become fully vested and exercisable, as applicable, and all forfeiture,
repurchase and other restrictions on such award will lapse, in which case such award, to the extent in the money, will be canceled upon the consummation of the change in control in exchange for the right to receive the consideration payable
in the change in control.
Repricings. The
plan administrator may, without shareholder approval, reduce the exercise price of any stock option or SAR, cancel any stock option or SAR with an exercise price that is less than the fair market value of a share of Surviving Corporation
Common Stock in exchange for cash, or cancel any stock option or SAR in exchange for options, SARs or other awards with an exercise price per share that is less than the exercise price per share of the stock options or SARs for which such new
stock options or SARs are exchanged.
Amendment and Termination. The Surviving Corporation Board may amend, suspend, or terminate the Incentive Plan at any time; provided that no amendment (other than an amendment that increases the number of shares reserved for issuance under
the Incentive Plan, is permitted by the applicable award agreement or is made pursuant to applicable law) may materially and adversely affect any outstanding awards under the Incentive Plan without the affected participant’s consent.
Stockholder approval will be required for any amendment to the Incentive Plan to increase the aggregate number of shares of Surviving Corporation Common Stock that may be issued under the Incentive Plan (other than due to adjustments as a
result of share dividends, reclassifications, share splits, consolidations or other similar corporate transactions), to the extent necessary to comply with applicable laws or for any amendment to increase the limitation on the sum of cash
compensation and the aggregate fair value of awards granted to a non-employee director during any fiscal year. An ISO may not be granted under the Incentive Plan after ten (10) years from the earlier of the date the RMG III Board adopted the
Incentive Plan or the date on which RMG III’s shareholders approve the Incentive Plan.
Foreign Participants, Clawback Provisions and
Transferability. The plan administrator may modify award terms, establish subplans and/or adjust other terms and conditions of awards, subject to the share limits described above, in order to facilitate grants
of awards subject to the laws and/or stock exchange rules of countries outside of the United States. All awards granted under the Incentive Plan will be subject to any company clawback policy as set forth in such clawback policy or the
applicable award agreement. Awards under the Incentive Plan are generally non-transferrable, except by will or the laws of descent and distribution, or, subject to the plan administrator’s consent, pursuant to a domestic relations order, and
are generally exercisable only by the participant.
TABLE OF CONTENTS
MATERIAL UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
The following is a general summary under current law of the principal
United States federal income tax consequences related to awards under the Incentive Plan. This summary deals with the general United States federal income tax principles that apply and is provided only for general information. Some kinds of
taxes, such as state, local and foreign income taxes and federal employment taxes, are not discussed. This summary is not intended as tax advice to participants, who should consult their own tax advisors.
Non-Qualified Stock Options. If an optionee is granted an NSO under the Incentive Plan, the optionee should not have taxable income on the grant of the option. Generally, the optionee should recognize ordinary income at the time of exercise
in an amount equal to the fair market value of the shares acquired on the date of exercise, less the exercise price paid for the shares. The optionee’s basis in Surviving Corporation Common Stock for purposes of determining gain or loss on a
subsequent sale or disposition of such shares generally will be the fair market value of Surviving Corporation Common Stock on the date the optionee exercises such option. Any subsequent gain or loss should be taxable as a long-term or
short-term capital gain or loss. The Surviving Corporation or its subsidiaries or affiliates generally should be entitled to a federal income tax deduction at the time and for the same amount as the optionee recognizes ordinary income,
subject to Code limitations.
Incentive Stock Options. A participant receiving ISOs should not recognize taxable income upon grant or at the time of exercise. However, the excess of the fair market value of the shares of Surviving Corporation Common Stock received over the option
exercise price is an item of tax preference income potentially subject to the alternative minimum tax. If stock acquired upon exercise of an ISO is held for a minimum of two years from the date of grant and one year from the date of exercise
and otherwise satisfies the ISO requirements, the gain or loss (in an amount equal to the difference between the fair market value on the date of disposition and the exercise price) upon disposition of the stock should be treated as a
long-term capital gain or loss, and we should not be entitled to any deduction. If the holding period requirements are not met, the ISO should be treated as one that does not meet the requirements of the Code for ISOs and the participant
should recognize ordinary income at the time of the disposition equal to the excess of the amount realized over the exercise price, but not more than the excess of the fair market value of the shares on the date the ISO is exercised over the
exercise price, with any remaining gain or loss being treated as capital gain or capital loss. The Surviving Corporation and its subsidiaries or affiliates generally are not entitled to a federal income tax deduction upon either the exercise
of an ISO or upon disposition of the shares acquired pursuant to such exercise, except to the extent that the participant recognizes ordinary income on disposition of the shares, subject to Code limitations.
Restricted Stock Units. A participant generally will not recognize taxable income upon grant of restricted stock units. When cash or shares of common stock are delivered under the terms of the award, the participant should recognize ordinary income equal
to the cash payment or the fair market value of the shares delivered, as the case may be, less any amount (if any) paid by the participant for such shares, and we or our subsidiaries or affiliates generally should be entitled to a
corresponding deduction at that time, subject to Code limitations.
Other Awards.
The current federal income tax consequences of other awards authorized under the Incentive Plan generally follow certain basic patterns: SARs are taxed and deductible in substantially the same manner as NSOs; nontransferable restricted stock
subject to a substantial risk of forfeiture results in income recognition equal to the excess of the fair market value over the price paid, if any, only at the time the restrictions lapse (unless the recipient elects to accelerate recognition
as of the date of grant through a Code Section 83(b) election); dividend equivalents and other stock or cash based awards are generally subject to tax at the time of payment. The Surviving Corporation and its subsidiaries or affiliates
generally should be entitled to a federal income tax deduction at the time and for the same amount as the optionee recognizes ordinary income, subject to Code limitations.
Section 409A of the Code
Certain types of awards under the Incentive Plan may constitute, or
provide for, a deferral of compensation subject to Section 409A of the Code. Unless certain requirements set forth in Section 409A of the Code are complied with, holders of such awards may be taxed earlier than would otherwise be the case
(e.g., at the time of vesting instead of the time of payment) and may be subject to an additional 20% penalty tax (and, potentially, certain interest, penalties and additional state taxes). To the extent applicable, the Incentive Plan and
awards granted under the Incentive Plan are intended to be structured and interpreted in a manner intended to either comply with or be exempt from the requirements of Section 409A of the Code and the Department of Treasury
TABLE OF CONTENTS
regulations and other interpretive guidance that may be issued under Section 409A of
the Code. To the extent determined necessary or appropriate by the plan administrator, the Incentive Plan and applicable award agreement may be amended to further comply with Section 409A of the Code or to exempt the applicable awards from
Section 409A of the Code.
PLAN BENEFITS
The benefits or amounts that may be received or allocated to
participants under the Incentive Plan will be determined at the discretion of the plan administrator and are not currently determinable. The closing price of Surviving Corporation Common Stock as of , 2023 was $ per share.
VOTE REQUIRED FOR APPROVAL
The approval of the Equity Incentive Plan Proposal requires an
ordinary resolution under Cayman Islands law, being the affirmative vote of a majority of the RMG III Ordinary Shares represented in person or by proxy and entitled to vote thereon and who vote at the Special Meeting. Abstentions and broker
non-votes, while considered present for the purposes of establishing a quorum, will not count as votes cast at the Special Meeting.
The Equity Incentive Plan Proposal is conditioned on the approval and
adoption of each of the other Condition Precedent Proposals. Therefore, if each of the Condition Precedent Proposals is not approved, the Equity Incentive Plan Proposal will have no effect, even if approved by holders of the RMG III Ordinary
Shares.
The Initial Shareholders own approximately 95.0% of the RMG III
Ordinary Shares. Accordingly, it is expected that the RMG III Ordinary Shares held by the Initial Shareholders will be sufficient to approve the Equity Incentive Plan Proposal. Therefore, assuming the Initial Shareholders all vote in favor of
the Equity Incentive Plan Proposal, pursuant to the Sponsor Support Agreement, and all outstanding RMG III Ordinary Shares held by the Initial Shareholders are represented at the Special Meeting in person or by proxy, the affirmative vote of
additional Public Shares is not required to approve the Equity Incentive Plan Proposal.
RESOLUTION
The full text of the resolution to be passed is as follows:
“RESOLVED, as an ordinary resolution, that the Incentive Plan,
including the authorization of the initial share reserve under the Incentive Plan, be approved in all respects.”
RECOMMENDATION OF THE RMG III BOARD
THE RMG III BOARD RECOMMENDS THAT RMG III
SHAREHOLDERS VOTE “FOR” THE APPROVAL OF THE EQUITY INCENTIVE PLAN PROPOSAL.
The existence of financial and personal interests of one or more of RMG III’s directors
may result in a conflict of interest on the part of such director(s) between what he, she or they may believe is in the best interests of RMG III and its shareholders and what he, she or they may believe is best for himself, herself, or
themselves in determining to recommend that shareholders vote for the proposals. In addition, RMG III’s directors, executive officers and the Sponsor and its affiliates may have interests in the Business Combination that may conflict with your
interests as a shareholder. See the section titled “Business Combination Proposal — Interests of RMG III’s Directors, Executive Officers and the Sponsor and its Affiliates in the Business Combination”
for a further discussion of these considerations.
TABLE OF CONTENTS
PROPOSAL NO. 7—THE ADJOURNMENT PROPOSAL
The Adjournment Proposal allows the RMG III Board to submit a
Proposal, to be effective as of the date of the Special Meeting, to approve, by ordinary resolution, the adjournment of the Special Meeting to a later date or dates, if necessary, (i) to permit further solicitation and vote of proxies in the
event that there are insufficient votes for the approval of one or more proposals at the Special Meeting or (ii) if the RMG III Board determines before the Special Meeting that it is not necessary or no longer desirable to proceed with the
proposals. The purpose of the Adjournment Proposal is to permit further solicitation of proxies and votes and to provide additional time for RMG III and the Sponsor and their respective shareholders to make purchases of RMG III Ordinary Shares
or other arrangements that would increase the likelihood of obtaining a favorable vote on the Proposals to be put to the Special Meeting. See “Business Combination Proposal — Interests of RMG III’s Directors,
Executive Officers and the Sponsor and its Affiliates in the Business Combination.”
CONSEQUENCES IF THE ADJOURNMENT PROPOSAL IS NOT APPROVED
If the Adjournment Proposal is presented to the Special Meeting and
is not approved by RMG III shareholders, the RMG III Board may not be able to adjourn the Special Meeting to a later date in the event that, based on the tabulated votes, there are not sufficient votes at the time of the Special Meeting to
approve the Condition Precedent Proposals. In such events, the Business Combination would not be completed.
VOTE REQUIRED FOR APPROVAL
The approval of the Adjournment Proposal requires an ordinary
resolution under Cayman Islands law, being the affirmative vote of the holders of a majority of RMG III Ordinary Shares represented in person or by proxy and entitled to vote thereon and who vote at the Special Meeting. Abstentions and broker
non-votes, while considered present for the purposes of establishing a quorum, will not count as votes cast at the Special Meeting.
The Adjournment Proposal is not conditioned on the approval of any
other proposal to be presented at the Special Meeting.
The Initial Shareholders own approximately 95.0% of the RMG III
Ordinary Shares. Accordingly, it is expected that the RMG III Ordinary Shares held by the Initial Shareholders will be sufficient to approve the Adjournment Proposal. Therefore, assuming the Initial Shareholders all vote in favor of the
Adjournment Proposal, pursuant to the Sponsor Support Agreement, and all outstanding RMG III Ordinary Shares held by the Initial Shareholders are represented at the Special Meeting in person or by proxy, the affirmative vote of additional
Public Shares is not required to approve the Equity Incentive Plan Proposal.
RESOLUTION
The full text of the resolution to be passed is as follows:
“RESOLVED, as an ordinary resolution, that the adjournment of the
Special Meeting to a later date or dates, if necessary, (i) to permit further solicitation and vote of proxies in the event that there are insufficient votes for the approval of one or more proposals at the Special Meeting or (ii) if the RMG
III Board determines before the Special Meeting that it is not necessary or no longer desirable to proceed with the proposals be approved.”
RECOMMENDATION OF THE RMG III BOARD
THE RMG III BOARD RECOMMENDS THAT RMG III
SHAREHOLDERS VOTE “FOR” THE APPROVAL OF THE ADJOURNMENT PROPOSAL.
The existence of financial and personal interests
of one or more of RMG III’s directors may result in a conflict of interest on the part of such director(s) between what he, she or they may believe is in the best interests of RMG III and RMG III shareholders and what he, she or they may
believe is best for himself, herself, or themselves in determining to recommend that RMG III shareholders vote for the proposals. In addition, RMG III’s directors, executive officers and the Sponsor and its affiliates may have interests in the
Business Combination that may conflict with your interests as a RMG III shareholder. See the section titled “Business Combination Proposal — Interests of RMG III’s
Directors, Executive Officers and the Sponsor and its Affiliates in the Business Combination” for a further discussion of these considerations.
TABLE OF CONTENTS
THE WARRANT HOLDERS MEETING
GENERAL
RMG III is furnishing this proxy statement/prospectus to RMG III
warrant holders as part of the solicitation of proxies by the RMG III Board for use at the Warrant Holders Meeting to be held on , 2023, and at any adjournment thereof. This proxy statement/prospectus is first being furnished to RMG III
warrant holders on or about , 2023 in connection with the vote on the Warrant Holder Proposals described in this proxy statement/prospectus. This proxy statement/prospectus provides RMG III warrant holders with information they need to know
to be able to vote or instruct their vote to be cast at the Warrant Holders Meeting.
DATE, TIME AND PLACE OF THE WARRANT HOLDERS MEETING
The Warrant Holders Meeting will be held in person or by proxy, on
, 2023, at , at the offices of Skadden, Arps, Slate, Meagher & Flom LLP located at One Manhattan West, New York, New York 10001, or in virtual format via live webcast at https://www.cstproxy.com/ .
VOTING POWER; RECORD DATE
Only RMG III warrant holders of record as of the close of business on
, 2023, are entitled to notice of, and to vote at, the Warrant Holders Meeting or any adjournment or postponement thereof. Each of the RMG III Warrants entitles the holder thereof to one vote. Holders of RMG III Warrants held in “street
name” or in a margin or similar account should contact such RMG III shareholder’s broker to ensure that votes related to the shares beneficially owned are properly counted. As of the close of business on the RMG III Record Date, there were
RMG III Warrants outstanding, including RMG III Public Warrants and RMG III Private Placement Warrants.
PURPOSE OF THE WARRANT HOLDERS MEETING
At the Warrant Holders Meeting, RMG III is asking RMG III warrant
holders to:
•
|
consider and vote upon the Warrant Amendment attached to this proxy statement/prospectus as Annex J, pursuant to which, upon
consummation of the Business Combination, each of the outstanding Domesticated RMG III Warrants will be canceled and exchanged for the right to receive 0.075 shares of Surviving Corporation Common Stock (the “Warrant Amendment Proposal”); and
|
•
|
consider and vote upon a proposal to approve the adjournment of the Warrant Holders Meeting to a later date or dates, if
necessary, to permit further solicitation and vote of proxies in the event that there are insufficient votes for the approval of the Warrant Amendment Proposal at the Warrant Holders Meeting (the “Warrant
Holders Adjournment Proposal” and, together with the Warrant Amendment Proposal, the “Warrant Holder Proposal”) to be effective as of the date of the Warrant Holders Meeting.
|
VOTE OF THE SPONSOR, DIRECTORS AND OFFICERS
As of the RMG III Record Date, the Initial Shareholders own 100% of
the outstanding RMG III Private Placement Warrants and none of the RMG III Public Warrants. Accordingly, it is expected that the RMG III Private Placement Warrants held by the Initial Shareholders will be voted in favor of the Warrant Amendment
Proposal and only the affirmative vote of the holders of at least 65% of the outstanding RMG III Public Warrants will be required to approve any of the Warrant Amendment Proposals. The RMG III Warrants will expire worthless if RMG III does not
consummate an initial business combination by the Completion Window.
QUORUM
A quorum of RMG III warrant holders is necessary to hold a valid
meeting. A quorum will be present at the Warrant Holders Meeting if the holders of at least 50% of each of the outstanding RMG III Warrants are represented in person (which would include presence at a virtual meeting) or by proxy. As of the RMG
III Record Date, RMG III Warrants would be required to achieve a quorum.
TABLE OF CONTENTS
ABSTENTIONS AND BROKER NON-VOTES
In general, if your RMG III Warrants are held in “street” name and
you do not instruct your broker, bank or other nominee or intermediary on a timely basis on how to vote your RMG III Warrants, your broker, bank or other nominee or intermediary, in its sole discretion, may either leave your RMG III Warrants
unvoted or vote your RMG III Warrants on routine matters, but not on any non-discretionary matters. Proxies that are marked “abstain” and proxies relating to “street name” RMG III Warrants that are returned to RMG III but marked by brokers as
“not voted” will be treated as RMG III Warrants present for purposes of determining the presence of quorum on all matters, but they will not be treated as RMG III Warrants voted on the matter and will, therefore, have the effect of an “AGAINST”
vote on the Warrant Amendment Proposal. Under applicable self-regulatory organization rules, your broker, bank or nominee cannot vote your RMG III Warrants with respect to “non-discretionary” matters unless you provide instructions on how to
vote in accordance with the information and procedures provided to you by your broker, bank or nominee. RMG III believes that none of the Warrant Holder Proposals to be presented at the Warrant Holders Meeting
are routine matters and that each such Warrant Holder Proposal is, therefore, a “non-discretionary” matter. As such, without your voting instructions, your brokerage firm cannot vote your RMG III Warrants on any Warrant Holder Proposal to be
voted on at the Warrant Holders Meeting.
VOTE REQUIRED FOR APPROVAL
The Warrant Amendment Proposal may be approved by the affirmative
vote of at least 65% of each of (i) the then outstanding RMG III Public Warrants and (ii) the then outstanding RMG III Private Placement Warrants, each voting separately as a class.
The Warrant Holders Adjournment Proposal may be approved by the
affirmative vote of at least 50% of each of the then outstanding RMG III Warrants represented in person or by proxy and entitled to vote thereon and who vote at the Warrant Holders Meeting.
RECOMMENDATION OF THE RMG III BOARD
The RMG III Board believes that the Warrant Amendment Proposal and
the Warrant Holders Adjournment Proposal to be presented at the Special Meeting are advisable and in the best interests of RMG III and the RMG III warrant holders and recommends that the RMG III warrant holders vote “FOR” the Warrant Amendment
Proposal and “FOR” the Warrant Holder Adjournment Proposal, if presented to the Warrant Holders Meeting.
The existence of financial and personal interests of one or more of
RMG III’s directors may result in a conflict of interest on the part of such director(s) between what he, she or they may believe is in the best interests of RMG III’s and the RMG III warrant holders and what he, she or they may believe is best
for himself, herself or themselves in determining to recommend that RMG III warrant holders vote for the Warrant Holder Proposals. In addition, RMG III’s officers have interests in the Business Combination that may conflict with your interests
as a RMG III warrant holder. See the section titled “Business Combination Proposal — Interests of RMG III’s Directors, Executive Officers and the Sponsor and its Affiliates in the Business Combination” for a
further discussion of these considerations.
VOTING YOUR WARRANTS
Each RMG III Warrant entitles the holder thereof to one vote. You can
vote your warrants in person (which includes virtual attendance) at the Warrant Holders Meeting or by proxy. If your warrants are owned directly in your name with Continental, RMG III’s transfer agent, you are considered, with respect to those
shares, the “warrant holder of record.” If your warrants are held in “street name” or are in a margin or similar account or by a bank or other nominee or intermediary, you are considered a “non-record (beneficial) shareholder.”
Warrant Holders of Record
You can vote by proxy by having one or more individuals who will
attend the Warrant Holders Meeting vote your warrants for you. These individuals are called “proxies” and using them to cast your ballot at the Warrant Holders Meeting is called voting “by proxy.” Alternatively, you may attend and vote your
warrants at the Warrant Holders Meeting in person at the offices of Skadden, Arps, Slate, Meagher & Flom LLP located at One Manhattan West, New York, New York 10001, or online via live webcast at https://www.cstproxy.com/
.
TABLE OF CONTENTS
If you wish to vote by proxy, you must (i) complete the enclosed
form, called a “proxy card,” and mail it in the envelope provided or (ii) submit your proxy over the Internet in accordance with the instructions on the enclosed proxy card. If you complete the proxy card and mail it in the envelope provided or
submit your proxy over the Internet as described above, you will designate each of Philip Kassin and Robert S. Mancini or the Chairperson of the Warrant Holders Meeting to act as your proxy at the Warrant Holders Meeting. One of the
aforementioned individuals will then vote your warrants at the Warrant Holders Meeting in accordance with the instructions you provided to them in the proxy card with respect to the Warrant Holder Proposals presented in this proxy
statement/prospectus. Proxies will extend to, and be voted at, any adjournments or postponements of the Warrant Holders Meeting. If you sign and return the proxy card but do not provide instructions as to how to vote your warrants, your
warrants will be voted, in accordance with the recommendation of the RMG III Board, “FOR” the Warrant Amendment Proposal and “FOR” the Warrant Holders Adjournment Proposal.
Beneficial Owners
If your warrants are held in an account through a broker, bank or
other nominee or intermediary, such broker, bank or other nominee or intermediary is considered the RMG III warrant holder of record for purposes of voting at the Warrant Holders Meeting and you are considered the beneficial owner of such
warrants held in “street name” and this proxy statement/prospectus is being sent to you by such broker, bank or other nominee or intermediary. As a beneficial owner, you have the right to direct your broker, bank or other nominee or
intermediary regarding how to vote the warrants in your account by following the instructions that the broker, bank or other nominee or intermediary provides you along with this proxy statement/prospectus. Your broker, bank or other nominee or
intermediary may have an earlier deadline by which you must provide it with instructions as to how to vote your warrants, so you should read carefully the materials provided to you by your broker, bank or other nominee or intermediary.
If you wish to attend and vote your warrants at the Warrant Holders
Meeting, you must first obtain a legal proxy from your broker, bank or other nominee or intermediary that holds your warrants and email a copy (a legible photograph is sufficient) of your legal proxy to Continental at
proxy@continentalstock.com. Beneficial owners who email a valid legal proxy will be issued a 12-digit meeting control number that will allow them to register to attend and participate in the Warrant Holders Meeting. Beneficial owners who wish
to attend the Warrant Holders Meeting virtually should contact Continental no later than , 2023, to obtain this information. If you wish to attend and vote your warrants at the Warrant Holders Meeting in person, you must bring with you a
legal proxy from your broker, bank or other nominee or intermediary authorizing you to vote those warrants. That is the only way RMG III can be sure that the broker, bank or other nominee or intermediary has not already voted the RMG III
Warrants beneficially owned by you.
REVOKING YOUR PROXY
If you are an RMG III warrant holder of record and you give a proxy,
you may revoke it at any time before it is exercised by doing any one of the following:
•
|
you may send another proxy card with a later date;
|
•
|
you may notify RMG III’s Secretary in writing before the Warrant Holders Meeting that you have revoked your proxy; or
|
•
|
you may attend the Warrant Holders Meeting and vote electronically by visiting and entering the control number found on your
proxy card, instruction form or notice you previously received. Attendance at the Warrant Holders Meeting will not, in and of itself, revoke a proxy.
|
If your warrants are held in “street name” or are in a margin or
similar account, you should contact your broker, bank or other nominee or intermediary for information on how to change or revoke your voting instructions.
WHO CAN ANSWER YOUR QUESTIONS ABOUT VOTING YOUR SHARES
RMG III warrant holders who have questions about how to vote or
direct a vote in respect of RMG III Warrants or need assistance in completing or submitting their proxy cards should contact , RMG III’s proxy solicitor, at , or banks and brokers can call collect at , or by emailing .
TABLE OF CONTENTS
APPRAISAL RIGHTS AND DISSENTERS’ RIGHTS
None of RMG III shareholders, RMG III unit holders or RMG III warrant
holders have appraisal rights in connection with the Business Combination or the Domestication under the DGCL. None of RMG III shareholders have dissenters’ rights in connection with the Business Combination or the Domestication under Cayman
Islands law.
PROXY SOLICITATION COSTS
RMG III is soliciting proxies on behalf of the RMG III Board. This
solicitation is being made by mail but also may be made by telephone or in person. RMG III and its directors, officers and employees may also solicit proxies in person, by telephone or by other electronic means. RMG III will bear the cost of
the solicitation.
RMG III has hired to assist in the proxy solicitation process.
RMG III will pay that firm a fee of $ plus disbursements. Such fee will be paid from non-Trust Account funds.
RMG III will ask banks, brokers and other institutions, nominees and
fiduciaries to forward the proxy materials to their principals and to obtain their authority to execute proxies and voting instructions. RMG III will reimburse them for their reasonable expenses.
RMG III INITIAL SHAREHOLDERS
As of , 2023, the RMG III Record Date, the Initial Shareholders
of record were entitled to vote an aggregate of RMG III Private Placement Warrants and RMG III Public Warrants. Such warrants currently constitute 100% the outstanding RMG III Private Placement Warrants and none of the outstanding RMG
III Public Warrants. The RMG III Warrants will expire worthless if RMG III does not consummate a business combination by the Completion Window.
TABLE OF CONTENTS
WARRANT HOLDER PROPOSAL NO. 1—THE WARRANT AMENDMENT
PROPOSAL
Holders of RMG III Warrants are being asked to consider and vote upon
a proposal to approve and adopt the Warrant Agreement (the “Warrant Amendment Proposal”). RMG III warrant holders should carefully read this proxy statement/prospectus in its entirety for more detailed information concerning the Warrant
Amendment, a copy of which is attached as Annex J to this proxy statement/prospectus. You are urged to carefully read the Warrant Amendment in its entirety before voting on this Warrant Amendment Proposal.
VOTE REQUIRED FOR APPROVAL
The approval of this Warrant Amendment Proposal requires the
affirmative vote of at least 65% of each of (i) the then outstanding RMG III Public Warrants and (ii) the then outstanding RMG III Private Placement Warrants, each voting separately as a class. Abstentions and broker non-votes, while considered
present for purposes of establishing quorum, will count as a vote “AGAINST” the Warrant Amendment Proposal.
The Business Combination is conditioned upon the approval of the
Warrant Amendment Proposal. Therefore, if the Warrant Amendment Proposal is not approved, but the Business Combination Proposal and Condition Precedent Proposals are approved, the Business Combination will not proceed unless the condition
requiring the approval of the Warrant Amendment Proposal is waived.
The Initial Shareholders own 100% of the outstanding RMG III Private
Placement Warrants and none of the RMG III Public Warrants. Accordingly, it is expected that the RMG III Private Placement Warrants held by the Initial Shareholders will be voted in favor of the Warrant Amendment Proposal and only the
affirmative vote of at least 65% of the outstanding RMG III Public Warrants will be required to approve the Warrant Amendment Proposal. The RMG III Warrants will expire worthless if RMG III does not consummate an initial business combination by
the Completion Window.
RECOMMENDATION OF THE RMG III BOARD
THE RMG III BOARD UNANIMOUSLY RECOMMENDS THAT THE RMG III WARRANT
HOLDERS VOTE “FOR” THE APPROVAL OF THE WARRANT AMENDMENT PROPOSAL.
The existence of financial and personal interests
of one or more of RMG III’s directors may result in a conflict of interest on the part of such director(s) between what he, she or they may believe is in the best interests of RMG III and RMG III warrant holders shareholders and what he, she or
they may believe is best for himself, herself, or themselves in determining to recommend that RMG III warrant holders vote for the proposals. In addition, RMG III’s directors, executive officers and the Sponsor and its affiliates may have
interests in the Business Combination that may conflict with your interests as a RMG III warrant holder. See the section titled “Business Combination
Proposal — Interests of RMG III’s Directors, Executive Officers and the Sponsor and its Affiliates in the Business Combination” for a further discussion of these considerations.
TABLE OF CONTENTS
WARRANT HOLDERS PROPOSAL NO. 2—
THE WARRANT HOLDERS ADJOURNMENT PROPOSAL
In the event that the Warrant Amendment Proposal has not received
sufficient votes for approval, the holders of RMG III Warrants will be asked to consider and vote upon a proposal to adjourn the Warrant Holders Meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies
(the “Warrant Holders Adjournment Proposal”). The purpose of the Warrant Holders Adjournment Proposal is to permit further solicitation of proxies and votes and to provide additional time for RMG III
and the Sponsor to take steps or make arrangements that would increase the likelihood of obtaining approval of the Warrant Amendment Proposal. See “Business Combination Proposal — Interests of RMG III’s
Directors, Executive Officers and the Sponsor and its Affiliates in the Business Combination.”
VOTE REQUIRED FOR APPROVAL
The approval of this Warrant Amendment Proposal requires the
affirmative vote of at least 50% of the RMG III Warrants, in each case represented in person or by proxy and entitled to vote thereon and who vote at the Warrant Holders Meeting. Abstentions and broker non-votes, while considered present for
the purposes of establishing a quorum, will not count as votes cast on the Adjournment Proposal at the Warrant Holders Meeting.
The Initial Shareholders own 100% of the outstanding RMG III Private
Placement Warrants and none of the RMG III Public Warrants. Accordingly, it is expected that the RMG III Private Placement Warrants held by the Initial Shareholders will be voted in favor of the Warrant Amendment Proposal and such proposal will
not require any affirmative votes of the outstanding RMG III Public Warrants represented in person or by proxy and entitled to vote thereon and who vote at the Warrant Holders Meeting to approve the Warrant Holders Adjournment Proposal. The RMG
III Warrants will expire worthless if RMG III does not consummate an initial business combination by the Completion Window.
RECOMMENDATION OF THE RMG III BOARD
THE RMG III BOARD UNANIMOUSLY RECOMMENDS THAT THE RMG III WARRANT
HOLDERS VOTE “FOR” THE APPROVAL OF THE WARRANT AMENDMENT PROPOSAL.
The existence of financial and personal interests
of one or more of RMG III’s directors may result in a conflict of interest on the part of such director(s) between what he, she or they may believe is in the best interests of RMG III and RMG III warrant holders shareholders and what he, she or
they may believe is best for himself, herself, or themselves in determining to recommend that RMG III warrant holders vote for the proposals. In addition, RMG III’s directors, executive officers and the Sponsor and its affiliates may have
interests in the Business Combination that may conflict with your interests as a RMG III warrant holder. See the section titled “Business Combination Proposal — Interests of RMG III’s Directors, Executive
Officers and the Sponsor and its Affiliates in the Business Combination” for a further discussion of these considerations.
TABLE OF CONTENTS
INFORMATION ABOUT RMG III
Introduction
RMG III is a blank check company incorporated as a Cayman Islands
exempted company on December 23, 2020 for the purpose of effecting a merger, capital stock exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses. RMG III is an emerging growth
company and, as such, it is subject to all of the risks associated with emerging growth companies.
RMG III’s History
In December 2020, the Sponsor purchased 10,062,500 Founder Shares for
an aggregate purchase price of $25,000, or approximately $0.002 per share. On January 31, 2021, RMG III effectuated a 5-for-6 share split of the RMG III Class B Ordinary Shares, resulting in an aggregate outstanding amount of 12,075,000 Founder
Shares outstanding for an aggregate adjusted purchase price of approximately $0.002 per share. Prior to the initial investment in RMG III of $25,000 by the Sponsor, RMG III had no assets, tangible or intangible. The per share price of the
Founder Shares was determined by dividing the amount of cash contributed to RMG III by the number of Founder Shares issued. The number of Founder Shares issued was determined based on the expectation that the Founder Shares would represent 20%
of the outstanding RMG III Ordinary Shares upon completion of the Initial Public Offering.
The IPO Registration Statement was declared effective on February 4,
2021. On February 9, 2021, RMG III consummated the Initial Public Offering of 48,300,000 RMG III Units, including 6,300,000 RMG III Units issued pursuant to the exercise of the underwriters’ over-allotment option in full. The RMG III Units were
sold at a price of $10.00 per unit, generating gross proceeds of $483,000,000. Each whole Public Warrant is exercisable to purchase one RMG III Class A Ordinary Share at a price of $11.50 per share. Gross proceeds from the Initial Public
Offering were placed into the Trust Account.
Simultaneously with the closing of the Initial Public Offering,
RMG III consummated the sale of 8,216,330 RMG III Private Placement Warrants at a price of $1.50 per RMG III Private Placement Warrant in a private placement to the Sponsor, including 840,000 RMG III Private Placement Warrants issued pursuant
to the exercise of the underwriters’ over-allotment option in full, generating gross proceeds of $12,324,495. Each Private Placement Warrant is exercisable to purchase one RMG III Class A Ordinary Share at a price of $11.50 per share. The
proceeds from the sale of the RMG III Private Placement Warrants were added to the net proceeds from the Initial Public Offering held in the Trust Account.
On February 9, 2021, the RMG III Units began trading on the Nasdaq
Global Market under the symbol “RMGCU.” The securities comprising the RMG III Units began separate trading on March 29, 2021. Any underlying RMG III Class A Ordinary Shares and RMG III Public Warrants that were separated began trading on the
Nasdaq Global Market under the symbols “RMGC” and “RMGCW,” respectively.
On January 11, 2023, RMG III shareholders approved the Extension
Amendment. The Extension Amendment extends the date by which RMG III must consummate its initial business combination from February 9, 2023, to (i) May 9, 2023 or (ii) August 9, 2023, in the event RMG III has signed a definitive agreement with
respect to a Business Combination and has elected to extend the amount of time to complete a Business Combination for up to three times for an additional one month each time. If RMG III’s initial business combination is not consummated by
(i) May 9, 2023 or (ii) August 9, 2023, if applicable, then RMG III’s existence will terminate, and RMG III will distribute amounts in the Trust Account as provided in the RMG III Governing Documents.
RMG III Ordinary Shares Prior to the Business Combination
Public Shares Prior to the Business Combination
RMG III is providing Public Shareholders with the opportunity to
redeem all or a portion of their Public Shares upon the consummation of the Business Combination at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest (which interest shall
be net of taxes payable), divided by the number of then outstanding Public Shares, subject to the limitations described herein. The Initial Shareholders have entered into a letter agreement with us, pursuant to which they have agreed to waive
their redemption rights with respect to the Founder Shares and any Public Shares they may hold in connection with the completion of the Business Combination.
TABLE OF CONTENTS
The Business Combination will be consummated only if the Condition
Precedent Proposals are approved at the Special Meeting. The Initial Shareholders and their permitted transferees have agreed to vote their shares in favor of each of the Proposals. As a result, the affirmative vote of any of the Public Shares
is not required to approve the Condition Precedent Proposals. Public Shareholders may elect to redeem their Public Shares whether they vote for or against the Business Combination.
Pursuant to the RMG III Governing Documents, if RMG III has not
completed a business combination by the Completion Window, RMG III will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than 10 business days thereafter, redeem 100% of the
Public Shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest earned on the funds held in the Trust Account and not previously released to RMG III to pay its taxes
(less up to $100,000 of interest to pay dissolution expenses and which interest shall be net of taxes payable), divided by the number of then issued and outstanding Public Shares, which Redemption will completely extinguish Public Shareholders’
rights as shareholders (including the right to receive further liquidating distributions, if any), and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the RMG III’s remaining RMG III shareholders
and the RMG III Board, liquidate and dissolve, subject in each case to the RMG III’s obligations under Cayman Islands law to provide for claims of creditors and the requirements of other applicable law. If RMG III is not able to complete the
Business Combination or another initial business combination by the Completion Window, then the Initial Shareholders will be entitled to liquidating distributions from the Trust Account with respect to any Public Shares they hold.
RMG III shareholders have no preemptive or other subscription rights.
There are no sinking fund provisions applicable to the RMG III Ordinary Shares, except that RMG III will provide its Public Shareholders with the opportunity to redeem the Public Shares for cash equal to the pro rata share of the aggregate
amount then on deposit in the Trust Account, including interest earned on the funds held in the Trust Account and not previously released to RMG III to pay its taxes (which interest shall be net of taxes payable), upon the completion of an
initial business combination, subject to the limitations described herein.
Founder Shares
The Founder Shares, which are held solely by the Initial
Shareholders, are identical to the Public Shares sold in the Initial Public Offering, and holders of the Founder Shares have the same shareholder rights as Public Shareholders, except that (i) the Founder Shares are subject to certain transfer
restrictions, as described in more detail below, and (ii) the Initial Shareholders have entered into letter agreements with RMG III, pursuant to which they have agreed (A) to waive their redemption rights with respect to their Founder Shares
and Public Shares in connection with the completion of an initial business combination and (B) to waive their rights to liquidating distributions from the Trust Account with respect to their Founder Shares if RMG III fails to complete an
initial business combination by the Completion Window, although they will be entitled to liquidating distributions from the Trust Account with respect to any Public Shares they hold if RMG III fails to complete an initial business combination
within such time period.
With certain limited exceptions, the Founder Shares are not
transferable, assignable or salable (except to RMG III’s directors and officers and other persons or entities affiliated with the Sponsor, each of whom will be subject to the same transfer restrictions) until the earlier of: (A) one year after
the completion of an initial business combination; and (B) subsequent to an initial business combination (x) if the last reported sale price of the RMG III Class A Ordinary Shares equals or exceeds $12.00 per share (as adjusted for share
sub-divisions, share dividends, rights issuances, consolidations, reorganizations, recapitalizations and other similar transactions) for any 20 trading days within any 30-trading day period commencing at least 150 days after an initial business
combination or (y) the date on which RMG III completes a liquidation, merger, share exchange, reorganization or other similar transaction that results in all of the Public Shareholders having the right to exchange their Public Shares for cash,
securities or other property.
As of the RMG III Record Date, the Initial Shareholders own
approximately 95.0% of the issued and outstanding RMG III Ordinary Shares. Pursuant to the Sponsor Support Agreement, the Sponsor has agreed to, among other things, vote in favor of each of the Proposals presented at the Special Meeting,
including the Merger Agreement and the transactions contemplated thereby. Accordingly, it is expected that the RMG III
TABLE OF CONTENTS
Ordinary Shares held by the Initial Shareholders will be sufficient to approve each
Proposal. Assuming the Initial Shareholders all vote in favor of each Proposal and all shares held by them are represented at the Special Meeting, the affirmative vote of additional Public Shares is not required to approve any of the Proposals
to be presented thereat.
Preference Shares
The RMG III Governing Documents authorize 5,000,000 preferred shares
and provide that preference shares may be issued from time to time in one or more series. The RMG III Board will be authorized to fix the voting rights, if any, designations, powers, preferences, the relative, participating, optional or other
special rights and any qualifications, limitations and restrictions thereof, applicable to the shares of each series. The RMG III Board will be able to, without RMG III shareholder approval, issue preference shares with voting and other rights
that could adversely affect the voting power and other rights of the holders of the RMG III Ordinary Shares and could have anti-takeover effects. The ability of the RMG III Board to issue preference shares without RMG III shareholder approval
could have the effect of delaying, deferring or preventing a change of control of RMG III or the removal of existing management. RMG III has no preference shares issued and outstanding at the date of this proxy statement. Although RMG III does
not currently intend to issue any preference shares, RMG III cannot assure you that it will not do so in the future.
Warrants Prior to the Business Combination
If the Warrant Amendment Proposal and the Condition Precedent
Proposals are approved and the Business Combination is consummated, upon the effective time of the Domestication, each of the then outstanding RMG III Domesticated Warrants will be canceled and exchanged for the right to receive 0.075 shares
of Surviving Corporation Common Stock.
Redeemable Warrants
Each whole Public Warrant entitles the registered holder to purchase
one RMG III Class A Ordinary Share at a price of $11.50 per share, subject to adjustment as discussed below, at any time commencing 30 days after the completion of an initial business combination, except as described below. Pursuant to the
Warrant Agreement, a Public Warrant holder may exercise its RMG III Public Warrants only for a whole number of RMG III Class A Ordinary Shares. This means only a whole Public Warrant may be exercised at a given time by a Public Warrant holder.
No fractional RMG III Public Warrants have been or will be issued upon separation of the RMG III Units and only whole RMG III Public Warrants will trade. The RMG III Public Warrants will expire five years after the completion of an initial
business combination, at 5:00 p.m., New York City time, or earlier upon redemption or liquidation.
RMG III will not be obligated to issue or deliver any RMG III Class A
Ordinary Shares pursuant to the exercise of a Public Warrant and will have no obligation to settle such Public Warrant exercise unless a registration statement under the Securities Act covering the issuance of the RMG III Class A Ordinary
Shares issuable upon exercise of the RMG III Public Warrants is then effective and a current prospectus relating thereto is current, subject to RMG III satisfying its obligations described below with respect to registration, or a valid
exemption from registration is available, including in connection with a cashless exercise permitted as described. Except as described below, no Public Warrant will be exercisable for cash or on a cashless basis, and RMG III will not be
obligated to issue any shares to holders seeking to exercise their RMG III Public Warrants, unless the issuance of the shares upon such exercise is registered or qualified under the securities laws of the state of the exercising holder, or an
exemption is available. In the event that the conditions in the two immediately preceding sentences are not satisfied with respect to a Public Warrant, the holder of such Public Warrant will not be entitled to exercise such warrant and such
Public Warrant may have no value and expire worthless. In the event that a registration statement is not effective for the exercised RMG III Public Warrants, the purchaser of a RMG III Unit containing such Public Warrant will have paid the full
purchase price for the RMG III Unit solely for the RMG III Class A Ordinary Share underlying such RMG III Unit.
RMG III has agreed to, as soon as practicable but in no event later
than 15 business days, after the closing of an initial business combination, use its commercially reasonable efforts to file with the SEC a post-effective amendment to the IPO Registration Statement, under the Securities Act, of the RMG III
Class A Ordinary Shares issuable upon exercise of the RMG III Public Warrants, and RMG III will use its commercially reasonable efforts
TABLE OF CONTENTS
to cause the same to become effective within 60 business days after the closing of an
initial business combination and to maintain the effectiveness of such post-effective amendment or registration statement, and a current prospectus relating thereto, until the expiration of the RMG III Public Warrants in accordance with the
provisions of the Warrant Agreement.
If a registration statement covering the RMG III Class A Ordinary
Shares issuable upon exercise of the RMG III Public Warrants does not become effective within 60 business days after the closing of an initial business combination, holders of the RMG III Public Warrants will have the right, during any period
thereafter when there is no such effective registration statement, to exercise the RMG III Public Warrants on a cashless basis. Additionally, if, at the time that a Public Warrant is exercised, the RMG III Class A Ordinary Shares are not listed
on a national securities exchange such that they satisfy the definition of a “covered security” under Section 18(b)(1) of the Securities Act, RMG III may, at its option, require holders of the RMG III Public Warrants who exercise their warrants
to do so on a cashless basis in accordance with Section 3(a)(9) of the Securities Act and, in the event RMG III so elects, it will not be required to file or maintain in effect a registration statement, but will use its commercially reasonable
efforts to register or qualify the shares under applicable blue sky laws to the extent an exemption is not available.
In the event of a cashless exercise pursuant to the preceding
paragraph, each holder would pay the exercise price by surrendering the RMG III Public Warrants for that number of RMG III Class A Ordinary Shares equal to the quotient obtained by dividing (x) the product of the number of RMG III Class A
Ordinary Shares underlying the RMG III Public Warrants, multiplied by the excess of the “fair market value” (defined below) less the exercise price of the RMG III Warrants by (y) the fair market value. The “fair market value” as used in the
preceding sentence shall mean the volume weighted average price of the RMG III Class A Ordinary Shares for the 10 trading days ending on the trading day prior to the date on which the notice of exercise is received by the warrant agent.
Redemption of RMG III Public
Warrants. Once the RMG III Public Warrants become exercisable, RMG III may redeem the outstanding RMG III Public Warrants:
•
|
in whole and not in part;
|
•
|
at a price of $0.01 per Public Warrant;
|
•
|
upon not less than 30 days’ prior written notice of redemption to each Public Warrant holder; and
|
•
|
if and only if the last reported sale price of the RMG III Class A Ordinary Shares for any 20 trading days within a 30-trading
day period ending on the third trading day prior to the date on which RMG III sends the notice of redemption to the Public Warrant holders equals or exceeds $18.00 per share (as adjusted for adjustments to the number of shares issuable
upon exercise or the exercise price of a Public Warrant “ – Anti-dilution Adjustments”).
|
RMG III will not redeem the RMG III Public Warrants as described
above unless a registration statement under the Securities Act covering the issuance of the RMG III Class A Ordinary Shares issuable upon exercise of the RMG III Public Warrants is then effective and a current prospectus relating to those RMG
III Class A Ordinary Shares is available throughout the 30-day redemption period or RMG III has elected to require the exercise of the RMG III Public Warrants on a cashless basis as described below. If and when the RMG III Public Warrants
become redeemable by RMG III, it may exercise its redemption right even if it is unable to register or qualify the underlying securities for sale under all applicable state securities laws. If RMG III calls the RMG III Public Warrants for
redemption as described in this paragraph, its management will have the option to require any holder that wishes to exercise his, her or its Public Warrant following the notice of redemption to do so on a cashless basis. In the case of such a
cashless exercise, each holder would pay the exercise price by surrendering the RMG III Public Warrants for that number of RMG III Class A Ordinary Shares equal to the quotient obtained by dividing (x) the product of the number of the RMG III
Class A Ordinary Shares underlying the RMG III Public Warrants, multiplied by the excess of the “fair market value” less the exercise price of the RMG III Warrants by (y) the fair market value. The “fair market value” as used in the preceding
sentence shall mean the volume weighted average price of the RMG III Class A Ordinary Shares for the 10 trading days ending on the trading day prior to the date on which the notice of redemption is sent to the holders of the RMG III Public
TABLE OF CONTENTS
Warrants. If RMG III’s management takes advantage of this option, the notice of
redemption will contain the information necessary to calculate the number of shares of RMG III Class A Ordinary Shares to be received upon exercise of the RMG III Public Warrants, including the “fair market value” in such case.
RMG III established the last of the redemption criterion discussed
above to prevent a redemption call unless there is at the time of the call a significant premium to the Public Warrant exercise price. If the foregoing conditions are satisfied and RMG III issues a notice of redemption of the RMG III Public
Warrants, each Public Warrant holder will be entitled to exercise his, her or its Public Warrant prior to the scheduled redemption date. However, the price of the RMG III Class A Ordinary Shares may fall below the $18.00 redemption trigger
price (as adjusted for adjustments to the number of shares issuable upon exercise or the exercise price of a Public Warrant as described under the heading “ – Anti-dilution Adjustments”) as well as the
$11.50 (for whole shares) Public Warrant exercise price after the redemption notice is issued.
Redemption procedures. A holder of a Public Warrant may notify RMG III in writing in the event it elects to be subject to a requirement that such holder will not have the right to exercise such Public Warrant, to
the extent that after giving effect to such exercise, such person (together with such person’s affiliates), to the warrant agent’s actual knowledge, would beneficially own in excess of 9.8% (or such other amount as a holder may specify) of
the RMG III Class A Ordinary Shares issued and outstanding immediately after giving effect to such exercise.
Anti-dilution Adjustments. If the number of issued and outstanding RMG III Class A Ordinary Shares is increased by a capitalization or share dividend payable in RMG III Class A Ordinary Shares, or by a split-up of RMG
III Class A Ordinary Shares or similar event, then, on the effective date of such capitalization or share dividend, split-up or similar event, the number of RMG III Class A Ordinary Shares issuable on exercise of each Public Warrant will be
increased in proportion to such increase in the issued and outstanding RMG III Class A Ordinary Shares. A rights offering made to all or substantially all holders of RMG III Class A Ordinary Shares entitling holders to purchase RMG III
Class A Ordinary Shares at a price less than the “historical fair market value” (as defined below) will be deemed a share dividend of a number of RMG III Class A Ordinary Shares equal to the product of (i) the number of RMG III Class A
Ordinary Shares actually sold in such rights offering (or issuable under any other equity securities sold in such rights offering that are convertible into or exercisable for RMG III Class A Ordinary Shares) and (ii) one minus the quotient of
(x) the price per RMG III Class A Ordinary Share paid in such rights offering and (y) the historical fair market value. For these purposes, (i) if the rights offering is for securities convertible into or exercisable for RMG III Class A
Ordinary Shares, in determining the price payable for RMG III Class A Ordinary Shares, there will be taken into account any consideration received for such rights, as well as any additional amount payable upon exercise or conversion and (ii)
“historical fair market value” means the volume weighted average price of RMG III Class A Ordinary Shares during the 10 trading day period ending on the trading day prior to the first date on which the RMG III Class A Ordinary Shares trade on
the applicable exchange or in the applicable market, regular way, without the right to receive such rights.
In addition, if RMG III, at any time while the RMG III Public
Warrants are outstanding and unexpired, pay to all or substantially all of the holders of RMG III Class A Ordinary Shares a dividend or make a distribution in cash, securities or other assets to the holders of RMG III Class A Ordinary Shares on
account of such RMG III Class A Ordinary Shares (or other securities into which the RMG III Public Warrants are convertible), other than (i) as described above, (ii) any cash dividends or cash distributions which, when combined on a per share
basis with all other cash dividends and cash distributions paid on the RMG III Class A Ordinary Shares during the 365-day period ending on the date of declaration of such dividend or distribution does not exceed $0.50 (as adjusted for share
sub-divisions, share dividends, rights issuances, consolidations, reorganizations, recapitalizations and other similar transactions) but only with respect to the amount of the aggregate cash dividends or cash distributions equal to or less than
$0.50 per share, (iii) to satisfy the redemption rights of the holders of RMG III Class A Ordinary Shares in connection with a proposed business combination, (iv) to satisfy the redemption rights of the holders of Class A ordinary shares in
connection with a RMG III shareholder vote to amend the RMG III Governing Documents (1) to modify the substance or timing of RMG III’s obligation to allow redemption in connection with an initial business combination or to redeem 100% of the
Public Shares if RMG III does not complete an initial business combination by the Completion Window or (2) with respect to any other provision relating to RMG III shareholders’ rights or pre-initial business combination activity, or (v) in
connection with the redemption of the Public Shares upon RMG III’s failure to complete an initial business
TABLE OF CONTENTS
combination, then the Public Warrant exercise price will be decreased, effective
immediately after the effective date of such event, by the amount of cash and/or the fair market value of any securities or other assets paid on each RMG III Class A Ordinary Share in respect of such event.
If the number of issued and outstanding RMG III Class A Ordinary
Shares is decreased by a consolidation, combination, reverse share sub-division or reclassification of RMG III Class A Ordinary Shares or other similar event, then, on the effective date of such consolidation, combination, reverse share
sub-division, reclassification or similar event, the number of RMG III Class A Ordinary Shares issuable on exercise of each Public Warrant will be decreased in proportion to such decrease in issued and outstanding RMG III Class A Ordinary
Shares.
Whenever the number of RMG III Class A Ordinary Shares purchasable
upon the exercise of the RMG III Public Warrants is adjusted, as described above, the Public Warrant exercise price will be adjusted by multiplying the Public Warrant exercise price immediately prior to such adjustment by a fraction (x) the
numerator of which will be the number of RMG III Class A Ordinary Shares purchasable upon the exercise of the RMG III Public Warrants immediately prior to such adjustment and (y) the denominator of which will be the number of RMG III Class A
Ordinary Shares so purchasable immediately thereafter.
In addition, if (x) RMG III issues additional RMG III Ordinary Shares
or equity-linked securities for capital raising purposes in connection with the closing of a business combination at an issue price or effective issue price of less than $9.20 per RMG III Ordinary Share (with such issue price or effective issue
price to be determined in good faith by the RMG III Board and, in the case of any such issuance to the Sponsor or its affiliates, without taking into account the Founder Shares held by the Sponsor or such affiliates, as applicable, prior to
such issuance) (the “Newly Issued Price”), (y) the aggregate gross proceeds from such issuances represent more than 60% of the total equity proceeds, and interest thereon, available for the funding of an
initial business combination on the date of the completion of such business combination (net of redemptions), and (z) the volume weighted average trading price of the RMG III Class A Ordinary Shares during the 20 trading day period starting on
the trading day prior to the day on which RMG III consummates such initial business combination (such price, the “Market Value”) is below $9.20 per share, the exercise price of the RMG III Public
Warrants will be adjusted (to the nearest cent) to be equal to 115% of the higher of the Market Value and the Newly Issued Price, the $18.00 per share redemption trigger price described above under “—Redemption
of RMG III Public Warrants” will be adjusted (to the nearest cent) to be equal to 180% of the higher of the Market Value and the Newly Issued Price.
In case of any reclassification or reorganization of the issued and
outstanding RMG III Class A Ordinary Shares (other than those described above or that solely affects the par value of such RMG III Class A Ordinary Shares), or in the case of a merger or consolidation of RMG III with or into another corporation
(other than a merger or consolidation in which RMG III is the continuing corporation and that does not result in any reclassification or reorganization of the issued and outstanding RMG III Class A Ordinary Shares), or in the case of any sale
or conveyance to another corporation or entity of the assets or other property of RMG III as an entirety or substantially as an entirety in connection with which RMG III is dissolved, the holders of the RMG III Public Warrants will thereafter
have the right to purchase and receive, upon the basis and upon the terms and conditions specified in the RMG III Public Warrants and in lieu of the RMG III Class A Ordinary Shares immediately theretofore purchasable and receivable upon the
exercise of the rights represented thereby, the kind and amount of shares, stock or other equity securities or property (including cash) receivable upon such reclassification, reorganization, merger or consolidation, or upon a dissolution
following any such sale or transfer, that the holder of the RMG III Public Warrants would have received if such holder had exercised their RMG III Public Warrants immediately prior to such event. However, if such holders were entitled to
exercise a right of election as to the kind or amount of securities, cash or other assets receivable upon such merger or consolidation, then the kind and amount of securities, cash or other assets for which each Public Warrant will become
exercisable will be deemed to be the weighted average of the kind and amount received per share by such holders in such merger or consolidation that affirmatively make such election, and if a tender, exchange or redemption offer has been made
to and accepted by such holders (other than a tender, exchange or redemption offer made by RMG III in connection with redemption rights held by RMG III shareholders as provided for in the RMG III Governing Documents or as a result of the
redemption of RMG III Class A Ordinary Shares by RMG III if a proposed business combination is presented to RMG III shareholders for approval) under circumstances in which, upon completion of such tender or exchange offer, the maker thereof,
together with members of any group (within the meaning of Rule 13d-5(b)(1) under the Exchange Act) of which such maker is
TABLE OF CONTENTS
a part, and together with any affiliate or associate of such maker (within the
meaning of Rule 12b-2 under the Exchange Act) and any members of any such group of which any such affiliate or associate is a part, own beneficially (within the meaning of Rule 13d-3 under the Exchange Act) (x) if prior to the initial business
combination, more than 50% of the issued and outstanding ordinary shares or (y) if on or after the initial business combination, securities representing more than 50% of the aggregate voting power represented by the issued and outstanding
shares of RMG III, the holder of a warrant will be entitled to receive the highest amount of cash, securities or other property to which such holder would actually have been entitled as a RMG III shareholder if such RMG III warrant holder had
exercised the warrant prior to the expiration of such tender or exchange offer, accepted such offer and all of the RMG III Class A Ordinary Shares held by such holder had been purchased pursuant to such tender or exchange offer, subject to
adjustment (from and after the consummation of such tender or exchange offer) as nearly equivalent as possible to the adjustments provided for in the Warrant Agreement. Additionally, if less than 70% of the consideration receivable by the
holders of RMG III Class A Ordinary Shares in such a transaction is payable in the form of RMG III Ordinary Shares in the successor entity that is listed for trading on a national securities exchange or is quoted in an established
over-the-counter market, or is to be so listed for trading or quoted immediately following such event, and if the registered holder of the Public Warrant properly exercises it within 30 days following public disclosure of such transaction, the
Public Warrant exercise price will be reduced as specified in the Warrant Agreement based on the per share consideration minus Black-Scholes Warrant Value (as defined in the Warrant Agreement) of the Public Warrant.
The RMG III Public Warrants will be issued in registered form under
the Warrant Agreement between Continental, as warrant agent, and RMG III. The Warrant Agreement provides that (a) the terms of the RMG III Public Warrants may be amended without the consent of any holder for the purpose of (i) curing any
ambiguity or correct any mistake, including to conform the provisions of the Warrant Agreement to the description of the terms of the RMG III Public Warrants and the Warrant Agreement set forth in the IPO Registration Statement, or defective
provision (ii) removing or reducing RMG III’s ability to redeem the RMG III Public Warrants and, if applicable, a corresponding amendment to RMG III’s ability to redeem the RMG III Private Placement Warrants or (iii) adding or changing any
provisions with respect to matters or questions arising under the Warrant Agreement as the parties to the Warrant Agreement may deem necessary or desirable and that the parties deem to not adversely affect the rights of the registered holders
of the RMG III Public Warrants under the Warrant Agreement in any material respect, (b) the terms of the warrants may be amended with the vote or written consent of at least 50% of the then outstanding RMG III Public Warrants and RMG III
Private Placement Warrants, voting together as a single class, to allow for the RMG III Warrants to be classified as equity in RMG III’s financial statements and (c) all other modifications or amendments to the Warrant Agreement with respect to
the RMG III Public Warrants require the vote or written consent of at least 50% of the then outstanding RMG III Public Warrants and amending the Warrant Agreement with respect to the RMG III Private Placement Warrants will require a vote of
holders of at least 50% of the then outstanding RMG III Private Placement Warrants.
The Public Warrant holders do not have the rights or privileges of
holders of RMG III Class A Ordinary Shares or any voting rights until they exercise their RMG III Public Warrants and receive RMG III Class A Ordinary Shares. After the issuance of RMG III Class A Ordinary Shares upon exercise of the RMG III
Public Warrants, each holder will be entitled to one vote for each share held of record on all matters to be voted on by RMG III shareholders.
No fractional RMG III Public Warrants will be issued upon separation
of the RMG III Units and only whole RMG III Public Warrants will trade.
RMG III has agreed that, subject to applicable law, any action,
proceeding or claim against RMG III arising out of or relating in any way to the Warrant Agreement will be brought and enforced in the courts of the State of New York or the United States District Court for the Southern District of New York,
and RMG III will irrevocably submit to such jurisdiction, which jurisdiction will be the exclusive forum for any such action, proceeding or claim. This provision applies to claims under the Securities Act but does not apply to claims under the
Exchange Act or any claim for which the federal district courts of the United States of America are the sole and exclusive forum.
In order to finance transaction costs in connection with an initial
business combination, RMG Acquisition Management provided to RMG III a $500,000 loan for working capital purposes, evidenced by the January 2022 Note issued by RMG III to RMG Acquisition Management, effective as of January 19, 2022, pursuant to
which
TABLE OF CONTENTS
RMG Acquisition Management agreed to provide RMG III up to an aggregate of $500,000
in loans for working capital purposes. RMG Acquisition Management further provided to RMG III a $250,000 loan for working capital purposes, evidenced by the July 2022 Note issued by RMG III to RMG Acquisition Management, effective as of July
27, 2022, pursuant to which RMG Acquisition Management agreed to provide RMG III up to an aggregate of $475,000 in loans for working capital purposes. The January 2022 Note and the July 2022 Note are each non-interest bearing and become due and
payable in full by RMG III upon the consummation of a business combination. Any unpaid principal balance of the January 2022 Note and the July 2022 Note will be repaid in cash upon the consummation of the Business Combination.
RMG III Private Placement Warrants
The RMG III Private Placement Warrants (including the RMG III Class A
Ordinary Shares issuable upon exercise of the RMG III Private Placement Warrants) will not be transferable, assignable or salable until 30 days after the completion of an initial business combination and they will not be redeemable by RMG III.
The holders of the RMG III Private Placement Warrants have the option to exercise the RMG III Private Placement Warrants on a cashless basis and have certain registration rights described herein. In addition, the RMG III Private Placement
Warrants held by the employees of RMG III will not be exercisable more than five years from the commencement of sales of the Initial Public Offering in accordance with FINRA Rule 5110(g)(8)(A). Otherwise, the RMG III Private Placement Warrants
have terms and provisions that are identical to those of the RMG III Public Warrants.
If holders of the RMG III Private Placement Warrants elect to
exercise them on a cashless basis, they would pay the exercise price by surrendering his, her or its RMG III Private Placement Warrants for that number of RMG III Class A Ordinary Shares equal to the quotient obtained by dividing (x) the
product of the number of the RMG III Class A Ordinary Shares underlying the RMG III Private Placement Warrants, multiplied by the excess of the “Sponsor Fair Market Value” (defined below) less the
exercise price of the RMG III Private Placement Warrants by (y) the Sponsor Fair Market Value. For these purposes, the “Sponsor Fair Market Value” shall mean the average last reported sale price of the RMG III Class A Ordinary Shares for the 10
trading days ending on the third trading day prior to the date on which the notice of warrant exercise is sent to the warrant agent. The reason that RMG III agreed that the RMG III Private Placement Warrants will be exercisable on a cashless
basis is because it was not known at that time whether the holders would be affiliated with RMG III following a business combination. If they remain affiliated with RMG III, their ability to sell RMG III’s securities in the open market will be
significantly limited. RMG III expects to have policies in place that restrict insiders from selling RMG III’s securities except during specific periods of time. Even during such periods of time when insiders will be permitted to sell RMG III’s
securities, an insider cannot trade in RMG III’s securities if he or she is in possession of material non-public information. Accordingly, unlike Public Shareholders who could exercise their RMG III Public Warrants and sell the RMG III Class A
Ordinary Shares received upon such exercise freely in the open market in order to recoup the cost of such exercise, the insiders could be significantly restricted from selling such securities. As a result, RMG III believes that allowing the
holders to exercise the RMG III Private Placement Warrants on a cashless basis is appropriate.
Redemption Rights for Holders of Public Shares
RMG III is providing Public Shareholders with the opportunity to
redeem all or a portion of their Public Shares upon the completion of the Business Combination at a per share price, payable in cash, equal to (i) the aggregate amount then on deposit in the Trust Account as of two business days prior to the
Closing, including interest earned on the funds held in the Trust Account and not previously released to RMG III to pay its taxes, divided by (ii) the number of then-outstanding Public Shares, subject to the limitations described herein. The
amount in the Trust Account as of , 2023, the RMG III Record Date, was approximately $ per Public Share. The per share amount RMG III will distribute to Public Shareholders who properly redeem their shares will not be reduced by any
deferred underwriting commissions that it pays to the IPO Underwriters or another FINRA member. There will be no redemption rights upon the completion of the Business Combination with respect to the RMG III Warrants. The redemption rights will
include the requirement that any beneficial owner on whose behalf a redemption right is being exercised must identify itself in order to validly redeem its shares. The Initial Shareholders have entered into a letter agreement with RMG III
pursuant to which they have agreed to waive their redemption rights with respect to any Founder Shares they hold and any Public Shares they may acquire in connection with the completion of the Business Combination. These waivers were made at
the time of the Initial Public Offering for no additional consideration.
TABLE OF CONTENTS
Permitted Purchases of RMG III’s Securities
If RMG III seeks RMG III shareholder approval of the Business
Combination and it does not conduct redemptions in connection with the Business Combination pursuant to the tender offer rules, the Sponsor, RMG III’s directors, executive officers, advisors or their affiliates may purchase RMG III Class A
Ordinary Shares or RMG III Public Warrants in privately negotiated transactions or in the open market either prior to or following the completion of the Business Combination. There is no limit on the number of RMG III Class A Ordinary Shares
the Sponsor, RMG III’s directors, executive officers, advisors or their affiliates may purchase in such transactions, subject to compliance with applicable law, including Rule 14e-5 under the Exchange Act, and Nasdaq rules. However, they have
no current commitments, plans or intentions to engage in such transactions and have not formulated any terms or conditions for any such transactions. None of the funds in the Trust Account will be used to purchase RMG III Class A Ordinary
Shares or RMG III Public Warrants in such transactions. If they engage in such transactions, they will be restricted from making any such purchases when they are in possession of any material non-public information not disclosed to the seller
or if such purchases are prohibited by Regulation M under the Exchange Act.
In the event that the Sponsor, RMG III’s directors, executive
officers, advisors or their affiliates purchase RMG III Class A Ordinary Shares in privately negotiated transactions from Public Shareholders who have already elected to exercise their redemption rights, such selling shareholders would be
required to revoke their prior elections to redeem their RMG III Class A Ordinary Shares. RMG III does not currently anticipate that such purchases, if any, would constitute a tender offer subject to the tender offer rules under the Exchange
Act or a going-private transaction subject to the going-private rules under the Exchange Act; however, if the purchasers determine at the time of any such purchases that the purchases are subject to such rules, the purchasers will comply with
such rules.
The purpose of any such purchases of RMG III Class A Ordinary
Shares could be to (i) increase the likelihood of obtaining RMG III shareholder approval of the Business Combination or (ii) satisfy a closing condition pursuant to the Merger Agreement that requires RMG III to have a minimum net worth or a
certain amount of cash at the Closing, where it appears that such requirement would otherwise not be met. The purpose of any such purchases of RMG III Public Warrants could be to reduce the number of RMG III Public Warrants outstanding or to
vote such warrants on any matters submitted to the RMG III warrant holders for approval in connection with a business combination. Any such purchases of RMG III securities may result in the completion of the Business Combination that may not
otherwise have been possible. Further, in the event that the Sponsor, RMG III’s directors, executive officers, advisors or any of their respective affiliates were to purchase RMG III Class A Ordinary Shares in privately negotiated
transactions, such purchases would be structured in compliance with the requirements of Rule 14e-5 under the Exchange Act, including, in relevant part, through adherence to the following:
•
|
This proxy statement/prospectus discloses the possibility that the Sponsor, RMG III’s directors, executive officers, advisors
or any of their respective affiliates may purchase RMG III Class A Ordinary Shares outside the redemption process, along with the purpose of such purchases;
|
•
|
If the Sponsor, RMG III’s directors, executive officers, advisors or any of their respective affiliates were to purchase
RMG III Class A Ordinary Shares:
|
○
|
the Sponsor and such directors, executive officers, advisors or affiliates would do so at a
price no higher than the price offered through the redemption process;
|
○
|
such purchased RMG III Class A Ordinary Shares would not be voted in favor of approving the Business
Combination;
|
○
|
the Sponsor and such directors, executive officers, advisors or affiliates would not possess
any redemption rights with respect to such purchased RMG III Class A Ordinary Shares or, if they do acquire and possess redemption rights, they would waive such rights; and
|
•
|
RMG III would disclose in a Current Report on Form 8-K, before the Special Meeting, the following:
|
○
|
the amount of RMG III Class A Ordinary Shares purchased outside of the redemption offer by the
Sponsor, RMG III’s directors, executive officers, advisors or any of their respective affiliates, along with the purchase price;
|
TABLE OF CONTENTS
○
|
the purpose of such purchases;
|
○
|
the impact, if any, of such purchases on the likelihood that a business combination will be approved;
|
○
|
the identities of our selling shareholders for such purchases (if not purchased on the open
market) or the nature of our stockholders (e.g., 5% stockholders) who sold to the Sponsor, RMG III’s directors, executive officers, advisors or any of their respective affiliates; and
|
○
|
the number of our RMG III Class A Ordinary Shares for which we have received redemption requests
pursuant to the redemption offer.
|
In addition, if such purchases are made, the public “float” of RMG
III Class A Ordinary Shares or RMG III Public Warrants may be reduced and the number of beneficial holders of RMG III’s securities may be reduced, which may make it difficult to maintain or obtain the quotation, listing or trading of RMG III’s
securities on a national securities exchange.
The Sponsor, RMG III’s directors, executive officers and/or their
affiliates anticipate that they may identify RMG III shareholders with whom the Sponsor, RMG III’s directors, executive officers or their affiliates may pursue privately negotiated purchases by either RMG III shareholders contacting us
directly or by our receipt of redemption requests submitted by RMG III shareholders (in the case of RMG III Class A Ordinary Shares) following our mailing of proxy materials in connection with the Business Combination. To the extent that the
Sponsor, RMG III’s directors, executive officers, advisors or their affiliates enter into a private purchase, they would identify and contact only potential selling shareholders who have expressed their election to redeem their RMG III
Class A Ordinary Shares for a pro rata share of the Trust Account or vote against the Business Combination, whether or not such RMG III shareholder has already submitted a proxy with respect to the Business Combination, but only if such
RMG III Class A Ordinary Shares have not already been voted at the shareholder meeting related to the Business Combination. The Sponsor, RMG III’s directors, executive officers, advisors or any of their affiliates will select which RMG III
shareholders to purchase RMG III Class A Ordinary Shares from based on a negotiated price and number of RMG III Class A Ordinary Shares and any other factors that they may deem relevant, and will only purchase RMG III Class A Ordinary Shares
if such purchases comply with Regulation M under the Exchange Act and the other federal securities laws. The Sponsor, RMG III’s directors, executive officers and/or their affiliates will be restricted from making purchases of RMG III Class A
Ordinary Shares if the purchases would violate Section 9(a)(2) of, or Rule 10b-5 under, the Exchange Act. We expect any such purchases will be reported pursuant to Section 13 and Section 16 of the Exchange Act to the extent such purchases are
subject to such reporting requirements.
Redemption of Public Shares and Liquidation if No Business
Combination
If RMG III has not completed the Business Combination or another
business combination by the Completion Window, RMG III will: (i) cease all operations except for the purpose of winding up; (ii) as promptly as reasonably possible but not more than 10 business days thereafter, redeem all of the Public Shares,
at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest (less up to $100,000 of interest to pay dissolution expenses and which interest will be net of taxes payable), divided
by the number of then issued and outstanding Public Shares, which redemption will completely extinguish Public Shareholders’ rights as shareholders (including the right to receive further liquidating distributions, if any); and (iii) as
promptly as reasonably possible following such redemption, subject to the approval of RMG III’s remaining RMG III shareholders and the RMG III Board, liquidate and dissolve, subject in each case to its obligations under Cayman Islands law to
provide for claims of creditors and the requirements of other applicable law.
The Sponsor and RMG III’s directors, officers and Initial
Shareholders and their permitted transferees have entered into a letter agreement with RMG III, pursuant to which they have waived their rights to liquidating distributions from the Trust Account with respect to their RMG III Class B Ordinary
Shares if RMG III fails to complete its business combination within the required time period. However, if the Sponsor (including RMG III’s directors, officers and Initial Shareholders and their permitted transferees) or any of its respective
affiliates owns any Public Shares, they will be entitled to liquidating distributions from the Trust Account with respect to such Public Shares if RMG III fails to complete its business combination within the allotted time period.
TABLE OF CONTENTS
The Sponsor and RMG III’s directors, officers and Initial
Shareholders and their permitted transferees have agreed, pursuant to a written agreement with RMG III, that they will not propose any amendment to the RMG III Governing Documents (A) to modify the substance or timing of RMG III’s obligation
to allow for redemption in connection with RMG III’s initial business combination or to redeem 100% of its Public Shares if it does not complete its business combination by February 9, 2024 (or if such date is further extended at a duly
called extraordinary general meeting, such later date) or (B) with respect to any other provision relating to RMG III shareholders’ rights or pre-initial business combination activity, unless RMG III provides its Public Shareholders with the
opportunity to redeem their Public Shares upon approval of any such amendment at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest (which interest will be net of taxes
payable), divided by the number of then outstanding Public Shares.
RMG III expects that all costs and expenses associated with
implementing its plan of dissolution, as well as payments to any creditors, will be funded from amounts held outside the Trust Account, although it cannot assure you that there will be sufficient funds for such purpose. However, if those funds
are not sufficient to cover the costs and expenses associated with implementing RMG III’s plan of dissolution, to the extent that there is any interest accrued in the Trust Account not required to pay taxes, expenses relating to the
administration of the trust account or limited withdrawals for working capital, RMG III may request the trustee to release to it an additional amount of up to $100,000 of such accrued interest to pay those costs and expenses.
The proceeds deposited in the Trust Account could, however, become
subject to the claims of RMG III’s creditors, which would have higher priority than the claims of the Public Shareholders. RMG III cannot assure you that the actual per-share redemption amount received by Public Shareholders will not be
substantially less than $10.00. While RMG III intends to pay such amounts, if any, RMG III cannot assure you that RMG III will have funds sufficient to pay or provide for all creditors’ claims.
Although RMG III will seek to have all vendors, service providers
(other than RMG III’s independent auditors), prospective target businesses and other entities with which RMG III does business execute agreements with it waiving any right, title, interest or claim of any kind in or to any monies held in the
Trust Account for the benefit of RMG III’s Public Shareholders, there is no guarantee that they will execute such agreements or even if they execute such agreements that they would be prevented from bringing claims against the Trust Account,
including but not limited to fraudulent inducement, breach of fiduciary responsibility or other similar claims, as well as claims challenging the enforceability of the waiver, in each case, in order to gain an advantage with respect to a claim
against RMG III’s assets, including the funds held in the Trust Account. If any third party refuses to execute an agreement waiving such claims to the monies held in the Trust Account, RMG III’s management will perform an analysis of the
alternatives available to it and will enter into an agreement with a third party that has not executed a waiver only if management believes that such third party’s engagement would be significantly more beneficial to RMG III than any
alternative. Examples of possible instances where RMG III may engage a third party that refuses to execute a waiver include the engagement of a third party consultant whose particular expertise or skills are believed by management to be
significantly superior to those of other consultants that would agree to execute a waiver or in cases where RMG III is unable to find a service provider willing to execute a waiver. In addition, there is no guarantee that such entities will
agree to waive any claims they may have in the future as a result of, or arising out of, any negotiations, contracts or agreements with RMG III and will not seek recourse against the Trust Account for any reason. Upon redemption of the Public
Shares, if RMG III has not completed a business combination within the Completion Window, or upon the exercise of a redemption right in connection with RMG III’s initial business combination, RMG III will be required to provide for payment of
claims of creditors that were not waived that may be brought against it within the 10 years following redemption. In order to protect the amounts held in the Trust Account, the Sponsor has agreed that it will be liable to RMG III if and to the
extent any claims by a third party (other than RMG III’s independent auditors) for services rendered or products sold to RMG III, or a prospective target business with which RMG III has discussed entering into a transaction agreement, reduce
the amount of funds in the Trust Account to below (i) $10.00 per Public Share or (ii) such lesser amount per Public Share held in the Trust Account as of the date of the liquidation of the Trust Account, due to reductions in value of the trust
assets, in each case, net of the amount of interest which may be withdrawn to pay taxes, expenses relating to the administration of the trust account and limited withdrawals for working capital, except as to any claims by a third party who
executed a waiver of any and all rights to seek access to the Trust Account and except as to any claims under RMG III’s indemnity of the IPO Underwriters against certain liabilities, including liabilities under the Securities Act. In the event
that an executed waiver is deemed to be unenforceable against a third party, then
TABLE OF CONTENTS
the Sponsor will not be responsible to the extent of any liability for such
third-party claims. RMG III has not independently verified whether the Sponsor has sufficient funds to satisfy its indemnity obligations and RMG III believes that the Sponsor’s only assets are securities of RMG III and, therefore, the Sponsor
may not be able to satisfy those obligations. None of RMG III’s other directors or officers will indemnify it for claims by third parties including, without limitation, claims by vendors and prospective target businesses.
In the event that the proceeds in the Trust Account are reduced below
(i) $10.00 per Public Share or (ii) such lesser amount per Public Share held in the Trust Account as of the date of the liquidation of the Trust Account, due to reductions in value of the trust assets, in each case, net of the amount of
interest which may be withdrawn to pay taxes expenses relating to the administration of the trust account and limited withdrawals for working capital, and the Sponsor asserts that it is unable to satisfy its indemnification obligations or that
it has no indemnification obligations related to a particular claim, RMG III’s independent directors would determine whether to take legal action against the Sponsor to enforce its indemnification obligations. While RMG III currently expects
that RMG III’s independent directors would take legal action on RMG III’s behalf against the Sponsor to enforce its indemnification obligations to RMG III, it is possible that RMG III’s independent directors, in exercising their business
judgment, may choose not to do so in any particular instance. Accordingly, RMG III cannot assure you that, due to claims of creditors, the actual value of the per- share redemption price will not be substantially less than $10.00 per share.
RMG III will seek to reduce the possibility that the Sponsor will
have to indemnify the Trust Account due to claims of creditors by endeavoring to have all vendors, service providers (other than RMG III’s independent auditors), prospective target businesses and other entities with which RMG III does business
execute agreements waiving any right, title, interest or claim of any kind in or to monies held in the Trust Account. The Sponsor will also not be liable as to any claims under RMG III’s indemnity of the IPO Underwriters against certain
liabilities, including liabilities under the Securities Act.
If RMG III files a winding-up or bankruptcy petition or an
involuntary winding-up or bankruptcy petition is filed against it that is not dismissed, the proceeds held in the Trust Account could be subject to applicable insolvency law, and may be included in RMG III’s insolvency estate and subject to the
claims of third parties with priority over the claims of RMG III shareholders. To the extent any insolvency claims deplete the Trust Account, RMG III cannot assure you it will be able to return $10.00 per share to the Public Shareholders.
Additionally, if RMG III files a winding-up or bankruptcy petition or an involuntary winding-up or bankruptcy petition is filed against it that is not dismissed, any distributions received by Public Shareholders could be viewed, under
applicable debtor/creditor and/or insolvency laws, as a voidable performance. As a result, a bankruptcy court could seek to recover some or all amounts received by RMG III shareholders.
Furthermore, the RMG III Board may be viewed as having breached its
fiduciary duty to RMG III’s creditors or may have acted in bad faith, and thereby exposing itself and RMG III to claims of punitive damages, by paying Public Shareholders from the Trust Account prior to addressing the claims of creditors. RMG
III cannot assure you that claims will not be brought against it for these reasons.
RMG III’s Public Shareholders will be entitled to receive funds from
the Trust Account only upon the earliest to occur of: (i) RMG III’s completion of an initial business combination, and then only in connection with those Public Shares that such Public Shareholder properly elected to redeem, subject to the
limitations described herein; (ii) the redemption of any Public Shares properly submitted in connection with a RMG III shareholder vote to amend the RMG III Governing Documents (1) to modify the substance or timing of RMG III’s obligation to
allow redemption in connection with RMG III’s initial business combination or to redeem 100% of the Public Shares if RMG III does not complete an initial business combination by the Completion Window or (2) with respect to any other provision
relating to RMG III shareholders’ rights or pre-initial business combination activity; and (iii) the redemption of the Public Shares if RMG III has not completed an initial business combination by the Completion Window, subject to applicable
law. In no other circumstances will a RMG III shareholder have any right or interest of any kind to or in the Trust Account. Holders of RMG III Warrants will not have any right to the proceeds held in the Trust Account with respect to the RMG
III Warrants.
Voting Restrictions in Connection with the Special Meeting
Pursuant to the terms of the Sponsor Support Agreement, the Sponsor
has agreed to vote any Founder Shares held by them and any Public Shares purchased during or after the Initial Public Offering in favor of each of the Proposals presented at the Special Meeting. See the section entitled “Other Agreements—Sponsor Support
TABLE OF CONTENTS
Agreement” for more
information. The Initial Shareholders own approximately 95.0% of outstanding RMG III Ordinary Shares entitled to vote thereon. The quorum and voting thresholds at the Special Meeting and the Sponsor Support
Agreement may make it more likely that RMG III will consummate the Business Combination.
Facilities
RMG III currently maintains its executive offices at 57 Ocean, Suite
403, 5775 Collins Avenue, Miami Beach, Florida 33140. RMG III considers its current office space adequate for RMG III’s current operations.
Upon consummation of the Business Combination, the principal
executive offices of the Surviving Corporation will be located at .
Employees
RMG III currently has no employees and four executive officers.
Members of its management team are not obligated to devote any specific number of hours to RMG III matters, but they intend to devote as much of their time as they deem necessary to its affairs until RMG III has completed the Business
Combination.
Legal Proceedings
There is no material litigation, arbitration or governmental
proceeding currently pending against RMG III or any members of its management team in their capacity as such. RMG III has received one demand letter from a putative shareholder of RMG III dated July 19, 2023 (the “Demand”) generally alleging
that the proxy statement/prospectus forming part of the registration statement on Form S-4 filed by RMG III with the SEC on July 6, 2023 omits material information with respect to the Business Combination. The Demand seeks the issuance of
corrective disclosures in an amendment or supplement to the proxy statement/prospectus.
TABLE OF CONTENTS
In this section, any references to “RMG III,” the
“Company,” “we,” our” or “us” generally are to RMG III prior to the Business Combination, unless context otherwise requires.
Directors and Executive Officers
RMG III’s current directors and executive officers are as follows:
D. James Carpenter
|
|
|
55
|
|
|
Chairman and Director
|
Robert S. Mancini
|
|
|
65
|
|
|
Chief Executive Officer and Director
|
Philip Kassin
|
|
|
66
|
|
|
President, Chief Operating Officer and Director
|
Wesley Sima
|
|
|
35
|
|
|
Chief Financial Officer
|
Craig Broderick
|
|
|
63
|
|
|
Director
|
W. Thaddeus Miller
|
|
|
72
|
|
|
Director
|
Catherine D. Rice
|
|
|
63
|
|
|
Director
|
D. James Carpenter has been our Chairman since inception. Mr. Carpenter has also served as the Chairman of the Board of Directors of RMG I from October 2018 through its business combination with Romeo Power in
December 2020. He has also served as the chairman and a director of RMG II since its inception in July 2020 through its business combination with ReNew. Mr. Carpenter is the Founder and has been Chief Executive Officer of Riverside Management
Group, LLC for 24 years. From 2002 to 2004, Mr. Carpenter served as the Chief Executive Officer of Horsehead Industries (renamed American Zinc Recycling), the largest zinc recyclers and producers in the U.S. Mr. Carpenter was a founding
investor and has served as a longtime advisor of Allied Resource Corp, a clean water and clean energy company. He is a founder of Mohegan Energy where he led the capital formation for the acquisition of Met Resources. Mr. Carpenter earned his
B.A. from Boston University in 1989. He also has FINRA Series 24, 63 and 79 licenses. Mr. Carpenter is well qualified to serve on our Board due to his extensive management, investment banking, M&A advisory and investing experience.
Robert S. Mancini has been our Chief Executive Officer and a director since inception. He has also served as the Chief Executive Officer and a director of RMG I from October 2018 through its business
combination with Romeo Power in December 2020, and served as chairman of the board of directors of Romeo Power through its acquisition by Nikola Corporation in October 2022. He also served as the Chief Executive Officer and a director of RMG
II from its inception in July 2020 through its business combination with ReNew. From June 2018 to December 2018, Mr. Mancini served as a Senior Advisor to Carlyle Power Partners and was a Partner and a Managing Director with The Carlyle Group
and head or co-head of Carlyle’s power investment business from December 2012 until June 2018. Prior to joining Carlyle, from June 1993 to December 2012, Mr. Mancini was an employee of Goldman Sachs & Co., and from November 1999 through
December 2012 was a Managing Director at Goldman Sachs & Co. From December 2003 to December 2012, Mr. Mancini led or co-led Goldman Sach’s on-balance sheet power asset investment business. During that period Goldman Sachs conducted most
of its power asset investment business through its wholly owned subsidiary, Cogentrix Energy LLC, where Mr. Mancini served in various capacities, including as the President, co-President and Chief Executive Officer and serving as a member of
the Board. Mr. Mancini was instrumental in the formation of and Goldman’s entry into the power asset investment business in 2003 and he was also responsible for the creation of Goldman’s proprietary Commodities Principal Investment business
in 2006, where he led investments on Goldman’s behalf in companies involved in the processing, production and logistics for a broad range of commodities including base, precious and specialty metals, oil, gas, coal and other energy related
raw materials, as well as CO2 offsets and mitigation. Prior to 2003, Mr. Mancini was a member of the legal department where he eventually became the Deputy General Counsel of the Securities Division. During his tenure at Goldman, Mr. Mancini
sat on several committees including the firm-wide Risk Committee, Operational Risk Committee, and Divisional Risk Committee, as well as several portfolio company boards. Prior to joining Goldman, Mr. Mancini spent nine years in private
practice as a lawyer with Debevoise and Plimpton, where he established that firm’s derivatives practice. Mr. Mancini received his J.D. from New York University School of Law in 1984, where he was a member of Law Review, and received his B.A.
degree from Binghamton University in 1980. Mr. Mancini is well qualified to serve on our Board due to his extensive investment and advisory experience in businesses across a broad range of industries, his many years of management and
leadership experience, as well as his service on several boards and committees throughout his career.
TABLE OF CONTENTS
Philip Kassin has been our President and Chief Operating Officer and a director since inception. He has also served as the President, Chief Operating
Officer and a Director of RMG I from October 2018 through its business combination with Romeo Power in December 2020, and served as a director of Romeo Power through its
acquisition by Nikola Corporation in October 2022. He also served as the President, Chief Operating Officer and a director of RMG II from its inception in July 2020 through it business combination with
ReNew, and serves as a director of ReNew. From August 2016 to October 2016, Mr. Kassin was a Managing Director and Head of M&A and Financing at M-III Partners and has over 35 years of experience as
both an advisor and investor in public and private equity. At M-III Partners, he completed a $345 million SPAC transaction for M-III Acquisition Corp., successfully acquiring Infrastructure and Energy Alternatives (NASDAQ:
IEA) from Oaktree Capital Management, and serving on its Board from March 2018 to September 2018. Prior to joining M-III Partners, Mr. Kassin was a Senior Managing Director at Evercore from July 2010 to April 2016,
specializing in chemicals and energy. Prior to Evercore, from September 2005 to July 2010, Mr. Kassin was the Head of M&A and Financing for Access Industries, a privately held industrial group which focused on natural
resources and chemicals, media and telecommunications, technology and e-commerce and real estate. Mr. Kassin also served as a Supervisory Board Member of Basell Polyolefins from 2005 to 2007 and as a Supervisory Board Member
of LyondellBasell Industries from 2007 to 2010, where he also served as Chairman of the Finance and Investment Committee and Chairman of the Audit Committee. Earlier in his career, Mr. Kassin held senior investment banking
roles at Morgan Stanley, Goldman Sachs, Merrill Lynch and AIG. He was also a Partner at PwC where he was responsible for its energy M&A consulting practice. Mr. Kassin started his career as a utilities analyst at Standard
& Poor’s. Mr. Kassin earned an M.P.A. from the Maxwell School at Syracuse University and a B.A, in Policy Studies from Syracuse University. He also has FINRA Series 24, 63 and 79 Qualifications. Mr. Kassin is well
qualified to serve on our Board due to his extensive principal investment expertise across a broad range of sectors, investment banking, M&A, capital markets and publicly listed company director experience.
Wesley Sima is currently the Chief Financial Officer of RMG III. In February 2019, Mr. Sima joined RMG I as a consultant, functioning as Treasurer and Controller as well as being a member of RMG I’s deal
execution team through its business combination with Romeo Power in December 2020. Mr. Sima also served as Chief Financial Officer of RMG II through its business combination with ReNew, and serves as a board observer of ReNew. From August
2016 to January 2019, Mr. Sima served as a Vice President of M-III Partners, completing a $345 million SPAC transaction for M-III Acquisition Corp., the special purpose acquisition vehicle of M-III Partners, acquiring Infrastructure and
Energy Alternatives (NASDAQ: IEA) from Oaktree Capital Management and executing three successful follow-on acquisitions, while also advising M-III Partners’ largest financial advisory client, Sears Holdings Corp. (formerly NASDAQ: SHLD), for
two years on its capital restructuring and bankruptcy process. From 2014 to 2016, Mr. Sima was a member of ING Capital LLC’s Natural Resources Project Finance, Corporate Finance, and Advisory deal teams in New York City. Mr. Sima began his
professional career in 2012 as a member of both the finance and corporate development teams at Entegra Power Group, formerly an independent power producer and owner/operator of multiple natural gas related assets, based in Tampa, FL. Mr. Sima
earned his Master of Business Administration and dual B.S. in Finance and Marketing from the Florida State University, graduating in 2012 and 2010 respectively. Mr. Sima earned his Master of Business Administration and dual B.S. in Finance
and Marketing from the Florida State University, graduating in 2012 and 2010 respectively.
Craig Broderick has been a director of RMG III since inception. Mr. Broderick has served as a director of RMG I from February 2019 through its business combination with Romeo Power in
October 2020 and RMG II since its inception in July 2020 through its business combination with ReNew. Mr. Broderick has also served as a director of Circle Internet since July 2023. Mr. Broderick is a Senior
Director of Goldman, Sachs & Co., from which he retired as an active employee in January 2018 after a 32-year career. He was most recently the firm’s Chief Risk Officer, a member of its Management Committee, and chair or
co-chair of key risk committees. Mr. Broderick reported to the firm’s CEO and was responsible for managing the firm’s Risk Division, which oversees control of the firm’s credit, market, liquidity, operational, model and
insurance risks. Prior to his tenure at Goldman, Mr. Broderick was a lending officer at the Chase Manhattan Bank. Mr. Broderick also currently serves as a Director of the Bank of Montreal and of McDermott International.
Mr. Broderick previously served for nine years as a Trustee of the William and Mary Foundation and was chair of its Investment Committee. Mr. Broderick graduated with a BA in Economics from the College of William and Mary.
Mr. Broderick is well qualified to serve as a member of the Board due to his extensive experience with risk management and his finance background.
TABLE OF CONTENTS
W. Thaddeus Miller has been a director of RMG III since inception. Mr. Miller has served as a director of RMG I from February 2019 through its business combination with Romeo Power in October
2020 and RMG II since its inception in July 2020 through its business combination with ReNew. He has decades of legal and energy industry experience, including substantial experience over the last two decades in power sector
mergers and acquisitions, operations and regulatory oversight. He has served as Executive Vice Chairman and Chief Legal Officer of Calpine Corporation since 2020, prior to which, from 2008, he served
as that company’s Executive Vice President and Chief Legal Officer. In 2018 he helped lead public-to-private sale of Calpine, then a NYSE listed company, to private equity and other private investors and has served on the
Calpine Board of Directors since 2018. In 2006-7, as Executive Vice President and Chief Legal Officer of Texas Genco Inc., he helped lead the merger sale of a large privately held IPP to a public company, having also
helped lead the acquisition of Texas Genco Inc. a year earlier by five major private equity firms, the largest private equity “club” transaction at the time. From 2002 to 2005, Mr. Miller was a consultant to
Texas Pacific Group (now TPG), a private equity firm. From 1998 to 2002, he served as Executive Vice President and Chief Legal Officer of Orion Power, an IPP majority owned by Goldman Sachs & Co., that
acquired over 90 power plants in various transactions which he helped lead, as well the company’s initial public offering and subsequent merger sale. From 1994 to 1998, Mr. Miller was Vice President of
Goldman Sachs & Co., where he focused on wholesale electric and other energy commodity trading. Before joining Goldman Sachs & Co., Mr. Miller was a partner with a New York law firm. Mr. Miller earned his Bachelor of
Science degree from the United States Merchant Marine Academy, where he has served on the board of directors of the alumni association and foundation, and his Juris Doctor from St. John’s School of Law. In addition, he was
an officer in the United States Coast Guard. Mr. Miller is well qualified to serve as a member of the Board due to his extensive experience in mergers and acquisitions and public company management experience.
Catherine D. Rice has been a director of RMG III since inception. Ms. Rice has also served as a director of RMG II since its inception in July 2020 through its business combination with ReNew. She
currently serves as an independent director on the boards of BrightSpire Capital (NYSE: BRSP) and Urban Edge (NYSE: UE) , a commercial real estate REIT, and previously served as an independent
director on the board of Store Capital Corporation (NYSE: STOR), a net-lease REIT, until its privatization in February 2023. From 2013 to 2016, she served as a Managing director and Chief Financial
Officer and then Senior Managing Director of W.P. Carey Inc. (NYSE: WPC), one of the largest public global net-lease REITs, where she was responsible for financial strategy, public capital-raising initiatives and a
company-wide strategic evaluation, and was also a member of the operating and investment committees. Before joining W.P. Carey, Ms. Rice was a partner and a Managing Director at Parmenter Realty Partners, a private real
estate investment firm focused on distressed and value-add properties in the southern regions of the U.S. Prior to that, she was the Chief Financial Officer of iStar Inc. (NYSE: STAR), a publicly traded finance company
focused on the commercial real estate industry, where she was responsible for financial strategy and capital-raising initiatives, financial reporting and investor relations. Ms. Rice spent the first 16 years of her career as
a professional in the real estate investment banking groups of Merrill Lynch, Lehman Brothers and Banc of America Securities. Ms. Rice received a Bachelor of Arts degree from the University of Colorado and a Master of
Business Administration from Columbia University.
Director Independence
Nasdaq listing standards require that a majority of RMG III Board be
independent. An “independent director” is defined generally as a person other than an officer or employee of the company or its subsidiaries or any other individual having a relationship which in the opinion of the company’s board of directors,
would interfere with the director’s exercise of independent judgment in carrying out the responsibilities of a director.
On October 21, 2022, Mr. W. Grant Gregory, a Class II director and
member of the Nominating and Corporate Governance Committee of the RMG III Board notified RMG III of his decision to resign as a member of the RMG III Board and the Nominating and Corporate Governance Committee of the RMG III Board, effective
as of October 21, 2022. Mr. Gregory’s decision to resign was not the result of any dispute or disagreement with RMG III or any matter relating to RMG III’s operations, policies or practices.
After giving effect to Mr. Gregory’s resignation, RMG III Board no
longer has a majority of independent directors as required by Nasdaq Marketplace Rule 5605(b)(1). RMG III informed Nasdaq of the foregoing and received, on October 26, 2022, a notice from Nasdaq regarding its non-compliance with this rule. The
Nasdaq
TABLE OF CONTENTS
notice stated that the Nasdaq Marketplace Rules have a cure period for the majority
independent board requirement, which gives RMG III until the earlier of RMG III’s next annual meeting of RMG III shareholders or October 21, 2023 to regain compliance. The RMG III intends to timely regain compliance with the rule.
RMG III has three “independent directors” as defined in Nasdaq
listing standards and applicable SEC rules. RMG III Board has determined that each of Craig Broderick, Catherine D. Rice and W. Thaddeus Miller is an independent director under applicable SEC rules and Nasdaq listing standards.
Number, Terms of Office and Election of Officers and Director
RMG III Board of directors consists of six members. Each of the
directors will hold office for a two-year term. Subject to any other special rights applicable to RMG III shareholders, any vacancies on RMG III Board may be filled by the affirmative vote of the holders of a majority of the directors present
and voting at the meeting of RMG III Board or by a majority of the holders of our ordinary shares.
RMG III Board is divided into three classes with only one class of
directors appointed in each year and each class (except for those directors appointed prior to our first annual general meeting) serving a three-year term. The term of office of the first class of directors, consisting of W. Thaddeus Miller and
Craig Broderick, will expire at our first annual general meeting. The term of office of the second class of directors, consisting of Catherine D. Rice, will expire at the second annual general meeting. The term of office of the third class of
directors, consisting of D. James Carpenter, Robert S. Mancini and Philip Kassin, will expire at the third annual general meeting.
The officers are appointed by RMG III Board and serve at the
discretion of it, rather than for specific terms of office. RMG III Board is authorized to appoint persons to the offices set forth in its amended and restated memorandum and articles of association as it deems appropriate. RMG III’s amended
and restated memorandum and articles of association provide that its officers may consist of a Chairman, a Chief Executive Officer, a President, a Chief Operating Officer, a Chief Financial Officer, Vice Presidents, a Secretary, Assistant
Secretaries, a Treasurer and such other offices as may be determined by RMG III Board.
Committees of the Board of Directors
Pursuant to Nasdaq listing rules we have established three standing
committees — an audit committee in compliance with Section 3(a)(58)(A) of the Exchange Act, a compensation committee and a nominating committee, each comprised of independent directors.
Audit Committee
The members of the audit committee are Craig Broderick, W. Thaddeus
Miller and Catherine Rice. Mr. Broderick serves as chairman of the audit committee.
Each member of the audit committee is financially literate and RMG
III Board has determined that Mr. Broderick qualifies as an “audit committee financial expert” as defined in applicable SEC rules and has accounting or related financial management expertise.
We have adopted an audit committee charter, which details the purpose
and principal functions of the audit committee, including:
•
|
assisting board oversight of (i) the integrity of our financial statements, (ii) our compliance with legal and regulatory
requirements, (iii) our independent auditor’s qualifications and independence, and (iv) the performance of our internal audit function and independent auditors;
|
•
|
the appointment, compensation, retention, replacement and oversight of the work of the independent auditors and any other
independent registered public accounting firm engaged by RMG III;
|
•
|
pre-approving all audit and non-audit services to be provided by the independent auditors or any other registered public
accounting firm engaged by us, and establishing pre-approval policies and procedures;
|
•
|
reviewing and discussing with the independent auditors all relationships the auditors have with us in order to evaluate their
continued independence;
|
•
|
setting clear hiring policies for employees or former employees of the independent auditors;
|
•
|
setting clear policies for audit partner rotation in compliance with applicable laws and regulations;
|
TABLE OF CONTENTS
•
|
obtaining and reviewing a report, at least annually, from the independent auditors describing (i) the independent auditor’s
internal quality-control procedures and (ii) any material issues raised by the most recent internal quality-control review, or peer review, of the audit firm, or by any inquiry or investigation by governmental or professional
authorities, within the preceding five years respecting one or more independent audits carried out by the firm and any steps taken to deal with such issues;
|
•
|
meeting to review and discuss our annual audited financial statements and quarterly financial statements with management and the
independent auditor, including reviewing our specific disclosures under “Management’s Discussion and Analysis of Financial Condition and Results of Operations”;
|
•
|
reviewing and approving any related party transaction required to be disclosed pursuant to Item 404 of Regulation S-K
promulgated by the SEC prior to us entering into such transaction; and
|
•
|
reviewing with management, the independent auditors, and our legal advisors, as appropriate, any legal, regulatory or compliance
matters, including any correspondence with regulators or government agencies and any employee complaints or published reports that raise material issues regarding our financial statements or accounting policies and any significant
changes in accounting standards or rules promulgated by the Financial Accounting Standards Board, the SEC or other regulatory authorities.
|
Compensation Committee
The members of RMG III’s compensation committee are Catherine D. Rice
and Craig Broderick. Mr. Broderick serves as chairman of the compensation committee.
RMG III has adopted a compensation committee charter, which details
the purpose and responsibility of the compensation committee, including:
•
|
reviewing and approving on an annual basis the corporate goals and objectives relevant to the Chief Executive Officer’s
compensation, evaluating the Chief Executive Officer’s performance in light of such goals and objectives and determining and approving the remuneration (if any) of the Chief Executive Officer based on such evaluation;
|
•
|
reviewing and making recommendations to RMG III Board with respect to the compensation, and any incentive-compensation and
equity-based plans that are subject to board approval, of all of its other officers;
|
•
|
reviewing the executive compensation policies and plans;
|
•
|
implementing and administering the incentive compensation equity-based remuneration plans;
|
•
|
assisting management in complying with the proxy statement/prospectus and annual report disclosure requirements;
|
•
|
approving all special perquisites, special cash payments and other special compensation and benefit arrangements for the
officers and employees;
|
•
|
producing a report on executive compensation to be included in the annual proxy statement/prospectus; and
|
•
|
reviewing, evaluating and recommending changes, if appropriate, to the remuneration for directors.
|
The charter also provides that the compensation committee may, in its
sole discretion, retain or obtain the advice of a compensation consultant, independent legal counsel or other adviser and is directly responsible for the appointment, compensation and oversight of the work of any such adviser. However, before
engaging or receiving advice from a compensation consultant, external legal counsel or any other adviser, the compensation committee will consider the independence of each such adviser, including the factors required by Nasdaq and the SEC.
Nominating and Corporate Governance Committee
The members of RMG III’s Nominating and Corporate Governance
Committee are Craig Broderick, and W. Thaddeus Miller. Mr. Miller serves as chair of the nominating and corporate governance committee. RMG III has adopted a nominating and corporate governance committee charter, which details the purpose and
responsibilities of the nominating and corporate governance committee, including:
•
|
identifying, screening and reviewing individuals qualified to serve as directors, consistent with criteria approved by RMG III
Board, and recommending to RMG III Board candidates for nomination for appointment at the annual general meeting or to fill vacancies on RMG III Board;
|
TABLE OF CONTENTS
•
|
developing and recommending to RMG III Board and overseeing implementation of our corporate governance guidelines;
|
•
|
coordinating and overseeing the annual self-evaluation of RMG III Board, its committees, individual directors and management in
the governance of the company; and
|
•
|
reviewing on a regular basis our overall corporate governance and recommending improvements as and when necessary.
|
The charter also provides that the nominating and corporate
governance committee may, in its sole discretion, retain or obtain the advice of, and terminate, any search firm to be used to identify director candidates, and is directly responsible for approving the search firm’s fees and other retention
terms.
RMG III has not formally established any specific, minimum
qualifications that must be met or skills that are necessary for directors to possess. In general, in identifying and evaluating nominees for director, RMG III Board considers educational background, diversity of professional experience,
knowledge of the business, integrity, professional reputation, independence, wisdom, and the ability to represent the best interests of RMG III’s shareholders. Prior to the initial business combination, holders of our public shares will not
have the right to recommend director candidates for nomination to RMG III Board.
Delinquent Section 16(a) Reports
Section 16(a) of the Exchange Act requires RMG III’s officers,
directors and persons who beneficially own more than ten percent of any class of equity security which is registered pursuant to Section 12 of the Exchange Act to file reports of ownership and changes in ownership with the SEC. Based solely
upon a review of such forms, RMG III believes that during the year ended December 31, 2021, there were no delinquent filers.
Code of Ethics
RMG III has adopted a code of ethics and business conduct (our “Code
of Ethics”) applicable to RMG III’s directors, officers and employees. RMG III has filed a copy of our Code of Ethics as an exhibit to this Annual Report. We have also posted a copy of our Code of Ethics and the charters of our audit committee,
compensation committee and nominating and corporate governance committee, on its website www.rmgacquisition.com under “RMG Acquisition Corp. III—Corporate Governance Guidelines.” RMG III’s website and
the information contained on, or that can be accessed through, the website is not deemed to be incorporated by reference in, and is not considered part of, this Annual Report. You are able to review these documents by accessing our public
filings at the SEC’s website at www.sec.gov. In addition, a copy of the Code of Ethics will be provided without charge upon request from RMG III. We intend to disclose any amendments to or waivers of certain provisions of our Code of Ethics in
a Current Report on Form 8-K.
Conflicts of Interest
Under Cayman Islands law, officers and directors owe fiduciary duties
to the company, including the following:
•
|
duty to act in good faith in what the director or officer believes to be in the best interests of the company as a whole;
|
•
|
duty to exercise authority for the purpose for which it is conferred;
|
•
|
duty to not improperly fetter the exercise of future discretion;
|
•
|
duty not to put themselves in a position in which there is a conflict between their duty to the company and their personal
interests; and
|
•
|
duty to exercise independent judgment.
|
In addition to the above, directors also owe a duty of care and
skill, which is not fiduciary in nature. This duty has been defined as a requirement to act as a reasonably diligent person having both the general knowledge, skill and experience that may reasonably be expected of a person carrying out the
same functions as are carried out by that director in relation to the company and the general knowledge, skill and experience which that director has.
As set out above, directors have a duty not to put themselves in a
position of conflict and this includes a duty not to engage in self-dealing, or to otherwise benefit as a result of their position at the expense of the
TABLE OF CONTENTS
company. However, in some instances what would otherwise be a breach of this duty can
be forgiven and/or authorized in advance by RMG III shareholders; provided that there is full disclosure by the directors. This can be done by way of permission granted in the amended and restated memorandum and articles of association or
alternatively by RMG III shareholder approval at general meetings.
Certain of RMG III officers and directors have fiduciary or
contractual duties to certain other companies in which they have invested or advised. These entities may compete with us for acquisition opportunities. If these entities decide to pursue any such opportunity, we may be precluded from pursuing
such opportunities. None of the members of the management team who are also employed by the Sponsor or its affiliates have any obligation to present us with any opportunity for a potential business combination of which they become aware,
subject to his or her fiduciary duties under Cayman Islands law. RMG III’s management team, in their capacities as members, officers or employees of our sponsor or its affiliates or in their other endeavors, may choose to present potential
business combinations to the related entities described above, current or future entities affiliated with or managed by the Sponsor, or third parties, before they present such opportunities to RMG III, subject to his or her fiduciary duties
under Cayman Islands law and any other applicable duties.
Each of RMG III officers and directors presently has, and any of them
in the future may have, additional, fiduciary or contractual obligations to other entities pursuant to which such officer or director is or will be required to present a business combination opportunity to such entity. Accordingly, if any of
these directors or officers becomes aware of a business combination opportunity that is suitable for an entity to which he or she has then-current fiduciary or contractual obligations, he or she may need to honor these fiduciary or contractual
obligations to present such business combination opportunity to such entity, subject to his or her fiduciary duties under Cayman Islands law. RMG III’s amended and restated memorandum and articles of association provide that, to the fullest
extent permitted by applicable law: (i) no individual serving as a director or an officer shall have any duty, except and to the extent expressly assumed by contract, to refrain from engaging directly or indirectly in the same or similar
business activities or lines of business as RMG III; and (ii) RMG III renounces any interest or expectancy in, or in being offered an opportunity to participate in, any potential transaction or matter which may be a corporate opportunity for
any director or officer, on the one hand, and us, on the other. RMG III’s officers and directors are also not required to commit any specified amount of time to RMG III’s affairs, and, accordingly, will have conflicts of interest in allocating
management time among various business activities, including identifying potential business combinations and monitoring the related due diligence. See “Risk Factors — Certain of our officers and directors are
now, and all of them may in the future become, affiliated with entities engaged in business activities similar to those intended to be conducted by us and, accordingly, may have conflicts of interest in determining to which entity a
particular business opportunity should be presented.”
RMG III does not believe, however, that the fiduciary duties or
contractual obligations of its directors or officers will materially affect their ability to identify and pursue business combination opportunities or complete an initial business combination.
The Sponsor, officers and directors may become involved with
subsequent special purpose acquisition companies similar to our company, although they have agreed not to participate in the formation of, or become an officer or director of, any special purpose acquisition company with a class of securities
registered under the Exchange Act until we have entered into a definitive agreement regarding our initial Business Combination or we have failed to complete our initial Business Combination within the Completion Window . Potential investors
should also be aware of the following potential conflicts of interest:
•
|
None of the directors or officers is required to commit his or her full time to our affairs and, accordingly, may have conflicts
of interest in allocating his or her time among various business activities.
|
•
|
In the course of their other business activities, the officers and directors may become aware of investment and business
opportunities that may be appropriate for presentation to us as well as the other entities with which they are affiliated. The management may have conflicts of interest in determining to which entity a particular business opportunity
should be presented.
|
•
|
RMG III’s Initial Shareholders, officers and directors have agreed to waive their redemption rights with respect to any Founder
Shares and Public Shares held by them in connection with the consummation of an initial business combination. Additionally, the Initial Shareholders have agreed to waive their
|
TABLE OF CONTENTS
redemption rights with respect to their Founder Shares if we fail to consummate the
initial business combination within the Completion Window. However, if the Initial Shareholders (or any of our directors, officers or affiliates) acquire Public Shares, they will be entitled to liquidating distributions from the Trust Account
with respect to such Public Shares if we fail to consummate an initial business combination within the prescribed time frame. If RMG does not complete an initial business combination within such applicable time period, the proceeds of the sale
of the RMG III Private Placement Warrants held in the Trust Account will be used to fund the redemption of the Public Shares, and the RMG III Private Placement Warrants will expire worthless. With certain limited exceptions, the Founder Shares
will not be transferable, assignable or salable by our Initial Shareholders until the earlier of: (i) one (1) year after the completion of the initial business combination; and (ii) subsequent to our initial Business Combination (x) if the last
reported sale price of our Class A ordinary shares equals or exceeds $12.00 per share (as adjusted for share sub-divisions, share dividends, rights issuances, consolidations, reorganizations, recapitalizations and the like) for any 20 trading
days within any 30-trading day period commencing at least 150 days after our initial business combination or (y) the date on which we complete a liquidation, merger, amalgamation, share exchange, reorganization or other similar transaction that
results in all of our Public Shareholders having the right to exchange their ordinary shares for cash, securities or other property. With certain limited exceptions, the RMG III Private Placement Warrants and the RMG III Class A Ordinary Shares
underlying such warrants, will not be transferable, assignable or salable by the Sponsor until 30 days after the completion of an initial business combination. Since the Sponsor and officers and directors may directly or indirectly own ordinary
shares and warrants following the Initial Public Offering, the officers and directors may have a conflict of interest in determining whether a particular target business is an appropriate business with which to effectuate our initial business
combination.
•
|
The officers and directors may negotiate employment or consulting agreements with a target business in connection with a
particular business combination. These agreements may provide for them to receive compensation following an initial business combination and as a result, may cause them to have conflicts of interest in determining whether to proceed
with a particular business combination.
|
•
|
The officers and directors may have a conflict of interest with respect to evaluating a particular business combination if the
retention or resignation of any such officers and directors was included by a target business as a condition to any agreement with respect to our initial business combination.
|
•
|
The conflicts described above may not be resolved in RMG III’s favor.
|
Accordingly, as a result of multiple business affiliations, our
officers and directors have similar legal obligations relating to presenting business opportunities meeting the above-listed criteria to multiple entities. Below is a table summarizing the entities to which RMG III’s directors, officers and
director nominees currently have fiduciary duties or contractual obligations:
D. James Carpenter
|
|
|
Riverside Management Group, LLC
|
|
|
Merchant Bank
|
|
|
Founder & CEO
|
|
|
|
|
|
|
|
|
Robert S. Mancini
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Philip Kassin
|
|
|
ReNew Energy Global PLC
|
|
|
Renewable Energy Company
|
|
|
Director
|
|
|
|
|
|
|
|
|
Craig Broderick
|
|
|
Goldman, Sachs & Co.
|
|
|
Investment Bank
|
|
|
Senior Director
|
|
|
|
|
|
|
|
|
|
|
|
Credit Benchmark Limited
|
|
|
Financial Services
|
|
|
Senior Advisor
|
|
|
|
|
|
|
|
|
TABLE OF CONTENTS
|
|
|
Bank of Montreal
|
|
|
Private Equity Firm
|
|
|
Director
|
|
|
|
|
|
|
|
|
|
|
|
McDermott International
|
|
|
Bank Construction
|
|
|
Director
|
|
|
|
|
|
|
|
|
|
|
W. Thaddeus Miller
|
|
|
Calpine Corporation
|
|
|
Energy Services
|
|
|
Executive Vice Chairman & Board Member
|
|
|
|
|
|
|
|
|
Catherine D. Rice
|
|
|
BrightSpire Capital
|
|
|
Real Estate
|
|
|
Director
|
|
|
|
|
|
|
|
|
|
|
|
Store Capital Corporation
|
|
|
Real Estate
|
|
|
Director
|
Accordingly, if any of the above directors or officers become aware
of a business combination opportunity which is suitable for any of the above entities to which he or she has then-current fiduciary or contractual obligations, he or she will honor his or her fiduciary or contractual obligations to present such
business combination opportunity to such entity, and only present it to us if such entity rejects the opportunity, subject to his or her fiduciary duties under Cayman Islands law. RMG III’s amended and restated memorandum and articles of
association provide that, to the fullest extent permitted by applicable law: (i) no individual serving as a director or an officer shall have any duty, except and to the extent expressly assumed by contract, to refrain from engaging directly or
indirectly in the same or similar business activities or lines of business as RMG III; and (ii) RMG III renounces any interest or expectancy in, or in being offered an opportunity to participate in, any potential transaction or matter which may
be a corporate opportunity for any director or officer, on the one hand, and RMG III, on the other. RMG III does not believe, however, that any of the foregoing fiduciary duties or contractual obligations will materially affect RMG III’s
ability to identify and pursue business combination opportunities or complete an initial business combination.
RMG III is not prohibited from pursuing an initial business
combination with a company that is affiliated with the Sponsor, officers or directors, subject to certain approvals and consents. In the event RMG III seeks to complete an initial business combination with such a company, we, or a committee of
independent directors, would obtain an opinion from an independent investment banking firm which is a member of FINRA, or from an independent accounting firm, that such an initial business combination is fair to RMG III from a financial point
of view.
In addition, the Sponsor or any of its affiliates may make additional
investments in the company in connection with the initial business combination, although our sponsor and its affiliates have no obligation or current intention to do so. If the Sponsor or any of its affiliates elects to make additional
investments, such proposed investments could influence the Sponsor’s motivation to complete an initial business combination.
In the event that RMG III submits their initial business combination
to our Public Shareholders for a vote, the Sponsor has agreed to vote any Founder Shares held by it and any Public Shares purchased during or after the offering in favor of the initial business combination and the officers and directors have
also agreed to vote any public shares purchased during or after the offering in favor of the initial business combination.
Executive Compensation
None of the directors or officers have received any cash compensation
for services rendered to RMG III. Certain of the directors and officers have received a grant of profits interest from the Sponsor. Commencing on the date that the securities are first listed on Nasdaq through the earlier of consummation of an
initial business combination and a liquidation, the Sponsor, officers and directors, or any of their respective affiliates, will be reimbursed for any out-of-pocket expenses incurred in connection with activities on behalf of RMG III such as
identifying potential target businesses and performing due diligence on suitable business combinations. The audit committee will review on a quarterly basis all payments that were made by RMG III to the Sponsor, directors, officers or RMG III’s
or any of their respective affiliates. Please see the section entitled “Certain Relationships and Related Transactions, and Director Independence.”
After the completion of our initial business combination, directors
or members of our management team who remain with us may be paid consulting, management or other compensation from the combined company. All compensation will be fully disclosed to RMG III shareholders, to the extent then known, in the tender
offer
TABLE OF CONTENTS
materials or proxy solicitation materials furnished to our RMG III shareholders in
connection with a proposed business combination. It is unlikely the amount of such compensation will be known at the time, because the directors of the post-combination business will be responsible for determining executive officer and director
compensation. Any compensation to be paid to the officers after the completion of an initial business combination will be determined by a compensation committee constituted solely by independent directors.
RMG III is not party to any agreements with its officers and
directors that provide for benefits upon termination of employment. The existence or terms of any such employment or consulting arrangements may influence our management’s motivation in identifying or selecting a target business, and RMG III
does not believe that the ability of our management to remain with us after the consummation of an initial Business Combination should be a determining factor in the decision to proceed with any potential business combination.
Principal Accounting Fees and Services.
The following is a summary of fees paid to Marcum LLP, for services
rendered.
Audit Fees.
Audit fees consist of fees billed for professional services rendered for the audit of our year-end financial statements, reviews of our quarterly financial statements and services that are normally provided by our independent registered
public accounting firm in connection with statutory and regulatory filings. The aggregate fees by Marcum LLP for audit fees, inclusive of required filings with the SEC for the years ended December 31, 2022 and 2021, and of services rendered
in connection with our Initial Public Offering, totaled $86,005 and $162,225, respectively.
Audit-Related Fees. Audit-related fees consist of fees for assurance and related services that are reasonably related to performance of the audit or review of our year-end financial statements and are not reported under “Audit Fees.” These services
include attest services that are not required by statute or regulation and consultation concerning financial accounting and reporting standards. We did not pay Marcum LLP any audit-related fees during the years ended December 31, 2022 and
2021.
Tax Fees. Tax
fees consist of fees billed for professional services relating to tax compliance, tax planning and tax advice. We did not pay Marcum LLP any audit-related fees during the years ended December 31, 2022 and 2021.
All Other Fees.
All other fees consist of fees billed for all other services. We did not pay Marcum LLP any audit-related fees during the years ended December 31, 2022 and 2021.
Policy on Board Pre-Approval of Audit and
Permissible Non-Audit Services of the Independent Auditors
The audit committee is responsible for appointing, setting
compensation and overseeing the work of the independent auditors. In recognition of this responsibility, the audit committee shall review and, in its sole discretion, pre-approve all audit and permitted non-audit services to be provided by the
independent auditors as provided under the audit committee charter.
The RMG III Governing Documents provide that, to
the fullest extent permitted by applicable law: (i) no individual serving as a director or an executive officer shall have any duty, except and to the extent expressly assumed by contract, to refrain from engaging directly or indirectly in the
same or similar business activities or lines of business as RMG III and (ii) RMG III renounces any interest or expectancy in, or in being offered an opportunity to participate in, any potential transaction or matter which may be a corporate
opportunity for any director or executive officer, on the one hand, and RMG III, on the other. RMG III’s directors and executive officers are also not required to commit any specified amount of time to the affairs of RMG III, and, accordingly,
will have conflicts of interest in allocating management time among various business activities, including identifying potential business combinations and monitoring the related due diligence. For further information related to potential
conflicts of interests, see the section titled “Business Combination Proposal — Interests of RMG III’s Directors, Executive Officers and the Sponsor and its Affiliates in the Business Combination” in
this proxy statement/prospectus.
TABLE OF CONTENTS
SELECTED HISTORICAL FINANCIAL INFORMATION OF RMG
III
The selected historical financial information of RMG III for the
years ended December 31, 2022 and December 31, 2021 was derived from the audited financial statements of RMG III included elsewhere in this proxy statement/prospectus. You should read the following summary financial information in conjunction
with the sections titled “Selected Historical Financial Information of RMG III” and “RMG III Management’s Discussion and Analysis of Financial Condition and Results of
Operations” and RMG III’s financial statements and related notes appearing elsewhere in this proxy statement/prospectus.
TABLE OF CONTENTS
RMG III MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Unless the context otherwise requires, all
references in this section to the “we,” “us,” “our,” the “Company” or “RMG III” are to RMG III prior to the Business Combination. The following discussion and analysis of RMG III’s financial condition and results of operations should be read in
conjunction with RMG III’s consolidated financial statements and notes to those statements included in this proxy statement/prospectus.
Certain information contained in the discussion and analysis set
forth below includes forward-looking statements that involve risks and uncertainties. RMG III’s actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors. Please see “Cautionary Statement Regarding Forward- Looking Statements” and “Risk Factors” in this proxy statement/prospectus.
Overview
RMG III is a blank check company incorporated as a Cayman Islands
exempted company on December 23, 2020. RMG III was formed for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses. RMG III is an
emerging growth company and, as such, we are subject to all of the risks associated with emerging growth companies.
The Sponsor is a Delaware limited liability company. The registration
statement for the Initial Public Offering was declared effective on February 4, 2021. On February 9, 2021, RMG III consummated the Initial Public Offering of 48,300,000 units (the “Units” and, with
respect to the RMG III Class A Ordinary Shares included in the RMG III Units being offered, the “Public Shares”), including 6,300,000 additional Units to cover over-allotments (the “Over-Allotment Units”), at $10.00 per RMG III Unit, generating gross proceeds of $483.0 million, and incurring offering costs of approximately $27.1 million, of which approximately $16.9 million was for
deferred underwriting commissions and $250,000 was for deferred legal fees.
Simultaneously with the closing of the Initial Public Offering,
RMG III consummated the private placement (“Private Placement”) of 8,216,330 warrants (each, a “Private Placement Warrant” and
collectively, the “RMG III Private Placement Warrants”) at a price of $1.50 per RMG III Private Placement Warrant to the Sponsor, generating proceeds of approximately
$12.3 million.
Upon the closing of the Initial Public Offering and the Private
Placement, $483.0 million ($10.00 per RMG III Unit) of the net proceeds of the Initial Public Offering and certain of the proceeds of the Private Placement was placed in the Trust Account and has been invested in United States government
treasury bills with a maturity of 185 days or less or in money market funds investing solely in U.S. Treasuries and meeting certain conditions under Rule 2a-7 under the Investment Company Act, as determined by RMG III, until the earlier of:
(i) the completion of a business combination and (ii) the distribution of the Trust Account as described below.
On January 11, 2023, at an extraordinary general meeting of RMG III
shareholders, RMG III shareholders voted to approve an amendment to the amended and restated memorandum and articles of association to extend the date by which the Company must complete a business combination within the Completion Window. In
connection with the Extension Amendment, a total of 260 RMG III shareholders elected to redeem an aggregate of 47,381,598 RMG III Class A Ordinary Shares, representing approximately 98.10% of the issued and outstanding RMG III Class A Ordinary
Shares, for an aggregate of approximately $478 million in cash.
The management has broad discretion with respect to the specific
application of the net proceeds of the Initial Public Offering and the sale of RMG III Private Placement Warrants, although substantially all of the net proceeds are intended to be applied generally toward consummating a business combination.
The initial business combination must be with one or more operating businesses or assets with a fair market value equal to at least 80% of the net assets held in the Trust Account (excluding the deferred underwriting commissions and taxes
payable on the income earned on the Trust Account) at the time RMG III signs a definitive agreement in connection with the initial business combination. However, we will only complete a business combination if the post-transaction company owns
or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires a controlling interest in the target sufficient for it not to be required to register as an investment company under the Investment Company Act.
If RMG III is unable to complete a business combination by
February 9, 2024, we will (1) cease all operations except for the purpose of winding up; (2) as promptly as reasonably possible but not more than 10 business days thereafter, redeem the Public Shares, at a per-share price, payable in cash,
equal to the
TABLE OF CONTENTS
aggregate amount then on deposit in the Trust Account, including interest (less taxes
payable, expenses relating to the administration of the Trust Account, amounts withdrawn to fund RMG III’s working capital requirements and up to $100,000 of interest to pay dissolution expenses), divided by the number of then issued and
outstanding Public Shares, which redemption will completely extinguish Public Shareholders’ rights as shareholders (including the right to receive further liquidating distributions, if any); and (3) as promptly as reasonably possible following
such redemption, subject to the approval of the remaining shareholders and the board of directors, liquidate and dissolve, subject in each case to RMG III’s obligations under Cayman Islands law to provide for claims of creditors and the
requirements of other applicable law. There will be no redemption rights or liquidating distributions with respect to RMG III Warrants, which will expire worthless if RMG III fails to complete the initial business combination by the end of the
Completion Window, or by the applicable deadline as may be extended.
Recent Developments
Proposed Business Combination
On May 9, 2023, RMG III entered into the Merger Agreement, which
provides for, among other things, the domestication of RMG III as a Delaware corporation and, following the Domestication, the merger of H2B2 with and into RMG III, with RMG III continuing as the surviving corporation as described in more
detail elsewhere in this proxy statement/prospectus.
Extension of Date to Consummate a Business Combination
RMG III’s amended and restated memorandum and articles of association
previously provided that RMG III had until February 9, 2023 to complete a business combination. On January 11, 2023, at an extraordinary general meeting of shareholders, RMG III shareholders voted to approve an amendment to the amended and
restated memorandum and articles of association to extend the date by which RMG III must complete a business combination within the Completion Window. In connection with the Extension, a total of 260 RMG III shareholders elected to redeem an
aggregate of 47,381,598 RMG III Class A Ordinary Shares, representing approximately 98.10% of our issued and outstanding RMG III Class A Ordinary Shares, for an aggregate of approximately $478,003,632 in cash.
As of January 11, 2023, RMG III’s amended and restated memorandum
and articles of association previously provided that RMG III must consummate its initial business combination by (i) May 9, 2023 or (ii) August 9, 2023, in the event RMG III has signed a definitive agreement with respect to a business
combination and has elected to extend the amount of time to complete a business combination for up to three times for an additional one month each time. On August 4, 2023, at an extraordinary general meeting of shareholders, the RMG III
shareholders voted to approve the third amended and restated memorandum and articles of association to extend the date by which the Company must complete a business combination to February 9, 2024. In connection with the Second Extension
Amendment, a total of 16 shareholders elected to redeem an aggregate of 282,624 RMG III Class A Ordinary Shares, representing approximately 30.77% of our issued and outstanding RMG III Class A Ordinary Shares, for an aggregate of
approximately $2,942,663 in cash.
Going Concern
As of March 31, 2023, RMG III had approximately $15,000 in its
operating bank account, and a working capital deficit of approximately $3 million. Further, it has incurred and expects to continue to incur significant costs in pursuit of its financing and acquisition plans. These factors, among others, raise
substantial doubt about our ability to continue as a going concern within one year after the date that the unaudited condensed financial statements are issued.
RMG III’s liquidity needs to date have been satisfied through a
payment of $25,000 from the Sponsor to cover certain expenses in exchange for the issuance of the Founder Shares, the loan of $135,000 from the Sponsor pursuant to the promissory note, where the Sponsor agreed to lend to RMG III up to $300,000
to be used for the payment of costs related to the Initial Public Offering, and the proceeds from the consummation of the Private Placement not held in the Trust Account. We fully repaid the Note on February 12, 2021. In addition, in order to
finance transaction costs in connection with a business combination, the Sponsor or an affiliate of the Sponsor, or certain of RMG III’s officers and directors may provide us Working Capital Loans. As of March 31, 2023 and December 31, 2022,
there was $750,000 and $500,000, respectively, outstanding under any Working Capital Loan.
TABLE OF CONTENTS
In connection with RMG III’s assessment of going concern
considerations in accordance with FASB ASC Topic 205-40, “Basis of Presentation of Financial Statements-Going Concern,” RMG III has determined that the mandatory liquidation date and subsequent dissolution raises substantial doubt about RMG
III’s ability to continue as a going concern. If RMG III is unable to complete a business combination by February 9, 2024, then it will cease all operations except for the purpose of liquidating. Over this time period, RMG III has used, and
will be using, these funds for paying existing accounts payable, paying for travel expenditures, and structuring, negotiating and consummating the Business Combination. No adjustments have been made to the carrying amounts of assets or
liabilities should we be required to liquidate after February 9, 2024. The financial statements do not include any adjustment that might be necessary if RMG III is unable to continue as a going concern.
Management continues to evaluate the impact of COVID-19 on the
industry and has concluded that while it is reasonably possible that the virus could have a negative effect on our financial position, results of RMG III’s operations and/or search for a target company, the specific impact is not readily
determinable as of the date of the financial statements. The unaudited condensed financial statements do not include any adjustments that might result from the outcome of this uncertainty.
In February 2022, the Russian Federation and Belarus commenced a
military action with the country of Ukraine. As a result of this action, various nations, including the United States, have instituted economic sanctions against the Russian Federation and Belarus. Further, the impact of this action and related
sanctions on the world economy are not determinable as of the date of the RMG III unaudited condensed financial statements contained in this proxy statement/prospectus and the specific impact on the Company’s financial condition, results of
operations, and cash flows is also not determinable as of the date of the unaudited condensed financial statements contained in this proxy statement/prospectus.
Results of Operations
For the three months ended March 31, 2023, RMG III had a net loss of
approximately $2.8 million from interest in from the bank of $57 and approximately $1.4 million investment income earned on cash and investments held in Trust Account partially offset by changes in the value of derivative warrant liabilities of
approximately $2.1 million and approximately $2.1 million in general and administrative costs.
For the three months ended March 31, 2022, RMG III had net income of
approximately $5.8 million, from changes in the value of derivative warrant liabilities of approximately $6.4 million and $48,000 investment income earned on cash and investments held in Trust Account partially offset by approximately $690,000
in general and administrative costs.
Contractual Obligations
RMG III does not have any long-term debt obligations, capital lease
obligations, operating lease obligations, purchase obligations or long-term liabilities, other than a working capital loan and the Administrative Services Agreement to pay the Sponsor $20,000 per month for office space, secretarial and
administrative services provided to us.
Administrative Services Agreement
Commencing on the effective date of the Registration Statement, RMG
III agreed to pay an affiliate of the Sponsor a total of $20,000 per month for office space, administrative and support services (including salaries). Upon liquidation, it will cease paying these monthly fees. Upon completion of the Business
Combination, RMG III will pay to such affiliate an amount equal to $20,000 multiplied by the number of whole months that have elapsed between the date of the completion of the Business Combination and the closing of the Initial Public Offering.
The Sponsor, officers and directors, or any of their respective
affiliates, will be reimbursed for any out-of-pocket expenses incurred in connection with activities on RMG III’s behalf such as identifying potential target businesses and performing due diligence on suitable business combinations. The audit
committee will review on a quarterly basis all payments that were made by RMG III to the Sponsor, directors, officers or itself or any of their respective affiliates.
TABLE OF CONTENTS
RMG III incurred approximately $60,000 in general and
administrative expenses in the accompanying statements of operations for three months ended March 31, 2023 and March 31, 2022, respectively. RMG III had $180,000 and $120,000 included in accrued expenses-related party in connection with such
services as of March 31, 2023 and December 31, 2022, respectively.
Registration and Shareholder Rights Agreement
The holders of the Founder Shares, RMG III Private Placement Warrants
and any warrants that may be issued upon conversion of Working Capital Loans (and any RMG III Class A Ordinary Shares issuable upon the exercise of the RMG III Private Placement Warrants or warrants issued upon conversion of the Working Capital
Loans and upon conversion of the Founder Shares) were entitled to registration rights pursuant to a registration and shareholder rights agreement signed upon the effective date of the Initial Public Offering. The holders of these securities
were entitled to make up to three demands, excluding short form demands, that the Company registers such securities. In addition, the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent
to the completion of the Business Combination. RMG III will bear the expenses incurred in connection with the filing of any such registration statements.
Underwriting Agreement
RMG III granted the underwriters a 45-day option from the date of the
Initial Public Offering to purchase up to 6,300,000 additional RMG III Units at the Initial Public Offering price less the underwriting discounts and commissions. The underwriter exercised its over-allotment option in full on February 9, 2021.
The underwriters were entitled to an underwriting discount of $0.20
per unit, or approximately $9.7 million in the aggregate, paid upon the closing of the Initial Public Offering. In addition, $0.35 per unit, or approximately $16.9 million in the aggregate will be payable to the underwriters for deferred
underwriting commissions. The deferred fee will become payable to the underwriters from the amounts held in the Trust Account solely in the event that we complete a business combination, subject to the terms of the underwriting agreement.
On April 16, 2023, one of the underwriters waived its entitlement to
the payment of any deferred fee, of approximately $10,143,000, to be paid under the terms of the underwriting agreement and is no longer serving in any advisor capacity.
On April 17, 2023, one of the underwriters waived its entitlement to
the payment of any deferred fee, of approximately $6,762,000, to be paid under the terms of the underwriting agreement specifically to the closing of the Merger Agreement with H2B2
Deferred Legal Fees
We entered into an engagement letter to obtain legal advisory
services, pursuant to which RMG III’s legal counsel agreed to defer their fees until the closing of the Business Combination. As of March 31, 2032 and December 31, 2022, RMG III recorded an aggregate of $250,000 in connection with such
arrangement as deferred legal fees in the accompanying balance sheet.
Other Contractual Agreements
In December 2022, RMG III engaged a capital market advisor to assist
with the completion of the business combination. RMG III agreed to pay the advisor $500,000 in cash and $250,000 paid in equivalent dollar amount in common stock, solely in the event that we complete a business combination. As of March 31,
2023, we determined that a Business Combination is not considered probable. If the fee is determined to be a transaction cost for the Business Combination then the amount payable to the advisor may be accounted for as an expense in the period
the liability is recorded.
Critical Accounting Policies
The preparation of financial statements in accordance with accounting
principles generally accepted in the United States of America requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. A summary of the significant accounting policies
is included in Note 2 to the condensed financial statements in Part I Item I of the financial statements for RMG III included in this
TABLE OF CONTENTS
proxy statement/ prospectus. Certain of RMG III’s accounting policies are considered
critical, as these policies are the most important to the depiction of RMG III’s financial statements and require significant, difficult or complex judgments, often employing the use of estimates about the effects of matters that are inherently
uncertain. Such policies are summarized in the Management’s Discussion and Analysis of Financial Condition and Results of Operations section in RMG III’s 2022 Annual Report on Form 10-K filed with the SEC on April 18, 2023. There have been no
significant changes in the application of our critical accounting policies during the three months ended March 31, 2023.
Recent Accounting Pronouncement
Please see Note 2 to the unaudited condensed financial statements
included in Part I, Item I of the financial statements for RMG III included in this proxy statement/ prospectus for a discussion of recent accounting pronouncements.
Off-Balance Sheet Arrangements
As of March 31, 2023, RMG III did not have any off-balance sheet
arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K.
JOBS Act
The JOBS Act contains provisions that, among other things, relax
certain reporting requirements for qualifying public companies. RMG III qualifies as an “emerging growth company” under the JOBS Act and is allowed to comply with new or revised accounting pronouncements based on the effective date for private
(not publicly traded) companies. RMG III elected to delay the adoption of new or revised accounting standards, and as a result, it may not comply with new or revised accounting standards on the relevant dates on which adoption of such standards
is required for non-emerging growth companies. As a result, the unaudited condensed financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates.
Additionally, RMG III is in the process of evaluating the benefits of
relying on the other reduced reporting requirements provided by the JOBS Act. Subject to certain conditions set forth in the JOBS Act, if, as an “emerging growth company,” RMG III chooses to rely on such exemptions it may not be required to,
among other things, (i) provide an auditor’s attestation report on our system of internal controls over financial reporting pursuant to Section 404, (ii) provide all of the compensation disclosure that may be required of non-emerging growth
public companies under the Dodd-Frank Wall Street Reform and Consumer Protection Act, (iii) comply with any requirement that may be adopted by the PCAOB regarding mandatory audit firm rotation or a supplement to the auditor’s report providing
additional information about the audit and the financial statements (auditor discussion and analysis), and (iv) disclose certain executive compensation related items such as the correlation between executive compensation and performance and
comparisons of the CEO’s compensation to median employee compensation. These exemptions will apply for a period of five years following the completion of our Initial Public Offering or until we are no longer an “emerging growth company,”
whichever is earlier.
Quantitative and Qualitative Disclosures about Market Risk
RMG is a smaller reporting company as defined by Rule 12b-2 of the
Exchange Act and is not required to provide the information otherwise required under this item. As of March 31, 2023, RMG III was not subject to any market (other than related to our warrant liabilities) or interest rate risk. The net proceeds
of the Initial Public Offering, including amounts in the Trust Account, has been invested in U.S. government securities with a maturity of 185 days or less or in money market funds that meet certain conditions under Rule 2a-7 under the
Investment Company Act, that invest only in direct U.S. government treasury obligations. Due to the short-term nature of these investments, RMG III believes there will be no associated material exposure to interest rate risk.
RMG III has not engaged in any hedging activities since its inception
and it does not expect to engage in any hedging activities with respect to the market risk to which RMG III is exposed.
TABLE OF CONTENTS
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT OF RMG III AND THE SURVIVING CORPORATION
The following table and accompanying footnotes set forth information
known to RMG III regarding (i) the actual beneficial ownership of RMG III Class A Ordinary Shares and RMG III Class B Ordinary Shares, as of , 2023 (before the Business Combination) and (ii) expected beneficial ownership of the Surviving
Corporation immediately following consummation of the Business Combination (after the Business Combination), assuming no Public Shares are redeemed in connection with the Business Combination, and alternatively that all of the Public Shares are
redeemed in connection with the Business Combination, by:
•
|
each person who is, or is expected to be, the beneficial owner of more than 5% of the outstanding shares of common stock of RMG
III or the Surviving Corporation, as applicable;
|
•
|
each of RMG III’s current directors and executive officers;
|
•
|
each person who will become a director or executive officer of the Surviving Corporation; and
|
•
|
all directors and officers of RMG III, as a group, and of the Surviving Corporation, as a group.
|
The beneficial ownership of RMG III Ordinary Shares before the
Business Combination is based on 635,778 RMG III Class A Ordinary Shares, 12,075,000 RMG III Class B Ordinary Shares, 9,660,000 RMG III Public Warrants and 8,216,330 RMG III Private Placement Warrants issued and outstanding as of , 2023.
The expected beneficial ownership of shares of Surviving
Corporation Common Stock after the Business Combination on a fully diluted basis, assuming no Public Shares are redeemed, has been determined based upon the following: (i) no Public Shareholder has exercised its redemption rights to receive
cash from the Trust Account in exchange for its Public Shares; (ii) shares of Surviving Corporation Common Stock have been issued pursuant to the conversion of Class B Ordinary Shares; (iii) there will be an aggregate of shares of
Surviving Corporation Common Stock issued and outstanding at the Closing and (iv) an aggregate of up to shares of common stock are issued in connection with each of the then outstanding RMG III Domesticated Warrants being canceled and
exchanged for the right to receive 0.075 shares of Surviving Corporation Common Stock.
The expected beneficial ownership of shares of the Surviving
Corporation Common Stock after the Business Combination on a fully diluted basis, assuming all of the Public Shares have been redeemed, has been determined based on the following: (i) Public Shareholders have exercised their redemption rights
with respect to RMG III Class A Ordinary Shares; (ii) shares of Surviving Corporation Common Stock have been issued pursuant to the conversion of Class B Ordinary Shares; (iii) there will be an aggregate of shares of Surviving
Corporation Common Stock issued and outstanding at the Closing and (iv) an aggregate of up to shares of common stock are issued in connection with each of the then outstanding RMG III Domesticated Warrants being canceled and exchanged
for the right to receive 0.075 shares of Surviving Corporation Common Stock.
Beneficial ownership for the purposes of the following table is
determined in accordance with the rules and regulations of the SEC, which generally provide that a person is a “beneficial owner” of a security if that person possesses sole or shared “voting power,” which includes the power to vote or to
direct the voting of the security, or “investment power,” which includes the power to dispose of or to direct the disposition of the security or has the right to acquire such powers within 60 days.
TABLE OF CONTENTS
Unless otherwise noted in the footnotes to the following table,
and subject to applicable community property laws, the persons and entities named in the table have sole voting and investment power with respect to their beneficially owned common stock.
Name of Beneficial Owner
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RMG III
Directors and Executive Officers Pre-Business Combination
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
D. James Carpenter
|
|
|
12,075,000(2)(3)
|
|
|
95.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert S. Mancini
|
|
|
12,075,000(2)(3)
|
|
|
95.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
Philip Kassin
|
|
|
12,075,000(2)(3)
|
|
|
95.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
Wesley Sima
|
|
|
—(4)
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
Craig Broderick
|
|
|
—(4)
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
W. Thaddeus Miller
|
|
|
—(4)
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
Catherine D. Rice
|
|
|
—(4)
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
All officers and directors as a group (7 individuals)
|
|
|
12,075,000
|
|
|
95.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
RMG III Company
Five Percent Holders Pre-Business Combination
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sponsor
|
|
|
12,075,000(2)(3)
|
|
|
95.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
Surviving
Corporation Directors and Executive Officers Post-Business Combination
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jose Antonio Vázquez Romero
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Anselmo Andrade Fernández de Mesa
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Blanca Benjumea de Porres
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Florencio Salvador Ferrera Saldaña
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jose Javier Brey Sánchez
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Felipe Benjumea de Porres
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Africa Castro Rosende
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All officers and directors as a group ( individuals)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Surviving
Corporation Five Percent Holders Post-Business Combination
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Combined Company
Five Percent Holders Post-Business Combination
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Share ownership under each redemption scenario is only presented for illustrative purposes. RMG III cannot predict how many of
its Public Shareholders will exercise their right to have their Public Shares redeemed for cash. As a result, the RMG III Share Redemption
|
TABLE OF CONTENTS
Amount and the number of RMG III Class A Ordinary Shares redeemed in connection
with the Business Combination may differ from the amounts presented above. As such, the ownership percentages of H2B2 Stockholders, Public Shareholders, Sponsor, Holders of RMG III Public Warrants, and other stockholders may also differ from
the presentation above if the actual redemptions are different from these assumptions.
(2)
|
The Sponsor is the record holder of the shares reported herein. Each of the officers, directors and certain members of the RMG
III advisory board is or will be, directly or indirectly, a member of the Sponsor. MKC Investments LLC is the sole managing member of RMG Sponsor III, LLC, and Messrs. Carpenter, Mancini and Kassin are the managing members of MKC
Investments LLC. As such, they may be deemed to have or share beneficial ownership of the Class B Ordinary Shares held directly by the Sponsor. Each such person disclaims any beneficial ownership of the reported shares other than to the
extent of any pecuniary interest they may have therein, directly or indirectly.
|
(3)
|
Interests shown consist solely of Founder Shares, classified as RMG III Class B Ordinary Shares.
|
(4)
|
Does not include any shares indirectly owned by this individual as a result of a profit interest in the Sponsor. Each of these
individuals disclaims beneficial ownership of any shares except to the extent of their pecuniary interest therein.
|
TABLE OF CONTENTS
Unless the context otherwise requires, all
references in this section to “H2B2,” the “Company,” “we,” “us,” “our” and other similar terms refer to the business of H2B2 Electrolysis Technologies, Inc. and its subsidiaries prior to the consummation of the Business Combination, which will
be the business of the Surviving Corporation and its subsidiaries following the consummation of the Business Combination.
Our Company
Overview
We are a global green hydrogen platform that provides bespoke
integrated solutions to our customers across the whole hydrogen value chain. Our customer-centric, one-stop shop offering enables seamless and effective support through the entire lifecycle of a hydrogen production facility (including the
identification of the opportunity, R&D, design, engineering, procurement and construction, and operation and maintenance services for the hydrogen facility), and complete solutions for transportation, storage, and sale of green hydrogen.
Our global strategy aims to offer our products and services in
regulated markets where hydrogen is expected to play a key role in decarbonizing mobility and industrial activities, among other sectors of the economy, and for hydrogen storage solutions to secure energy independence. Our target markets
include EMEA, the Americas, and APAC, where we have built a robust and diversified project pipeline and identified significant growth opportunities. In light of our proprietary technologies and successful track record in delivering large-scale
projects, we believe we are positioned to continue providing curated solutions that satisfy our customers’ needs and expectations while being at the forefront of green hydrogen’s growth, as a leading OEM, project developer, EPC provider,
O&M provider and producer in the green hydrogen sector.
The Company is comprised of the following wholly owned subsidiaries:
H2B2 USA, LLC, H2B2 Electrolysis Technologies, S.L., H2B2 QOF LLC, Green H2 LLC, SoHyCal LLC, H2B2 Corp S.L., H2B2 O&M S.L., Flitecho, S.L. and H2B2 Electrolysis Technologies UK Ltd, and the investment in the following joint ventures;
GreenH Private Limited (“GreenH”) and H2V2 de Mexico SA (“H2V2”).
Our Platform
Our commercial footprint expands across EMEA, the Americas, and APAC.
We lease a state-of-the-art manufacturing facility in Seville, Spain, with an estimated total production capacity of 200 MW per year. This 3,300 m2 facility allows for the integration of our corporate services and engineering and is expected to
serve as our manufacturing hub. We are planning the construction of a 4,800 m2 manufacturing facility in Fresno, California, to be strategically located between Sacramento and Los Angeles, one of the areas with the highest political support for
renewable energy in the U.S. We believe this facility will enable us to further penetrate the U.S. market.
We are also expanding rapidly and are planning additional
electrolyzer manufacturing facilities in the U.S., India, Colombia, Northern Spain and other regions where we are able to secure relevant roles in strategic projects. In addition, we seek to offer added value to customers by co-locating
electrolyzer manufacturing facilities close to major customers and serve as technology partners by contributing to the local high skilled and quality employment where we act, allowing us to become a top-tier green hydrogen company. We have a
pipeline with several projects we expect are executable in the near-term. We have several installed projects or awarded projects, including SoHyCal, a 9 MW green hydrogen facility, a pioneer green hydrogen project 100% owned and developed by
us, which we believe is one of the largest pure renewable energy hydrogen projects in the United States. The facility has been completed and is currently in the process of quality control testing and preproduction test runs, starting with
Biogas when available, to ensure the capacity, quality and specifications required by the CEC, preparing the long-lived asset to be ready for its intended use. Another relevant project includes our technology partnership with Ecopetrol
(Colombia’s leading oil company, and the second-largest oil & gas company in Latin America, currently ranked number 346 in the Fortune Global 500) to develop green hydrogen projects for mobility. In addition, we recently were selected as
the preferred bidder for the contract to manufacture two 18 MW green hydrogen facilities in Norway, one facility to be located in Glomfjord for Greenstat (a listed renewable energy company, primarily focused on developing hydrogen, industrial
wind, and solar energy projects) and the other facility to be located in Rørvik for Greenstat and NTE (one of the largest utility companies in Norway). A Letter of Intent is pending negotiation for the Glomfjord project; a Letter of Intent has
been signed for the EPC for the Rørvik project.
TABLE OF CONTENTS
Our Products
We have a customer-centric go-to-market business model and look to
provide our customers with differentiated and scalable solutions:
•
|
Conventional Product: Currently we provide our customers with this solution, which focuses on selling and installing hydrogen
facilities for third parties, which includes manufacturing and installing equipment, including electrolyzers, consulting and engineering services, EPC, and O&M services, with limited integration and specific to the needs of a
project; and
|
•
|
Integrated Product: Going forward, we expect to provide a more fulsome and integrated suite of products and services that
includes all the services offered under our Conventional Product together with project development services, such as identification of opportunities, site selection, negotiating PPAs and off-take agreements, permitting, and financing
solutions, including offering production guarantees (“PG”) to secure sustainable financing. Our Integrated Products will be self-developed and the majority funded by third parties, or, in some cases, we may function as a technological
partner for a customer interested in developing a green hydrogen production facility.
|
To continue to successfully secure and develop landmark projects and
establish ourselves as a leading global green hydrogen platform, we have built our business with a highly capable workforce with complementary skills that will enable us to deliver a comprehensive and integrated offering of products and
services to create customized solutions throughout the green hydrogen value chain, spanning from our R&D team, toward the development and the equipment manufacturing teams, to our EPC and O&M services specialists, and closing the gap
within the value chain with a group of employees with financial background to provide asset management services.
Our Projects and Pipeline
We have been successful in identifying a robust and diversified
pipeline of more than 200 projects that we believe could be contracted in the next 18 months representing approximately 5.6 GW split across our target markets (EMEA, the Americas, and APAC). Our pipeline includes installed projects, projects
under construction, awarded projects and potential pipeline projects.
According to the advancement stage of the project, our pipeline as of
the date of this proxy statement/prospectus is as follows:
Installed projects
|
|
|
Approximately 0.1 MW
|
|
|
Conventional Product
|
|
|
PowiDian (0.1 MW)
|
|
|
|
Approximately 3 MW
|
|
|
Integrated Product
|
|
|
Our landmark SoHyCal production facility, one of the largest green hydrogen
electrolysis production facilities in the U.S. Construction of Phase I (the first 3 MW) has been completed and is currently in the process of quality control testing and preproduction test runs, starting with Biogas when available, to
ensure the capacity, quality and specifications required by the CEC, preparing the long-lived asset to be ready for its intended use.
|
Projects under construction
|
|
|
Approximately 15 MW
|
|
|
Conventional Product
|
|
|
Projects under construction include GP Joule (10 MW), Redexis (2.5 MW),
Serveo (1 MW), Puerto de Vigo (1 MW) and Ecopetrol (0.27 MW).
|
Awarded projects(1)
|
|
|
Approximately 63 MW
|
|
|
Conventional Product
|
|
|
Pending customer obtaining financial close, including projects, Dynamis
Energy (18 MW), Greenstat (Glomfjord project (18 MW)(2), Rørvik project (18 MW) and GreenSwitch project (3 MW).(3)
|
TABLE OF CONTENTS
|
|
|
|
|
|
Integrated Product
|
|
|
We recently received a conditional use permit for Phase II of SoHyCal which
includes an additional 6 MW of electrolysis powered by a 15 MW solar facility. We are awaiting final approvals and financial close for Phase II. We are also awaiting review and approval of a separate conditional use permit for a HRS
that will be part of Phase II.
|
Potential pipeline projects(4)
|
|
|
Approximately 5.5 GW
|
|
|
Conventional Product
|
|
|
Approximately 2.7 GW across several projects.
|
|
|
|
|
|
|
Integrated Product
|
|
|
Approximately 2.8 GW across several projects
|
(1)
|
Projects awarded or named preferred bidder, subject to client obtaining financial close. The contract is still to be signed.
|
(2)
|
A letter of intent is pending negotiation for this project.
|
(3)
|
The commitment is that the plant will be operational in 2026. We have a Right of First Refusal with GreenSwitch and have helped
them with the preparation for the tender process.
|
(4)
|
Includes projects that have not been awarded yet but are at varying stages of the process, including those that (i) we have bids
out for, (ii) are at the budgetary or technological partner stage, (iii) are at the technical economical proposal or expected RFQ stage or (iv) are at the tender process or early development stage.
|
Technology
Our technology platform is highly flexible and versatile. We are
technologically agnostic and have the capability to deal with a variety of green hydrogen technologies. Our current projects under development primarily rely on PEM electrolysis technology, a proven and more mature technology that we are
already producing and commercializing. For our PEM offering, we are focused on providing technical value through the integration of “off-the-shelf” electrolyzers, including various supporting and auxiliary components of a hydrogen production
facility (BoP). This includes engineering, design, procurement, manufacturing, testing and operations to meet customer specifications for an efficient and robust electrolysis process. With our PEM offerings, we are able to integrate our PEM
electrolyzers, which we manufacture in-house with third party stacks, and our flexible solutions to develop and maintain green hydrogen production facilities for our customers. In addition, we have already filed five patent applications
relating to BoP. In addition to utilizing PEM technology, we are investing in emerging technologies to maintain our leading position as the market evolves. For example, we are currently developing a next-generation SOEC technology, for which
we are seeking patent protection, and AEM technologies. We expect to be able to provide the same Integrated Products and solutions that we currently offer for PEM technologies for our future SOEC and AEM technologies, with a key difference
being that we plan to develop the stacks in-house for our future SOEC and AEM electrolyzers, thus controlling the entire process.
History and Growth
We were formed in 2016 and since our inception we have been growing
steadily. We have proven our execution capabilities, successfully developed multiple projects and we believe we are transforming into a leading developer, builder, and operator of green hydrogen production facilities for clean energy
generation. We have secured approximately $35 million in public grants, including from the European Commission’s IPCEI Hy2Tech program and the CEC, among others. We are an active member in various hydrogen associations in the U.S. and Europe,
including Hydrogen Europe, Advanced Energy Group, and Asociación Española del Hidrógeno, and we have collaborated in green hydrogen innovation programs such as Clean Hydrogen Mission and the European Strategic Research Agenda.
TABLE OF CONTENTS
Key milestones since inception
(1)
|
SoHyCal Phase I will have an electrolysis capacity of 1,290 kg per day of hydrogen, and once Phase II is completed, SoHyCal is
expected to have an electrolysis capacity of 3,000 kg or more of hydrogen per day.
|
(2)
|
Important Projects of Common European Interest.
|
(3)
|
Hydrogen Refueling Stations.
|
Our Market Opportunity
There is a global focus from governments and other stakeholders on
limiting GHG emissions and securing energy independence. In addition, adherence to various ESG targets has become important to certain investors as they consider investing in private and public companies. Companies are increasingly compelled to
prioritize relevant ESG initiatives based on government initiatives and regulation. To facilitate the transition towards a net-zero emission economy, many jurisdictions around the world, in particular the current U.S. presidential
administration, certain U.S. states and the member countries of the EU, have set ambitious decarbonization targets and released dedicated hydrogen strategies. Financial or regulatory support for increased R&D, and broader use of hydrogen to
reduce carbon emissions, is becoming more common in many developed countries, several of which are considered as the largest greenhouse gas polluters.
In this context, we believe that there is an increased recognition of
the potential for green hydrogen to play a central role in the future decarbonized energy system due to its relatively high energy content (on a mass basis), its abundance in nature and relatively simple production methods, which we identified
as a growth opportunity. Accordingly, the development of efficient hydrogen production facilities, including those utilizing electrolysis technologies, is estimated to grow significantly in the coming years.
According to BloombergNEF New Energy Outlook 2021, the green hydrogen
energy market has the potential to reach $10 trillion in value by 2030. On the demand side, according to the Hydrogen Council, green hydrogen is expected to surpass 10 Mt by 2030, from a demand of 0.1 Mt in 2020. Driven by this increased
hydrogen demand, the electrolyzer market is expected to experience significant growth over the next decade. According to BloombergNEF, 2022 was a record year in electrolysis deployment, with more than 1 GW of additional installed capacity. When
compared to the 0.2 GW 2021 annual installed capacity according to the International Energy Agency (“IEA”), we see that there was a fivefold increase in annual electrolyzer installations from 2021 to
2022. This increase has led to a total operational capacity above 300 MW in Europe and North America. The favorable outlook for growth in electrolyzer demand has stimulated a boost in electrolyzer capacity, which has reached 2 GW in 2022
worldwide and could reach 242 GW in 2030, which would represent an 82% CAGR. In addition, as of January 2023, globally, there are over 1,146 announced large
TABLE OF CONTENTS
hydrogen projects with $320 billion of required investment, according to Hydrogen
Council & McKinsey March 2023 H2 insights report. One half of the total announced projects are considered mature, and 9% of the total announced projects have either reached FID status or are under construction or operational.
Our Competitive Strengths
We believe our customer-centric, fully integrated and flexible
solutions for the development and maintenance of green hydrogen production facilities provide an attractive value proposition for customers and will support our ability to capture a significant part of the green hydrogen market. Our key
strengths and competitive advantages are outlined below:
An innovative, commercially proven and leading
industrial platform, providing end-to-end green hydrogen solutions, with a pathway to be positioned as a leader in the market
We are a leading green hydrogen platform, providing a range of
services across the entire value chain.
To offer holistic capabilities and quality services, we have
assembled a seasoned team with complementary skills which will play an intrinsic role across the entire green hydrogen value chain from the designing/improvement of the technology itself, to the manufacturing of the equipment required for the
green hydrogen facilities, through the development and end-to-end EPC services of those facilities and once commissioned, a team of professionals able to support customers through our O&M services. Depending on the customers, we may be able
to offer investment solutions for certain projects. We are positioned to capitalize on developing technologies around PEM, AEM, and SOEC electrolysis. Further, our expertise and complementary services enable us to obtain faster approvals for
our development projects and easier access to technical information. It also facilitates our ability to provide tailor-made solutions for our customers, and to achieve reduced hydrogen production costs.
Unlike many competitors in the space, our holistic and comprehensive
approach positions us well within the market, allowing us to win landmark projects and identify a robust and diversified pipeline of more than 200 potential projects. We have an outstanding track record and proven integration capabilities with
renewable production facilities.
Our manufacturing flexibility allows us to manufacture electrolyzers
independently of the electrolyzer stack technology and follow a scalable model to build local manufacturing facilities where needed, allowing us to more easily adapt to the evolving market and contribute to local economic development. Once a
facility is ready, we intend to provide PG, and we expect to be one of the few players in the industry doing so.
SoHyCal, our green hydrogen facility in California, has been
completed and is currently in the process of quality control testing and preproduction test runs, starting with Biogas when available, to ensure the capacity, quality and specifications required by the CEC, preparing the long-lived asset to be
ready for its intended use. SoHyCal is a prime example of our capabilities. We developed the whole project in a seamless manner from the initial identification of the opportunity, through the financing, design, permitting, construction, and now
commissioning of the project. Our success in this project is attributable to our team’s unique team commercial, technological, EPC and O&M capabilities to provide this kind of turnkey solution to our clients.
Customer-centric business model to satisfy
customer needs
We firmly believe in a customer-centric model, allowing our customers
to tailor and scale our solutions to their needs. By covering each stage of the entire green hydrogen value chain, we have developed a one-stop-shop approach that offers our customers development and design services, off-take agreements,
financing, and O&M services. This broad but flexible and scalable mix of products and services gives us an attractive selling point in the market, and allows us to bid for various projects and build a robust project pipeline.
Our Conventional Product allows us to collaborate on projects
developed by third parties, typically contracted through a competitive bidding process. We offer equipment (including electrolyzers) and construction of production facilities, as well as planning, and O&M services to those projects. We
offer all the services for these hydrogen production facilities to become operational and our specific role may vary depending on the customer’s needs.
Our Integrated Product will be utilized by either self-developed
projects or third-party developed projects. In the case of self-developed projects, we may invest a minority stake in the project while a third party funds the rest. In the
TABLE OF CONTENTS
case of projects developed by third parties, we will position ourselves as a
technological partner for third parties interested in developing green hydrogen projects. We will retain exclusivity over the whole project and provide turnkey solutions for such third-party developers. The third party is typically the lead
developer, already having off-take agreement arrangements, but requires technological capabilities to develop and build the project. This will sometimes be funded by the off-taker or by third-party funds.
For both products, our dedicated team works together with the
customer under the direction of a Project Manager whose main goal is to satisfy our customers’ needs within the scope of the applicable services agreement, bringing solutions and reliability in the hydrogen production. We believe that working
side by side with our customers allows us to develop stronger customer relationships, and enables us to benefit from customer feedback throughout our customer engagements.
Proprietary and flexible electrolysis
technology
We currently utilize proven PEM technology and our PEM
electrolyzers are already being produced and commercialized. We manufacture our electrolyzers in-house and procure our PEM electrolyzer stacks from third-party suppliers. As of the date of this proxy statement/prospectus, we have filed five
European patent applications related to our BOP (including in relation to our PEM electrolyzer offerings). We look to provide our customers on-site and on-demand hydrogen generation, capable of operating in part-load and over-load conditions.
We continuously invest to maintain our leadership position in the
green hydrogen market. We are currently working on developing next-generation SOEC and AEM technologies. Currently, we have a pending European patent application regarding our SOEC stack manufacturing technology. Our aim is to manufacture
electrolyzers and SOEC/AEM electrolyzer stacks in-house, with the expectation of making megawatt-scale electrolyzers commercially available once the technology is viable.
We expect our upcoming technologies to give us a competitive
advantage. We strive to have greater hydrogen production yields and reliability than our competitors, which would provide us with an opportunity to gain a greater market share.
We are a global company with the ability to
identify and deliver unique projects of different scale across our target markets
We have been successful in identifying a robust and diversified
pipeline of more than 200 potential projects, with an aggregate capacity of approximately 5.6 GW of identified potential projects. Furthermore, we have worked with significant customers such as Ecopetrol, GP Joule, Cepsa and Tecnicas Reunidas.
In 2018, the CEC awarded us a landmark project, SoHyCal. SoHyCal is a
green hydrogen production facility, wholly owned by us, and expected to be one of the largest green hydrogen production facilities in the U.S. SoHyCal will have an expected 9 MW capacity after completion of Phase II. Phase I of the facility has
been completed and is currently in the process of quality control testing and preproduction test runs, starting with Biogas when available, to ensure the capacity, quality and specifications required by the CEC, preparing the long-lived asset
to be ready for its intended use. We also received a conditional use permit for Phase II of SoHyCal in June 2023. SoHyCal’s green hydrogen production is intended to serve California’s network of public hydrogen refueling stations.
Our leading proprietary technology, tailor-made scalable solutions
across the entire green hydrogen value chain, and first-hand knowledge of costs and efficiencies involved in project development, positions us to continue identifying, securing and successfully delivering landmark projects.
As of the date of this proxy statement/prospectus, we have two
headquarters, one in California and one in Spain. In addition, we also work through joint ventures in India and Mexico and are developing projects in Colombia, Netherlands, Middle East and Germany. Finally, we also have a commercial support
center in central Europe. The latter shows our ability to grow fast, starting with a commercial growth and then going through an increased capacity of our manufacturing and EPC capabilities – all possible due to trustable and reputed
professionals previously identified by our crew.
TABLE OF CONTENTS
Industry-leading management team
Since inception, we have curated a leading management team that
brings two decades of hydrogen production, processing and technology development experience to deliver outstanding performance. Taken together, our management team has an accumulated experience of over 200 years and has a strong background in
engineering and financing projects. Additionally, our management team has significant experience in building large energy EPC projects. We believe these two features allow us to be a key player in the sector and enable us to offer scalable
green hydrogen solutions in the market under the guidance of an experienced team. Given our management team’s experience, we believe that they have developed a growth strategy that drives us to be a leader in the sector and create new
innovative solutions in the green hydrogen industry. We are an active member in various hydrogen associations in the U.S. and Europe, including Hydrogen Europe, Advanced Energy Group, and Asociación Española del Hidrógeno, and we have
collaborated in green hydrogen innovation programs such as Clean Hydrogen Mission and the European Strategic Research Agenda.
We achieved an extraordinary balance with our management team, as
part of our team has vast experience in the know-how and technology related to the green hydrogen while some have an impressive track record in large EPC energy projects worldwide, are used to deal with important customers. Therefore, we
believe we are uniquely positioned to manage large scale hydrogen projects. Furthermore, our team has extensive of experience in thermosolar plants, such as in Solana and Mojave in the U.S., the first of their kind, as well as vast experience
with energy projects worldwide covering all the disciplines from the management, engineering, procurement, construction, commissioning and O&M, due to its over 20 years of experience in a very big leading global EPC company.
Our Growth Strategy
Our growth strategy is focused on leveraging our competitive
strengths and expanding our core business of providing end-to-end hydrogen solutions to customers across the entire green hydrogen value chain.
Focus on innovation and our expansion into new
electrolysis technologies
We continue to enhance our PEM technology, and invest in
developing new technologies, including SOEC and AEM, in an effort to remain at the forefront of innovation in the green hydrogen industry. Our goal is to lead the green hydrogen industry in technological transformation by introducing these
new technologies. We also expect to maintain our competitive edge by reducing hydrogen production costs, and increasing energy efficiency, technology reliability, and hydrogen production yield. We also aim to consolidate as a reference player
in large, integrated green hydrogen solutions by scaling-up our execution capabilities. We have applied for five European patents relating to BoP and one European patent relating to manufacturing SOEC stacks to shore up the investments we
have made in technology development.
For the development of these technologies, we have collaboration
agreements with eight research centers that bring together more than 25 researchers, who collaborate with us. Developments of SOEC and AEM technologies include not only new electrolyzer stacks, but also the efficient manufacturing of these
systems in-house.
Expand our pipeline organically and capitalize on
attractive opportunities in our existing markets and by expanding into new markets
As of the date of this proxy statement/prospectus, we have been
successful in identifying a robust and diversified pipeline of more than 200 potential projects and we plan to replicate this success going forward by continuing to focus on expanding our pipeline, with an added emphasis on our Integrated
Product. Our Integrated Product will enable a step-up in business activities, focused on securing recurring medium-term revenue streams and allowing us to become a technology partner for companies entering the hydrogen space.
We have recently expanded our operating into APAC and certain
countries in Latin America. These new markets may represent a growing opportunity for our products and services, nonetheless we expect EMEA and the Americas to remain our core markets.
We continue to expand our team to increase our funnel of
opportunities and to accommodate our expanding pipeline. We are expanding our presence worldwide by reinforcing our commercial teams in the U.S., México and India (through our JV) and Europe. We expect to hire more personnel as our pipeline
grows.
We also planning to continue targeting significant customers in our
existing and new markets. A key factor in expanding our pipeline in new and existing markets will be increasing our current manufacturing capacity by
TABLE OF CONTENTS
expanding our manufacturing facility footprint in targeted markets. We hope to
decentralize the manufacturing of our equipment and hydrogen production facilities to avoid investments in large factories, therefore evading associated market risks. We believe a decentralized manufacturing approach will allow us to attract
customers that will positively support our partnership as we look to collaborate with the local economy and create local jobs in new and existing markets.
Scaling manufacturing facilities by following a
successful partnership strategy in existing and new markets
Our current manufacturing facility is in Seville, Spain and we are
planning to expand our manufacturing facilities where our projects and joint-ventures require it. Our strategy to form successful partnerships and joint ventures has allowed us to expand more rapidly in new regions, such as in the case of
GreenH, a joint venture with GR Promoter Group to develop the green hydrogen economy in Asia. Leveraging partnerships and joint ventures allows for expansion into those markets where knowledge from our partners can enable and enhance the
deployment of hydrogen production facilities. Often this knowledge includes information regarding local permits and familiarity with local regulatory authorities, allowing for faster project development and construction. Additionally, we are
often able to leverage these relationships to unlock a greater commercial network, allowing direct access to the main hydrogen consumers in these markets. We have been able to use this approach several times, granting us access, for example, to
the Indian, Mexican and Colombian hydrogen markets through our joint ventures with GR Promoter Group and Hidrógeno Verde de México, and our role as Ecopetrol’s technology partner, respectively.
To meet surging demand, we are scaling up our manufacturing
capacities. In April 2023, we moved into a new, state-of-the-art manufacturing facility in Seville, Spain. The facility has 3,300 m2 of total surface space and allows for the integration of our corporate services and engineering and will serve
as our manufacturing hub. The facility also represents a significant improvement in manufacturing capability, aiming to increase our PEM electrolyzer assembly capacity from 90 MW to 200 MW per year.
In addition to this new facility, our global strategy relies on
locating electrolyzer manufacturing facilities close to major customers, allowing us to be flexible, establish manufacturing where hydrogen demand is located and contributing to the local development. This strategy allows us to adapt to the
fast-evolving market that we operate in and to ensure efficiency. For this purpose, we are currently securing new facilities in several locations to support different partnerships.
By following this strategy, we have achieved significant milestones
such as:
•
|
Opening our state-of-the-art manufacturing facility in Seville, Spain;
|
•
|
Entered into a lease agreement for an approximately 9,000 m2 facility in Yakubpur, India that will
be used as a manufacturing facility and managerial office center in connection with our GreenH joint venture. The manufacturing facility and managerial office center are expected to be operational in September 2023;
|
•
|
Entered into a framework agreement with Ecopetrol to analyze the development of manufacturing facilities in Colombia to
support Ecopetrol’s hydrogen plan; and
|
•
|
Signed a memorandum of understanding with Enel for the building of a manufacturing facility in northern Spain that is
expected to have at least 40 MW capacity.
|
TABLE OF CONTENTS
Well positioned to continue to win grants and
benefit from increasing government investment
Currently, governments across the world are increasing their efforts
to promote the energy transition. An example of such efforts is the IRA, which announced a $369 billion investment by the U.S. into clean energy technologies and infrastructure industries. Europe likewise has seen several initiatives, such as
the Paris Agreement and government investment programs, such as REPowerEU and NextGenerationEU’s Recovery and Resilience Facility. The European Commission also appears to be working towards making funds easier and faster to access for renewable
energy technologies, as well as to potentially increase investment into green industrial projects. In Europe, we highlight the creation of the European Hydrogen Bank, which was announced in September 2022, aims to support hydrogen producers
using an auction bidding system, which ranks bidders according to price per kilo of hydrogen. Utilizing the Innovation Fund, the European Commission will allocate €800 million for the first auction for support from the European Hydrogen Bank,
with subsidies capped at €4/kg of hydrogen. Another example is the Spanish government announcing that more than €1,000 million of aid will be available for the development of technology and hydrogen projects between 2023 and 2026 (“Componente 9, Plan de Recuperación, Transformación y Resiliencia”).
We believe that we are at the forefront of the hydrogen sector as a
result of our leading green hydrogen platform, which positions us to access the vast amount of government funds available. So far, we have secured approximately $35 million in public grants from the European Commission’s IPCEI Hy2Tech program,
CEC, as well as others. Currently we are finalizing our Phase I of the SoHyCal project, one of the largest green hydrogen electrolysis production facilities in the United States, which was funded with a CEC grant. We believe that our strong
track record in engineering, our technological knowledge of hydrogen production, our proprietary technology and our EPC capabilities are all key attributes that will enable us to secure government and institutional grants. We believe our strong
track record combined with the increase in public funding for green hydrogen projects will allow us to secure new grants to partially fund our growth strategy and more importantly to continue investing in R&D activities to stay in the
forefront of innovation.
As an example, as of the date of this proxy statement/prospectus, we
have recently been named the selected bidder for two projects to produce green hydrogen for maritime use in Norway that will benefit from grant from Enova.
De-risking investments by offering guarantees to
our customers
Depending on the nature and requirements of the customer, we offer
different levels of guarantees during the construction phase to include coverage for costs, delays, and/or potential performance variances. Furthermore, once a project is finalized, we may guarantee the availability of hydrogen, depending on
the specific arrangement entered into with our customers. Such arrangements typically result in our team caring for the facility’s critical equipment and provide us an opportunity to entrench ourselves over the life of the facility, giving our
customers a seamless solution from the conception of the facility through completion and operation and until its decommissioning.
Currently, the cost of equity for investors looking to enter into the
construction of hydrogen production facilities is adjusted for consideration of off-take risks and technological risks. We believe we are one of the few companies in the market that intend to offer PG to offset risk. In such cases, we reduce
the technological risks, which significantly lowers the cost of capital and makes the entry into the hydrogen production facility market much more attractive for investors. This is especially true for non-specialized investors, which
subsequently broadens our potential pool of partners and third-party investors.
Green Hydrogen Industry
Introduction to Green Hydrogen
Although hydrogen is the most abundant element in the known universe,
it rarely exists in its pure form on Earth. In most cases, hydrogen occurs as a compound with oxygen in water molecules or as a carbon compound in living beings or fossil energy sources. Consequently, hydrogen typically cannot be extracted
directly from natural sources in its pure form and instead must be produced through chemical processes. Depending on the production method used, and whether the hydrogen produced is fossil-based or not, the resulting hydrogen is categorized as
either grey (produced from natural gas), blue (grey hydrogen but with carbon capture utilization and storage techniques), pink (electrolysis powered by nuclear energy), or green (clean hydrogen generated from renewable energy).
TABLE OF CONTENTS
Green hydrogen is produced through electrolysis of water or
water-based solutions of electrolytes such as potassium hydroxide. Green hydrogen is a uniquely abundant source of energy that comes from 100% renewable sources, such as wind or solar, and is expected to play a key role in the global
decarbonization process as it is lightweight and has a high source of gravimetric energy density, making it more powerful and energy efficient than fossil fuels. Furthermore, it can be produced on demand and is easy to store. The green hydrogen
production process emits only negligible amounts of CO2, and as such, green hydrogen is considered the cleanest method for producing hydrogen in terms of CO2 emissions. Additionally, electrolysis produces a much higher purity of hydrogen,
compared to reforming and gasification, meaning that green hydrogen is more powerful and energy efficient than fossil fuels. For that reason, it is widely applicable in various end-use sectors including, mobility, industrial applications, and
agriculture.
Mature Electrolysis Technologies
Currently, only two electrolysis technologies, AWE and PEM, are
mature enough for commercial use and support the MW capacity range demanded by industrial applications.
Alkaline Water Electrolysis:
AWE is a mature and safe technology, currently used in many
industrial applications. One of the main advantages of using AWE over other technologies is its ability to scale-up to higher MW range production capacities. However, alkaline electrolysis is bulky and slow, making it difficult to integrate
with renewable energy production plants. AWE utilizes alkaline electrolytes such as sodium hydroxide (NaOH) or potassium hydroxide (KOH) solutions, typically in concentrations of approximately 20–40%. This can create a waste management problem
during operation. AWE electrolyzers do not use noble metal catalysts, but instead utilize stable and long lifetime metals, such as nickel (800 kilogram per megawatt (“kg/MW”)), steel (10,000 kg/MW), and
aluminum (500 kg/MW). With current metal prices, use of these catalysts results in costs of around $25/kW, representing only a small share of total AWE electrolyzer costs.
From an economic viewpoint, the lifespan of AWE systems (several tens
of thousands of hours of operation) is sufficient for continuous operation and can be profitable. The cost reductions as a result of using AWE technology have generally been moderate over recent decades, reaching CapEx requirements in the range
of $500–$1,400 per Kilowatt-electric (“kWe”), which may be lower per kWe than PEM technology. One limitation seen in emerging markets, and an obstacle for AWE, is that current AWE cells have difficulty operating at low current densities. This
in turn limits the ability to deploy AWE with renewable energy sources. PEM is the only other mature electrolysis technology that can be deployed at scale. Compared to PEM, AWE is durable and has relatively low operating costs. AWE
electrolyzers are also less sensitive to water impurities, reducing the need for expensive water treatment and allowing for the use of seawater or wastewater. Nonetheless, AWE electrolyzers are considered less efficient than PEM as they require
higher operating pressures.
Proton Exchange Membrane:
The primary difference between PEM and AWE is, in the case of PEM,
the use of a solid polymeric membrane instead of a liquid alkaline solution for electrolysis. Furthermore, PEM electrolyzers use rare and noble metals in the anodes and cathodes (iridium and platinum respectively), while AWE electrolyzers use
more widely available materials such as nickel, iron, cobalt and carbon.
PEM electrolyzers can reach high current and power densities and can
operate well under dynamic operations and partial load. Therefore, PEM electrolyzers are highly responsive, which makes them easier to couple with renewable energy sources than AWE electrolyzers. Disadvantages of PEM systems include their
reduced durability, related to catalyst loss and membrane lifetime, and their cost, partly due the use of precious metals as catalysts (like ruthenium, iridium, and platinum) and the exposure of materials to highly acidic media. Therefore, in
order to develop PEM systems, it is necessary to maintain the maximum efficiency of the electrolysis stack at minimum cost. PEM technology has shown significant cost reductions, mainly realized through R&D. CapEx requirements for PEM
electrolyzers are currently in the range of $1,100–1,800 kWe.
According to the IEA latest Global Hydrogen Review 2022 edition, in
2021, almost 70% of the installed capacity was AWE, followed by PEM electrolyzers accounting for 25%. The share of AWE in the total installed capacity (for which technology information is available) is expected to remain at around 60% for the
next five
TABLE OF CONTENTS
years, but decreases afterwards, so that by 2030 the total capacity could be equally
split between AWE and PEM. Regarding manufacturing capacity, by 2030, AWE is projected to account for 64% of manufacturing capacities, followed by PEM (22%) and SOEC (4%).
Emerging Electrolysis Technology
Emerging electrolysis technologies include SOEC and AEM
electrolyzers, but these technologies are less mature than AWE and PEM electrolyzers and represent only a small fraction of the total installed capacity today. In many cases, developers of projects in our project pipeline have not yet announced
the electrolysis technology that they intend to utilize, especially for projects expected to be operational in 2026 or later.
Despite the maturity of AWE and PEM electrolysis technologies and
their commercialization, AWE and PEM technologies continue to suffer from feasibility problems due to production inefficiencies and economic challenges. The materials necessary to produce hydrogen using AWE and PEM technologies are also scarce,
so large-scale hydrogen production using these technologies may not be viable in the long run. To mitigate these setbacks, governments have introduced initiatives to develop new electrolysis technologies that can replace or compete with
existing technologies.
SOEC and AEM are examples of emerging technologies at the early
stages of commercial development, as a result of which we believe only a few companies and OEMs will be involved in their manufacture and commercialization in the short-term. SOEC offers gains in efficiency because it uses steam instead of
water, and thus requires less electrical energy to produce the same amount of hydrogen. However, SOEC typically produces non-pressurized hydrogen, and downstream hydrogen compression results in loss of efficiency. SOEC technology has proven to
be best suited to industrial applications that use heat and need to decarbonize, such as steel and ammonia production, among others. The downside of SOEC technology is that it may potentially require a higher CapEx, but this is partially offset
by the higher efficiency of the system once operational.
AEM technology is situated in between PEM and AWE technologies. AEM’s
potential lies in its ability to operate in less harsh environments, like AWE electrolyzers, combined with the simplicity and efficiency that is associated with PEM electrolyzers. The AEM technology relies on the use of a solid alkaline
membrane and presents a fast and compact option for electrolysis. Although AEM has not yet been commercialized, it is a promising option in the electrolyzer sector as it does not rely on scarce materials, as required by PEM electrolyzers. AEM
technology uses cheaper materials than PEM, including steel, plate, and precious metals and integrates a solid, non-porous polymer electrolyte to enhance the kinetics, thus reducing cell cost while making much purer hydrogen at higher
efficiency. In contrast to AWE, AEM electrolysis can be operated at higher pressures and current densities, and allows for rapid start-up and shutdown, all of which provides a high degree of flexibility. Therefore, AEM electrolysis combines the
benefits of both PEM and AWE technology.
The main obstacle currently faced by AEM is that its production
remains at a small-scale and it uses a modular approach with small stack sizes compared to other technologies, limiting industrial applications. The AEM membrane has chemical and mechanical stability problems, leading to unstable lifetime
profiles. Performance of AEM electrolyzers has not reached its expected potential yet, mostly due to low AEM conductivity, poor electrode architectures, slow catalyst kinetics, and substantial electrical energy requirements. Performance
enhancement is typically achieved by tuning membrane conductivity properties, or by adding a supporting electrolyte (e.g., potassium hydroxide (KOH). Such tuning could lead to decreased durability. The Hydroxide (OH- ion) is intrinsically
three-fold slower (lower conductivity) than hydrogen ion (H+) protons within PEM, which forces AEM developers to either make thinner membranes, or membranes with higher charge density. The trade-off for AEM is between mechanical stability,
ionic conductivity, and cost. For instance, the production of commercial AEM that achieves high mechanical stability and high ionic conductivity is challenging and therefore still expensive. There are known chemical strategies to increase AEM
ionic conductivity, but they lead to loss of mechanical strength due to excessive water uptake.
Nonetheless, companies and governments are currently working to
enhance existing technologies and promote new emerging technologies to ensure green hydrogen production can meet increasing demand.
Road to Decarbonization
There is a global focus from governments and other stakeholders on
limiting GHG emissions and securing energy independence. In this context, we believe that there is an increased recognition of the potential for green hydrogen to play a central role in the future decarbonized energy system due to its
relatively high energy content
TABLE OF CONTENTS
(on a mass basis), abundance in nature and relatively simple production methods,
which we identified as a growth opportunity. Accordingly, the development of efficient hydrogen production facilities, including those utilizing electrolysis technologies, is estimated to grow significantly in the coming years.
The growing concern over the contribution of GHG emissions to global
climate change has led to an increasing number of initiatives, across both the political and private spectrum, aimed at GHG and CO2 emission reduction. Of the 196 United Nation member states that adopted the Paris Agreement in 2015, 189 have
since ratified it and made commitments to limit future GHG emissions. The Paris Agreement seeks to keep global warming below 2 degrees Celsius and preferably below 1.5 degrees Celsius, compared to pre-industrial levels.
To facilitate the transition towards a net-zero emission economy,
many countries around the world have released dedicated hydrogen strategies and have set ambitious decarbonization targets. The U.S. is aiming to produce 100% carbon pollution-free electricity by 2035 and achieve a net-zero emissions economy by
2050. The EU is aiming to use 45% of energy from renewable sources by 2030 and reduce GHG emissions by 55%, as compared to its 1990 levels, by 2030. Spain plans to achieve 74% of renewable energy generation by 2030 and reduce GHG emission by
21% as compared to its 1990 levels. India’s objective by 2030 is to decarbonize energy production by 50% and achieve 500 GW of fossil fuel-free generating capacity. Many of these strategies include significant public investment, highlighting
the understanding by many governments that hydrogen production needs public financial support to gain momentum in the market. In 2022, according to BloombergNEF Global Electrolyzer Outlook 2023 published in October 2022 (“BloombergNEF
Outlook”), the annual investment in electrolyzer deployment was $1 billion. However, projections estimate that $36 billion will be invested in 2030, representing a 56% CAGR, according to BloombergNEF Outlook.
In July 2020, the EU adopted a comprehensive “hydrogen strategy” as
an integral part of the “climate-neutral Europe” program, which includes policy actions, pertaining to investment support, support of production and demand, and creation of a hydrogen market and infrastructure. Since then, several initiatives,
policies, and regulations have been developed by the EU to support the energy transition, including REPowerEU, Green Deal Industrial Plan, the RED II, and RFNBO. According to the European Commission, cumulative investments in renewable hydrogen
in Europe could rise to approximately $180 billion–$470 billion by 2050. As of the date of this proxy statement/prospectus, 16 EU Member States, Norway, and the UK have communicated hydrogen strategies, aiming for over approximately $55 billion
in public funding and over 80 GW in installed capacity by 2030. We believe these initiatives have become more relevant and may attract more attention following the Russia-Ukraine conflict and the renewed focus on energy independence.
In the U.S., several policies and initiatives have been developed,
including the “Road Map to a U.S. Hydrogen Economy,” a private initiative encouraged by major oil & gas, power, automotive, fuel cell, and hydrogen companies. In August 2022, a landmark piece of legislation for hydrogen technology was
passed, the IRA. The IRA allows renewable energy and clean hydrogen production facilities that meet certain requirements to receive a PTC and positions the U.S. as a low-cost region for hydrogen production, with expected growth to 21 GW in
installed capacity by 2030. The IRA earmarked approximately $369 billion for energy security and climate initiatives.
Both the U.S. and European initiatives aim to ultimately stimulate
and increase demand for hydrogen. Under the IRA framework, the U.S. seeks to do so by subsidizing production and making hydrogen competitive, while Europe is focused on directly creating demand by setting ambitious renewable energy and hydrogen
specific targets.
In addition, adherence to ESG targets has become important to certain
investors as they consider investing into private and public companies. Companies are also increasingly compelled to prioritize relevant ESG initiatives based on government initiatives and regulation.
Currently, energy production remains largely dominated by fossil
fuels, and almost all existing hydrogen production comes from gas and coal. While the growing availability of at-scale renewable energy means that power production could go through a relatively swift decarbonization process, there will also be
challenges for renewable energy sources. Common challenges of the most predominant renewable energy sources, wind and solar, are the intermittent supply of renewable electricity and irregular demand for end-consumers. On the supply side, in
2022, energy production from wind parks and solar plants only represents 11% and 13%, respectively, of global installed capacity and each exhibit substantial short- and long-term variations subject to weather and seasonal changes. Solar plants
are further subject to daily variations between day and night.
TABLE OF CONTENTS
According to the IEA, in 2022 the global installed capacity by
energy sources remains largely dominated by non-renewable energy sources such as coal (25.6%) and natural gas (22.1%). Despite governmental efforts, both energy sources still represent almost half of the global installed capacity. However,
significant progress has been made since the Paris Agreement was established. As for green renewable energy sources, wind, solar, hydropower and bioenergy represent 11%, 13%, 16% and 2%, respectively, which accounts for 42% of the global
installed capacity.
On the demand side, energy consumption is likewise variable depending
on the hour of the day and seasonal changes. Complete integration of renewables into the energy system will thus require both short- and long-term balancing. While energy transportation is possible via transmission lines, it is costly and
difficult to establish due to local regulations and planning issues. Hence, an energy system based entirely on renewable energy sources would require a solution for storing energy when excess renewable energy is generated and for transporting
such stored energy across distances. Batteries are not considered a viable option to act as buffering and balancing agents for integration in renewable energy infrastructure due to their low energy density and inability to store energy
efficiently over extended periods.
Hydrogen is presented as a possible solution to the limitations of
wind and solar energy and can be a clean alternative to natural gases, such as methane. It is the most abundant chemical element in the universe, contributing approximately 75% of the total chemical mass on the planet, with vast numbers of
hydrogen atoms contained in water, plants, animals, and humans. However, despite being present in nearly all molecules in living things, hydrogen is very scarce as a gas (less than one part per million by volume) in nature.
Green Hydrogen Market
Global hydrogen demand reached more than 94 Mt in 2021, compared to
91 Mt in 2019. Most of this increase was driven by the use of hydrogen in traditional applications, particularly in chemicals, with a nearly 3 Mt increase, and in refining, with a nearly 2 Mt increase as compared to 2020. Demand for hydrogen in
new applications, such as in heavy industry, transport, power generation, and the buildings sectors or the production of hydrogen-derived fuels, was very low in 2021, at around 40 kilotons (“kt”) of
green hydrogen (about 0.04% of global hydrogen demand). In 2021, China consumed the most hydrogen at 28 Mt consumed, followed by the U.S. and the Middle East with 12 Mt consumed each, and Europe with 8 Mt consumed.
The green hydrogen market is nascent and highly fragmented. Given its
attributes described above and variety of applications, we believe there is significant market opportunity for green hydrogen. According to BloombergNEF New Energy Outlook 2021, the green hydrogen energy market has the potential to reach
$10 trillion in value by 2030. This is in part due to an expectation of green hydrogen to have a significant role in decarbonizing the industrial and mobility sectors. In the mobility sector, hydrogen is already being used and increasingly
becoming a more commonly used source of fuel for both heavy and light forms of transportation by land and sea, which utilizes hydrogen that is converted to electricity through fuel cells. Further, green hydrogen is expected to play a key role
in industrial use cases as an alternative raw material and as a fuel replacement for fossil fuels, replacing gas and coal.
TABLE OF CONTENTS
On the demand side, according to the Hydrogen Council, green hydrogen
is expected to surpass 10 Mt by 2030, from a demand of 0.1 Mt in 2020. According to the IEA, since 2021, the prominence of hydrogen as a green energy source has been gaining momentum.
Global Electrolyzer Market
Driven by this increased hydrogen demand, the electrolyzer market is
expected to experience significant growth over the next decade. According to BloombergNEF, 2022 was a record year in electrolysis deployment, with more than 1 GW of additional installed capacity. When compared to the 0.2 GW capacity installed
in 2021 according to the IEA, we see that the annual electrolyzer installations has increased fivefold from 2021 to 2022. This increase has led to a total operational capacity above 300 MW in Europe and North America. The favorable outlook for
growth in electrolyzer demand has stimulated a boost in electrolyzer capacity, which has reached 2 GW in 2022 worldwide and could reach 242 GW in 2030, which could represent an 82% CAGR.
Global Growth of Green Hydrogen Projects
As of January 2023, globally, there are over 1,146 announced large
hydrogen projects with $320 billion of required investment, according to the Hydrogen Council & McKinsey March 2023 H2 insights report. One half of the total announced projects are considered mature, and 9% of the total announced projects
have either reached FID status or are under construction or operational.
TABLE OF CONTENTS
As green hydrogen enters the growth phase of its development, key
drivers of success, margins, and competition are proving to be dynamic. The market has shifted from early-stage development to an upcoming exponential growth phase.
Our Business Model
Our involvement throughout the entire green
hydrogen value chain
We have assembled a seasoned team that is able to provide customers
with bespoke services across the entire green hydrogen value chain.
R&D: technical innovation
A focus of our R&D team is the development of more efficient and
durable electrolysis technologies to reduce both CapEx and OpEx in green hydrogen production. The team’s current focus is the continuous improvement of PEM electrolyzers, and the development of next-generation SOEC and AEM technologies in
partnership with leading institutions.
As of the date of this proxy statement/prospectus, we have built an
R&D department of over 33 researchers dedicated to our R&D plan. This multidisciplinary team is comprised of eight employees and over 25 researchers through technology partnerships with prominent institutions, such as Loyola University
(Andalucia), the University of Castilla-La Mancha (UCLM), the Catalonia Energy Research Institute (IREC), and the Spanish National Research Council (CSIC). Our mixed R&D model allows us to be more flexible and efficient, focus on sales, and
lower structural costs, while providing for our exclusive ownership or licensing of intellectual property arising from research efforts.
We have won several grants to finance our R&D efforts. The
grants amount to approximately $35 million and were provided by leading institutions such as the Institute for Energy Diversification and Saving (“IDEA”), the Center for Technological
Development and Innovation (“CDTI”), and the European Commission. As of the date of this proxy statement/prospectus, we have entered into two exclusive patent licensing arrangements for
electrolysis technologies, and we have filed five European patent applications related to our BoP. We also have one European patent application pending that relates to manufacturing SOEC stacks.
Development of Green Hydrogen Facilities
We provide our customers with integral solutions and services
required to set up the facility prior to the construction phase, which includes identifying opportunities, carrying out the feasibility analysis, off-take agreements, and sourcing financing.
We believe our key differentiators compared to other developers is
our ownership of proprietary technology, our first-hand knowledge of costs and efficiencies involved in project development, and our regulatory and technical expertise. Furthermore, we are flexible and provide tailor-made solutions to our
customers, we have the necessary capabilities to negotiate and be involved in off-take agreements/PPAs and are well positioned to access a large number of opportunities since project developers are looking to partner with technology providers.
TABLE OF CONTENTS
Currently, we have identified potential pipeline projects totaling
2.8 GW of our Integrated Product, focusing mainly on our core markets, EMEA and the Americas. We expect to form strategic partnerships with co-developers to help identify projects. We believe this partnership strategy allows us to expand more
rapidly into new markets and leverage the local knowledge from our partners. As a result, we expect to reduce costs due to lower fixed labor expenses by limiting the number of employees on site, and reduce time spent on project deployment.
To date, we have performed multiple feasibility and engineering
studies for customers within the energy storage (Cobra), mobility (FM Logistic), aerospace (Albasix), and industrial (CTA, Repsol) sectors. Additionally, we continue to further develop our SoHyCal project in the in the U.S.
Manufacturing of the equipment
We have assembled a team of experts capable of providing our
customers with comprehensive services including the engineering, procuring, manufacturing, integration, assembly, installation, commissioning, and testing of electrolyzers and HRS we provide. Since 2016, we have manufactured and installed
multiple electrolyzers and HRS, offering a specialized set of product offerings in the industry. The team focusing on this area is also responsible for start-up and testing work and has an estimate of approximately 15 MW projects under
construction or 63 MW of awarded projects as of the date of this proxy statement/prospectus. Furthermore, we currently have an estimated total production capacity of approximately 200 MW per year, which we expect to grow to 600 MW by 2024. We
have a competitive advantage in this production area as we have a strong track record with PEM projects, we use our own proprietary technology, are able to provide tailor-made solutions and have scalable manufacturing facilities (e.g., our
current estimated total production capacity of 200 MW per year but planning the construction of new manufacturing to keep up with demand, including the construction of a manufacturing facility in the US and new sites in India and Colombia as
well as our capability of providing ad-hoc manufacturing services for specific projects).
We provide customers the following electrolyzer solutions, that we
tailor to our customers’ capacity needs:
1.
|
Containerized solutions for those units up to approximately 15–20 MW. These solutions are plug-and-play. Our product portfolio
for the containerized solutions include:
|
|
|
|
|
|
|
|
|
|
Small-scale containerized system
|
|
|
|
|
|
|
|
|
|
|
•
|
|
|
Capacity of 3.2–12 kilowatts (“kW”)
|
|
|
|
|
|
|
|
•
|
|
|
Able to supply hydrogen production with a range of 0.5–2 normal cubic meter per
hour (“Nm3/h”)
|
|
|
|
|
|
|
|
•
|
|
|
Optimal for small consumers (laboratories, residential, and small fleets)
|
|
|
|
|
|
|
|
•
|
|
|
Integrated within a cabinet
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Medium-scale containerized system
|
|
|
|
|
|
|
|
|
|
|
•
|
|
|
Capacity of 50–300 kW
|
|
|
|
|
|
|
|
•
|
|
|
Able to supply hydrogen production with a range of 10–60 Nm3/h
|
|
|
|
|
|
|
|
•
|
|
|
These systems are integrated into 10-40 ft long containers depending on the
size of the electrolyzers and the scope of the project
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Large-scale containerized system
|
|
|
|
|
|
|
|
|
|
|
•
|
|
|
Capacity of 0.5–5 MW
|
|
|
|
|
|
|
|
|
|
•
|
|
|
Able to supply hydrogen with a range of 100–1,000 Nm3/h
|
|
|
|
|
|
|
|
•
|
|
|
These systems are integrated into several 40 ft containers
|
|
2.
|
Skid mounted solutions for those facilities greater than 20 MW. These solutions are installed on-site and connection made among
different components of the hydrogen facility.
|
When manufacturing these solutions, the skids and all interconnecting
piping and cables are installed at our facilities and the entire unit is assembled to ensure the unit meets the customer’s agreed upon standards. Once completed, the entire unit is disassembled and shipped to the project site, at which point it
is re-assembled with minimal work as a result of the pre-assembly process, which saves time and mitigates risks.
TABLE OF CONTENTS
At the request of customers, we can also provide CE and ETL marks,
UL Stamps, and hazard and operability studies can be provided regardless of the size of the system or solution. Each unit is also tailored to comply with all local safety and installation requisites and with applicable codes and standards,
depending on our customer geography.
We have a wide range of electrolyzers under commercialization, with 1
to 4 stacks, with a total maximum output of approximately 1,726kg of green hydrogen per day. Apart from manufacturing and installation, we can also cover start-up and testing based on the customer’s needs, and we oversee guarantees for cost,
delay and performance that are granted to customers. We typically offer one-year warranties for the equipment we manufacture.
In addition, we manufacture and install HRS, a facility in which
hydrogen is typically:
•
|
Compressed to the final storing pressure;
|
•
|
Stored in order to have enough flow to dispense the equipment to be fueled; and
|
•
|
Dispensed to the final consumer, that could be a forklift, light and heavy-duty vehicles, maritime or industrial and residential
use. Depending on the final use the dispensing system will vary accordingly
|
Engineering, procurement, and construction (EPC)
We manage the end-to-end EPC projects, as well as consulting and
integration solutions ranging from power generation to dispensing and injecting green hydrogen. We look to perform all design, engineering, procurement, construction, commissioning, and testing services requested for the construction of green
hydrogen production facilities. Therefore, we have the necessary capabilities to build tailor-made hydrogen production facilities in less than 20 months including the engineering, purchasing, integrating, and commissioning all the equipment
requested for the successful completion of the project.
Our main steps include:
•
|
Engineering: As soon as a project is awarded, we get involved in the development of the
basic and detailed engineering as part of the design of the equipment, including designing specifications, procedures, calculations, permits documents, tabulations, instructions, and any other document requested for the manufacturing,
commissioning and testing of the hydrogen production facilities. Most of these tasks are developed by in-house resources, although our team is able to manage and coordinate with other local engineering firms, if necessary, while
maintaining our know-how confidential.
|
•
|
Procurement: We purchase all materials and equipment needed and begin contract
negotiations in parallel with our engineering team, by supporting commercial teams and leading technical aspects while supported by our engineering team. During this phase, we aim to build long-term relationships with key suppliers in
the local market.
|
•
|
Construction: We oversee on-site construction and installation of the production
facility, as well as the integration of our equipment with any third-party equipment if necessary. These tasks can be carried out by our own staff or through the hiring of subcontractors in local markets who are specialized in the
applicable area of construction. We rely on our personnel to manage any subcontractors and supervise such work to ensure it complies with our expectations related to performance, cost, timeliness, quality and health and safety
standards.
|
•
|
Commissioning and Testing: We also conduct, in coordination with our main suppliers,
commissioning of the different systems of a project and the commissioning of entire hydrogen production facilities. Finally, performance tests are conducted to ensure the production facility complies with the committed features, until
provisional acceptance is achieved, and the production facility reaches COD status.
|
This is done primarily in reliance on our own resources, though we
may seek support from external subcontractors in some cases. We can fit the requirements of any customer, from a limited engagement of only providing equipment to full construction and integration of an entire hydrogen production facility.
Depending on the nature of the project and requirements of the customer, we are prepared to offer different levels of guarantees to include coverage for costs, delays, and potential performance variances. We also typically offer a warranty of
one year, but we may adapt any warranties to the customer’s needs, guaranteeing the availability of the facility and providing a warranty of all the components of the facility during that period of time.
TABLE OF CONTENTS
Operation and maintenance support to our customers
Once a project is completed, we intend to offer our customers
supporting services which can range from assisting the customer in a limited scope to full O&M services and guarantees for a project. With these services, we cover the entire value chain in the development, completion and operation of a
hydrogen production facility. The most common services requested by our customers are:
•
|
PM: The customer develops the operation work plan, and we regularly visit the hydrogen
facility for approved preventative maintenance to the facilities’ main equipment and components.
|
•
|
LTSA: Tasks may include full O&M services to be provided for a hydrogen facility or
may be limited to only supervising services. Under these arrangements, we are responsible for providing guaranteed availability to the customer. Our employees are typically permanently located at the facility conducting surveillance
tasks or O&M services, depending on the customers’ needs.
|
•
|
PG: For the Integrated Product, we intend to guarantee a specific level of the plant’s
availability. We believe our offering positions us among the few green hydrogen companies capable of providing such level of assurance to our projects. Such a guarantee is of an outstanding importance in making these projects
financially viable. In order to achieve the latter, we undertake a thorough analysis of the project's business model, taking into account the availability required by the off-taker and potential penalties, and design a technical
configuration that ensures this level of availability. This may involve sizing storage and entering into backup hydrogen contracts.
|
To instill investors with confidence that this level of availability can be met, we
carry out a comprehensive risk analysis for each project. This analysis identifies all potential risks and assigns a probability of occurrence to each. We then mitigate each risk by obtaining insurance or designing the plant to include
technical solutions such as duplicate critical spare parts or increased storage capacity. Following this analysis, we quantify the remaining risk of the special purpose vehicle (SPV) so that it is acceptable to the investor in terms of risk and
return. We help to design the appropriate solution that balances cost, return, and risk.
To ensure the required level of availability, we plan to own spare critical parts and
equipment that can be used to replace any components that fail. The amount of spare parts needed will depend on the number of projects and megawatts to which we are providing this service, as well as the expected failure rates of each
component.
Investments and asset management
Based on our business plan, in certain cases and for certain
projects, we may opt to remain as a minority shareholder directly in the chosen investment vehicle for a project that we have developed. This way it enables us to potentially create a new and recurring revenue stream, including the distribution
of dividends and proceeds from asset sales. Furthermore, in these projects, we intend to oversee 100% of production facility development, including electrolyzer manufacturing and EPC, as well as providing technical support to our customers.
Our Products
We look to offer our customers differentiated and scalable solutions.
Currently, a majority of our revenue is generated from our Conventional Products, but we expect in the short to medium term that revenue from our Integrated Products will grow.
Conventional Product
Our Conventional Product allows us to collaborate on projects
developed by third parties, typically contracted through a competitive bidding process. We offer equipment (including electrolyzers) and construction of production facilities, planning, and O&M services to those projects. We offer all the
services for these hydrogen production facilities to become operational and our specific role may vary depending on the customer’s needs. We also provide a performance bond and other guarantees to customers for our products. Our Conventional
Product is usually contracted through a competitive bidding process.
Our Conventional Product does not involve the development phase of
the project. Normally during the construction phase, we first receive a bid request from a customer, usually in competition, to provide
TABLE OF CONTENTS
electrolyzers or hydrogen production facilities. Then, once the production facility
is in operation, we receive a bid request from a customer, sometimes in competition, to provide O&M services.
Revenue streams for our Conventional Product include revenues from
the provision of the electrolyzer, from the construction of the facility and from the operation and maintenance of the facility.
We have a vast sample of Conventional Product projects including the
supply of 10 MW PEM electrolyzer capacity (five units) to power German HRS, the supply of 2.5 MW PEM electrolyzer to a leading gas distribution company, the supply of a 1 MW PEM electrolyzer, HRS to one of the largest ports in Spain, the supply
of 1 MW electrolyzer to serve one of the most important transit agencies in Spain and detailed training and support in O&M for Cepsa, a leading Spanish gas company.
Integrated Product
Our Integrated Product will focus on the full-scale production and
sale of hydrogen, from discovery of opportunities to off-take of a project. Our Integrated Product will provide all of the services required to set up a green hydrogen production facility, ranging from the project development at the earliest
stages through obtaining COD status for a project and providing O&M services. Our Integrated Product will include the complete construction of the production facility and all of the development services required, including market and
feasibility analysis, signing of PPAs and off-take agreements, and permitting, as well as any future O&M that might be required for the project. In these cases, we also look to provide construction and PG. Overall, our Integrated Product
will have significant intangible value for us, as the production facilities utilizing this product will enable us to accelerate sales and grow.
We will offer two types of Integrated Product:
•
|
Self-Developed: We intend to participate in 100% of the project development and may
remain a minority stake. Under this approach, we will sell the development to a financial partner, who will fund 85% or more of the project’s construction. We may develop the project by ourselves or partner with other co-developers to
create synergies. These projects are currently focused on regulated markets such as the U.S. and Europe. Our SoHyCal production facility in California is an example of a self-developed project.
|
•
|
Third-Party Developed: We intend to position ourselves as a technology partner for
third parties interested in developing green hydrogen projects. We will retain exclusivity over the whole project and provide turnkey solutions for such third-party developers. The third party is typically the lead developer, already
having off-take agreement arrangements, but requires technological capabilities to develop and build the project. This will sometimes be funded by the off-taker or by third-party funds. Our SDCL project is a clear example of a
third-party developed Integrated Product. In such project, we act as a technology partner to SDCL, with the overall aim being decarbonizing cogeneration assets by introducing hydrogen as a substitute for natural gas.
|
Under our Integrated Product, we will be involved in the development
phase of the project or the purchase of the development with investment partners. Normally during the construction phase, we are the exclusive contractor for the production facility, in charge of the full EPC and electrolyzer manufacturing. And
finally, during the operations phase of the production facility, we exclusively provide the O&M services for the production facility.
We expect our Integrated Products will provide key intangible
benefits to us, as it is a tool to develop projects for third parties and further accelerate sales for our other products and services.
Revenue streams for our Integrated Product may include revenues from
a development fee upon financial close, from the provision of the electrolyzer, from the construction of the facility and from the operation and maintenance of the facility, and in case of being a minority shareholder, the revenues may come in
the form of earning dividends.
Our Technology
Green hydrogen is a viable solution for global economy
decarbonization, and we believe that we are well positioned to be part of this energy transition. Currently, there are four technologies in the market for green hydrogen production by using electrolysis: AWE and PEM which are currently the
leading technologies in the
TABLE OF CONTENTS
market and are currently being commercialized, and AEM and SOEC which are emerging
technologies. The differences in these technologies are mainly based on the electrolyte and operation temperature, which guides the selection of other materials and components. AWE and PEM are the most mature, well-understood, and widely
commercialized of the four technologies. While both SOEC and AEM have significant potential, R&D is still underway, particularly regarding electrolysis stack degradation and resulting durability issues, which thus far have delayed the
large-scale commercialization of these technologies.
We currently utilize PEM technology because it is more compact and
easier to integrate with renewable energies, despite its higher CapEx requirements and lower efficiency when compared to AWE technology. Although we believe that PEM will continue to play a fundamental role in the short term, its dependence on
precious metals, such as platinum and iridium, will likely cause a gradual shift towards other technologies. With this in mind, we are investing in next generation SOEC and AEM technologies as we believe they will be cost-competitive with AWE
and PEM technologies once they reach technological maturity.
In PEM, we remain stack agnostic to adapt to market constraints. For
our PEM offering, we procure “off-the-shelf” equipment, which we configure and package into a marketable product through value-add and detailed engineering for project and customer specifications. This allows for an efficient and robust
electrolysis process as a result of our high-quality engineering and cost-optimized manufacturing. We have a diversified supplier network of stacks for our PEM offering to ensure consistent supply, with our current main supplier being a listed
American hydrogen and fuel cell company.
Moreover, what differentiates us in the market is our ability to
provide tailor-made turnkey solutions for our customers looking to install and operate leading green hydrogen production facilities. Through our engineering and domain knowledge, as well as proven track record in delivering landmark hydrogen
projects such as SoHyCal, we believe we are well positioned to provide customers comprehensive services and technologically advanced solutions in the development of their green hydrogen production facilities. To maintain our market position, we
are developing proprietary SOEC and AEM stack technologies through our R&D efforts to ensure efficiency, flexibility, and quality.
For the development of AEM technology, we have signed a research
agreement with the Centre for Energy, Environment and Technological Research (Centro de Investigaciones Energéticas, Medioambientales y Tecnológicas, CIEMAT) in Spain for the development of an electrolysis stack, and four research agreements
with different universities and institutions (Jaume I University, UCLM, the University of Valencia, and CSIC, all of them in Spain) for electrode and electrolyte development. Together, we aim to match or surpass current state of the art in
terms of stack size, efficiency, and current density. As there is currently a small group of competitors in the AEM technology space, manufacturing an AEM electrolyzer would provide us a significant advantage. Our electrode manufacturing is
based on “dry processes,” which may simplify large-scale manufacturing. Tests show that capacities could reach current densities of 600 milliamperes per square centimeter (“mA/ cm2”) or higher.
When choosing our technology partners, we examine their track record
in the electrolyzer and fuel cell fields, the quality of materials used in their processes, including the resistance and scarcity of such materials, and their supply chains.
We are also undergoing the development of our SOEC technology
offerings. For this technology, we are working with IREC, which is leading the research for the electrodes, the electrolyte, and the stack. We are working on a SOEC electrolyzer with an expected power density higher than 3 watts per cubic
centimeter. Our work aims to produce corrugated ceramic electrolytes and flat electrodes. While this might seem more complicated than the traditional process, 3D ceramic printing makes this process cheaper and more straightforward.
Our Strategic Alliances
We have partnered with top-tier institutions and companies in
different capacities, including suppliers, financial and management partners, strategic partners, or R&D partners, to become a leader in the hydrogen industry. We are a member of ARCHES, a public-private partnership among several entities
designed to create a sustainable statewide clean hydrogen hub in California, utilizing local renewable resources to produce hydrogen with the objective to fully decarbonize the regional economy. In addition, we have established an ecosystem of
leading partners. Below are some examples of our strategic partnerships.
TABLE OF CONTENTS
Ecopetrol: technology partner for decarbonization
Ecopetrol is Colombia’s most significant and primary petroleum
company, and it is the second-largest oil & gas company in Latin America, currently ranked number 346 in the Fortune Global 500. In May 2022, we were selected by Ecopetrol as a technology partner to help decarbonize its activities through
the development of green hydrogen production facilities. We were chosen after a robust selection process that included over 80 companies from 16 countries.
As part of our partnership, we will lead the construction of a
manufacturing facility in Colombia to supply Ecopetrol’s South American market, as well as provide maintenance services and HRS once completed.
GreenH: JV to grow the hydrogen economy in Asia
In 2023, H2B2 launched GreenH, a joint venture with GR Promoter Group
to develop the hydrogen economy in Asia. GR Promoter Group, through its flagship company GR Infraprojects Limited, an Indian public company, has more than two decades of experience in design, construction, and O&M of various road, railway,
metro, and power transmission and distribution projects in India.
GreenH is based in India, and we maintain a 50% ownership. We expect
to manufacture electrolyzers, produce green hydrogen, and develop technologies. Based on our experience and internal estimates, GreenH is expected to have a manufacturing capacity of 100 MW by 2024.
Our key responsibilities include the development and transfer of
technology, supply of stacks (PEM, SOEC, and AEM) and ensuring projects are up to date with any necessary technological upgrades.
JV with HVMX de México to expand into Mexico
We have created a joint venture, H2V2, with HVMX de México to expand
operations into Mexico. HVMX de México is an engineering company whose purpose is the production, marketing, distribution, supply, import, export and storage of renewable hydrogen. Mexico, which currently is significantly behind the U.S. and
Europe in terms of government initiatives to promote the hydrogen economy.
So far, H2V2 is focused on identifying potential customers and
developing pilot projects. H2V2 will focus on green hydrogen solutions for industrial and mobility uses.
The main objective of this joint venture is to be positioned at the
“starting line” upon an imminent Mexican regulatory framework for the promotion of green hydrogen. We further seek to benefits from the synergies with HVMX de México and take the lead in the decarbonization of Mexico’s industry and mobility.
Our Projects and Pipeline
We have been successful in identifying a robust and diversified
pipeline of more than 200 projects that we believe could be contracted in the next 18 months representing approximately 5.6 GW split across our target markets (EMEA, the Americas, and APAC). Our pipeline includes installed projects, projects
under construction, awarded projects and potential pipeline projects.
TABLE OF CONTENTS
According to the advancement stage of the project, our pipeline as
of the date of this proxy statement/prospectus is as follows:
Installed projects
|
|
|
Approximately 0.1 MW
|
|
|
Conventional Product
|
|
|
PowiDian (0.1 MW)
|
|
|
|
Approximately 3 MW
|
|
|
Integrated Product
|
|
|
Our landmark SoHyCal production facility, one of the largest green hydrogen
electrolysis production facilities in the U.S. Construction of Phase I (the first 3 MW) has been completed and is currently in the process of quality control testing and preproduction test runs, starting with Biogas when available, to
ensure the capacity, quality and specifications required by the CEC, preparing the long-lived asset to be ready for its intended use.
|
Project under construction
|
|
|
Approximately 15 MW
|
|
|
Conventional Product
|
|
|
Projects under construction include GP Joule (10 MW), Redexis (2.5 MW),
Serveo (1 MW), Puerto de Vigo (1 MW) and Ecopetrol (0.27 MW).
|
Awarded projects(1)
|
|
|
Approximately 63 MW
|
|
|
Conventional Product
|
|
|
Pending customer obtaining financial close, including projects, Dynamis
Energy (18 MW), Greenstat (Glomfjord project (18 MW)(2), Rørvik project (18 MW) and GreenSwitch project (3 MW)(3).
|
|
|
|
|
|
|
Integrated Product
|
|
|
We recently received a conditional use permit for Phase II of SoHyCal which
includes an additional 6 MW of electrolysis powered by a 15 MW solar facility. We are awaiting final approvals and financial close for Phase II. We are also awaiting review and approval of a separate conditional use permit for a HRS
that will be part of Phase II.
|
Potential pipeline projects(4)
|
|
|
Approximately 5.5 GW
|
|
|
Conventional Product
|
|
|
Approximately 2.7 GW across several projects.
|
|
|
|
|
|
|
Integrated Product
|
|
|
Approximately 2.8 GW across several projects
|
(1)
|
Projects awarded or named preferred bidder, subject to client obtaining financial close. The contract is still to be signed.
|
(2)
|
A letter of intent is pending negotiation for this project.
|
(3)
|
The commitment is that the plant will be operative in 2026. We have a Right of First Refusal with GreenSwitch and have helped
them with the preparation for the tender process.
|
(4)
|
Includes projects that have not been awarded yet but are at varying stages of the process, including those that (i) we have bids
out for, (ii) are at the budgetary or technological partner stage, (iii) are at the technical economical proposal or expected RFQ stage or (iv) are at the tender process or early development stage.
|
Highlighted projects under Construction
SoHyCal green hydrogen production facility in
California
We are building one of the leading hydrogen production facilities in
California. SoHyCal is expected to have a total electrolyzer capacity of 9 MW, making it one of the U.S.’s largest green hydrogen production facilities. It will be primarily powered by a 15 MW solar plant and a biogas engine that burns biogas
from a dairy next to our production facility.
The project is divided into two phases:
•
|
SoHyCal Project Phase I: With an expected capacity of 3 MW of electrolysis, SoHyCal
will be powered by a biogas engine and is expected an electrolysis capacity of 1,290 kg/day.
|
TABLE OF CONTENTS
•
|
SoHyCal Project Phase II: This phase will add an additional 6 MW of
electrolysis capacity for a total expected capacity of 9 MW. This phase is planned to be powered by a 15 MW solar plant. We received a conditional use permit for Phase II from the Fresno County Planning Commission in June 2023, but
final permitting and approvals for Phase II are still underway. Phase II is also pending financial close in order to start operations. Once completed, it will have an expected electrolysis capacity of approximately 3,000 kg or more
per day. We are also awaiting review and approval of a separate conditional use permit for a HRS from the City of Fresno as part of Phase II.
|
SoHyCal is a pioneer project for the region, as it is one of the
leading hydrogen plants in California and is a pioneer project for us as a company both from a technical and commercial standpoint, as we are performing the design and development, construction, financing, and operation of a 100% green hydrogen
production facility. SoHyCal is a green hydrogen production facility located in California, which is currently pursuing US Federal Hydrogen Hub funding via the Alliance for Renewable Clean Hydrogen Energy Systems (“ARCHES”), a public-private
partnership among several entities designed to create a sustainable statewide clean hydrogen hub in California utilizing local renewable resources to produce hydrogen and fully decarbonize the regional economy. SoHyCal is intended to serve
California’s network of public refueling stations, including a self-developed HRS. The storage of hydrogen for SoHyCal involves storing the hydrogen in compressed gas and dispensing it into tube trailers and distributing it to refueling
stations.
SoHyCal Phase I was awarded to us by the CEC in 2018, and
construction started in September 2021. Phase I has been completed and is currently in the process of quality control testing and preproduction test runs, starting with Biogas when available, to ensure the capacity, quality and specifications
required by the CEC, preparing the long-lived asset to be ready for its intended use.
According to the CEC grant agreement, SoHyCal is required to have at
least three full-time employees during the active operation and maintenance of the project. As of the date of this proxy statement/prospectus, three full-time employees were already working at SoHyCal.
Our team will be in charge of accomplishing the production facility’s
target capacity with the CEC. This will be done through a LTSA. Our O&M specialists will rely on the following services:
•
|
On-site personnel taking care of the O&M of the production facility
|
•
|
Remote support from our engineering and O&M teams
|
•
|
Preventive maintenance of both spare parts and assistance
|
•
|
Corrective maintenance with recommended spare parts and assistance
|
We believe SoHyCal is a pioneering renewable hydrogen project in
California—a market that is making significant efforts to increase hydrogen development compared to other global markets, and one that currently has significant unmet demand, particularly for transportation uses. Furthermore, SoHyCal is one of
the largest pure renewable energy hydrogen projects in the U.S., using a 15 MW solar plant and biogas to power the facility, rather than the more common natural gas and steam methane reforming process. We believe that we have a “first mover
advantage,” as SoHyCal is expected to lead the supply of renewable hydrogen to major off-takers present in the region to fill unmet demand. The project, which will be entirely developed by us, provides us with development experience that can be
leveraged for future projects involving renewables, gas pipelines, permitting, and hydrogen distribution and transport. We believe that this will give us a significant competitive advantage over other hydrogen production facility developers.
GP Joule – 10 MW electrolyzer
In November 2022, we signed a contract to supply five PEM
electrolyzers of 2 MW each to GP Joule, a German integrated energy supplier and one of the most relevant players in the heavy-duty vehicle mobility industry, having recently purchased a fleet of 5,000 40-ton hydrogen fuel cell trucks. These
electrolyzers will power hydrogen refueling stations in Germany, producing in total 4,300 kg of green hydrogen per day. We are currently manufacturing the electrolyzers to be provided during 2023 and expect to begin operations in 2024. The
hydrogen production facility will be powered by renewable energy, such as wind or solar.
TABLE OF CONTENTS
Redexis – 2.5 MW electrolyzer
In February 2023, we were awarded a contract to supply a 2.5 MW
electrolyzer for the Garray green hydrogen production facility, located in Soria, Spain. The Garray production facility is a joint private-public project, developed jointly by Redexis and Somacyl. Redexis is a leading Spanish gas company,
primarily engaged in transmission and distribution networks of natural gas.
The project is projected to be executed during 2023 and 2024. The
production facility is expected to have a storage tank with 150 m3 of hydrogen capacity and will be powered by a 5 MW PV installation. The hydrogen produced will be used for industrial and mobility applications within the complex.
Puerto de Vigo – 1 MW electrolyzer and HRS
In January 2023, the Puerto de Vigo project was awarded to a
partnership between H2B2 and the infrastructure contractor ImesAPi. Our role involved providing a 1 MW electrolyzer and one HRS. This electrolyzer will be powered by renewable energy sourced from a nearby solar plant. Engineering services are
currently underway and COD status is expected to be achieved in the third quarter of 2024.
Serveo – 1 MW electrolyzer
In October 2022, Serveo, a services and social infrastructure
company, which is developing the project along the Empresa Municipal de Transporte, Madrid’s public transportation company, contracted us for the supply of a 1 MW electrolyzer to produce green hydrogen that will be used by up to 20 local
municipal buses in the city of Madrid. We are expected to supply electrolyzers by January 2024.
Highlighted Awarded
Projects
Glomfjord project – 18 MW electrolysis production facility
The Glomfjord project is a 18 MW hydrogen production facility for
maritime fuel located in Norway. The project was launched by Greenstat, a listed renewable energy company, primarily focused on developing hydrogen, industrial wind, and solar energy projects. The project has been selected to receive funds from
Norway’s Enova SF, a government enterprise responsible for the promotion of environmentally friendly production and consumption of energy. We have been selected to develop the project through FID status and to provide final EPC services. For
this project, the stack will be provided by the Norwegian company Hystar.
Rørvik project – 18 MW electrolysis production facility
The Rørvik project is a 18 MW hydrogen production facility located in
Norway. The project was launched by a partnership between Greenstat and NTE. NTE is one of the largest utility companies in Norway. The project has been selected to receive funds from Enova SF. We have been selected to develop the project
through FID status and to provide final EPC services. For this project, the stack will be provided by Hystar.
GreenSwitch BioFuel project – 3 MW electrolysis production
facility
The project will involve the construction of a modular and scalable
green hydrogen plant with a capacity of 3 MW powered by a solar plant (PV), located in Ferrandina, Italy. The commitment is that the plant will be operative in 2026. We have a Right of First Refusal with GreenSwitch, a bio-refinery that aims to
produce clean chemicals using raw materials of vegetable origin. Furthermore, GreenSwitch was selected to receive a €10 million grant from the PNRR program for the construction of the facility.
Dynamis Energy project – 18 MW electrolysis production facility
The Dynamis Energy project is a 18 MW electrolyzer facility located
in California. The project is promoted by Dynamis Energy, a waste-to-energy company serving governments, utilities, and private industries. We have been named preferred bidder for this project.
Potential Pipeline Projects
We believe that we are well positioned to execute a well-defined
strategy in the green hydrogen space. Our near-term focus will be on expanding our PEM electrolyzer manufacturing capacity, enhancing our technical expertise, and bolstering our track record. Our main objective is to grow in project size, going
from 1–10 MW
TABLE OF CONTENTS
projects to 50–100 MW projects. Additionally, we plan to expand geographically into
EMEA, the Americas, and APAC, although our primary focus will remain on Europe and the U.S. Finally, we will look to target top-tier customers that we believe will lead the hydrogen economy in the future.
Furthermore, we also want to focus in the short term on growing our
Integrated Product, building up its importance within our pipeline, and significantly increasing bookings. Our long-term focus is on expanding into new electrolysis technologies by beginning the commercialization phase of our proprietary SOEC
and AEM electrolysis technologies.
As of the date of this proxy statement/prospectus, we have identified
more than 200 opportunities, totaling approximately 5.6 GW, of which approximately 5.5 GW are potential pipeline projects.
For our Conventional Product within the potential pipeline projects
we have identified projects totaling 2.7 GW. For our Integrated Product within the potential pipeline projects we have identified projects totaling 2.8 GW.
Our pipeline is primarily focused on our core markets in EMEA and the
Americas and also in recurrent trustable customers. We have been active in these two regions for longer, but with time we expect other areas, such as APAC, which is still in an early development phase for us, to gain a more significant share
within our project pipeline. We have demonstrated a robust track record of winning bids, recently being awarded a number of significant projects, such as with Greenstat, and Dynamis. We foresee a growth in the size of the projects that we will
be involved in and expect to bid on some of the largest green hydrogen projects over the next few years.
Manufacturing, Raw Material and Supplier Relationships
As our business grows, we intend to continue expanding our
manufacturing capabilities. In April 2023, we moved into a state-of-the-art new facility with 3,300 m2 of total surface, that integrates our corporate services and engineering and serves as our manufacturing hub in Seville, Spain.
The facilities include a two-story office area of 600 m2 and provide for an estimated total production capacity of 200 MW per year.
We aim to co-locate our electrolyzer manufacturing facilities close
to our major customers. This strategy, proven by our track record, demonstrates our ability to swiftly build local manufacturing capacity alongside large projects. Among the tasks financed by the IPCEI, funds awarded to us include those for the
development and construction of manufacturing facilities for both AEM and SOEC technology stacks (100 MW capacity of manufacturing for each technology) and also for the manufacturing of electrolyzers. Furthermore, we are negotiating the
construction of a manufacturing facility to supply electrolyzers to Enel for their planned hydrogen economy development in northern Spain.
Furthermore, we are planning the construction of a manufacturing
facility in California, that will enable us to further penetrate the U.S. market. This 4,800 m2 manufacturing facility will be strategically located in Fresno, California, between Sacramento and Los Angeles, one of the areas with the
highest political support for renewable energy in the U.S. This facility is expected to start production in 2024, and is expected to be able to manufacture PEM, AEM, and SOEC electrolyzers once the technology is viable. Through this planned
manufacturing facilities, we aim to (i) expand our project footprint in the U.S. market, (ii) ensure compliance with U.S. federal, state and local requirements, and (iii) support execution capabilities in a key market.
We are also planning the construction of a manufacturing facility in
India and have identified a potential site in New Delhi. Additionally, under our strategic partnership with Ecopetrol, we are planning the construction of a manufacturing facility in Colombia. Initially, the manufacturing facility will supply
hydrogen exclusively to Ecopetrol, with the possibility to expand capacity to supply other customers in the region.
The raw materials used for our electrolyzer production are
primarily steel, nickel, and nickel-based materials as well as various noble metals such as ruthenium, iridium, rhodium and platinum. Some of these materials are scarce natural resources and we are dependent upon a sufficient supply of such
commodities. Our business has a dependency on the price and availability of these high-quality raw materials. Prices for such raw materials are susceptible to fluctuations driven by global or regional supply and demand dynamics in commodity
markets and production capacity constraints among suppliers, which may include unavailability of certain raw materials or skilled labor, transportation costs, government regulations, geopolitical events, changes in currency exchange rates
among other factors. A shortage of raw materials could arise from reduced production capacities on the global market, trade limitations for specific countries or other interruptions in global supply chains, including Russia’s invasion of
Ukraine. Therefore, increased prices or lack of accessibility, whether for ourselves or those
TABLE OF CONTENTS
of our suppliers who use such raw materials in their components, could impair our
production capability. Nonetheless, most of the raw materials essential to our business are generally available from multiple sources and we attempt to mitigate potential supply risks by working closely with our suppliers on strategic
inventories and coordinate schedules.
Our global operations have required us to establish, maintain and
continuously grow our supply chain as we have expanded our geographic footprint across three continents. Our key suppliers provide equipment, such as PEM stacks or purifiers, and services for our R&D technology development and
transportation. We are in the process of developing relationships with branded and trustable suppliers that allow us to have better technical and commercial terms in the future. The increase of our capacities will afford us to be more
competitive in the future by reaching framework agreements with suppliers. Our procurement team is being reinforced for this purpose. This procurement process is supported by our engineering team so, both teams can procure in an efficient way
to get the most of the technical and commercial conditions. Our contracting strategy accounts for potential supply chain issues. By anticipating these issues, we accommodate for the current status of the market in the delivery dates.
We have established a network of leading industrial suppliers, mainly
located in the U.S. and Central and Northern Europe, but we are constantly searching for new and more competitive suppliers.
For our electrolyzers, we primarily procure our PEM stacks from
suppliers located in the U.S.. In the past few years, more companies have entered the PEM stack technology space. We are now in contact with several of them to have alternatives to the Plug Power stacks, mitigating potential supplier risks and
widening the range of possibilities in terms of services and products.
Research and Development; Intellectual Property
Our management team knows that the ability to grow and maintain a
leading position depends on our ongoing R&D activities and our continuing investment in R&D. H2B2 Labs oversees the development of efficient and durable electrolysis technologies for cost efficient green hydrogen production, with the
aim of maintaining and improving our position in the market. The goals of our R&D efforts include continuing to optimize our existing products and technologies, performing R&D in promising new technologies, and protecting and developing
our intellectual property rights in these new developments and technologies.
Our full-time R&D employees work alongside over 25 researchers
from our various technology partnerships. Our operating expenses on R&D for 2021 were $0.6 million and increased to $1.3 million in 2022.
Our mixed R&D model allows us to have more flexibility, lower
structural costs, and ensure greater efficiency and higher quality through partnering with leading institutions. It also allows the rest of our team to focus more on our holistic services around the entire green hydrogen value chain.
As of the date of this proxy statement/prospectus, we had six
pending patent applications. Of the six applications, five applications relate to BoP (including in relation to our PEM electrolyzer offering) while one patent application relates to the manufacture of next-generation SOEC stacks. As of the
date of this proxy statement/prospectus, we also held five registered trademarks for H2B2 (in the U.S., European Union, Spain, South Korea, and Japan). Furthermore, we have also entered into licensing arrangements with third parties for
patents related to electrolysis technologies.
In addition, we rely on non-disclosure agreements with employees,
independent contractors, customers, and other third parties to protect our intellectual property and proprietary rights. Circumstances outside our control could pose a threat to our intellectual property rights. For more information, see “Risk Factors—Risks Related to H2B2—Risks Related to Information Technology, Intellectual Property, Data Security and Privacy—If we are unable to maintain, protect or enforce our rights in proprietary technology,
brands or other intellectual property, our competitive advantage, business, financial condition, results of operations, cash flow and prospectus could be adversely affected.”
TABLE OF CONTENTS
Competition
The green hydrogen industry is competitive and highly fragmented. New
regulatory requirements for carbon emissions, technological advances, lower costs of renewable energy, improving electrolysis technology, and shifting customer demands are causing the industry to evolve and expand rapidly. There is a rising
demand for green hydrogen for various end uses, and this industry transformation has created several opportunities for us and our competitors.
We believe our competitive strengths, including our holistic
capabilities across the entire green hydrogen value chain, our customer-centric business model, our proprietary technology, our proven track record in delivering landmark large-scale green hydrogen production facilities, and our strategy
delivered by our bespoke management team, allow us to compete well in the green hydrogen sector. We are uniquely positioned across the entire green hydrogen value chain as an electrolyzer manufacturer, EPC provider and project developer, thus
allowing us to provide tailor-made solutions to our customers across the whole value chain.
Within the electrolyzer manufacturing space, we compete with several
large competitors already successful in selling electrolyzers, most notably: Nel, ITM Power, Plug Power, Topsoe, Sunfire, Enapter, Alchemr, Ionomr, among others. Some of our competitors have significantly greater financial capacity,
manufacturing capabilities, marketing resources, and name recognition than we do. However, while most of our competitors typically focus on the manufacturing of a single electrolysis technology, we are technology agnostic, developing PEM, SOEC
and AEM technologies concurrently. Furthermore, we are much more geographically diversified, and our partnership strategy allows us to bypass certain market entry barriers. One key differentiator is that we not only focus on the manufacturing
of the equipment. Given our engineering background, and vast experience with facility development, we can offer our customers and prospective customers a broad range of services including the development of the facility as well as EPC and
O&M services, among others.
Also, our competitive landscape includes EPC providers and project
developers, such as Lhyffe, Air Liquide, Air Products, Iberdrola, Linde, ThyseendKrupp Nucera, Siemens, HDF, and Cummins. Nonetheless these larger, diversified players are more focused on hydrogen production rather than project development,
commissioning, and O&M services. We, as a green hydrogen platform, offer products and services throughout the entire green hydrogen value chain, from the design, engineering, manufacturing, construction, commissioning, operation and
maintenance of hydrogen production facilities, including technology development, manufacturing of electrolyzers, asset management, as well as transport, storage, and sale of green hydrogen. Our hydrogen experience, track record in completing
large scale projects, and our unique offer of delivering turnkey solutions has helped us to successfully identify a robust and diversified pipeline of more than 200 projects and we plan to replicate this success going forward by continuing to
focus on expanding our pipeline and winning bids.
Regulation
We are a global green hydrogen platform and aim to develop our
business in the following central regions: EMEA, the Americas, and APAC. Our activities are subject to various federal, state, local, and foreign laws, rules, and regulations.
We operate in an industry that is subject to many established
environmental regulations. We are also subject to laws and regulations surrounding health, safety and transportation, including laws and regulations governing the generation, use, processing, treatment, storage, transportation, disposal,
release of, and exposure to, hazardous materials.
Green hydrogen’s growth is globally supported by governments pledging
substantial investments to reach ambitious decarbonization targets. To achieve said targets, key initiatives, policies, and regulations have been developed in each region/country where we have a presence. In recent months, we have seen several
environmental regulations being discussed or implemented. Below is a summary of such rules applicable to us and our activities. The summary has been included for illustrative purposes only and is not intended to be an exhaustive description of
all laws, rules, and regulations applicable to our operations in the U.S., the EU, APAC, and Latin America. In addition to the rules summarized below, we are generally subject to, among others, U.S. company and tax laws, which are not described
in this section.
United States
The U.S. is an important market for us. In June 2021, the DOE
launched the first of its Energy Earthshots, an initiative intended to accelerate technological breakthroughs, address technological challenges, and reduce
TABLE OF CONTENTS
costs of clean energy technologies over the next decade that will help provide 100%
clean energy electricity by 2035 and net zero carbon emissions economy-wide by 2050, the Hydrogen Shot. The Hydrogen Shot seeks to reduce the cost of clean hydrogen by 80% to $1/kg of clean hydrogen by 2030. Hydrogen regulation in the United
States is dealt with at two main levels: nation-wide federal regulation and individual state regulation.
Our operations in the U.S. are subject to extensive federal, state
and local laws and regulations that regulate the discharge of materials into, or otherwise relate to the protection of, the environment. These laws and regulations may, among other things: require the acquisition of various permits; require
notice to stakeholders of proposed and ongoing operations; require the installation of expensive pollution control equipment; restrict the types, quantities and concentration of substances that can be released into the environment; and require
remedial measures to address pollution from our current and former operations.
Numerous governmental agencies issue rules and regulations to
implement and enforce such laws, which may be difficult and costly to comply with, and which may carry substantial administrative, civil and even criminal penalties for any failure to comply. Violations and liabilities with respect to these
laws and regulations could also result in remedial obligations, natural resource damages, permit modifications or revocations, operational interruptions or shutdowns. The costs of remedying such conditions may be significant, and remediation
obligations could adversely affect our financial condition, results of operations and cash flows. In certain instances, citizens or citizen groups also have the ability to bring legal proceedings against us if we are not in compliance with
environmental laws or to challenge our ability to receive environmental permits that we need to operate. Some laws, rules and regulations relating to protection of the environment may, in certain circumstances, impose “strict liability” for
environmental contamination, rendering a person liable for environmental and natural resource damages and cleanup costs without regard to negligence or fault on the part of such person.
Key regulations and policies impacting us in the region include:
US: Regulatory Framework – Federal Level
Production
Clean Air Act.
Our operations are subject to the federal Clean Air Act administered by the U.S. Environmental Protection Agency (“EPA”) and comparable state and local requirements to control emissions from sources of
air pollution. Federal and state laws require new and modified sources of air pollutants to obtain permits prior to commencing construction. Major sources of air pollutants are subject to more stringent, federally imposed requirements
including additional permitting requirements. Federal and state laws designed to control toxic air pollutants and GHGs might require installation of additional controls.
The EPA regulates hydrogen production, including pursuant to 40 CFR
Part 98, Subpart P. Specified facilities that emit 25,000 metric tons of CO2e or more per year must comply with EPA’s GHG reporting requirements, emissions monitoring and quality assurance requirements, and other data reporting requirements.
Clean Water Act.
The EPA also administers the federal Clean Water Act (“CWA”). The CWA and implementing regulations, which are primarily enforced through a system of permits, govern the discharge of certain pollutants
into waters of the United States.
CERCLA. The
Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”) is also known as the “Superfund” law. CERCLA and comparable state laws impose liability, without regard to fault or the
legality of the original conduct, on parties that are considered to have contributed to the release of a “hazardous substance” into the environment. These persons include the current or former owner or operator of the site where the release
occurred and anyone who disposed or arranged for the disposal of a hazardous substance released at the site. Such “responsible parties” may be subject to joint and several liability under CERCLA for the costs of cleaning up the hazardous
substances that have been released into the environment and for damages to natural resources. It is not uncommon for neighboring landowners and other third parties to file claims for personal injury and property damage allegedly caused by the
hazardous substances released into the environment.
RCRA. The
Resource Conservation and Recovery Act, or RCRA, and comparable state statutes regulate the generation, transportation, treatment, storage, disposal and cleanup of hazardous and non- hazardous wastes. Under the auspices of the EPA, the
individual states administer some or all of the provisions of RCRA.
TABLE OF CONTENTS
OSHA. The
Occupational Safety and Health Act (“OSHA”) and comparable state laws regulate the protection of the health and safety of workers. In addition, the OSHA hazard communication standard requires
maintenance of information about hazardous materials used or produced in operations, and the provision of such information to employees, state and local government authorities and citizens. Other OSHA standards regulate specific worker safety
aspects of our operations.
Project Development
For any green hydrogen project, numerous federal laws may be
triggered when a federal agency approval is required. For example, the National Environmental Policy Act requires a federal agency undertaking a discretionary major federal action that significantly affects the quality of the human environment
to prepare a detailed statement on the environmental impact of the proposed action. If impacts are not significant, the agency may prepare a less comprehensive environmental assessment or a finding of no significant impact to meet the law’s
requirements. This process has the potential to delay development of some of our projects.
US: Public Support – Federal Level
Inflation Reduction Act
The IRA was passed in the U.S. in August 2022 and earmarks
approximately $369 billion for energy security and climate initiatives. Under this legislation, clean hydrogen production facilities, starting in 2023, can receive a PTC for the first ten years after such facility was placed in service. This
PTC is up to $3.00 per kg of hydrogen produced in the United States (or a possession of the United States); provided that certain prevailing wage and apprenticeship requirements are satisfied (or an exception applies). The clean hydrogen PTC
does not place any limitations on the intended use of the hydrogen produced.
Bipartisan Infrastructure Law (“BIL”)
In November 2021, the U.S. enacted the Infrastructure Investment and
Jobs Act, also known as the Bipartisan Infrastructure Law, which earmarks $9.5 billion to expand the use of clean hydrogen in the industrial sector and beyond, including $8 billion directed to establishing regional clean hydrogen hubs across
the United States. These hubs will support the DOE goal of a 100% clean electrical grid by 2035 and net-zero emissions by 2050.
The BIL also sets aside $1 billion for the Clean Hydrogen
Electrolysis Program intended to reduce the cost of hydrogen produced from clean electricity and allocates $500 million to fund Clean Hydrogen Manufacturing and Recycling Initiatives to support domestic clean hydrogen supply chains. The BIL
also requires DOE to develop a clean hydrogen strategy and roadmap, establish a clean hydrogen production standard, and solicit proposals for the development of regional clean hydrogen hubs.
National Clean Hydrogen Strategy and Roadmap
This “roadmap” was produced by the DOE and includes three key
priorities for the U.S.: increasing the high impact use of clean hydrogen, reducing the cost of clean hydrogen production, and deploying regional clean hydrogen hubs. The roadmap is based on demand scenarios for 2030, 2040, and 2050, with
strategic opportunities for 10 million tons (“Mt”) per year by 2030, 20 Mt by 2040, and 50 Mt by 2050. This roadmap reiterates the Hydrogen Earthshot objective to reduce production cost of clean hydrogen
by 80% to $1/kg by 2030.
Clean Hydrogen Production Standard (“CHPS”)
The DOE issued an initial draft guidance for a CHPS that proposes a
lifecycle GHG emissions target of 4 kg CO2e/kg H2 to meet the requirements of the BIL. The CHPS is not a regulatory standard, and DOE may not necessarily require future funded activities to achieve the standard. However, hydrogen hubs receiving
federal funding, discussed below, will be required to “demonstrably aid achievement” of the CHPS by mitigating emissions across the supply chain.
H2 Hubs Program
In November 2021, the U.S. enacted the Infrastructure and Jobs Act,
also known as the Bipartisan Infrastructure Law, which sets earmarks $8 billion that will create jobs to expand the use of clean hydrogen in the industrial sector and beyond, including $7 billion directed to establish six to ten regional clean
hydrogen hubs (“H2Hubs”) across the United States to develop innovative hydrogen supply and end-use networks.
TABLE OF CONTENTS
Clean Hydrogen Electrolysis, Manufacturing and Recycling
In March 2023, DOE published a $750 million Funding Opportunity
Announcement (“FOA”) to promote cost reductions in clean hydrogen production. The FOA aims to (i) reduce the cost of clean hydrogen production using electrolyzer technologies to less than $2/kg H2 by
2026, (ii) advance new manufacturing technologies and techniques for clean hydrogen production and use equipment, specifically for electrolyzer and fuel cell technologies, and (iii) research, develop, and demonstrate innovative and practical
approaches to increase the reuse and recycling of clean hydrogen technologies.
Industrial Demonstrations Program
DOE has announced approximately $6 billion in funding to accelerate
decarbonization projects in the highest emitting industries, including iron and steel, aluminum, cement, and concrete. Eligible hydrogen projects include hydrogen-based direct reduced ironmaking facilities; hybrid glass furnace approaches such
as hydrogen fueling with electrification; new ironmaking or steelmaking technologies with hydrogen integration; and conversion of iron and steelmaking thermal processes to clean hydrogen.
US: Regulatory Framework and Public Support –
State Level – Focus on California
California Public Utilities Commission
The California Public Utilities Commission (“CPUC”) may have regulatory authority over certain hydrogen projects. The CPUC is empowered to supervise and regulate every public utility in the state, which includes gas corporations that own, control, operate, or manage gas
plants dedicated to the public use. Depending on their circumstances, hydrogen production, transmission, and distribution facilities may be considered “gas plants” subject to CPUC regulation; however, the CPUC has not yet reached this question
in any proceeding.
California Energy Commission
In June 2022, the California Legislature passed Assembly Bill (AB)
205, granting the CEC exclusive siting authority over certain types of clean energy projects, which could include qualifying hydrogen projects or associated facilities. Under AB 205, the CEC’s authority to site and approve eligible projects
would largely replace the authority of cities, counties, and regional agencies who currently issue permits, certificates, or similar approvals for these facilities.
Project Development
Several additional state laws may be triggered as part of siting and
approving a green hydrogen project. For example, the California Environmental Quality Act requires public agencies to evaluate and consider the environmental consequences of their proposed actions; consider and respond to relevant public
comment on such actions; and, when feasible, to avoid or mitigate associated adverse environmental impacts.
Green hydrogen projects may also be subject to various state and
local project siting, land use, and zoning requirements.
Low Carbon Fuel Standard
The Low Carbon Fuel Standard (“LCFS”)
program is designed to decrease the carbon intensity of the state’s transportation fuel pool by offering credits for low-carbon transportation fuels, such as hydrogen.
Two categories of hydrogen can generate credits under the LCFS:
(i) hydrogen used in fuel cell electrical vehicles and (ii) renewable hydrogen used for fuel production. In addition to generating LCFS credit for dispensed fuel, eligible hydrogen stations can generate infrastructure credits under the LCFS’s
Hydrogen Refueling Infrastructure (HRI) provision.
LCFS credits can be used to meet a regulated entity’s annual
compliance obligations or may be monetized by transferring the credits to a buyer in exchange for cash.
Zero-Emission Vehicle Regulation
Requires large volume and intermediate volume vehicle manufacturers
to bring to and/or operate in California a certain proportion of their sales as plug-in hybrid electric vehicles or zero-emission vehicles.
TABLE OF CONTENTS
The 2022 Advanced Clean Cars II regulations require all new
passenger cars, trucks, and SUVs sold in California to be zero emissions by 2035.
Advanced Clean Trucks Regulation
The Advanced Clean Trucks regulation requires manufacturers who
certify Class 2b-8 chassis or complete vehicles with combustion engines to sell zero-emission trucks as an increasing percentage of their annual California sales from 2024 to 2035. By 2035, zero-emission truck/chassis sales would need to be 55%
of Class 2b-3 truck sales, 75% of Class 4-8 straight truck sales, and 40% of truck tractor sales.
Also requires large entities and fleets to report about their
existing fuel operations to help identify future strategies to ensure that fleets purchase available zero-emission trucks and place them in service where suitable.
Advanced Clean Fleets Regulation
The California Air and Resources Board recently approved an Advanced
Clean Fleets regulation requiring all medium- and heavy-duty vehicles produced by manufacturers for purchase in California to be zero emissions starting in 2036.
The regulation also requires fleets performing drayage operations,
those owned by State, local and, federal government agencies, and high priority fleets to transition to zero emissions vehicles by specified deadlines.
Clean Transportation Program
The CEC’s Clean Transportation Program provides funding to support
innovation and accelerate the development and deployment of advanced transportation and fuel technologies. Funding is used to develop retail hydrogen fueling stations with a target of 100 stations operating in California.
H2B2 was awarded a US$3.96 million grant from the CEC Clean
Transportation Program in the context of the SoHyCal project, with an investment aim for H2B2 to generate up to 1,000 kg/day of 100% emission free hydrogen to serve the Hydrogen Refueling Stations of the San Joaquin Valle and the San
Francisco Bay Area. The term of the grant is from November 8, 2021 to October 31, 2024.
European Union
Net-Zero Industry Act
In March 2023, the UN announced the European Net-Zero Industry Act
(“NZIA”), which calls for 40% of the hydrogen equipment used in Europe to be manufactured in Europe. Furthermore, the European Commission announced the creation of approximately $3 billion European Hydrogen bank in September 2022 and announced
a target to have 50% of all hydrogen demand in the industry come from renewable origins by 2030.
REPowerEU
In May 2022, the EU announces its REPowerEU plan which aims to
rapidly reduce dependence on Russian fossil fuels by 2027. For this purpose, a combination of short, mid-, and long-term targets and measures have been set covering the following three pillars: (i) demand reduction, (ii) diversification of
suppliers for conventional fuel imports while future proofing the corresponding infrastructure, and (iii) acceleration of the transition to renewable energy sources. The plan sets targets to develop the hydrogen infrastructure including:
•
|
10 Mt of renewable hydrogen production in the EU and the same quantity of imports by 2030
|
•
|
Double the number of hydrogen valleys through Hydrogen Joint Undertaking
|
•
|
Mapping hydrogen infrastructure needs by March 2023
|
•
|
Scale-up of electrolyzer manufacturing, details outlined in the “Electrolyzer Declaration”
|
•
|
Align sub-targets for RFNBOs for industry and transport
|
•
|
Defining objectives for renewable hydrogen production and establishing methodology for calculating greenhouse emissions of
different production methods
|
TABLE OF CONTENTS
Green Deal Industrial Plan
In February 2023, the European Commission announced the Green
Industrial Plan, which aims to provide a more supportive environment for the scaling up of the EU’s manufacturing capacity for the net-zero technologies and products required to meet Europe’s ambitious climate targets. This plan is based on
four pillars: (i) a predictable and simplified regulatory environment, (ii) speeding up access to finance, (iii) enhancing skills, and (iv) open trade for resilient supply chains.
RED II
In 2018, the European Commission announced RED II, which defines the
level of renewable energy or fuels to be used in certain sectors. RED II sets the following targets for 2030:
•
|
RFNBO to make up at least 5.7% of all fuels by 2030, including 1.2% for the maritime sector
|
•
|
50% transition by industries to green hydrogen by 2030, followed by a 75% transition by 2035
|
•
|
GHG intensity reductions of 16% for the transportation sector
|
Further, RED II established the criteria for an RFNBO through the
Methodology Delegated Act and the Additionality Delegated Act. The Methodology Delegated Act defines the GHG threshold allowed in the production process for nonbiological fuels to be considered an RFNBO. The act sets the fossil fuel comparator
at 94gCO2eq/MJ and requires a 70% GHG emission savings. Given this, the GHG emission threshold for nonbiological fuel producers to produce RFNBOs is 28.2gCO2eq/MJ. The Additionality Delegated Act imposes renewable origin, temporal correlation,
spatial correlation, and additionality requirements on producers. These rules apply across different project types, including whether hydrogen is being produced through a direct line set up or through grid connection. The Additionality
Delegated Act describes several methods hydrogen producers can follow to demonstrate that the hydrogen produced is 100% from renewable electricity. There are several obligations producers must consider for each method including obligations
related to additionality, temporal and geographical factors.
Latin America
We also aim to develop our presence in key Latin American markets. We
are currently involved in one of Colombia’s pilot green hydrogen projects, Ecopetrol, and have ambitions to grow our presence in Uruguay and Chile. A number of strategies are in place or under development to support the growth of green hydrogen
production in the region and to be a low-cost player and exporter to the global market.
Colombia’s Hydrogen Roadmap
In 2021, Colombia’s Mines and Energy Ministry published a hydrogen
roadmap established the commitment to low-carbon hydrogen development in Colombia in a 3 phased approach. The objective of the roadmap is to install 1– 3GW of electrolyzer capacity in Colombia by 2030. The roadmap aims to decrease the price
from 2.1–2.8 $/kg to 1.1–1.5 $/kg by 2050. In 2021, Colombia further announced the Energy Transition Law for financing of hydrogen development, which assigns responsibility to the Fund for Non-Conventional Renewable Energy Sources and Energy
Efficiency (“FENOGE”) to promote and finance Green and Blue Hydrogen projects. In July 2022, FENOGE approved the financing of 10 hydrogen projects for a total value of approximately $6.5 billion.
Chile Hydrogen Strategy
In 2020, Chile published its National Hydrogen Strategy, aiming to be
one of the world’s leading low-cost exporters of green hydrogen globally by 2040. The strategy aims to produce the cheapest green hydrogen globally at less than $1.5/kg by 2030. The Chilean production development agency, CORFO, intends to
finance six hydrogen projects with a total capacity of 396 MW that are expected to be up and running by 2025. These projects will be funded by public subsidies of $50 million.
Uruguay Hydrogen Roadmap
In mid-2022, Uruguay published its draft Hydrogen Roadmap, which
outlines steps for the country to produce and export hydrogen.
TABLE OF CONTENTS
APAC: India and Australia
Our growth areas in the APAC market are focused on India and
Australia. BloombergNEF and the IEA predict that the APAC region will install 30 GW in green hydrogen projects by 2030. The APAC regulatory environment is more nascent compared to the EU and the U.S. In 2021, India adopted a net-zero target by
2070 and is committed to establishing a non-fossil energy capacity of 500 GW by 2030. The regulations regarding green hydrogen that may impact us as in the APAC region include:
India’s National Hydrogen Mission
In January 2023, the Indian government approved the National Green
Hydrogen Mission to scale up its green hydrogen production and to align India’s energy transition with best practices globally. India is targeting producing 5 million metric tons of green hydrogen per annum by 2030. To achieve this goal 15 GW
of electrolyzer capacity will need to be installed by 2030. An associated renewable energy capacity of 125 GW and grid transmission network was identified to be able to meet this goal.
As part of the National Green Hydrogen Mission, Rs 19,744 crore
(approximately $2.3 billion) is available in funding support for renewable hydrogen production and electrolyzer manufacturing. According to NITI Aayog, an Indian Government think tank, and a Rocky Mountain Institute report, hydrogen demand in
India is expected to increase fourfold by 2050.
Australia’s National Hydrogen Strategy
In 2019, Australia released its National Hydrogen Strategy followed
by an announcement in February 2023, of a review of the strategy by the Australian Government’s Energy and Climate Change Ministerial Council that announced they would lead a Review of the strategy. According to the Australian Renewable Energy
Agency, demand for hydrogen exported from Australia could be over 3 Mt/year by 2040. The National Hydrogen Strategy further supports the Australian government’s broader industrial strategy, the Low Emissions Technology Statement that was
announced in 2021, which includes a stretch target to bring the cost of hydrogen below AUD $2/kg. The Australian Hydrogen Council, based on a report by a consulting firm, has also encouraged the Australian government to introduce a production
credit of AUD $2/kg for hydrogen projects over ten years.
Australia’s Regional Hydrogen Hubs Program
In 2022, Australia announced plans to earmark up to AUD $526 million
in grants, to be used for the implementation, roll-out and development design for up to 17 total hydrogen hubs. The funding will cover the construction of eight of these hubs, and feasibility and design studies for a further hubs.
Employees
As of as of the date of this proxy statement/prospectus, we had 67
full-time employees located in Seville, Spain, three full-time employees located in the U.S, three full-time employees located in India and one full-time employee located in Mexico. None of our employees are represented by a labor union. We
have not experienced any work stoppages and believe we maintain good employee relations.
Facilities
Our registered office is located at 8 The Green A, Dover, DE 19901
and we maintain a co-working space in Fresno, California. We also lease our main manufacturing facility in Seville, Spain, and our offices are located within the same facility. This leased facility consists of 3,380 m2 of working
space, including a two-story office area of 600 m2. The lease will expire in December 2027. We believe that this office and manufacturing space is adequate for our needs for the immediate future. Upon execution of our expansion plans, we
believe this property will accommodate our planned growth for the foreseeable future.
We also have two leases for our facility in Fresno, California, each
with a commencement date of February 1, 2021.
•
|
Lease with Bar 20 Dairy, LLC of our hydrogen production facility, 1.5 acres, for a 22-year initial term that has since
commenced, with optional subsequent renewals.
|
TABLE OF CONTENTS
•
|
Lease with Bar 20 Dairy, LLC for a solar plant, 40 acres, for a 22-year initial term that will commence when the solar plant is
complete, with optional subsequent renewals.
|
As of the date of this proxy statement/prospectus, we own,
develop/operate/supply projects described under “—Our Projects and Pipeline”.
Legal proceedings
From time to time, we may be subject to various claims, lawsuits and
other legal and administrative proceedings that may arise in the ordinary course of business. Some of these claims, lawsuits and other proceedings may range in complexity and result in substantial uncertainty; it is possible that they may
result in damages, fines, penalties, non-monetary sanctions or relief. We have not been, are not currently a party to, nor are we aware of, any claims, lawsuits and other legal and administrative proceedings which, in the opinion of management,
is likely to materially adversely affect our business, operations, results or financial or other condition.
TABLE OF CONTENTS
SELECTED HISTORICAL FINANCIAL INFORMATION OF H2B2
The information presented below is derived from the Q1-2023 Unaudited
Interim Condensed Consolidated Financial Statements of H2B2 and the 2022 Audited Consolidated Financial Statements of H2B2 included elsewhere in this proxy statement/prospectus.
H2B2’s historical results are not necessarily indicative of the
results that may be expected for any other period in the future. The selected financial information set out below is a summary only. It may not contain all the information that is important to prospective investors and, accordingly, should be
read in conjunction with “Risk Factors”, “H2B2 Management’s Discussion and Analysis of Financial Condition and Results of Operations”, the Q1-2023 Unaudited Interim Condensed Consolidated Financial
Statements of H2B2 and the 2022 Audited Consolidated Financial Statements of H2B2, included in this proxy statement/prospectus.
Consolidated Statements of Operations for the periods indicated below
Product sales
|
|
|
$866,913
|
|
|
$100,130
|
|
|
$3,491,673
|
|
|
$961,607
|
Cost of sales
|
|
|
974,046
|
|
|
83,997
|
|
|
3,042,412
|
|
|
815,956
|
Gross (loss) profit
|
|
|
(107,133)
|
|
|
16,133
|
|
|
449,261
|
|
|
145,651
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development
|
|
|
542,773
|
|
|
196,201
|
|
|
1,333,961
|
|
|
588,281
|
Selling, general and administrative
|
|
|
1,105,019
|
|
|
981,238
|
|
|
3,904,132
|
|
|
3,220,510
|
Depreciation of long-lived assets
|
|
|
40,58l
|
|
|
5,803
|
|
|
88,257
|
|
|
24,178
|
Income from grants
|
|
|
350,127
|
|
|
90,007
|
|
|
801,991
|
|
|
242,170
|
Losses from unconsolidated investments
|
|
|
(7,032)
|
|
|
—
|
|
|
—
|
|
|
—
|
Loss from operations
|
|
|
(1,452,411)
|
|
|
(1,077,102)
|
|
|
(4,075,098)
|
|
|
(3,445,148)
|
Other income (expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income
|
|
|
326,204
|
|
|
411,878
|
|
|
411,878
|
|
|
105,979
|
Interest and other income (expense), net
|
|
|
207,175
|
|
|
(98,121)
|
|
|
(557,112)
|
|
|
(757,444)
|
Total other expense, net
|
|
|
533,379
|
|
|
313,757
|
|
|
(145,233)
|
|
|
(651,465)
|
Loss before tax expense
|
|
|
(919,032)
|
|
|
(763,345)
|
|
|
(4,220,331)
|
|
|
(4,096,613)
|
Income tax expense
|
|
|
23,635
|
|
|
10,349
|
|
|
76,128
|
|
|
34,391
|
Net loss
|
|
|
(942,667)
|
|
|
(773,694)
|
|
|
(4,296,459)
|
|
|
(4,131,004)
|
Less: Net loss attributable to non-controlling interests
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(253)
|
Net loss attributable to Stockholders
|
|
|
$(942,667)
|
|
|
$(773,694)
|
|
|
$(4,296,459)
|
|
|
$(4,130,751)
|
Net loss per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per share – basic
|
|
|
$(0.10)
|
|
|
$(0.08)
|
|
|
$(0.44)
|
|
|
$(0.50)
|
Net loss per share – diluted
|
|
|
$(0.10)
|
|
|
$(0.08)
|
|
|
$(0.44)
|
|
|
$(0.50)
|
Weighted average shares outstanding – basic
|
|
|
9,708,341
|
|
|
9,734,728
|
|
|
9,727,939
|
|
|
8,321,904
|
Weighted average shares outstanding – diluted
|
|
|
9,708,341
|
|
|
9,734,728
|
|
|
9,727,939
|
|
|
8,321,904
|
Consolidated Balance Sheets as of March 31, 2023 and December 31, 2022
and 2021
Total assets
|
|
|
$29,117,281
|
|
|
$25,185,188
|
|
|
$17,446,766
|
Total liabilities
|
|
|
21,572,000
|
|
|
16,702,754
|
|
|
4,607,604
|
Total equity
|
|
|
7,545,281
|
|
|
8,482,434
|
|
|
12,839,162
|
Total liabilities and equity
|
|
|
$29,117,281
|
|
|
$25,185,188
|
|
|
$17,446,766
|
TABLE OF CONTENTS
Consolidated Statements of Cash Flows for the periods indicated
below
Net cash (used in)/provided by:
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating activities
|
|
|
$1,764,841
|
|
|
$(649,569)
|
|
|
$(4,712,637)
|
|
|
$(5,411,020)
|
Investing activities
|
|
|
(1,902,945)
|
|
|
(13,673)
|
|
|
(1,240,429)
|
|
|
(1,736,570)
|
Financing activities
|
|
|
108
|
|
|
(12,310)
|
|
|
(20,230)
|
|
|
9,014,233
|
Effect of exchange rate changes on cash and cash
equivalents
|
|
|
212,840
|
|
|
(80,031)
|
|
|
(526,836)
|
|
|
(650,253)
|
(Decrease) increase in cash and cash equivalents
|
|
|
$74,844
|
|
|
$(755,583)
|
|
|
$(6,500,132)
|
|
|
$1,216,390
|
TABLE OF CONTENTS
H2B2 MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Unless the context otherwise requires, all
references in this section to “we,” “us,” “our,” “H2B2”, or the “Company” refer to H2B2 Electrolysis Technologies, Inc. and its subsidiaries prior to the consummation of the Business Combination.
The following discussion and analysis of our
results of operations and financial condition should be read together with sections “Financial Statements Presentation”, “Selected Historical Financial Information About H2B2”, “Unaudited Pro Forma Combined Financial Information”, the Q1-2023
Unaudited Interim Condensed Consolidated Financial Statements of H2B2, the 2022 Audited Consolidated Financial Statements of H2B2 and their related notes included elsewhere into this proxy statement/prospectus.
This discussion and analysis contain certain
forward-looking statements based upon current expectations that involve risks and uncertainties. Our future results could differ materially from those discussed below. Factors that could cause or contribute to such differences include, without
limitation, those discussed in the sections entitled “Risk Factors”, “Cautionary Note Regarding Forward-Looking Statements” and “Information About H2B2” in this proxy statement/prospectus.
The objective of this discussion and analysis is
to provide material information relevant to an assessment of the financial condition and results of operations of the Company including an evaluation of the amounts and certainty of cash flows from operations and from outside sources.
Overview
We are a global green hydrogen platform that provides bespoke
integrated solutions to our customers across the whole hydrogen value chain. Our customer-centric, one-stop shop offering enables seamless and effective support through the entire lifecycle of a hydrogen production facility (including the
identification of the opportunity, R&D, design, engineering, procurement and construction, and operation and maintenance services for the hydrogen facility), and complete solutions for transportation, storage, and sale of green hydrogen.
Our global strategy aims to offer our products and services in
regulated markets where hydrogen is expected to play a key role in decarbonizing mobility and industrial activities, among other sectors of the economy, and for hydrogen storage solutions to secure energy independence. Our target markets
include EMEA, the Americas, and APAC, where we have built a robust and diversified project pipeline and identified significant growth opportunities. In light of our proprietary technologies and successful track record in delivering large-scale
projects, we believe we are positioned to continue providing curated solutions that satisfy our customers’ needs and expectations while being at the forefront of green hydrogen’s growth, as a leading OEM, project developer, EPC provider,
O&M provider and producer in the green hydrogen sector.
Our commercial footprint expands across EMEA, the Americas, and APAC.
We lease a state-of-the-art manufacturing facility in Seville, Spain, with an estimated total production capacity of 200 MW per year. This 3,300 m2 facility allows for the integration of our corporate services and engineering and is expected to
serve as our manufacturing hub. We are planning the construction of a 4,800 m2 manufacturing facility in Fresno, California, to be strategically located between Sacramento and Los Angeles, one of the areas with the highest political support for
renewable energy in the U.S. We believe this facility will enable us to further penetrate the U.S. market.
We are also expanding rapidly and are planning additional
electrolyzer manufacturing facilities in the U.S., India, Colombia, Northern Spain and other regions where we are able to secure relevant roles in strategic projects. In addition, we seek to offer added value to customers by co-locating
electrolyzer manufacturing facilities close to major customers and serve as technology partners by contributing to the local high skilled and quality employment where we act, allowing us to become a top-tier green hydrogen company. We have a
pipeline with several projects we expect are executable in the near-term. We have several installed or awarded projects, including SoHyCal, a 9 MW green hydrogen facility, a pioneer green hydrogen project 100% owned and developed by us, which
we believe is one of the largest pure renewable energy hydrogen projects in the United States. Construction of Phase I (the first 3 MW) was completed in April 2023. The facility has been completed and is currently in the process of quality
control testing and preproduction test runs, starting with Biogas when available, to ensure the capacity, quality and specifications required by the CEC, preparing the long-lived asset to be ready for its intended use. We also received a
conditional use permit to develop Phase II of
TABLE OF CONTENTS
SoHyCal in June 2023. Another relevant project includes our technology partnership
with Ecopetrol (Colombia’s leading oil company, and the second-largest oil & gas company in Latin America, currently ranked number 346 in the Fortune Global 500) to develop green hydrogen projects for mobility. In addition, we recently were
selected as the preferred bidder for the contract to manufacture two 18 MW green hydrogen facilities in Norway, one facility to be located in Glomfjord for Greenstat (a listed renewable energy company, primarily focused on developing hydrogen,
industrial wind, and solar energy projects) and the other facility to be located in Rørvik for Greenstat and NTE (one of the largest utility companies in Norway). For the Glomfjord project, a letter of intent is still to be negotiated while for
the Rørvik project, a letter of intent has been signed for the EPC.
We have a customer-centric go-to-market business model and look to
provide our customers with differentiated and scalable solutions:
•
|
Conventional Product: Currently we provide our customers with this solution, which focuses on selling and installing
hydrogen facilities for third parties, which includes manufacturing and installing equipment, including electrolyzers, consulting and engineering services, EPC, and O&M services, with limited integration and specific to the needs of
a project; and
|
•
|
Integrated Product: Going forward, we will provide a more fulsome and integrated suite of products and services that
includes all the services offered under our Conventional Product together with project development services, such as identification of opportunities, site selection, negotiating PPAs and off-take agreements, permitting, and financing
solutions, including offering production guarantees to secure sustainable financing. Our Integrated Products could be self-developed and the majority funded by third parties, or, in some cases, we may function as a technological partner
for a customer interested in developing a green hydrogen production facility.
|
As of March 31, 2023, our Product Sales derive entirely from our
single operating segment (Sale of Electrolyzers) that fully correspond to our Conventional Product sales. We believe that in the near term, the revenue mix will change, with the Integrated Product gaining more share within our single operating
segment.
To continue to successfully secure and develop landmark projects and
establish ourselves as a leading global green hydrogen platform, we have built our business with a highly capable workforce with complementary skills that will enable us to deliver a comprehensive and integrated offering of products and
services to create customized solutions throughout the green hydrogen value chain going from our electrolyzer technology R&D team, towards the development and the equipment manufacturing teams, to our EPC and O&M services specialists,
and closing the gap within the value chain with a group of employees with financial background to provide asset management services.
Recent Developments
On May 9, 2023, the Company entered into the Merger Agreement with
RMG III, a publicly traded special purpose acquisition company. Under the terms of the Merger Agreement, the Company and RMG III would become a combined entity, with H2B2’s existing equity holders continuing to hold substantially all of their
equity in the combined public company. We expect the merger agreement to be consummated in the third quarter of 2023.
On May 30, 2023, the Company acquired 193,333 shares of H2B2
Common Stock from Ardachon, for a total consideration of EUR 14,500,000 and H2B2 has the option to purchase 73,334 additional shares of H2B2 Common Stock from Ardachon for EUR 5,500,000, subject to the payment of the purchase price prior to
July 31, 2023. On July 28, 2023, the Company and the insolvency administration agreed to extend the date by which the Company could purchase the Ardachon Option Shares from July 31, 2023 to December 31, 2023.
To fund the purchase of the 193,333 shares for EUR 14,500,000, the
Company executed a loan agreement in the amount of EUR 14,500,000. The loan bears an interest rate of 10% paid-in-kind (PIK) per annum. Unpaid principal and interest amounts are due at maturity on May 30, 2026. According to the agreement, if
the Company were to close a capital transaction of more than EUR 40,000,000 and/or were to generate free cash flow in excess of EUR 10,000,000 in any quarterly period, the excess amount must be used for early repayments of the loan. The
Company incurred debt issuance costs of EUR 435,000 in connection with the loan agreement.
In July 2023, the Company made an additional investment in its
joint venture with GreenH Electrolysis Private Limited of $150,000 for the construction of a factory in India to manufacture electrolyzers.
TABLE OF CONTENTS
On August 2, 2023, the Company executed a EUR 3,000,000 working
capital facility agreement to fund the acquisition of five electrolyzers. The facility agreement expires October 28, 2024 and has been guaranteed by CESCE for up to 60% or EUR 1,800,000.
Going Concern
As explained in Note 1.2 to the Q1-2023 Unaudited Interim Condensed
Consolidated Financial Statements of H2B2 and the 2022 Audited Consolidated Financial Statements of H2B2, the Company is in the development stage and continues to incur in net losses including a net loss of $942,667 for the three months ended
March 31, 2023. Neither the Q1-2023 Unaudited Interim Condensed Consolidated Financial Statements of H2B2 nor the 2022 Audited Consolidated Financial Statements of H2B2 include any adjustments that might be necessary if the Company is unable to
continue as a going concern. See “–Liquidity and Capital Resources” for further information.
Main Factors Affecting Our Results of Operations
Level of development and production activity in the
green hydrogen industry
The green hydrogen market is nascent and highly fragmented. Given its
attributes (see “Information About H2B2 — Green Hydrogen Industry”) and variety of applications, we believe there is significant market opportunity for green hydrogen. According to BloombergNEF New
Energy Outlook 2021, the green hydrogen energy market has the potential to reach $10 trillion in value by 2030. Driven by the increased hydrogen demand, the electrolyzer market is expected to experience significant growth over the next decade.
Our growth strategy is focused on leveraging our competitive strengths and expanding our core business of providing end-to-end hydrogen solutions to customers across the entire green hydrogen value chain. For further information see “Information About H2B2 — Our Growth Strategy”. One of the main factors that impacts our results of operations is the volatility of the demand for green hydrogen and its effect on the interest in acquiring
our services. The demand for our electrolyzers and end-to-end green hydrogen solutions is contingent upon the level of activity and expenditure within the green hydrogen industry, which is directly affected by the prevailing trends in energy
and hydrogen demand. Although the regulation in our main market is evolving favorably (US – IRA and Europe – Green deal), if there is a reversal of policies, it may lead to a decrease in development, investment, and production activity levels.
We try to reduce this risk focusing on those markets where there is a clear and secure regulation that incentivizes the green hydrogen.
Sourcing new projects
Our business relies heavily on our ability to source and secure
projects with customers. The process of bidding, contract proposals, and negotiations is complex, competitive and long, and often involves lengthy discussions and challenging selection processes, all of which is impacted by several factors,
including market conditions, demonstrating the effectiveness of our solutions to potential customers, meeting the technical and economic requirements necessary to submit bids, securing financing arrangements, and obtaining any necessary
governmental approvals. To optimize our execution capacity and cash flows, we have implemented a systematic bid evaluation framework based on various parameters, such as project maturity or client credit profile. We plan to continue deploying a
prudent approach that is supported by thorough diligence and data analysis to maintain our business growth. Despite the challenges, we believe we are well-positioned to enhance our committed capacity at attractive internal rates of return and
remain competitive in our bids.
Efficiency of green hydrogen and price of
renewable power
Our business is subject to the risk that green hydrogen may not
become a cost-competitive alternative to conventional energy sources, including fossil-based alternatives such as grey hydrogen and blue hydrogen. Failure to achieve price parity at the expected rate may result in significant demand for green
hydrogen not materializing. This, in turn, could lead to reduced demand for our electrolyzers and end-to-end hydrogen solutions. We try to minimize this risk focusing on those markets where there is a clear competitive advantage in renewables
and in those markets where there is a regulation that makes the green hydrogen price competitive.
Upfront investments
The timeline for monetizing our green hydrogen projects is typically
lengthy, with several months or even years passing between our initial bid in renewable energy auctions and the recognition of revenue from project completion. Our upfront investment in such projects includes various expenses such as legal,
accounting and
TABLE OF CONTENTS
third-party fees, payments for land rights, government permits, interconnection and
grid connectivity arrangements, and engineering and procurement of electrolysis components, among others, which may be non-refundable. Due to the extended timeline for project completion, we must bear the costs of these initial investments
upfront, which may not be fully monetized for many years following the start of commercial operations.
Cost inflation
The renewable energy industry has historically experienced a decline
in equipment costs, but there is no guarantee that this trend will continue or that it may even be reversed. If inflation or the absence of cost reductions occurs, it may adversely affect the Company by increasing the actual or expected costs
of land, raw materials, labor, and other goods and services required to construct our projects. This, in turn, could reduce the profitability of our projects. Any future increase in actual or anticipated costs may negatively impact our
business, financial condition, and results of operations. The Company has implemented internal controls to reduce this risk by diversifying the suppliers base and shortening the validity of our offers.
Competition and continuous incremental
technological change
The green hydrogen market is competitive and highly fragmented. New
regulatory requirements for carbon emissions, technological advances, lower costs of renewable energy, improving electrolysis technology, and shifting customer demands are causing the industry to evolve and expand rapidly. There is a rising
demand for green hydrogen for various end uses, and this industry transformation has created several opportunities for us and our competitors. We believe our competitive strengths, including our holistic capabilities across the entire green
hydrogen value chain, our customer-centric business model, our proprietary technology, our proven track record in delivering landmark large-scale green hydrogen production facilities, and our strategy delivered by our bespoke management team,
allow us to compete well in the green hydrogen sector. We are uniquely positioned across the entire green hydrogen value chain as an electrolyzer manufacturer, EPC provider and project developer, thus allowing us to provide tailor-made
solutions to our customers across the whole value chain. However, the realization of new technologies or technological advancement in industries that are currently not directly competing with the electrolysis industry, but which could expand
the competitive landscape of the electrolysis industry. For more information, see “Information About H2B2 – Competition”.
Supply chain
Our global operations have required us to establish, maintain and
continuously grow our supply chain as we have expanded our geographic footprint. Our key suppliers provide equipment, such as PEM stacks or purifiers, and services for our R&D technology development and transportation. The increase of our
capacities will afford us to be more competitive in the future by reaching framework agreements with suppliers. However, and since we are subject to risk from fluctuating market prices of certain raw materials, particularly copper, nickel and
steel, should prices of components and raw materials which are used in the construction and maintenance of our electrolyzers and projects increase, the required capital expenditures to develop our projects would increase accordingly.
Our contracting strategy accounts for potential supply chain issues.
By anticipating these issues, we accommodate for the current status of the market in the delivery dates. Thanks to our constant screening of the market and consistent communication with our potential suppliers, we have not experienced any
delays to date and, in the case of our most recently awarded project, we were able to anticipate supply issues and adapt appropriately to ensure we were able to meet our project timeline. For more information, see “Risk Factors — Disruptions in our supply chain for materials and components and the resulting increase in equipment and logistics costs could adversely affect our financial performance” and “Information
About H2B2 — Manufacturing and Supplier Relationships”.
Foreign currency exchange rates
A substantial portion of the Company’s business derives from projects
outside the U.S., and we expect to continue expanding our international operations. Thus, the Company is subject to currency risks arising from foreign currency transactions and exposures which could adversely affect the Company’s financial
results by currency exchange fluctuations or that any efforts by the Company to engage in currency hedging activities in
TABLE OF CONTENTS
the future will be effective. Currency exchange rate fluctuations, thus, could have a
material adverse effect on the Company’s business, financial condition, results of operations, cash flows and/or prospects. See “Risk Factors — Fluctuations in foreign currency exchange rates may negatively
affect our capital expenditures and could result in exchange losses” for further information.
Government subsidies, public grants and
supportive regulatory framework
Currently, governments across the world are increasing their efforts
to promote the energy transition. Both U.S. and European initiatives aim to ultimately stimulate and increase demand for green hydrogen. Under the IRA framework, the U.S. seeks to do so by subsidizing production and making green hydrogen cost
competitive, while Europe is focused on directly creating demand by setting ambitious renewable energy and green hydrogen specific targets. For further information see “Information About H2B2 — Our Growth
Strategy” and “Information About H2B2 — Green Hydrogen Industry”. Our ability to develop green hydrogen production projects and obtain financing is impacted by government incentives and policies
that support green hydrogen. Despite the global support from major economies towards the green hydrogen, we may need to enter contracts, grants, and other agreements with government entities to fund and develop our projects, and any adverse
amendment or elimination of these incentives or policies or the reduction in funding for these incentives could negatively impact our business operations, including the viability of new green hydrogen projects and the profitability of our
existing projects. Discontinuation or reduction of governmental support of renewable energy development, particularly green hydrogen, could impact our operating costs and cash flows.
Foreign currency transactions
Our reporting currency is the U.S. dollar. The Company has designated
the U.S. dollar as the functional currency of the Company’s legal entities. Transaction gains and losses resulting from the effect of exchange rate changes on transactions denominated in currencies other than the functional currency of the
Company’s operations give rise to realized foreign currency transaction gains and losses. Foreign currency transaction gains/losses are reported in the consolidated statement of operations in interest and other income (expense), net. See “Risk Factors — Fluctuations in foreign currency exchange rates may negatively affect our capital expenditures and could result in exchange losses,” alongside with the Q1-2023 Unaudited Interim Condensed
Consolidated Financial Statements of H2B2 and the 2022 Audited Consolidated Financial Statements of H2B2 for further information.
The table below shows the values as of and for the periods ended on
the following indicated dates of the corresponding currencies of the countries in which the Company operates, as compared to its presentation currency (U.S. dollar):
Euro (EUR)
|
|
|
0.9195
|
|
|
0.9320
|
|
|
0.9008
|
|
|
0.8915
|
Euro (EUR)
|
|
|
0.9376
|
|
|
0.9497
|
|
|
0.8785
|
|
|
0.8453
|
Relevant measures of the Company
We closely monitor the following financial drivers of our business
on a consolidated basis: product sales, gross (loss) profit, net loss, Adjusted EBITDA and Adjusted EBITDA Margin. For further information regarding our financial data, see “—Historical Results of
Operations of the Company” and “—Non-GAAP Financial Measures”.
Additionally, the main operational drivers used by the Company to
monitor and analyse H2B2’s business strategy are our number of operating projects, number of pipeline projects, installed capacity and bookings (in
TABLE OF CONTENTS
units and $ million) by type of product or business line, market and geographical
area. See the section entitled “Information About H2B2” for further information regarding our main operational or business key performance indicators.
Key Components of our Statements of Operations
Product sales
We generate product sales primarily through the sale of
electrolyzers, measured based on the transaction price specified in a contract with a customer, subject to the allocation of the transaction price to distinct performance obligations. We recognize revenue overtime when it satisfies a
performance obligation by transferring control over a product or service to a customer.
Cost of sales
Our cost of sales includes the production costs associated with the
electrolyzers’ manufacturing. Costs incurred related to shipping and handling are included in cost of sales.
Operating expenses
Operating expenses consists primarily of R&D expenses, SG&A
expenses and depreciation of long-lived assets.
Income from grants
Income from grants consists of income from government grants mainly
related to R&D activities and to the construction and development of green hydrogen facilities.
Other income
Other income consists primarily of income from contingent payments
and other non-recurring income.
Interest and other income (expense), net
Interest and other income (expense) consist primarily of foreign
currency transaction gains/losses.
Income tax expense
Income tax expense consists of current income taxes, changes in
deferred tax assets and deferred tax liabilities calculated on (Loss)/Income before tax expense.
Historical results of operations of the Company
This section includes discussions of variations, on a consolidated
basis, in the Company’s consolidated statement of operations for the three-month periods ended March 31, 2023 and 2022 and for the years ended December 31, 2022 and 2021.
For the three-month periods ended March 31, 2023 and 2022 and for the
years ended December 31, 2022 and 2021, as disclosed within the Q1-2023 Unaudited Interim Condensed Consolidated Financial Statements of H2B2 and the 2022 Audited Consolidated Financial Statements of H2B2, we operate in a single segment and
that is the sale of electrolyzers, including the design, engineering, manufacturing, integration, financing and O&M expenses for green hydrogen facilities. We have identified the Chief Executive Officer as the chief operating decision maker
(“CODM”), and all significant operating decisions are based on one-segment basis. Therefore, the following discussions of variations are conveyed on a consolidated basis only.
TABLE OF CONTENTS
Three-month period ended March 31, 2023 compared
with the three-month period ended March 31, 2022
The following table sets forth the Company’s consolidated statement
of operations’ data for the three-month periods ended March 31, 2023 and 2022.
Product sales
|
|
|
$866,913
|
|
|
$100,130
|
|
|
$766,783
|
|
|
n.m.
|
Cost of sales
|
|
|
974,046
|
|
|
83,997
|
|
|
890,049
|
|
|
n.m.
|
Gross (loss) profit
|
|
|
(107,133)
|
|
|
16,133
|
|
|
(123,266)
|
|
|
n.m.
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development
|
|
|
542,773
|
|
|
196,201
|
|
|
346,572
|
|
|
176.6%
|
Selling, general and administrative
|
|
|
1,105,019
|
|
|
981,238
|
|
|
123,781
|
|
|
12.6%
|
Depreciation of long-lived assets
|
|
|
40,58l
|
|
|
5,803
|
|
|
34,778
|
|
|
n.m.
|
Income from grants
|
|
|
350,127
|
|
|
90,007
|
|
|
260,120
|
|
|
n.m.
|
Losses from unconsolidated investments
|
|
|
(7,032)
|
|
|
—
|
|
|
(7,032)
|
|
|
n.m.
|
Loss from operations
|
|
|
(1,452,411)
|
|
|
(1,077,102)
|
|
|
(375,307)
|
|
|
34.8%
|
Other income (expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income
|
|
|
326,204
|
|
|
411,878
|
|
|
(85,674)
|
|
|
(20.8)%
|
Interest and other income (expense), net
|
|
|
207,175
|
|
|
(98,121)
|
|
|
305,296
|
|
|
n.m.
|
Total other expense, net
|
|
|
533,379
|
|
|
313,757
|
|
|
219,622
|
|
|
70.0%
|
Loss before tax expense
|
|
|
(919,032)
|
|
|
(763,345)
|
|
|
(155,687)
|
|
|
20.4%
|
Income tax expense
|
|
|
23,635
|
|
|
10,349
|
|
|
13,286
|
|
|
n.m.
|
Net loss
|
|
|
(942,667)
|
|
|
(773,694)
|
|
|
(168,973)
|
|
|
21.8%
|
n.m.: not meaningful.
Product sales
Product sales increased $766,783 to $866,913 for the three-month
period ended March 31, 2023 from $100,130 for the three-month period ended March 31, 2022, mainly due to the increase in the number of operating projects generating product sales as compared with the previous quarter, particularly relevant in
the European market. Throughout the first quarter of 2023, we had 16 operating projects compared to nine in the previous quarter.
See Note 13 to the Q1-2023 Unaudited Interim Condensed Consolidated
Financial Statements of H2B2 for a presentation of our product sales by geographic area.
Cost of sales
Cost of sales increased $890,049 to $974,046 for the year three-month
period ended March 31, 2023 from $83,997 for the three-month period ended March 31, 2022, mainly due to expenses directly related to the increase in operating projects during the first quarter of 2023 as compared to the same period in 2022.
Gross (loss) profit
Gross (loss) profit decreased $123,266 to $(107,133) for the
three-month period ended March 31, 2023 from $16,133 for the three-month period ended March 31, 2022, due to the aforementioned discussions of year-on-year variations in product sales and cost of sales and due to the recognition of loss
contracts.
Gross (loss) profit margin decreased 128.5% to (112.4)% for the
three-month period ended March 31, 2023 from 16.1% for the three-month period ended March 31, 2022 mainly due to the enlargement of cost of sales derived from the expansion of product sales and operating projects and certain contracts in a loss
position.
TABLE OF CONTENTS
Operating expenses
The main period-on-period operating expenses variations’ breakdown
is as follows:
•
|
R&D expenses increased $346,572 (176.6%) to $542,773 for the three-month period
ended March 31, 2023 from $196,201 for the three-month period ended March 31, 2022, mainly due to the continuation of our intensive capital investment efforts toward the development of electrolyzers’ related technology.
|
•
|
SG&A expenses increased $123,781 (12.6%) to $1,105,019 for the three-month period
ended March 31, 2023 from $981,238 for the three-month period ended March 31, 2022, mainly due to an increase in professional services partially offset by a decrease in staff costs.
|
•
|
Depreciation of long-lived assets increased $34,778 to $40,581 for the three-month
period ended March 31, 2023 from $5,803 for the three-month period ended March 31, 2022, mainly due to the increase in machinery and equipment due to the Company’s enhanced business activity as compared with the previous quarter.
|
Income from grants
Income from grants increased $260,120 to $350,127 for the three-month
period ended March 31, 2023 from $90,007 for the three-month period ended March 31, 2022, due to the enlargement of public subsidies granted in the quarter for the development of new technologies.
Losses from unconsolidated investments
Losses from unconsolidated investments amounts to $7,032 for the
three-month period ended March 31, 2023 from nil in the first quarter of the year 2022 due to accrued losses of joint ventures in which we have invested in during the quarter. See Note 7 to the Q1-2023 Unaudited Interim Condensed Consolidated
Financial Statements of H2B2 for further information.
Loss from operations
Loss from operations increased $375,307 (34.8%) to $(1,452,411) for
the three-month period ended March 31, 2023 from $(1,077,102) for the three-month period ended March 31, 2022, mainly due to the aforementioned increases in cost of sales, SG&A, and R&D expenses in the period.
Other income
Other income decreased $85,674 to $326,204 for the three-month period
ended March 31, 2023 from $411,878 for the three-month period ended March 31, 2022, primarily due to the reduced amount of contingent payments received in 2023 from Plug Power Inc. as part of the sale of our ownership interest in Giner Elx,
Inc. to Plug Power Inc.
Interest and other income (expense), net
Interest and other income (expense) net decreased $305,296 to
$207,175 for the three-month period ended March 31, 2023 from $(98,121) for the three-month period ended March 31, 2022, due to favorable USD-EUR exchange differences in the quarter.
Net loss
Net loss increased $168,973 (21.8%) to $(942,667) for the three-month
period ended March 31, 2023 from $(773,694) for the three-month period ended March 31, 2022, mainly due to the aforementioned increase in loss from operations, increase in operating expense, as well as by the decrease in other income associated
with contingent payments received during the quarter, partially offset by the positive impact due to the favorable movement in the foreign currency exchange rate.
TABLE OF CONTENTS
Year ended December 31, 2022 compared with the
year ended December 31, 2021
The following table sets forth the Company’s consolidated statement
of operations’ data for the years ended December 31, 2022 and 2021.
Product sales
|
|
|
$3,491,673
|
|
|
$961,607
|
|
|
$2,530,066
|
|
|
263.1%
|
Cost of sales
|
|
|
3,042,412
|
|
|
815,956
|
|
|
2,226,456
|
|
|
272.9%
|
Gross (loss) profit
|
|
|
449,261
|
|
|
145,651
|
|
|
303,610
|
|
|
208.5%
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development
|
|
|
1,333,961
|
|
|
588,281
|
|
|
745,679
|
|
|
126.8%
|
Selling, general and administrative
|
|
|
3,904,132
|
|
|
3,220,510
|
|
|
683,622
|
|
|
21.2%
|
Depreciation of long-lived assets
|
|
|
88,257
|
|
|
24,178
|
|
|
64,079
|
|
|
265.0%
|
Income from grants
|
|
|
801,991
|
|
|
242,170
|
|
|
559,821
|
|
|
n.m.
|
Loss from operations
|
|
|
(4,075,098)
|
|
|
(3,445,148)
|
|
|
(629,950)
|
|
|
18.3%
|
Other income (expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income
|
|
|
411,878
|
|
|
105,979
|
|
|
305,899
|
|
|
n.m.
|
Interest and other expense, net
|
|
|
(557,112)
|
|
|
(757,444)
|
|
|
200,332
|
|
|
(26.4)%
|
Total other expense, net
|
|
|
(145,233)
|
|
|
(651,465)
|
|
|
506,232
|
|
|
(77.7)%
|
Loss before tax expense
|
|
|
(4,220,331)
|
|
|
(4,096,613)
|
|
|
(123,718)
|
|
|
3.0%
|
Income tax expense
|
|
|
76,128
|
|
|
34,391
|
|
|
41,737
|
|
|
121.4%
|
Net loss
|
|
|
(4,296,459)
|
|
|
(4,131,004)
|
|
|
(165,455)
|
|
|
4.0%
|
Less: Net loss attributable to
non-controlling interests
|
|
|
—
|
|
|
(253)
|
|
|
253
|
|
|
n.m.
|
Net loss attributable to Stockholders
|
|
|
$(4,296,459)
|
|
|
$(4,130,751)
|
|
|
$(165,708)
|
|
|
4.0%
|
n.m.: not meaningful.
Product sales
Product sales increased $2,530,066 (263.1%) to $3,491,673 for the
year ended December 31, 2022 from $961,607 for the year ended December 31, 2021, mainly due to the increase in the number of operating projects generating product sales in 2022 compared to 2021. Throughout 2022 we had 12 operating projects
compared to five in the previous year.
See Note 14 to the 2022 Audited Consolidated Financial Statements of
H2B2 for a presentation of our product sales by geographic area.
Cost of sales
Cost of sales increased $2,226,456 (272.9%) to $3,042,412 for the
year ended December 31, 2022 from $815,956 for the year ended December 31, 2021, mainly due to the necessary incremental costs directly associated with the expansion of new operating projects during the year as compared with previous year.
Gross (loss) profit
Gross (loss) profit increased $303,610 to $449,261 for the year ended
December 31, 2022 from $145,651 for the year ended December 31, 2021, due to the aforementioned discussions of year-on-year variations in product sales and cost of sales.
Gross (loss) profit margin decreased 2.2% to 12.9% for the year ended
December 31, 2022 from 15.1% for the year ended December 31, 2021 mainly due to cost inflation, and an increase in transportation and equipment costs.
Operating expenses
The year-on-year operating expenses variations’ breakdown is as
follows:
•
|
R&D expenses increased $745,679 (126.8%) to $1,333,961 for the year ended December
31, 2022 from $588,281 for the year ended December 31, 2021, mainly due to the intensive capital investment in
|
TABLE OF CONTENTS
the year associated with the in-house development of new technologies applicable to
our electrolyzers and electrolysis processes to accompany and sustain our business expansion, pursuing our main business goal of becoming a leading developer and operator of green hydrogen facilities.
•
|
SG&A expenses increased $683,622 (21.2%) to $3,904,132 for the year ended December
31, 2022 from $3,220,510 for the year ended December 31, 2021, mainly due to professional services in the year totaling $1,577,100 in 2022 (an increase of $751,728 as compared with $825,372 in 2021), and to a lesser extent due to an
increase in general SG&A costs related to our incremental business activity in 2022.
|
•
|
Depreciation of long-lived assets increased $64,079 (265.0%) to $88,257 for the year
ended December 31, 2022 from $24,178 for the year ended December 31, 2021, mainly due to the increase in machinery and equipment predominantly located in Spain.
|
Income from grants
Income from grants increased $559,821 to $801,991 for the year ended
December 31, 2022 from $242,170 for the year ended December 31, 2021, due to public subsidies granted in the year for the development of new technologies.
Loss from operations
Loss from operations increased $629,950 (18.3%) to $(4,075,098) for
the year ended December 31, 2022 from $(3,445,148) for the year ended December 31, 2021, mainly due to the aforementioned increases in cost of sales, SG&A, and R&D expenses in the year, partially offset by our year-on-year product sales
expansion associated with the increase in the number of operating projects generating positive product sales.
Other income
As of June 22, 2020, we had a 25% ownership interest of Giner Elx,
Inc., an electrolysis hydrogen generators’ developer. On that same date we sold our ownership interest in Giner Elx, Inc. to Plug Power Inc. Other income increased $305,899 to $411,878 for the year ended December 31, 2022 from $105,979 for the
year ended December 31, 2021, primarily due to contingent payments received in connection with the sale of Giner Elx, Inc.’s performance.
Interest and other expense, net
Interest and other income (expense), net decreased $200,332 (26.4%)
to $(557,112) for the year ended December 31, 2022 from $(757,444) for the year ended December 31, 2021, due to USD-EUR exchange differences in the year, as compared to the year 2022.
Net loss
Net loss increased $165,455 (4.0%) to $(4,296,459) for the year ended
December 31, 2022 from $(4,131,004) for the year ended December 31, 2021, mainly due to the aforementioned increase in loss from operations, partially offset by the increase in other income associated with contingent payments received during
the year and by the decrease in interest and other expense, net.
Key Components of our Balance Sheets
Cash and cash equivalents
We consider all highly liquid debt instruments with original
maturities of three months or less to be cash equivalents, as well as cash and bank accounts.
Accounts receivable
Accounts receivable are customer obligations due under normal trade
terms, which are stated at the amount billed or billable to customers and are ordinarily due between 30 and 60 days after the issuance of the invoice.
TABLE OF CONTENTS
Inventory
Inventory primarily relates to purchased components used in the
manufacturing of our products, such as stacks and other related materials which are valued at the lower of cost or net realizable value and accounted for on a first-in, first-out basis. Inventories mainly consists of stacks for the manufacture
of electrolyzers.
Grants receivable
The grants receivable balance corresponds to the amounts outstanding
from the time the eligible expenses are incurred until the grantor disburses those grants.
PP&E
PP&E is originally recorded at historical cost and mainly
consists of machinery and equipment, computer hardware, furniture and other fixtures. Expenditures for major additions and improvements are capitalized and minor replacements, maintenance and repairs are expensed as costs are incurred.
Depreciation on PP&E is calculated using the straight-line method over the estimated useful lives of the assets.
Intangible assets
Intangible assets mainly consist of acquired technology, patents,
licenses and similar rights.
Operating lease –ROU asset, net and long-term
operating lease liabilities
Operating lease – ROU asset, net and long-term operating lease
liabilities mainly stem from the impact of ASC Topic 842, which requires a lessee to recognize those assets and liabilities arising from a lease, discounting its unpaid lease payments using the interest rate implicit in the lease.
Accounts payable and accrued expenses
Accounts payable and accrued expenses consists of amounts payable to
suppliers mainly associated with stacks for the manufacture of electrolyzers.
Unearned grants
Unearned grants consist of grants received in advance to the related
costs for which they are intended to compensate are expensed.
Historical financial condition of the Company
This section includes discussions of variations, on a consolidated
basis, in the Company’s consolidated balance sheet as of March 31, 2023 and December 31, 2022.
March 31, 2023 compared to December 31, 2022
The following table sets forth the Company’s balance sheet’s data as
of March 31, 2023 and December 31, 2022.
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
$5,119,793
|
|
|
$5,044,949
|
|
|
$74,844
|
|
|
1.5%
|
Accounts receivable, net of allowance for doubtful
accounts of $64,825 and $47,758, respectively
|
|
|
3,968,220
|
|
|
2,099,177
|
|
|
1,869,043
|
|
|
89.0%
|
Inventory
|
|
|
6,175,000
|
|
|
6,175,000
|
|
|
—
|
|
|
—
|
Prepaid expenses and other current assets
|
|
|
2,094,443
|
|
|
1,281,268
|
|
|
813,175
|
|
|
63.5%
|
Grants receivable
|
|
|
890,827
|
|
|
742,837
|
|
|
147,990
|
|
|
19.9%
|
Contract assets
|
|
|
303,391
|
|
|
2,197,730
|
|
|
(1,894,339)
|
|
|
(86.2)%
|
Total current assets
|
|
|
18,551,674
|
|
|
17,540,961
|
|
|
1,010,713
|
|
|
5.8%
|
Property, plant, and equipment, net
|
|
|
8,178,246
|
|
|
5,148,017
|
|
|
3,030,229
|
|
|
58.9%
|
TABLE OF CONTENTS
Operating lease – Right of use asset, net
|
|
|
1,990,015
|
|
|
2,235,854
|
|
|
(245,839)
|
|
|
(11.0)%
|
Intangible assets, net
|
|
|
104,648
|
|
|
87,301
|
|
|
17,347
|
|
|
19.9%
|
Equity method investments
|
|
|
119,544
|
|
|
—
|
|
|
119,544
|
|
|
n.m.
|
Other assets
|
|
|
173,154
|
|
|
173,055
|
|
|
99
|
|
|
0.1%
|
Total assets
|
|
|
$29,117,281
|
|
|
$25,185,188
|
|
|
$3,932,093
|
|
|
15.6%
|
Liabilities and Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable and accrued expenses
|
|
|
$9,675,171
|
|
|
$8,484,808
|
|
|
$1,190,363
|
|
|
14.0%
|
Current maturities of long-term debt
|
|
|
10,872
|
|
|
10,663
|
|
|
209
|
|
|
2.0%
|
Current maturities of operating lease liabilities
|
|
|
230,645
|
|
|
230,645
|
|
|
—
|
|
|
n.m.
|
Contract liabilities
|
|
|
4,995,692
|
|
|
1,735,716
|
|
|
3,259,976
|
|
|
187.8%
|
Current provisions
|
|
|
8,448
|
|
|
44,378
|
|
|
(35,930)
|
|
|
(81.0)%
|
Other current liabilities
|
|
|
21,979
|
|
|
21,179
|
|
|
800
|
|
|
3.8%
|
Total current liabilities
|
|
|
15,018,839
|
|
|
10,527,389
|
|
|
4,491,450
|
|
|
42.7%
|
Unearned grants
|
|
|
2,553,092
|
|
|
2,053,159
|
|
|
499,933
|
|
|
24.3%
|
Long-term operating lease liabilities
|
|
|
1,912,823
|
|
|
2,111,530
|
|
|
(198,707)
|
|
|
(9.4)%
|
Income taxes payable
|
|
|
1,811,603
|
|
|
1,787,968
|
|
|
23,635
|
|
|
1.3%
|
Long-term debt, less current maturities
|
|
|
12,372
|
|
|
13,796
|
|
|
(1,423)
|
|
|
(10.3)%
|
Other liabilities
|
|
|
263,271
|
|
|
208,912
|
|
|
54,359
|
|
|
26.0%
|
Total liabilities
|
|
|
21,572,000
|
|
|
16,702,754
|
|
|
4,869,246
|
|
|
29.2%
|
Stockholders’ equity:
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock, $0.00001 par value per share; 10,346,314
shares authorized, 9,708,341 issued and outstanding at March 31, 2023 and December 31, 2022
|
|
|
103
|
|
|
103
|
|
|
—
|
|
|
n.m.
|
Treasury stock, at cost, 637,973 and 610,000 shares at
March 31, 2023 and December 31, 2022, respectively
|
|
|
(7)
|
|
|
(7)
|
|
|
—
|
|
|
n.m.
|
Additional paid-in capital
|
|
|
16,856,969
|
|
|
16,851,455
|
|
|
5,514
|
|
|
n.m.
|
Accumulated other comprehensive loss
|
|
|
(3,842)
|
|
|
(3,842)
|
|
|
—
|
|
|
n.m.
|
Accumulated deficit
|
|
|
(9,307,942)
|
|
|
(8,365,275)
|
|
|
(942,667)
|
|
|
11.3%
|
Total stockholders’ equity
|
|
|
7,545,281
|
|
|
8,482,434
|
|
|
(937,153)
|
|
|
(11.0)%
|
Total liabilities and stockholders’ equity
|
|
|
$29,117,281
|
|
|
$25,185,188
|
|
|
$3,932,093
|
|
|
15.6%
|
n.m.: not meaningful.
Cash and cash equivalents
Cash and cash equivalents increased $74,844 (1.5%) to $5,119,793 as
of March 31, 2023 from $5,044,949 as of December 31, 2022. This increase was primarily due to operating cash inflows associated with the progression of our product sales during the quarter as well as by a foreign exchange positive impact,
partially offset by the increase in cash used for SoHyCal facility construction.
Accounts receivable, net
Accounts receivable increased $1,869,043 (89.0%) to $3,968,220 as of
March 31, 2023 from $2,099,177 as of December 31, 2022. This increase was primarily due to continued business expansion during the period and an increase in the number of projects from 12 in 2022 to 16 in the first quarter of 2023.
Inventory
Inventory remained unchanged at $6,175,000 as of March 31, 2023 from
the same amount as of December 31, 2022.
TABLE OF CONTENTS
Prepaid expenses and other current assets
Prepaid expenses and other current assets increased $813,175 (63.5%)
to $2,094,443 as of March 31, 2023 from $1,281,268 as of December 31, 2022. This was mainly due to an increase in prepayments to suppliers.
Grants receivable
Grants receivable increased $147,990 (19.9%) to $890,827 as of March
31, 2023 from $742,837 as of December 31, 2022. This increase was mainly due to grants earned during the quarter for R&D activities in Spain.
Contract assets
Contract assets decreased $1,894,339 (86.2%) to $303,391 as of March
31, 2023 from $2,197,730 as of December 31, 2022. This decrease was due to the transfer of $2,197,730 from contract assets to receivables associated with timing differences between revenue recognition and customer billings.
PP&E, net
PP&E, net increased $3,030,229 (58.9%) to $8,178,246 as of March
31, 2023 from $5,148,017 as of December 31, 2022. This increase was primarily due to the assets under construction for the SoHyCal facility.
Operating lease – Right of use asset, net
Right of use assets decreased $245,839 (11.0%) to $1,990,015 as of
March 31, 2023 from $2,235,854 as of December 31, 2022, with a corresponding decrease in long-term operating lease liabilities. This decrease was primarily due to a $212,834 reduction adjustment in the right-of-use and lease liabilities due to
a lease amendment signed in February 2023 for one of the California lease agreements.
Equity method investments
Equity method investments amounted to $119,544 as of March 31, 2023
from nil as of December 31, 2022, which is attributed to our investment in two joint ventures during the first quarter of 2023. One of our joint ventures, GreenH Electrolysis Private Limited, became operational on March 15, 2023. The Company
holds a 50% ownership stake in this venture. Similarly, our second joint venture, H2V2 Mexico, S.A. de C.V., commenced operations on March 30, 2023, with the Company holding a 40% ownership interest. See Note 7 to the Q1-2023 Unaudited Interim
Condensed Consolidated Financial Statements of H2B2 for further information.
Accounts payable and accrued expenses
Accounts payable and accrued expenses increased $1,190,363 (14.0%) to
$9,675,171 as of March 31, 2023 from $8,484,808 as of December 31, 2022. The increase is primarily due to the construction costs incurred for the SoHyCal facility and expanded operations.
Contract liabilities
Contract liabilities increased $3,259,976 (187.8%) to $4,995,692 as
of March 31, 2023 from $1,735,716 as of December 31, 2022. This increase was primarily due to advance billings to customer for services that will be recognized over time.
Unearned grants
Unearned grants increased $499,933 (24.3%) to $2,553,092 as of
March 31, 2023 from $2,053,159 as of December 31, 2022. This increase was mainly due to the funds received in the form of grants for the construction and development of the SoHyCal facility.
TABLE OF CONTENTS
December 31, 2022 compared to December 31, 2021
The following table sets forth the Company’s balance sheet’s data
as of December 31, 2022 and 2021.
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
$5,044,949
|
|
|
$11,545,081
|
|
|
$(6,500,132)
|
|
|
(56.3)%
|
Accounts receivable, net of allowance for doubtful
accounts of $47,758 and $0, respectively
|
|
|
2,099,177
|
|
|
382,698
|
|
|
1,716,479
|
|
|
n.m.
|
Inventory
|
|
|
6,175,000
|
|
|
986
|
|
|
6,174,014
|
|
|
n.m.
|
Prepaid expenses and other current assets
|
|
|
1,281,268
|
|
|
2,100,391
|
|
|
(819,123)
|
|
|
(39.0)%
|
Grants receivable
|
|
|
742,837
|
|
|
498,308
|
|
|
244,529
|
|
|
49.1%
|
Contract assets
|
|
|
2,197,730
|
|
|
212,410
|
|
|
1,985,320
|
|
|
n.m.
|
Total current assets
|
|
|
17,540,961
|
|
|
14,739,874
|
|
|
2,801,087
|
|
|
19.0%
|
Property, plant, and equipment, net
|
|
|
5,148,017
|
|
|
858,149
|
|
|
4,289,868
|
|
|
n.m.
|
Operating lease – Right of use asset, net
|
|
|
2,235,854
|
|
|
1,553,135
|
|
|
682,719
|
|
|
44.0%
|
Intangible assets, net
|
|
|
87,301
|
|
|
85,503
|
|
|
1,798
|
|
|
2.1%
|
Other assets
|
|
|
173,055
|
|
|
210,105
|
|
|
(37,050)
|
|
|
(17.6)%
|
Total assets
|
|
|
$25,185,188
|
|
|
$17,446,766
|
|
|
$7,738,422
|
|
|
44.4%
|
Liabilities and Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable and accrued expenses
|
|
|
$8,484,808
|
|
|
$593,146
|
|
|
$7,891,662
|
|
|
n.m.
|
Current maturities of long-term debt
|
|
|
10,663
|
|
|
1,946
|
|
|
8,717
|
|
|
n.m.
|
Current maturities of operating lease liabilities
|
|
|
230,645
|
|
|
106,773
|
|
|
123,872
|
|
|
n.m.
|
Contract liabilities
|
|
|
1,735,716
|
|
|
257,061
|
|
|
1,478,655
|
|
|
n.m.
|
Current provisions
|
|
|
44,378
|
|
|
17,348
|
|
|
27,030
|
|
|
n.m.
|
Other current liabilities
|
|
|
21,179
|
|
|
3,792
|
|
|
17,387
|
|
|
n.m.
|
Total current liabilities
|
|
|
10,527,389
|
|
|
980,066
|
|
|
9,547,323
|
|
|
n.m.
|
Unearned grants
|
|
|
2,053,159
|
|
|
271,091
|
|
|
1,782,068
|
|
|
n.m.
|
Long-term operating lease liabilities
|
|
|
2,111,530
|
|
|
1,489,869
|
|
|
621,661
|
|
|
41.7%
|
Income taxes payable
|
|
|
1,787,968
|
|
|
1,729,227
|
|
|
58,741
|
|
|
3.4%
|
Long-term debt, less current maturities
|
|
|
13,796
|
|
|
17,743
|
|
|
(3,947)
|
|
|
(22.2)%
|
Other liabilities
|
|
|
208,912
|
|
|
119,608
|
|
|
89,304
|
|
|
74.7%
|
Total liabilities
|
|
|
16,702,754
|
|
|
4,607,604
|
|
|
12,095,150
|
|
|
n.m.
|
H2B2 Electrolysis Technologies, Inc.
Stockholders’ equity:
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock, $ 0.00001 par value per share; 10,346,314
shares authorized, 9,708,341 and 9,736,314 issued and outstanding at December 31, 2022 and 2021, respectively
|
|
|
103
|
|
|
103
|
|
|
—
|
|
|
n.m.
|
Treasury stock, at cost, 637,973 and 610,000 shares at
December 31, 2022 and 2021, respectively
|
|
|
(7)
|
|
|
(6)
|
|
|
(1)
|
|
|
16.7%
|
Additional paid-in capital
|
|
|
16,851,455
|
|
|
16,835,962
|
|
|
154,493
|
|
|
0.1%
|
Accumulated other comprehensive loss
|
|
|
(3,842)
|
|
|
(3,842)
|
|
|
—
|
|
|
n.m.
|
Accumulated deficit
|
|
|
(8,365,275)
|
|
|
(4,068,816)
|
|
|
(4,296,459)
|
|
|
n.m.
|
Total H2B2 Electrolysis Technologies,
Inc. Stockholders’ equity
|
|
|
8,482,434
|
|
|
12,763,401
|
|
|
(4,280,967)
|
|
|
(33.5)%
|
Non-controlling interests
|
|
|
—
|
|
|
75,761
|
|
|
(75,761)
|
|
|
n.m.
|
Total equity
|
|
|
8,482,434
|
|
|
12,839,162
|
|
|
(4,356,728)
|
|
|
(33.9)%
|
Total liabilities and equity
|
|
|
$25,185,188
|
|
|
$17,446,766
|
|
|
$7,738,422
|
|
|
44.4%
|
n.m.: not meaningful.
TABLE OF CONTENTS
Cash and cash equivalents
Cash and cash equivalents decreased $6,500,132 (56.3%) to $5,044,949
as of December 31, 2022 from $11,545,081 as of December 31, 2021. This decrease was primarily due to cash outflows related to the construction work associated with SoHyCal facility, the incremental costs during the year for new operating
projects, and with R&D and SG&A expenses as compared with previous period.
Accounts receivable, net
Accounts receivable increased $1,716,479 to $2,099,177 as of December
31, 2022 from $382,698 as of December 31, 2021. This increase was primarily due to business growth and the increase in the number of projects from five to 12 during 2022.
Inventory
Inventory increased $6,174,014 to $6,175,000 as of December 31, 2022
from $986 as of December 31, 2021. This increase was due to the business expansion which directly caused a significant increase in the number of orders. This increase was mainly driven by several stacks purchased during the year for the
manufacture of electrolyzers.
Grants receivable
Grants receivable increased $244,529 (49.1%) to $742,837 as of
December 31, 2022 from $498,308 as of December 31, 2021. This increase was mainly due to grants earned during the year for R&D activities in Spain.
Contract assets
Contract assets increased $1,985,320 to $2,197,730 as of December 31,
2022 from $212,410 as of December 31, 2021. This increase was due to the change in our balances primarily resulting from timing differences between revenue recognition and customer billings and/or payments.
PP&E, net
PP&E, net increased $4,289,868 to $5,148,017 as of December 31,
2022 from $858,149 as of December 31, 2021. This increase was primarily due to the assets under construction primarily associated with the SoHyCal facility. As of December 31, 2022, funds granted by the US Government related to this plant
construction and development totaled $2,053,159.
Operating lease – Right of use asset, net
Right of use assets increased $682,719 (44.0%) to $2,235,854 as of
December 31, 2022 from $1,553,135 as of December 31, 2021, with a corresponding increase in long-term operating lease liabilities. This increase was primarily due to two land leases in California (USA) for the SoHyCal facility and a land lease
in Seville (Spain) for offices and factory purposes. The California land leases expire in 2041 and 2043, whereas Seville offices and factory lease expires in 2027.
Accounts payable and accrued expenses
Accounts payable and accrued expenses increased $7,891,662 to
$8,484,808 as of December 31, 2022 from $593,146 as of December 31, 2021. This growth was primarily due to an increase in purchases related to the aforementioned stacks during the year for $6,175,000.
Contract liabilities
Contract liabilities increased $1,478,655 to $1,735,716 as of
December 31, 2022 from $257,061 as of December 31, 2021. This increase was primarily due to advance billings to customer for services that will be recognized over time.
Unearned grants
Unearned grants increased $1,782,068 to $2,053,159 as of December 31,
2022 from $271,091 as of December 31, 2021. This increase was primarily due to the grants received for the construction and development of the SoHyCal facility.
TABLE OF CONTENTS
Stock-Based Compensation
We granted two stock-based compensation awards (“stock-option award” or “SOA”) in December 2022 to the chairman of the H2B2 Board. There was no option activity for the three months period ended March 31, 2023 for
such SOAs.
The Company’s stock option compensation expense was $5,514 for the
three-month period ended March 31, 2023 (with no compensation expense for the three-month period ended March 31, 2022), and $619 and $0 for the years ended December 31, 2022 and 2021, respectively. There were $106,930 and $112,444 of total
unrecognized compensation costs related to outstanding stock options as of March 31, 2023 and December 31, 2022, respectively, which will be recognized over five years. The total intrinsic value was $113,063 as of December 31, 2022. The number
of stock options vested and unvested as of December 31, 2022 were 68,966 and 18,750, respectively.
During 2021, the Company executed stock-based compensation awards to
nine of the Company’s executives. The awards entitle the executives to purchase up to 555,000 shares for a purchase price of $1 per employee award. The award become fully vested between January 1, 2026, and March 31, 2026, upon satisfaction of
both of the following performance conditions:
•
|
The Company’s stock is publicly traded prior to January 1, 2026.
|
•
|
The executive maintains employment with the Company until March 31, 2026.
|
In the event the conditions are not met, the awards shall be
terminated on December 31, 2025 and the executives shall be entitled to receive a cash bonus of 30% of their gross salary as of December 31, 2025.
As of March 31, 2023, December 31, 2022, and 2021, the Company
determined that the performance conditions were not probable. Therefore, the Company recorded a liability associated with the cash bonus component of the awards. The accrued liability was $85,758, $72,745, and $35,767 as of March 31, 2023,
December 31, 2022, and 2021, respectively recorded in Non-current Other liabilities.
See Note 9 to the Q1-2023 Unaudited Interim Condensed Consolidated
Financial Statements of H2B2 and Note 9 to the 2022 Audited Consolidated Financial Statements of H2B2 included elsewhere in this proxy statement/prospectus for further information on our stock-based compensation plans.
Liquidity and Capital Resources
The Company is in the development stage and continues to incur net
losses including a net loss of $942,667 for the three-month period ended March 31, 2023 (net loss of $4,296,459 for the year ended December 31, 2022) and generate either limited cash from operation or negative cash in operating activities with
positive cash of $1,764,841 for the three-month period ended March 31, 2023 (negative cash flows of $4,712,637 for the year ended December 31, 2022). As of March 31, 2023, the Company had net working capital of $3,532,835 ($7,013,572 as of
December 31, 2022) and the Company’s principal source of liquidity consisted of $5,119,793 of cash and cash equivalents ($5,044,949 as of December 31, 2022) which, without additional funding, will not be sufficient to meet the Company’s
obligations within the next twelve months from the date of issuance of the Q1-2023 Unaudited Interim Condensed Consolidated Financial Statements of H2B2.
The Q1-2023 Unaudited Interim Condensed Consolidated Financial
Statements of H2B2 and the 2022 Audited Consolidated Financial Statements of H2B2 have been prepared assuming the Company will continue to operate as a going concern, which contemplates the realization of assets and the satisfaction of
liabilities in the normal course of business. Management’s plan to mitigate these conditions include raising additional capital, securing grant funding and developing profitable operations through the implementation of its current business
initiatives which include the expansion of manufacturing facilities and broadening the Company’s sales pipeline, however, there can be no assurances that the Company will be able to do so.
The Company has historically funded its operations through capital
raises from third parties. There can be no assurance that the Company will be successful in obtaining third-party capital raises and funding from grants. If external financing sources are not available or are inadequate to fund operations, or
the Company is unable to develop profitable operations through implementation of its current business initiatives, the Company will be required to reduce operating costs, which could jeopardize future strategic initiatives and business plans.
Due to the uncertainty that exists in management’s plans, substantial doubt remains about the Company’s ability to continue as a going concern. See “–Recent Developments–Going Concern”.
TABLE OF CONTENTS
Consolidated Statements of Cash Flows data
The table below sets forth the Company’s cash flows from/(used in)
consolidated operating activities, investing activities and financing activities for the periods indicated. Positive figures refer to cash inflows and negative figures refer to cash outflows.
Three-month period ended March 31, 2023 compared
with the three-month period ended March 31, 2022
Net cash provided by/(used) in :
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating activities
|
|
|
$1,764,841
|
|
|
$(649,569)
|
|
|
$2,414,410
|
|
|
n.m.
|
Investing activities
|
|
|
(1,902,945)
|
|
|
(13,673)
|
|
|
(1,889,272)
|
|
|
n.m.
|
Financing activities
|
|
|
108
|
|
|
(12,310)
|
|
|
12,418
|
|
|
(100.9)%
|
Effect of exchange rate changes on cash and cash
equivalents
|
|
|
212,840
|
|
|
(80,031)
|
|
|
292,871
|
|
|
(365.9)%
|
Increase (decrease) in cash and cash equivalents
|
|
|
$74,844
|
|
|
$(755,583)
|
|
|
830,427
|
|
|
(109.9%)
|
Cash and cash equivalents beginning of period
|
|
|
5,044,949
|
|
|
11,545,081
|
|
|
(6,500,132)
|
|
|
(56.3)%
|
Cash and cash equivalents end of period
|
|
|
$5,119,793
|
|
|
$10,789,498
|
|
|
$(5,669,705)
|
|
|
(52.5)%
|
n.m.: not meaningful.
Net cash provided by/(used) in operating
activities
Net cash provided by/(used) in operating activities increased
$2,414,410 to $1,764,841 of cash provided by operating activities for the three-month period ended March 31, 2023 from $649,569 of cash used in operating such activities for the three-month period ended March 31, 2022. This was mainly due to
positive changes in contract liabilities during the first quarter of 2023, due to advanced billings on recently awarded projects.
Net cash used in investing activities
Net cash used in investing activities increased $1,889,272 to
$1,902,945 for the three-month period ended March 31, 2023 from $13,673 for the three-month period ended March 31, 2022. This increase was mainly due to the payments for assets under construction of the SoHyCal facility.
Net cash used in/(provided by) financing
activities
Net cash (used in)/provided by financing activities decreased $12,418
(100.9%) to $108 of cash provided by financing activities for the three-month period ended March 31, 2023 from $12,310 of cash used in such activities for the three-month period ended March 31, 2022. This decrease was mainly because, contrarily
to the first quarter of 2022, no acquisition of treasury shares was performed during the period.
Year ended December 31, 2022 compared with the
year ended December 31, 2021
Net cash (used in)/provided by:
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating activities
|
|
|
$(4,712,637)
|
|
|
$(5,411,020)
|
|
|
$698,383
|
|
|
(12.9)%
|
Investing activities
|
|
|
(1,240,429)
|
|
|
(1,736,570)
|
|
|
496,141
|
|
|
(28.6)%
|
Financing activities
|
|
|
(20,230)
|
|
|
9,014,233
|
|
|
(9,034,463)
|
|
|
n.m.
|
Effect of exchange rate changes on cash and cash
equivalents
|
|
|
(526,836)
|
|
|
(650,253)
|
|
|
123,417
|
|
|
(19.0)%
|
(Decrease) increase in cash and cash equivalents
|
|
|
(6,500,132)
|
|
|
1,216,390
|
|
|
(7,716,522)
|
|
|
n.m.
|
Cash and cash equivalents beginning of period
|
|
|
11,545,081
|
|
|
10,328,691
|
|
|
1,216,390
|
|
|
11.8%
|
Cash and cash equivalents end of period
|
|
|
$5,044,949
|
|
|
$11,545,081
|
|
|
$(6,500,132)
|
|
|
(56.3)%
|
n.m.: not meaningful.
TABLE OF CONTENTS
Net cash used in operating activities
Net cash used in operating activities decreased $698,383 (12.9%) to
$4,712,637 for the year ended December 31, 2022 from $5,411,020 for the year ended December 31, 2021. This decrease was mainly due to the reduced cash outflows associated with payments to suppliers with the correspondent increase in accounts
payable.
Net cash used in investing activities
Net cash used in investing activities decreased $496,141 (28.6%) to
$1,240,429 for the year ended December 31, 2022 from $1,736,570 for the year ended December 31, 2021. This decrease was mainly due to proceeds from grants for assets under construction during the year ($1,895,712 in 2022 compared to nil in
2021), partially offset by the increase in cash used for SoHyCal facility construction ($4,612,932 in 2022 compared to $846,335 in 2021) and to a lesser extent by the increase in cash used for the acquisition of certain machinery.
Net cash provided by/(used in) financing
activities
Net cash provided/(used in) by financing activities decreased
$9,034,463 to $20,230 of cash used in financing activities for the year ended December 31, 2022 from $9,014,233 of cash provided by financing activities for the year ended December 31, 2021 due to private equity offerings that took place in
2021 but did not occur in 2022.
Contractual obligations
Leased property
As of December 31, 2022 and 2021, we had operating leases primarily
associated with land for a facility under construction in California, US and a facility in Seville, Spain. These leases expire in 2041 and 2043 (U.S.) and 2027 (Spain), respectively.
We recorded total operating lease expense for the fiscal years ended
December 31, 2022 and 2021 of $163,646 and $108,186, respectively, which is classified within SG&A expenses within the consolidated statements of operations. Operating lease expense includes short-term leases which are immaterial. The
following tables summarizes the maturities of lease commitments as of December 31, 2022:
2023
|
|
|
$290,645
|
2024
|
|
|
344,984
|
2025
|
|
|
346,020
|
2026
|
|
|
347,087
|
2027
|
|
|
331,314
|
Thereafter
|
|
|
2,287,624
|
Total future minimum lease payments
|
|
|
3,947,674
|
Less imputed lease interest
|
|
|
(1,605,499)
|
Total lease liabilities
|
|
|
$2,342,175
|
Critical Accounting Policies and Estimates
The preparation of our consolidated financial statements in
accordance with accounting principles generally accepted in the United States of America (GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. On an on-going basis, we evaluate our estimates and judgments, including those related to
revenue recognition, valuation of long-lived assets, operating leases, stock-based compensation, income taxes and contingencies. We base our estimates and judgments on historical experience and on various other factors and assumptions that are
believed to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions.
TABLE OF CONTENTS
We believe that the accounting policies described below involve a
significant degree of judgment and complexity. Accordingly, we believe these are the most critical to aid in fully understanding and evaluating our consolidated financial condition and results of operations. For further information and a full
summary of our accounting policies, see Note 2 to the 2022 Audited Consolidated Financial Statements of H2B2 included elsewhere in this proxy statement/prospectus.
During the three months ended March 31, 2023, there were no changes
to our significant accounting policies as described in the 2022 Audited Consolidated Financial Statements of H2B2.
Impairment of Long-Lived Assets
Long-lived assets, such as PP&E, ROU assets and finite-lived
intangible assets are reviewed for potential impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable. If circumstances require a long-lived asset or asset group
to be tested for impairment, the Company first compares undiscounted cash flows expected to be generated by the asset or asset group to it carrying amount. If the carrying amount of the long-lived asset or asset group is not recoverable on an
undiscounted cash flow basis, an impairment is recognized to the extent that the carrying amount exceeds its fair value. In making these determinations, the Company uses certain assumptions, including, but not limited to: (i) estimated fair
value of the assets; (ii) estimated, undiscounted future cash flows expected to be generated by these assets, which are based on additional assumptions such as asset utilization and length of service, the asset will be used in the Company’s
operations; and (iii) estimated residual values. Fair value is determined through various valuation techniques, including discounted cash flow models, quoted market values and third-party independent appraisals, as considered necessary. There
was no impairment recognized for long-lived assets during the years ended December 31, 2022 and 2021.
Revenue recognition
Revenue is recognized when a customer obtains control of promised
goods or services at a point in time and over time. The amount of revenue recognized reflects the consideration that the Company expects to be entitled to receive in exchange for these products. The Company applies the following five steps to
recognize revenue: (i) identification of the contract, or contracts, with a customer, (ii) identification of the performance obligation(s) in the contract, (iii) determination of the transaction price, (iv) allocation of the transaction price
to performance obligations in the contract and (v) warranties.
We enter into contracts that involve the development, manufacturing,
and sale of electrolyzers. The Company's customers primarily consist of industrial companies that require hydrogen and oxygen gas for their operations. The Company sells its electrolyzers directly to these customers.
The Company does not include a right of return on its products other
than rights related to standard warranty provisions that permit repair or replacement of defective goods. The Company accrues for anticipated standard warranty costs at the same time that revenue is recognized for the related product, or when
circumstances indicate that warranty costs will be incurred, as applicable.
Revenue is measured based on the transaction price specified in a
contract with a customer, subject to the allocation of the transaction price to distinct performance obligations. The Company recognizes revenue when it satisfies a performance obligation by transferring a product or service to a customer.
Promises to the customer are separated into performance obligations
and are accounted for separately if they are (1) capable of being distinct and (2) distinct in the context of the contract. The Company considers a performance obligation to be distinct if the customer can benefit from the good or service
either on its own or together with other resources readily available to the customer and the Company’s promise to transfer the goods or service to the customer is separately identifiable from other promises in the contract. The Company
allocates revenue to each distinct performance obligation based on relative standalone selling prices.
Payment terms on electrolyzer systems are typically based on
achievement of milestones over the term of the contract with the customer. The Company does not adjust the transaction price for a significant financing component when the performance obligation is expected to be fulfilled within a year.
Revenue from sales of electrolyzer systems represents sales of
products used to generate hydrogen for various applications including mobility, power-to-gas, and other uses.
TABLE OF CONTENTS
The Company classifies the development, manufacturing, and sale of
electrolyzers as a single performance obligation, which is recognized over time as the performance obligation is satisfied. The Company recognizes revenue over time when contract performance results in the creation of a product for which we do
not have an alternative use and the contract includes an enforceable right to payment in an amount that corresponds directly with the value of the performance completed. In these instances, the Company uses an input measure of progress
(cost-to-total), which best reflects the transfer of control to our customers, to determine the amount of revenue to recognize during each reporting period based on the costs incurred to satisfy the performance obligation.
Income taxes
We account for income taxes and related accounts under the asset and
liability method. Under the asset and liability approach, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and
liabilities and their respective tax basis and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the period that includes the enactment date. Income tax expense, deferred tax assets and
liabilities, and liabilities for unrecognized tax benefits reflect management’s best assessment of estimated current and future taxes to be paid. Significant judgment is required in determining income tax provisions and evaluating tax
positions. A valuation allowance is recorded to reduce the carrying amounts of deferred tax assets if it is more likely than not that such assets will not be realized.
Positions taken or expected to be taken on tax returns, including the
decision to exclude certain income or transactions from a return, are recognized in the consolidated financial statements when it is more likely than not the tax position can be sustained based solely on the technical merits of the position.
The amount of a tax return position that is not recognized in the consolidated financial statements is disclosed as an unrecognized tax benefit. Changes in assumptions on tax benefits may also impact interest expense or interest income and may
result in the recognition of tax penalties.
Stock-Based Compensation
We maintain employee stock-based compensation plans, which are
described more fully in Note 10 to the Q1-2023 Unaudited Interim Condensed Consolidated Financial Statements of H2B2 and in Note 9 to the 2022 Audited Consolidated Financial Statements of H2B2. Stock-based compensation represents the cost
related to stock-based awards granted to employees and Directors. We measure stock-based compensation cost at the grant-date, based on the fair value of the award, and recognize the cost as expense using the straight-line attribution method
over the award’s requisite service period for plans with only service conditions. Forfeitures are recognized as they occur.
We estimate the fair value of stock-based awards using a
Black-Scholes valuation model. Stock-based compensation expense is recorded in SG&A expenses in the consolidated statements of operations based on the employees’ respective function.
Off-Balance Sheet arrangements
As of March 31, 2023 we did not have any off-balance sheet
arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K.
JOBS Act
The JOBS Act contains provisions that, among other things, relax
certain reporting requirements for qualifying public companies. H2B2 qualifies as an “emerging growth company” under the JOBS Act and is allowed to comply with new or revised accounting pronouncements based on the effective date for private
(not publicly traded) companies. H2B2 elected to delay the adoption of new or revised accounting standards, and as a result, it may not comply with new or revised accounting standards on the relevant dates on which adoption of such standards is
required for non-emerging growth companies. As a result, H2B2 financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates.
TABLE OF CONTENTS
Additionally, H2B2 is in the process of evaluating the benefits of
relying on the other reduced reporting requirements provided by the JOBS Act. Subject to certain conditions set forth in the JOBS Act, if, as an “emerging growth company”, H2B2 chooses to rely on such exemptions it may not be required to, among
other things, (i) provide an auditor’s attestation report on our system of internal controls over financial reporting pursuant to Section 404, (ii) provide all of the compensation disclosure that may be required of non-emerging growth public
companies under the Dodd-Frank Wall Street Reform and Consumer Protection Act, (iii) comply with any requirement that may be adopted by the PCAOB regarding mandatory audit firm rotation or a supplement to the auditor’s report providing
additional information about the audit and the financial statements (auditor discussion and analysis), and (iv) disclose certain executive compensation related items such as the correlation between executive compensation and performance and
comparisons of the chief executive officer’s compensation to median employee compensation. These exemptions will apply for a period of five years following the completion of our Initial Public Offering or until we are no longer an “emerging
growth company,” whichever is earlier.
For more information on this regard, see “Risk Factors — We identified a material weakness in our internal control over financial reporting. If we are unable to develop and maintain an effective system of internal controls and procedures required by Section 404(a) of the
Sarbanes-Oxley Act, we may not be able to accurately report our financial results in a timely manner, which may adversely affect investor confidence in us and materially and adversely affect our stock price, business and operating results”.
Quantitative and Qualitative Disclosures about Market Risk
H2B2 is a smaller reporting company as defined by Rule 12b-2 of the
Exchange Act and is not required to provide the information otherwise required under this item.
Non-GAAP Financial Measures
We prepare our consolidated financial statements in accordance with
GAAP. The Company’s management believes that, in addition to the financial information expressly defined under GAAP, there are measures that provide information useful to assess the Company’s performance. These measures should not be viewed in
isolation or as a substitute for the measures presented according to GAAP.
In this proxy statement/prospectus, the Company has presented the
following non-GAAP financial measures: Adjusted EBITDA and Adjusted EBITDA Margin. These non-GAAP financial measures are presented in order to show the underlying business performance and to enhance comparability between reporting periods. By
facilitating comparisons of relative performance, the measures aid management to detect and evaluate trends, to forecast operating and financial performance and to compare actual performance to forecast expectations. The Company uses these
measures as internal measures to evaluate and compare its performance. For these reasons, the Company believes measures based on Adjusted EBITDA and other non-financial measures are regularly used by investors as means of comparing companies
in its industry.
However, these measures are not defined under GAAP, and different
companies and analysts may calculate them differently, so comparisons among companies on this basis should be made carefully. They are not measures of performance defined under GAAP and have not been audited or reviewed, and should not be
considered in isolation; such measures do not represent the Company’s revenues, margins, results of operations or cash flows for the periods presented and should not be regarded as alternatives to revenue, cash flows or results of operations
for the periods presented or other measures of performance as defined by GAAP.
The non-GAAP financial measures presented in this proxy
statement/prospectus include figures derived from the Q1-2023 Unaudited Interim Condensed Consolidated Financial Statements of H2B2 and the 2022 Audited Consolidated Financial Statements of H2B2 through aggregation, subtraction or division.
As a measure of the Company’s performance, which is not solely
restricted to these non-GAAP financial measures, these metrics have limitations. Some of these limitations are:
•
|
they do not reflect the Company’s capital expenditures, the Company’s future requirements for capital expenditures or the
Company’s contractual commitments;
|
•
|
they do not reflect changes in, or cash requirements for, the Company’s working capital needs;
|
TABLE OF CONTENTS
•
|
although depreciation is a non-cash charge, the assets being depreciated will often need to be replaced in the future and
measures based on Adjusted EBITDA do not reflect any cash requirements that would be required for such replacements; and
|
•
|
the fact that other companies in the industry may calculate Adjusted EBITDA differently than we do limit their usefulness as
comparative measures.
|
Definitions and reconciliations
The Company measures its performance by Adjusted EBITDA and
Adjusted EBITDA Margin and uses these metrics to make decisions to allocate resources to evaluate its financial performance and to establish operating and strategic targets for the Company companies. Adjusted EBITDA is a commonly reported
measure and is widely used among analysts, investors and other stakeholders.
Adjusted EBITDA
We define Adjusted EBITDA as net loss, determined in accordance
with GAAP, for the period presented, before interest and other expense, net, income tax expense, other income and depreciation of long-lived assets.
However, it is not a measure expressly defined under GAAP and
therefore it may not be comparable to similar indicators used by other companies.
The table below shows the calculation of Adjusted EBITDA for the
years indicated, as well as the tie-in with the Q1-2023 Unaudited Interim Condensed Consolidated Financial Statements of H2B2 and the 2022 Audited Consolidated Financial Statements of H2B2.
Net loss
|
|
|
$(942,667)
|
|
|
$(773,694)
|
|
|
$(4,296,459)
|
|
|
$(4,131,004)
|
Income tax expense
|
|
|
23,635
|
|
|
10,349
|
|
|
76,128
|
|
|
34,391
|
Interest and other (income) expense, net
|
|
|
(207,175)
|
|
|
98,121
|
|
|
557,112
|
|
|
757,444
|
Other income
|
|
|
(326,204)
|
|
|
(411,878)
|
|
|
(411,878)
|
|
|
(105,979)
|
Depreciation of long-lived assets
|
|
|
40,581
|
|
|
5,803
|
|
|
88,257
|
|
|
24,178
|
Adjusted EBITDA (unaudited)
|
|
|
$(1,411,830)
|
|
|
$(1,071,299)
|
|
|
$(3,986,841)
|
|
|
$(3,420,970)
|
Although we report negative Adjusted EBITDA figures for the
aforementioned periods due to the Company’s growth ramp-up stage (see the section entitled “Information About H2B2” for further information regarding our business model), we believe that
Adjusted EBITDA, as managed by the Company within its business model, will be useful to investors as it eliminates the significant level of non-cash depreciation expense that results from our capital investments and improves comparability. We
use Adjusted EBITDA as a measure of the performance of our business, as it provides an analysis of the operating loss before interest, taxes, depreciation and amortization. We expect a useful usage of Adjusted EBITDA to evaluate results over
time as it is an indicator of our earning ability.
Adjusted EBITDA Margin
Adjusted EBITDA Margin is calculated as Adjusted EBITDA divided by
revenue.
The table below shows the calculation of Adjusted EBITDA Margin
for the years indicated, as well as the tie-in with the Q1-2023 Unaudited Interim Condensed Consolidated Financial Statements of H2B2 and the 2022 Audited Consolidated Financial Statements of H2B2.
Adjusted EBITDA (unaudited)
|
|
|
$(1,411,830)
|
|
|
$(1,071,299)
|
|
|
$(3,986,841)
|
|
|
$(3,420,970)
|
Product sales
|
|
|
866,913
|
|
|
100,130
|
|
|
3,491,673
|
|
|
961,607
|
Adjusted EBITDA Margin (unaudited)
|
|
|
(162.9)%
|
|
|
(1,069.9)%
|
|
|
(114.2)%
|
|
|
(355.8)%
|
TABLE OF CONTENTS
MANAGEMENT OF THE SURVIVING CORPORATION
FOLLOWING THE BUSINESS COMBINATION
Management and Surviving Corporation Board
The following sets forth certain information, as of , 2023,
concerning the persons who are expected to serve as executive officers and members of the Surviving Corporation Board following the consummation of the Business Combination.
Jose Antonio Vázquez Romero
|
|
|
71
|
|
|
Chairman of the Board, Director
|
Anselmo Andrade Fernández de Mesa
|
|
|
30
|
|
|
Chief Executive Officer
|
Blanca Benjumea de Porres
|
|
|
33
|
|
|
Chief Financial Officer
|
Florencio Salvador Ferrera Saldaña
|
|
|
53
|
|
|
Chief Operating Officer
|
Jose Javier Brey Sánchez
|
|
|
49
|
|
|
Chief Technology Officer
|
Felipe Benjumea de Porres
|
|
|
29
|
|
|
Chief Investment Officer
|
África Castro Rosende
|
|
|
51
|
|
|
Business Development Officer
|
Biographical Information
Biographical information on our directors and executive officers is
set forth below.
Jose Antonio Vázquez Romero
Mr. Vázquez is expected to serve as the Chairman of the Surviving
Corporation Board following the consummation of the Business Combination. Mr. Vázquez has served as the Chairman of the Board of H2B2 since December 2022. Prior to his time at H2B2, Mr. Vázquez chaired the boards of International Airlines Group
(“IAG”) from 2011 to 2021, Iberia Lineas Aereas de Espana (“Iberia”) from 2009 to 2011, and Altadis/Tabacalera and Logista from 2005 to 2007, where he oversaw
several high profile mergers including: Iberia’s merger with British Airways, IAG’s merger with Iberia, and the Altadis and Logista mergers involving Tabacalera and SEITA (eventually Altadis). Mr. Vázquez also served as a director and was on
the nominations committee for IAG from 2011 to 2021, and otherwise has experience serving as a director for Iberia Lineas Aereas de Espana, Compañía de Distribución Integral Logista Holdings, S.A, and Altadis SA. Mr. Vázquez began his career in
consultancy at Arthur Andersen and in the consumer goods sector at Osborne and Domecq. Mr. Vázquez holds a Bachelor of Science in Economics from the University of Málaga and was named an Honour Student with the occasion of its 50th
anniversary. We believe that Mr. Vázquez is qualified to serve on the Surviving Corporation Board due to, among other things, his deep knowledge of H2B2 and his extensive leadership and director experience after having spent nearly 50 years
working for listed companies in various international markets.
Anselmo Andrade Fernández de Mesa
Mr. Fernández de Mesa is expected to serve as the Chief Executive
Officer of the Surviving Corporation following the consummation of the Business Combination. Mr. Fernández de Mesa has served as the Chief Executive Officer of H2B2 since December 2022. Mr. Fernández de Mesa is a founding partner of H2B2 and
has worked for H2B2 since its inception in 2016. From June 2016 to December 2022, Mr. Fernández de Mesa served as the Head of Business Development for H2B2’s Integrated Product line, during which he oversaw significant achievements such as the
“SoHyCal Project” awarded by the California Energy Commission. From June 2016 until December 2020, Mr. Fernández de Mesa served as the Chief Financial Officer of H2B2. He also served as Head of Investor Relations from December 2020 to December
2022. Prior to his time at H2B2, Mr. Fernández de Mesa was a consultant for Management Solutions from June 2015 to June 2016. Mr. Fernández de Mesa holds a Master of Science in Finance from The London School of Economics and Political Science,
and a Bachelor of Science in Economics, Finance, and Management from Queen Mary, University of London.
Blanca Benjumea de Porres
Ms. Benjumea is expected to serve as the Chief Financial Officer of
the Surviving Corporation following the consummation of the Business Combination. Ms. Benjumea is a founding partner of H2B2 and has worked for H2B2 since 2019. Since December 2020, Ms. Benjumea has served as the Chief Financial Officer of
H2B2.
TABLE OF CONTENTS
Prior to that, Ms. Benjumea served as the Head of Accounting, Finance and Human
Resources of H2B2 from June 2019 to December 2020. Prior to her time at H2B2, Ms. Benjumea was an auditor and strategic consultant at KPMG. Ms. Benjumea holds a Bachelor of Science in Business Administration from Fordham University.
Florencio Salvador Ferrera Saldaña
Mr. Ferrera is expected to serve as the Chief Operating Officer of
the Surviving Corporation following the consummation of the Business Combination. Mr. Ferrera has served as the Chief Operating Officer of H2B2 since December 2022. Mr. Ferrera joined H2B2 in July 2021 and served as the Chief Executive Officer
until December 2022. From 1996 to 2021 Mr. Ferrera held various positions at renewable energy company Abengoa Group in Spain, where he carried out management functions in different subsidiaries and was eventually appointed executive director
and general director. Mr. Ferrera began his career as a civil and structural engineer in 1995. Mr. Ferrera holds an industrial engineering degree from the University of Seville and has completed the University of Navarra’s IESE Business School
PDD (Management Development Program).
Jose Javier Brey Sanchez
Mr. Brey is expected to serve as the Chief Technology Officer of the
Surviving Corporation following the consummation of the Business Combination. Mr. Brey has served as the Chief Technology Officer of H2B2 since June 2016. Prior to joining H2B2, Mr. Brey served as the general director of Abengoa Hidrogeno S.A.
from May 2003 to May 2016. Mr. Brey has served as a director of H2B2 since 2016 and also currently serves on the board of Empelia Capital S.L. From January 2017 to June 2020 Mr. Brey served on the board of Giner Elx Inc. In addition, Mr. Brey
is the vice-chairman of the Energy and Hydrogen Alliance (EHA), chairman of the Spanish Hydrogen Association (AeH2), vice-chairman of the Spanish Fuel Cell Association (Appice) and secretary to the Spanish Hydrogen Technology Platform (PTeH2).
Mr. Brey holds a Ph.D. from Pablo de Olavide University, Seville and an engineering degree from the University of Seville and completed the University of Navarra’s IESE Business School PDD (Management Development Program).
Felipe Benjumea de Porres
Mr. Benjumea is expected to serve as the Chief Investment Officer of
the Surviving Corporation following the consummation of the Business Combination. Mr. Benjumea has served as the Chief Investment Officer of H2B2 since December 2022. Mr. Benjumea is a founding partner of H2B2 and has served in a variety of
roles since H2B2’s inception in 2016, including as Chief Financial Officer from June 2016 to December 2020, Head of Business Development for the Integrated Product line from June 2016 to December 2022 and Head of Investor Relations from
December 2020 to December 2022. Mr. Benjumea holds a Bachelor of Science in Business Administration from the Richard A. Chaifetz School of Business at Saint Louis University.
África Castro Rosende
Ms. Castro is expected to serve as the Business Development Officer
of the Surviving Corporation following the consummation of the Business Combination. Ms. Castro has served as the Director of Business Development for Conventional Product of H2B2 since August 2016. Prior to joining H2B2, Ms. Castro served as
the director of business development of Abengoa Group, a Spanish renewable energy company, from November 2001 to May 2016. At Abengoa Group, Ms. Castro was responsible for technological innovation, corporate strategy, and institutional
relations at regional, national, and international levels. Ms. Castro holds an industrial engineering degree from the University of Zaragoza and has completed the University of Navarra’s IESE Business School PDD (Management Development
Program).
Family Relationship
Blanca Benjumea de Porres, who is expected to serve as the Chief
Financial Officer of the Surviving Corporation, and Felipe Benjumea de Porres, who is expected to serve as the Chief Investment Officer of the Surviving Corporation, are siblings.
TABLE OF CONTENTS
Corporate Governance
The Surviving Corporation will structure its corporate governance in
a manner RMG III and H2B2 believe will closely align its interests with those of its stockholders following the Business Combination. Notable features of this corporate governance include:
•
|
the Surviving Corporation will have independent director representation on its audit, compensation and nominating committees
immediately at the time of the Business Combination, and its independent directors will meet regularly in executive sessions without the presence of its corporate officers or non-independent directors;
|
•
|
at least one of the Surviving Corporation’s directors will qualify as an “audit committee financial expert” as defined by the
SEC; and
|
•
|
the Surviving Corporation will implement a range of other corporate governance best practices, including implementing a robust
director education program.
|
Composition of the Surviving Corporation Board After the Business
Combination
The Surviving Corporation’s business and affairs will be managed
under the direction of the Surviving Corporation Board. Following the consummation of the Business Combination, the Surviving Corporation Board will initially consist of nine (9) directors. Subject to the terms of the Proposed Certificate of
Incorporation and the Proposed Bylaws, the number of directors will be fixed by the Surviving Corporation Board.
Director Independence
In connection with the Business Combination, the Surviving
Corporation Board undertook a review of the independence of its anticipated directors and considered whether any such anticipated director has a material relationship with it that could compromise that director’s ability to exercise independent
judgment in carrying out that director’s responsibilities. The Surviving Corporation expects each of and will be an “independent director,” as defined under the rules of the Nasdaq.
Board Committees
The Surviving Corporation Board will direct the management of the
Surviving Corporation’s business and affairs, as provided by Delaware law, and will conduct its business through meetings of the Surviving Corporation Board of directors and standing committees. Following the Closing, the Surviving Corporation
will have a standing audit committee, nominating committee and compensation committee. In addition, from time to time, special committees may be established under the direction of the Surviving Corporation Board when necessary to address
specific issues.
Audit Committee.
The Surviving Corporation’s audit committee will be responsible for,
among other things:
•
|
appointing, compensating, retaining, evaluating, terminating and overseeing its independent registered public accounting firm;
|
•
|
discussing with its independent registered public accounting firm their independence from management;
|
•
|
reviewing, with its independent registered public accounting firm, the scope and results of their audit;
|
•
|
approving all audit and permissible non-audit services to be performed by its independent registered public accounting firm;
|
•
|
overseeing the financial reporting process and discussing with management and its independent registered public accounting firm
the quarterly and annual financial statements that its files with the SEC;
|
•
|
overseeing its financial and accounting controls and compliance with legal and regulatory requirements;
|
•
|
reviewing its policies on risk assessment and risk management;
|
•
|
reviewing related person transactions; and
|
TABLE OF CONTENTS
•
|
establishing procedures for the confidential anonymous submission of concerns regarding questionable accounting, internal
controls or auditing matters.
|
Upon the completion of the Business Combination, the Surviving
Corporation’s audit committee will consist of , with serving as chair. Rule 10A-3 of the Exchange Act and the Nasdaq rules require that the Surviving Corporation’s audit committee must be composed entirely of independent members. The
Surviving Corporation Board has affirmatively determined that and each meets the definition of “independent director” for purposes of serving on the audit committee under Rule 10A-3 of the Exchange Act and the Nasdaq rules. Each
member of the Surviving Corporation’s audit committee also meets the financial literacy requirements of the Nasdaq listing standards. In addition, the Surviving Corporation Board has determined that and will each qualify as an “audit
committee financial expert,” as such term is defined in Item 407(d)(5) of Regulation S-K. The Surviving Corporation Board will adopt a written charter for the audit committee, which will be available on the Surviving Corporation’s corporate
website at upon the completion of the Business Combination. The information on any of the Surviving Corporation’s websites is deemed not to be incorporated in this proxy statement/prospectus or to be part of this proxy
statement/prospectus.
Compensation Committee.
The Surviving Corporation’s compensation committee will be
responsible for, among other things:
•
|
reviewing and approving the corporate goals and objectives, evaluating the performance of and reviewing and approving, (either
alone or, if directed by the Surviving Corporation Board, in conjunction with a majority of the independent members of the Surviving Corporation Board) the compensation of its Chief Executive Officer;
|
•
|
overseeing an evaluation of the performance of and reviewing and setting or making recommendations to the Surviving Corporation
Board regarding the compensation of its other executive officers;
|
•
|
reviewing and approving or making recommendations to the Surviving Corporation Board regarding the Surviving Corporation’s
incentive compensation and equity-based plans, policies and programs;
|
•
|
reviewing and approving all employment agreement and severance arrangements for the Surviving Corporation’s executive officers;
|
•
|
making recommendations to the Surviving Corporation Board regarding the compensation of the Surviving Corporation’s directors;
and
|
•
|
retaining and overseeing any compensation consultants.
|
Upon the completion of the Business Combination, the Surviving
Corporation’s compensation committee will consist of and , with serving as chair. The Surviving Corporation Board has affirmatively determined that and each meets the definition of “independent director” for purposes of
serving on the compensation committee under the Nasdaq rules, and are “non-employee directors” as defined in Rule 16b-3 of the Exchange Act. The Surviving Corporation Board will adopt a written charter for the compensation committee, which will
be available on the Surviving Corporation’s corporate website at upon the completion of the Business Combination. The information on any of the Surviving Corporation’s websites is deemed not to be incorporated in this proxy
statement/prospectus or to be part of this proxy statement/prospectus.
Nominating Committee.
The Surviving Corporation’s nominating committee will be responsible
for, among other things:
•
|
identifying individuals qualified to become members of the Surviving Corporation Board, consistent with criteria approved by the
Surviving Corporation Board;
|
•
|
overseeing succession planning for the Surviving Corporation’s Chief Executive Officer and other executive officers;
|
•
|
periodically reviewing the Surviving Corporation Board’s leadership structure and recommending any proposed changes to the
Surviving Corporation Board;
|
TABLE OF CONTENTS
•
|
overseeing an annual evaluation of the effectiveness of the Surviving Corporation Board and its committees; and
|
•
|
developing and recommending to the Surviving Corporation Board a set of corporate governance guidelines.
|
Upon completion of the Business Combination, the Surviving
Corporation’s nominating committee will consist of with serving as chair. The Surviving Corporation Board has affirmatively determined that and , each meets the definition of “independent director” under the Nasdaq rules. The
Surviving Corporation Board will adopt a written charter for the nominating committee, which will be available on the Surviving Corporation’s corporate website at upon the completion of the Business Combination. The information on any of
the Surviving Corporation’s websites is deemed not to be incorporated in this proxy statement/prospectus or to be part of this proxy statement/prospectus.
Risk Oversight
Upon the consummation of the Business Combination, one of the key
functions of the Surviving Corporation Board will be informed oversight of the Surviving Corporation’s risk management process. The Surviving Corporation Board does not anticipate having a standing risk management committee, but rather
anticipates administering this oversight function directly through the Surviving Corporation Board as a whole, as well as through various standing committees of the Surviving Corporation Board that address risks inherent in their respective
areas of oversight. In particular, the Surviving Corporation Board will be responsible for monitoring and assessing strategic risk exposure, and the Surviving Corporation’s audit committee will have the responsibility to consider and discuss
the Surviving Corporation’s major financial risk exposures and the steps its management will take to monitor and control such exposures, including guidelines and policies to govern the process by which risk assessment and management is
undertaken. The audit committee will also monitor compliance with legal and regulatory requirements. The Surviving Corporation’s compensation committee will also assess and monitor whether the Surviving Corporation’s compensation plans,
policies and programs comply with applicable legal and regulatory requirements.
Compensation Committee Interlocks and Insider Participation
None of the Surviving Corporation’s executive officers serves as a
member of the board of directors or compensation committee (or other committee performing equivalent functions) of any entity that has one or more executive officers serving on the Surviving Corporation Board or compensation committee.
Code of Business Conduct and Ethics
Prior to the completion of the Business Combination, the Surviving
Corporation will adopt a written code of business conduct and ethics that applies to its directors, officers and employees, including its principal executive officer, principal financial officer, principal accounting officer or controller, or
persons performing similar functions. A copy of the code will be posted on the Surviving Corporation’s corporate website at upon the completion of the Business Combination. In addition, the Surviving Corporation intends to post on the
Surviving Corporation’s website all disclosures that are required by law or the Nasdaq listing standards concerning any amendments to, or waivers from, any provision of the code. The information on any of the Surviving Corporation’s websites is
deemed not to be incorporated in this proxy statement/prospectus or to be part of this proxy statement/prospectus.
TABLE OF CONTENTS
EXECUTIVE AND DIRECTOR COMPENSATION
Throughout this section, unless otherwise noted,
“H2B2,” “Company,” “we,” “us,” “our” and similar terms refer to H2B2 Electrolysis Technologies, Inc. and its subsidiaries prior to the consummation of the Business Combination, and to H2B2 Electrolysis Technologies, Inc. and its subsidiaries
(including H2B2 Electrolysis Technologies, S.L.) after the Business Combination.
This section discusses the material components of the executive
compensation program for our executive officers who are named in the “2022 Summary Compensation Table” below. In 2022, our “named executive officers” and their positions were as follows:
•
|
Anselmo Andrade Fernández de Mesa, Chief Executive Officer and Former Head of Business
Development;
|
•
|
Florencio Ferrera Saldaña, Chief Operating Officer and Former Chief Executive Officer;
|
•
|
Felipe Benjumea Llorente, Executive President; and
|
•
|
Javier Brey Sánchez, Chief Technology Officer.
|
On December 30, 2022, Mr. Saldaña ceased serving as our Chief
Executive Officer and transitioned to the role of our Chief Operating Officer. Mr. Fernández de Mesa served as Head of Business Development through December 30, 2022, at which time he was appointed to serve as our Chief Executive Officer.
This discussion may contain forward-looking statements that are based
on our current plans, considerations, expectations and determinations regarding future compensation programs. Actual compensation programs that we adopt following the completion of this offering may differ materially from the currently planned
programs summarized in this discussion. Compensation values included in this discussion that were originally denoted in local currency (EUR) and have been converted to USD using an exchange rate as of December 30, 2022 (the last business day of
2022) of 1 USD to 0.93475 EUR.
TABLE OF CONTENTS
2022 Summary Compensation Table
The following table sets forth information concerning the
compensation of our named executive officers for the year ended December 31, 2022.
Anselmo Andrade Fernández de Mesa
Chief Executive Officer and Former Head of
Business Development
|
|
|
57,074
|
|
|
—
|
|
|
57,074
|
Florencio Ferrera Saldaña
Chief Operating Officer and Former Chief
Executive Officer
|
|
|
213,960
|
|
|
—
|
|
|
213,960
|
Felipe Benjumea Llorente
Executive President
|
|
|
352,117
|
|
|
—
|
|
|
352,117
|
Javier Brey Sánchez
Chief Technology Officer
|
|
|
106,980
|
|
|
—
|
|
|
107,260
|
(1)
|
Base salary and other compensation values in this Summary Compensation Table originally denoted in local currency (EUR) have been
converted to USD using an exchange rate as of December 30, 2022 (the last business day of 2022) of 1 USD to 0.93475 EUR.
|
(2)
|
Non-equity incentive plan compensation consists of payments made pursuant to our annual incentive bonus program, discussed below
under “Narrative to Summary Compensation Table—2022 Bonuses”. For fiscal year 2022, the amounts of the annual cash incentives earned by our named executive officers have not yet been determined
as of the date of this filing and are expected to be determined and disclosed in a subsequent filing. Messrs. Llorente and Sánchez did not participate in our 2022 annual incentive bonus program.
|
TABLE OF CONTENTS
NARRATIVE TO SUMMARY COMPENSATION TABLE
2022 Salaries
The named executive officers receive a base salary to compensate them
for services rendered to our company. The base salary payable to each named executive officer is intended to provide a fixed component of compensation reflecting the executive’s skill set, experience, role and responsibilities. As of
December 30, 2022, the annual base salaries for our named executive officers were $64,188 for Mr. Fernández de Mesa, $213,960 for Mr. Saldaña, $543,030 for Mr. Llorente and $107,260 for Mr. Sánchez. Mr. Fernández de Mesa’s base salary was
increased from $49,746 to $64,188 per year, effective July 1, 2022, and Mr. Llorente’s base salary was increased from $246,054 to $543,030 per year, effective as of September 21, 2022.
The actual base salaries earned by our named executive officers for
services in 2022 are set forth above in the Summary Compensation Table in the column entitled “Salary”.
2022 Bonuses
In fiscal year 2022, our named executive officers (other than Messrs.
Llorente and Sánchez) were eligible to earn annual cash incentives under our annual incentive program, based on our operating and financial performance, including performance goals relating to 2022 net income, general expenses, net financial
position, bookings, project completion and integration, investments, lost time incidents and our pre-money valuation, as well as the named executive officer’s contributions to our business. Annual cash incentives for Messrs. Fernández de Mesa
and Saldaña were targeted at $18,187 and $32,094, respectively. Messrs. Llorente and Sánchez did not participate in our 2022 annual incentive program. The actual annual cash bonuses awarded to each
eligible named executive officer for 2022 performance have not yet been determined and will be disclosed in a subsequent filing when amounts are finalized.
Equity Compensation
Certain of our named executive officers hold options covering shares
of our Common Stock (“H2B2 Options”). However, none of our named executive officers were granted H2B2 Options or other incentive equity awards in 2022. All of the H2B2 Options held by our named executive
officers as of December 31, 2022 are further described below under “—Outstanding Equity Awards at Fiscal Year-End.”
We intend to adopt a 2023 Incentive Award Plan, referred to in this
proxy statement/prospectus as the Incentive Plan, in order to facilitate the grant of cash and equity incentives to directors, employees (including our named executive officers) and consultants of our company and certain of its affiliates and
to enable our company and certain of its affiliates to obtain and retain services of these individuals, which is essential to our long-term success. We expect that the Incentive Plan will be effective on the date on which the Business
Combination is consummated, subject to approval of such plan by our stockholders. For additional information about the Incentive Plan, please see the section titled “Proposal No. 6 — Equity Incentive Plan
Proposal” elsewhere in this proxy statement/prospectus.
Other Elements of Compensation
Employee Benefits
Our named executive officers are entitled to statutory retirement,
health and welfare protections provided through social security contributions under the Spanish social security system.
No Tax Gross-Ups
We do not make gross-up payments to cover our named executive
officers’ personal income taxes that may pertain to any of the compensation or perquisites paid or provided by our company.
TABLE OF CONTENTS
Outstanding Equity Awards at Fiscal Year-End
The following table summarizes the number of shares of Surviving
Corporation Common Stock underlying outstanding awards for each named executive officer as of December 31, 2022. Mr. Llorente did not hold any equity awards as of December 31, 2022.
Anselmo Andrade Fernández de Mesa(1)
|
|
|
1/1/2021
|
|
|
—
|
|
|
125,000
|
|
|
—
|
|
|
$1.00
|
|
|
3/31/2026
|
Florencio Ferrera Saldaña(1)
|
|
|
7/1/2021
|
|
|
—
|
|
|
200,000
|
|
|
—
|
|
|
$1.00
|
|
|
3/31/2026
|
Felipe Benjumea Llorente
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
Javier Brey Sánchez(1)
|
|
|
1/1/2021
|
|
|
—
|
|
|
25,000
|
|
|
—
|
|
|
$1.00
|
|
|
3/31/2026
|
(1)
|
These option awards vest on January 1st, 2026, subject to the applicable named executive officer’s continued service,
and will vest in full upon the applicable named executive officer’s termination of service due to death or disability. In the event of termination of the named executive officer’s service with the Company (other than due to death or
disability) before January 1, 2026, the named executive officer shall lose their rights to purchase the shares subject to the options.
|
TABLE OF CONTENTS
Executive Compensation Arrangements
Employment Agreements
During 2022, we were party to employment agreements with Messrs.
Fernández de Mesa, Saldaña and Sánchez, the material terms of which are described below.
Anselmo Andrade Fernández de Mesa
2016 Employment Agreement
We entered into an employment agreement with Mr. Andrade, effective
June 27, 2016, pursuant to which he served as our Head of Business Development through December 30, 2022 and thereafter as our Chief Executive Officer. Mr. Andrade’s initial annual base gross remuneration for 2022 amounted to $49,746 (taking
into account, as noted above, the increase in his annual base salary to $64,188 effective July 1, 2022). Mr. Fernández de Mesa’s employment under the employment may be terminated by him upon 15 days’ prior notice and by the Company pursuant to
the grounds and formalities regulated under Spanish law.
The employment agreement also contains standard restrictive
covenants, including confidentiality and non-disclosure restrictions, assignment of intellectual property, and non-competition restrictions (effective during employment).
2023 Employment Agreement and Service Agreement
In connection with Mr. Andrade’s appointment as Chief Executive
Officer, we entered into an employment agreement on May 9, 2023. The new employment agreement is subject to laws of the State of California and provides for annual base gross remuneration of $62,828 and, at the discretion H2B2, an annual bonus
up to 30.1325% of annual base remuneration subject to the achievement of certain business and individual targets determined by the H2B2 Board from time to time.
Mr. Fernández de Mesa’s employment agreement may be terminated by
either party at any time for any or no reason and, in the case of a voluntary resignation by Mr. Fernández de Mesa, he must give 60 days’ notice. Upon a termination of Mr. Fernández de Mesa’s employment by the Company without cause, subject to
Mr. Fernández de Mesa’s timely execution and non-revocation of a release of claims and continued compliance with applicable restrictive covenants, Mr. Fernández de Mesa will be entitled to a lump-sum cash payment equal to 12 months’ base
salary.
The employment agreement also contains standard restrictive
covenants, including confidentiality and non-disclosure restrictions, non-disparagement restrictions and non-solicitation restrictions (effective during the service relationship and for one year after the service relationship terminates).
In addition, on May 9, 2023, H2B2 Corp, S.L., a subsidiary of H2B2,
entered into a service agreement with Mr. Fernández de Mesa, pursuant to which he serves as the sole director of H2B2 Corp, S.L. and which superseded his prior employment agreement with H2B2 Corp, S.L. The new service agreement is subject to
Spanish civil and commercial regulations and provides for an annual base gross remuneration of $62,828 and an annual bonus up to 30.1325% of annual base remuneration subject to the achievement of certain business and individual targets.
Mr. Fernández de Mesa’s new service agreement may be terminated for
any of the reasons set forth in the Spanish Company’s Act and, in case of a voluntary resignation by Mr. Fernández de Mesa, he must give 30 days’ notice.
Mr. Fernández de Mesa is entitled to receive a one-time payment of
$20,943, payable in a lump-sum or, in H2B2’s discretion, monthly in four equal installments. The service agreement also contains standard confidentiality and non-disclosure restrictions.
Florencio Ferrera Saldaña
We entered into an employment agreement with Mr. Saldaña, effective
on July 1, 2021, pursuant to which Mr. Saldaña served as our Chief Executive Officer through December 31, 2022. The employment agreement sets forth Mr. Saldaña initial annual base gross remuneration of $213,960, annual performance bonus
opportunity of up to $32,094, and initial grant of an H2B2 Option to purchase 200,000 shares of H2B2 Common Stock (for further information, see the section above titled “—Outstanding Equity Awards at Fiscal
Year-End”).
TABLE OF CONTENTS
Mr. Saldaña’s employment under the employment may be terminated by
either party upon three months’ prior notice. Upon a termination of Mr. Saldaña’s employment (i) by the Company without cause or (ii) by Mr. Saldaña due to (A) a serious breach by H2B2 of its obligations, (B) H2B2’s non-payment or continued
delay in the payment of his base salary, (C) a substantial modification of the working conditions that is detrimental to Mr. Saldaña or (D) a change of control of H2B2, Mr. Saldaña will be entitled to a lump-sum cash payment equal to 20 days’
of base salary per year of service with H2B2 (up to a maximum of 12 months’ base salary).
The employment agreement also contains standard restrictive
covenants, including confidentiality and non-disclosure restrictions, assignment of intellectual property, and non-competition and non-solicitation restrictions, effective during employment and for two years after employment terminates. During
the post-employment restricted period, Mr. Saldaña will receive a cash payment equal to 40% of his annual gross base salary as in effect on the date of his termination of employment, payable in four equal installments at the end of each
six-month period that occurs during the restricted period.
Felipe Benjumea Llorente
We entered into an employment agreement with Mr. Llorente, effective
on October 1, 2016, pursuant to which Mr. Llorente serves as our Executive President. The employment agreement sets forth Mr. Llorente’s initial annual base gross remuneration of $352,117. Mr. Llorente’s employment under the employment may be
terminated by him upon 15 days’ prior notice and by the Company pursuant to the grounds and formalities regulated under Spanish law.
The employment agreement also contains standard restrictive
covenants, including confidentiality and non-disclosure restrictions, assignment of intellectual property, and non-competition restrictions (effective during employment).
Mr. Llorente’s employment with us, and his employment agreement,
terminated effective January 6, 2023 and he currently serves as a senior advisor to the Company.
Javier Brey Sánchez
We entered into an employment agreement with Mr. Sánchez, effective
on June 3, 2016, pursuant to which Mr. Sánchez serves as our Chief Technology Officer. Mr. Sánchez’s annual base gross remuneration for 2022 amounted to $107,260. Mr. Sánchez’s employment under the employment may be terminated by him upon
15 days’ prior notice and by the Company pursuant to the grounds and formalities regulated under Spanish law.
The employment agreement also contains standard restrictive
covenants, including confidentiality and non-disclosure restrictions, assignment of intellectual property, and non-competition restrictions (effective during employment).
In addition to the compensation payable to Mr. Sánchez under his
employment agreement, under H2B2’s Stockholders’ Agreement, dated August 27, 2021, Mr. Sánchez is entitled to a lump sum payment of $107,260 on the 25-month anniversary of October 27, 2021, subject to his continued services with H2B2 through
such date.
TABLE OF CONTENTS
Director Compensation
Director Compensation Table
The following table sets forth the compensation paid to our
non-employee directors for service on our board of directors in 2022.
Antonio Vázquez Romero
|
|
|
4,167(3)
|
|
|
113,063
|
|
|
117,230
|
Ignacio Solis
|
|
|
16,047
|
|
|
—
|
|
|
16,047
|
Gonzalo Hidalgo
|
|
|
16,047
|
|
|
—
|
|
|
16,047
|
Guillermo Delclaux
|
|
|
16,047
|
|
|
—
|
|
|
16,047
|
Manuel Delclaux
|
|
|
16,047
|
|
|
—
|
|
|
16,047
|
Fernando Franco
|
|
|
16,047
|
|
|
—
|
|
|
16,047
|
Juan Suarez
|
|
|
16,047
|
|
|
—
|
|
|
16,047
|
(1)
|
Compensation values in this Director Compensation Table originally denoted in local currency (EUR) have been converted to USD
using an exchange rate as of December 30, 2022 (the last business day of 2022) of 1 USD to 0.93475 EUR.
|
(2)
|
Amount reflects the full grant-date fair value of awards of H2B2 Options granted during 2022 computed in accordance with ASC 718,
rather than the amounts paid to or realized by the named individual. See the consolidated financial statements and notes thereto included elsewhere in this proxy statement/prospectus for a discussion of the relevant assumptions used in
calculating this amount.
|
(3)
|
Mr. Vázquez Romero commenced service on our board of directors in December 2022. Accordingly, the amounts shown reflect the 2022
cash fees earned by or paid to Mr. Vázquez Romero in respect of his partial year of service.
|
The table below shows the aggregate H2B2 Options (whether exercisable
or unexercisable), held as of December 31, 2022 by each non-employee director who served in 2022.
Antonio Vázquez Romero
|
|
|
68,966(a)
|
Ignacio Solis
|
|
|
—
|
Gonzalo Hidalgo
|
|
|
—
|
Guillermo Delclaux
|
|
|
—
|
Manuel Delclaux
|
|
|
—
|
Fernando Franco
|
|
|
—
|
Juan Suarez
|
|
|
—
|
(a)
|
In December 2022, Mr. Vázquez Romero was granted two H2B2 Options: (i) an H2B2 Option covering 68,966 shares of H2B2 Common Stock
(the “First Romero H2B2 Option”) and (ii) an H2B2 Option covering a number of shares of H2B2 Common Stock determined as described below (the “Second Romero H2B2
Option”). In 2023, Mr. Vázquez Romero exercised the First Romero H2B2 Option in full, subject to and conditioned upon the closing of the Business Combination. The number of shares of H2B2 Common Stock subject to the Second
Romero H2B2 Option will be determined by dividing $750,000 by the exchange price of the Company’s shares in the Business Combination.
|
Service Agreement with Non-Executive Chairman
On December 15, 2022, H2B2 entered into a service agreement with Mr.
Vázquez Romero, pursuant to which he serves as the non-executive chairman of our board of directors. The service agreement entitles Mr. Vázquez Romero to an annual cash fee of $100,000 per year, payable monthly, and the Second H2B2 Option. The
number of shares of H2B2 Common Stock subject to the Second H2B2 Option will be determined by dividing $750,000 by the exchange price of the Company’s shares in the Business Combination. The Second H2B2 Option vests in equal annual installments
over a five year period commencing December 1, 2022, subject to Mr.Vázquez Romero’s continued service through the applicable vesting date and further subject to full accelerated vesting upon (i) a termination of his service due to his death or
disability, by H2B2 without “cause” (as defined in the service agreement) or due to a force majeure event or (ii) a change in control of the Company (excluding the Business Combination).
TABLE OF CONTENTS
We are not party to service agreements with any of our other
non-employee directors.
Director Compensation Program
In connection with the Business Combination, we are considering
approving and implementing a compensation program for our non-employee directors. The details of this program (if we determine to adopt and implement such a program) have not yet been determined.
TABLE OF CONTENTS
You are urged to carefully read the Merger
Agreement in its entirety, a copy of which is attached to this proxy statement/prospectus as Annex A. This summary does not purport to be complete and may not contain all of the information about the Merger Agreement that is important
to you. RMG III encourages you to read the Merger Agreement carefully and in its entirety. This section is not intended to provide you with any factual information about RMG III or H2B2. Such information can be found elsewhere in this proxy
statement/prospectus.
Background to the Business Combination
RMG III is a blank check company incorporated on December 23, 2020 as
a Cayman Islands exempted company for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses, which is referred to as a ‘‘business combination”.
On February 9, 2021, RMG III consummated its Initial Public Offering
of 48,300,000 RMG III Units (including 6,300,000 RMG III Units pursuant to the exercise in full of the IPO Underwriters’ over-allotment option), with each RMG III Unit consisting of one share of RMG III Class A Shares and one-fifth of one RMG
III Public Warrant. Each whole RMG III Public Warrant entitles the holder to acquire one share of RMG III Class A Shares at a price of $11.50. The RMG III Units from the Initial Public Offering (including the over-allotment option) were sold at
an offering price of $10.00 per unit, generating total gross proceeds of $483,000,000. Simultaneously with the consummation of the initial public offering and the exercise of the underwriters’ over-allotment option, RMG III consummated the
private placement of 8,216,330 RMG III Private Placement Warrants to the Sponsor, at a price of $1.50 per RMG III Private Placement Warrants for an aggregate purchase price of approximately $12,324,495. RMG III funded the Trust Account with
$483,000,000 of the cash proceeds from the initial public offering, including $16,900,000 of deferred underwriter fees (which have been waived by BofA Securities, Inc. and Barclays Capital Inc., as of April 16, 2023, and April 17, 2023,
respectively), and the related private placement. Prior to the consummation of the Initial Public Offering, neither RMG III, nor anyone on behalf of RMG III, had any substantive discussions, formal or otherwise, with respect to a business
combination with any target business.
Following its Initial Public Offering, RMG III’s management team
commenced a comprehensive search for a target business. In connection with this search process, the RMG III management team reached out to founder companies, investment bankers and advisors, and principals across RMG III’s extended network in a
broad range of sectors, including sustainable energy generation and clean energy technology, diversified industrials, business services, technology, telecommunications, media and entertainment, pharmaceutical and consumer healthcare, financial
services and financial technology, health and wellness, consumer products, traditional energy and power, real estate, including real estate services and related businesses, environmental services, mobility and electrification of the
transportation industry and insurance and insurance related services. In evaluating potential business combination opportunities, RMG III considered potential business combination targets that had compelling growth potential and a combination
of factors, among others, (i) being in a large and growing market, (ii) having an attractive and profitable business, (iii) having a strong management team, (iv) being of unrecognized value, (v) appropriately focused on ESG and sustainability,
(vi) ability to utilize network, (vii) possibility for RMG III to create value, and (viii) having differentiated products or services.
Before focusing on H2B2, RMG III’s management team evaluated
approximately 115 potential business combination targets and entered into non-disclosure agreements with 57 potential targets, based on the RMG III management team’s assessment of the relative strengths of these targets’ management teams,
businesses and marketability. RMG III’s management team actively pursued certain of these potential targets, conducting preliminary due diligence on, having management meetings with, and negotiating the preliminary terms of potential
transactions with, such potential targets. Following such discussions, RMG III entered into non-binding letters of interest with 15 potential business combination targets, including H2B2, as a result of successful preliminary negotiations with
such potential targets (including as to potential valuation ranges for such targets). With respect to the 14 companies, other than H2B2, to which the RMG III’s management team submitted a non-binding indication of interest, RMG III did not move
forward with these potential targets for a combination of reasons, including (i) targets deciding not to pursue a transaction with a special purpose acquisition company
TABLE OF CONTENTS
due to market conditions at the time and overall marketability, (ii) RMG III deciding
not to pursue a transaction due to an inability for the parties to align on valuation and transaction structure, (iii) RMG III being unsuccessful in the auction or sale process, and (iv) potential targets selecting to raise private capital
independently and choosing not to become a public company.
The following chronology summarizes the key meetings and events that
led to the signing of the Merger Agreement. This chronology does not purport to catalogue every correspondence among representatives of RMG III and H2B2. Representatives of RMG III involved in the discussions and negotiations referenced herein
included one or more of Mr. Robert S. Mancini, Chief Executive Officer and Director of RMG III, Mr. D. James Carpenter, Chairman and Director of RMG III, Mr. Philip Kassin, President, Chief Operating Officer and Director of RMG III, Mr. Wesley
Sima, Chief Financial Officer of RMG III, Mr. Andrew Smith, Vice President of RMG III, and Mr. Cutter Jones, Vice President of RMG III. Representatives of H2B2 involved in the discussions and negotiations referenced herein included one or more
of Mr. Anselmo Andrade Fernández de Mesa, Chief Executive Officer of H2B2, Mr. Felipe Benjumea de Porres, Chief Investment Officer of H2B2, Mr. Antonio Vázquez, President and Chairperson of the H2B2 Board, Mr. Roberto Wilson Fernández del
Castillo, Head of Investor Relations at H2B2, Mr. Javier Brey Sánchez, Chief Technology Officer of H2B2, Mr. Florencio Ferrera Sandana, Chief Operating Officer of H2B2, Ms. Blanca Benjumea de Porres, Chief Financial Officer of H2B2, Ms. Africa
Castro Rosende, Strategy, Communications and Business Development Manager of H2B2 and Mr. Mario Barragan Farfan, Legal, Management Systems and IT Systems Manager of H2B2.
On June 14, 2022, Mr. Robert Warfield, a special advisor at Riverside
Management Group, an affiliate of RMG III, and Mr. Andrade Fernández de Mesa, Chief Executive Officer of H2B2, discussed a potential business combination between RMG III and H2B2. The H2B2 management team discussed such a possibility and
decided to invite RMG III to submit a proposal regarding a proposed business combination. Subsequently, Mr. Warfield introduced Mr. Carpenter, Chairman and Director of RMG III, to Mr. Andrade Fernández de Mesa, Mr. Wilson Fernández del
Castillo, Head of Investor Relations of H2B2 and Mr. Benjumea de Porres, Chief Investment Officer of H2B2.
On July 21, 2022, Mr. Carpenter discussed H2B2’s business and the
potential business combination between RMG III and H2B2 with certain members of RMG III management. Members of RMG III management also received and discussed an information memorandum presenting the business and operations of H2B2 and its
subsidiaries. Following such discussions, RMG III’s management team determined to further explore a potential business combination with H2B2.
On June 27, 2022, BCW, an affiliate of RMG III, and H2B2 Electrolysis
Technologies S.L., one of H2B2’s Spanish subsidiaries, entered into a non-disclosure agreement. In the following days, H2B2 started sharing confidential information relating to its business and operations with RMG III.
Throughout August 2022 and September 2022, representatives of RMG III
had multiple telephone conversations, videoconferences and e-mail exchanges with representatives of H2B2 to, among other things, conduct business and financial due diligence, including in relation to current and potential customers and project
pipeline, and to discuss timeline for agreeing to a non-binding letter of intent, the general expected timeline to complete a potential business combination, requirements and readiness to become a public company, approach to valuation and a
potential investment from an infrastructure investor for purposes of financing certain of H2B2’s green hydrogen projects.
On September 18, 2022, RMG III submitted a preliminary non-binding
letter of intent to H2B2 regarding a potential business combination between RMG III and H2B2 (“November LOI”). Between September 18, 2022 and November 16, 2022, various discussions were held between the
parties around the terms of the proposed transaction and multiple drafts of the November LOI were exchanged. At the time of negotiating the November LOI, H2B2 was in discussions with an infrastructure investor to finance certain of its green
hydrogen projects, which, as mentioned below, was ultimately not pursued.
Throughout November 2022, representatives of RMG III had multiple
telephone conversations, videoconferences and e-mail exchanges with representatives of H2B2, including in-person meetings and a dinner in Spain on November 16, 2022 where Messrs. Mancini and Kassin of RMG III and Mr. Warfield were in
attendance, with the purpose of resuming RMG III’s business and financial due diligence and discussing the
TABLE OF CONTENTS
material shared by H2B2 in November 2022, and to also discuss key features of special
purpose acquisition companies, timeline of the potential business combination and related work streams (including high level discussions relating to legal documentation), structure of the transaction, due diligence activities and immediate next
steps.
On November 16, 2022, RMG III and H2B2 executed the November LOI. The
November LOI contemplated, among other terms, that either H2B2 or RMG III could terminate the November LOI in the scenario where the investor that was contemplating funding certain of H2B2’s green hydrogen projects did not execute a definitive
agreement relating to such financing within 20 business days following the date of the November LOI. The key terms of the November LOI contemplated a purchase equity price of $500,000,000, subject to further due diligence by RMG III and its
legal advisors.
On November 16, 2022, representatives of Skadden, RMG III’s U.S.
legal counsel, and Pérez-Llorca, RMG III’s local legal counsel in Spain (“PLL”), were provided access to a virtual data room of H2B2 and began conducting legal due diligence review of certain of the
materials contained therein, including information and documents relating to governance matters (including the organizational documents of H2B2), related party arrangements, commercial agreements and proposals, intellectual property licensed to
or used by H2B2, environmental matters, government contracts, partnership and collaboration agreements and certain regulatory and compliance matters.
On December 2, 2022, the RMG III Board met via videoconference to
consider and propose to RMG III shareholders an extension of the date by which RMG III must consummate an initial business combination from February 9, 2023 to May 9, 2023 and to allow RMG III, without another shareholder vote, to elect to
further extend the date to consummate a business combination up to three times by an additional month each time after such extended date, for a total of up to six months, to August 9, 2023, if RMG III has entered into a definitive business
combination agreement. The RMG III Board unanimously resolved to hold an extraordinary general meeting of shareholders at which RMG III shareholders would vote on such extension.
At the same meeting, Messers. Mancini, Kassin and Smith presented to
the RMG III Board a potential business combination opportunity involving H2B2. A presentation deck outlining the potential business combination, the related timeline and the due diligence process that would ensue was delivered to and discussed
by the directors of the RMG III Board and members of RMG III management present at the meeting. Messrs. Mancini, Kassin and Smith also mentioned they would provide the RMG III Board with regular updates on the progress of such potential
business combination.
On December 5, 2022, RMG III entered into an engagement letter with
Cohen & Company Capital Markets, the capital markets division of J.V.B Financial Group, LLC, pursuant to which it formally engaged Cohen to act as capital markets advisor to RMG III in connection with seeking an extension for completing a
business combination.
On December 7, 2022, representatives of RMG III, Skadden, H2B2 and
Latham, H2B2’s U.S. and Spanish legal counsel, held a meeting via videoconference to discuss, among other matters, potential terms of the business combination, the terms of a potential second letter of intent and matters related to legal due
diligence. In the meeting, H2B2 raised that Ardachon, one of H2B2’s significant stockholders, was subject to an ongoing insolvency proceeding and the parties discussed the status of such proceedings, the number of shares of H2B2 held by
Ardachon, the scope and significance of Ardachon’s debt and the potential acquisition by any third party (including Banco Santander, the main creditor of Ardachon) of the shares of H2B2 held by Ardachon. At the same meeting, H2B2 informed RMG
III that the investor that was considering financing certain of H2B2’s green hydrogen projects, as contemplated in the November LOI, decided not to pursue such financing.
Between December 2022 through January 2023, H2B2 engaged in various
discussions with a number of investment banks and financial advisors, the outcome of which was that H2B2 selected BCW and Natixis as co-placement agents for a potential private capital raise.
On December 10, 2022, RMG III and H2B2 entered into a second letter
of intent, to account for the fact that the infrastructure investor subsequently decided not to finance certain of H2B2’s green hydrogen projects as was contemplated by the November LOI (the “December LOI”).
The key terms of the December LOI specified the same equity purchase price as set out in the November LOI, but provided that such valuation would be
TABLE OF CONTENTS
revisited following completion of a potential capital raise transaction, which was
expected to raise up to $200,000,000 in aggregate proceeds.
On December 15, 2022 and December 28, 2022, the RMG III Board met via
videoconference to discuss updates relating to the status of negotiations between RMG III and H2B2, the expected timeline to complete the potential business combination and the results of RMG III’s business and financial due diligence,
including relating to H2B2’s awarded projects, project pipeline, research and development activities and manufacturing capabilities.
On December 20, 2022, representatives of RMG, H2B2 and an investment
bank held a meeting via videoconference to discuss the valuation of H2B2. During such discussion, such investment bank (in its capacity as H2B2’s financial advisor in connection with a potential private placement and as directed by H2B2) shared
information regarding a potential valuation of H2B2 using four valuation methodologies: (i) an illustrative valuation of H2B2 based on trading multiples of comparable companies in certain industries, (ii) a sum of the parts valuation of each of
H2B2’s segments using market peers, (iii) a discounted cash flow analysis which incorporated costs of capital and long-term growth rate, and (iv) a discounted initial public offering market-based analysis.
Throughout December 2022, representatives of RMG III and H2B2 held
weekly meetings in order to discuss updates regarding the status of the potential business combination transaction with RMG III and H2B2, including with respect to the terms of such a transaction and a third letter of intent, the negotiation of
definitive transaction documents, the due diligence review being conducted by RMG III’s advisors in parallel, the status of the capital raise transaction which H2B2 was considering, and other related matters.
On December 30, 2022, representatives of H2B2 and RMG III held a
meeting via videoconference. H2B2 informed RMG III that the H2B2 Board appointed Mr. Andrade Fernández de Mesa as Chief Executive Officer of H2B2 and Mr. Felipe Benjumea Llorente to serve as senior advisor to H2B2. H2B2 also provided updates on
the status of engaging RSM US LLP as its auditor for the purpose of conducting a PCAOB audit as well as the status of the potential private capital raise. H2B2 and RMG III also discussed RMG III’s upcoming shareholders meeting to approve an
extension of RMG III’s deadline to complete a business combination, as well as the terms of a third letter of intent.
On January 3, 2023, RMG III and H2B2 executed a final form of a third
letter of intent (the “January LOI”). The January LOI outlined key terms for a potential business combination between RMG III and H2B2, including:
•
|
Purchase equity price. RMG III derived a purchase equity price of $500,000,000. The
purchase equity price would be revisited after a minimum of $15,000,000 of new capital raised by H2B2 through a private capital raise, with the aim of an upward adjustment by a 5% to 10% premium to the amount of the post-money
calculation of the private capital raise. Such private capital raise was expected to raise up to $200,000,000 in equity commitments;
|
•
|
Earnout Shares. Consistent with the terms of the November LOI and the December LOI, an
additional 10,000,000 earnout shares would be issued to H2B2’s existing stockholders if the share price of the combined company met certain price targets;
|
•
|
Vesting of founder shares. RMG III Class B Ordinary Shares would vest in the combined
company pursuant to a vesting schedule based on the share price of the combined company meeting certain price targets;
|
•
|
Private capital raise. The consummation of the potential business combination would be
conditioned upon the completion by H2B2 of the private capital raise;
|
•
|
Sponsor lock-up agreement. A lock-up agreement would be entered into by the Sponsor
replicating the lock-up in effect relating to the RMG III Class B Ordinary Shares as of the date of the Initial Public Offering;
|
•
|
H2B2 stockholders lock-up agreement. Lock-up agreements would be entered into by
certain H2B2 Stockholders, subject to customary exceptions and registration rights, whereby shares held by certain H2B2 Stockholders at the closing of the proposed business combination would be released from lock-up 180 days after the
closing of the proposed business combination;
|
TABLE OF CONTENTS
•
|
Management. Senior management of H2B2 would continue to serve in their existing
positions in the combined entity, and the CEO of the combined entity would be Mr. Anselmo Andrade Fernández de Mesa;
|
•
|
Board composition. Non-independent directors of the combined company would be appointed
by H2B2, all but one independent director would be initially proposed by H2B2, and one independent director would be initially proposed by RMG III; and
|
•
|
Exclusivity. Each of RMG III and H2B2 agreed to an exclusivity term of 90 days
following the execution of the January LOI, at the end of which the January LOI would be automatically extended for 30-day terms unless advance notice to terminate was given by either party prior to the expiration of the relevant 30-day
term. During the exclusivity period, H2B2 agreed not to initiate, solicit, seek, negotiate or accept any proposal or offer or enter into or consummate any merger, consolidation, liquidation, dissolution, recapitalization,
reorganization, amalgamation, business combination or similar transactions (including a de-SPAC transaction) other than with RMG III, and RMG III agreed not to initiate, solicit, seek, negotiate or accept any proposal or offer or enter
into or consummate any de-SPAC transaction with a target other than H2B2 or its affiliates.
|
On January 11, 2023, RMG III held an extraordinary general meeting of
RMG III shareholders, at which its shareholders approved the proposal to amend and restate RMG III’s Amended and Restated Memorandum and Articles of Association to extend the date by which RMG III must consummate an initial business combination
from February 9, 2023 to May 9, 2023 and to allow RMG III, without another shareholder vote, to elect to further extend the date to consummate a business combination up to three times by an additional month each time after such extended date,
for a total of up to six months, to August 9, 2023, if RMG III had entered into a definitive business combination agreement. As a result of the redemptions of RMG III Class A Ordinary Shares in connection with the extension vote, 918,402 RMG
III Class A Ordinary Shares remained outstanding.
Between January 11, 2023 and January 13, 2023, following the approval
by RMG III shareholders of the Extension and the Extension Amendment, representatives of RMG III and H2B2 held a number of meetings to discuss, among other things, the results of redemptions by RMG III shareholders and the potential impact on
capital requirements for the business combination, the proposed terms of the potential business combination and transaction structure, and business and financial due diligence matters, such as project pipeline and customer backlog, H2B2’s
business development strategy, H2B2’s capital requirements and employee-related information.
On January 16, 2023, representatives of RMG III met with
representatives of Cohen, to provide an update on progress of the potential business combination with H2B2.
Also on January 16, 2023, representatives of RMG III had a call with
representatives of Arup Group, an engineering, sustainability, and design consulting firm (“Arup”), to discuss the preliminary draft report that Arup had prepared in connection with a prior potential
project financing relating to H2B2.
Between January 17, 2023 and January 19, 2023, RMG III and H2B2 held
a number of meetings to discuss H2B2’s potential business opportunities and project pipeline, including H2B2’s SoHyCal project in Fresno, California.
On January 20, 2023, Messrs. Kassin and Jones of RMG III visited
H2B2’s plant relating to the SoHyCal project in Fresno, California, as part of RMG III’s business diligence of H2B2’s operations.
On January 24, 2023, BCW and H2B2 entered into an engagement letter,
pursuant to which, among other things, H2B2 formally engaged BCW to act as placement agent in connection with the Capital Raise Transaction, and also agreed to pay BCW a cash fee equal to 4.5% of the gross proceeds actually received by H2B2 in
connection with the Capital Raise Transaction. See section titled “Certain Relationships and Related Party Transactions—RMG III—BCW Engagement Letter” for further information.
On January 27, 2023, a legal due diligence session via
videoconference was held. Representatives of Skadden, RMG III, PLL, Latham and H2B2 attended the meeting. Skadden discussed with H2B2 a list of high-level preliminary due diligence questions based on Skadden’s and PLL’s preliminary review of
the documents made available in the virtual data room and other diligence-related items.
Between January 30, 2023 and January 31, 2023, RMG III held two
meetings, during which it discussed updates with respect to H2B2, H2B2’s project pipeline and H2B2 customer backlog. In addition, RMG III also
TABLE OF CONTENTS
discussed the potential scope of Arup’s role in connection with the potential
business combination and its engagement by H2B2 to prepare a commercial vendors’ due diligence report in connection with the Capital Raise Transaction, a general status update of the potential business combination, and overall timeline to
complete a more comprehensive due diligence exercise.
On February 2, 2023, representatives of Skadden met with
representatives of Latham via videoconference to discuss certain process matters regarding the preparation of definitive transaction documents, legal due diligence, regulatory approvals required in connection with the potential business
combination, preparation and timeline of the registration statement on Form S-4 to be prepared in connection with the potential business combination, and related work streams. The group identified the immediate work deliverables and expected
timeline for the definitive transaction documents, and agreed to meet on a regular basis to review progress.
On February 3, 2023 and February 7, 2023, Skadden, on behalf of RMG
III, sent two extensive lists of questions and document requests arising from a preliminary review of the documentation made available in the virtual data room. Thereafter, Skadden circulated additional questions to H2B2 on a regular basis.
H2B2 addressed these questions, provided responses and uploaded supporting materials to the virtual data room on a rolling basis. Between February 2023 and May 2023, representatives of Skadden and PLL, on behalf of RMG III, and representatives
of Latham, on behalf of H2B2, had extensive correspondence regarding follow-up questions and requests arising from documents that H2B2 continued to make available to the virtual data room, and other matters arising over the course of Skadden’s
and PLL’s due diligence reviews.
On February 10, 2023, representatives of Skadden met with
representatives of Latham via videoconference to discuss the structure of the business combination based on tax considerations. On February 17, 2023, Latham shared a preliminary structure presentation depicting two alternative structures and
describing the U.S. and Spanish tax implications for each structure. Between February 2023 and March 2023, representatives of Skadden and Latham maintained ongoing correspondence regarding the proposed structure of the business combination and
revised and exchanged drafts of the structure presentation. The transaction structure ultimately pursued was determined based on tax considerations, including (i) the tax-free treatment of the share exchange from a U.S. perspective and (ii)
Spanish tax considerations.
On February 28, 2023, H2B2 entered into an engagement letter with
Natixis, pursuant, to which, among other things, H2B2 formally retained Natixis to act as exclusive co-placement agent, together with BCW, in connection with the Capital Raise Transaction, and agreed to pay Natixis a cash fee equal to 2.5% of
the gross proceeds actually received by H2B2 in connection with the Capital Raise Transaction. Further, if the gross proceeds actually received by H2B2 in connection with the Capital Raise Transaction were equal to or higher than $50,000,000
and the pre-money valuation of H2B2 was equal to, or higher, than $50,000,000, Natixis would be entitled to an additional cash fee of equal to 0.05% times the pre-money valuation of H2B2.
Throughout the second half of January 2023 and until the second half
of February 2023, RMG III and H2B2 held frequent check-in calls to discuss updates with respect to the potential business combination, the related definitive documentations, due diligence matters, which check-in calls were from time to time,
and as needed, attended by RMG III’s and H2B2’s respective legal advisors.
On March 2, 2023, BCW and H2B2 entered into an amendment to the
engagement letter, dated January 24, 2023, which, among other things, reflected that BCW would be acting on a co-exclusive basis as co-placement agent with Natixis in connection with the Capital Raise Transaction, and included a revised
compensation arrangement to align with the fee arrangements in Natixis’ engagement letter, as further described in the paragraph above, such that H2B2 would pay BCW a cash fee equal to 2.5% of the gross proceeds actually received by H2B2 in
connection with the Capital Raise Transaction. In addition, and similar to the fee arrangement with Natixis in its engagement letter described above, if the gross proceeds actually received by H2B2 in connection with the Capital Raise
Transaction were equal to or higher than $50,000,000 and the pre-money valuation of H2B2 was equal to, or higher, than $50,000,000, BCW would be entitled to an additional cash fee of equal to 0.05% times the pre-money valuation of H2B2. See
section titled “Certain Relationships and Related Party Transactions—RMG III—BCW Engagement Letter” for further information.
On March 7, 2023, representatives of RMG III and H2B2 had a meeting
with a representative of an investment bank to discuss potential financing structures for the combined company resulting from the proposed business combination. On March 23, 2023 representatives of RMG III and H2B2 had a meeting with a
TABLE OF CONTENTS
representative of the equity research group of the same investment bank in which the
research analyst presented the manner in which such research group prepares and publishes research for de-SPAC entities.
On (i) March 22, 2023, representatives of RMG III, Skadden, H2B2 and
Latham met via videoconference, and on (ii) April 5, 2023, representatives of Latham, on behalf of H2B2, and representatives of Skadden, on behalf of RMG III, to discuss the period of the financial projections prepared by H2B2 to be presented
to the RMG III Board and to be included in the registration statement.
On March 25, 2023, representatives of Skadden, on behalf of RMG III,
emailed representatives of Latham, on behalf of H2B2, an initial draft of the Merger Agreement based on the terms of the January LOI and the subsequent negotiations between H2B2 and RMG III. The final documentation, including with respect to
mechanics relating to the treatment in the Merger of certain outstanding securities of H2B2 and RMG III, the representations and warranties of each party, restrictions on the conduct of H2B2’s business between signing and closing, obligations
of the parties with respect to delivery of required approvals, certain conditions to closing, termination rights of the parties, provisions related to determination of the consideration to shareholders, and certain other terms and conditions,
the details of which were not fully addressed in the January LOI, required additional negotiation by the parties.
Between February 2023 and March 2023, in the context of its financial
due diligence, RMG III received drafts of confidential information memoranda with respect to H2B2 that were prepared by Natixis and BCW, which memoranda also formed the basis of the final confidential information memorandum that was distributed
to potential capital raise investors in connection with the Capital Raise Transaction by H2B2 on April 17, 2023.
On April 7, 2023, representatives of Latham, on behalf of H2B2,
emailed representatives of Skadden, on behalf of RMG III, a revised draft of the Merger Agreement. From April 7, 2023 to May 9, 2023, RMG III, H2B2, Skadden, on behalf of RMG III, and Latham, on behalf of H2B2, negotiated the terms of the
Merger Agreement, revising and exchanging multiple advanced drafts of the Merger Agreement.
On April 14, 2023 and April 16, 2023, RMG III and H2B2 held
further meetings to discuss, among other things, the equity valuation in the context of the Capital Raise Transaction and a potential premium to the post-money valuation of the Capital Raise Transaction in the event that at least $15,000,000
of proceeds were raised, and the latest updates to the Ardachon Proceedings, including the two offers that H2B2 submitted on April 10, 2023 for Ardachon’s shares of H2B2 Common Stock). The parties also discussed, as it related to the proposed
Merger Agreement, the calculation of the closing date purchase price, and RMG III’s potential reimbursement of expenses in the event the proposed Merger Agreement was terminated in certain scenarios. In addition, RMG III and H2B2 also
discussed the potential waiver of the deferred underwriting commissions payable by RMG III to BofA Securities, Inc. and Barclays Capital Inc., as well as RMG III’s proposal relating to the amendment to the conversion ratio of the RMG III
Private Placement Warrant and the RMG III Public Warrants.
On April 16, 2023 and April 17, 2023, BofA Securities, Inc. and
Barclays Capital Inc., respectively, agreed to waive their respective deferred underwriting commissions which were payable by RMG III in connection with the Initial Public Offering.
On April 24, 2023, the RMG III Board held a meeting via
videoconference with representatives from Skadden present where the attendees provided updates to the RMG III Board on status of negotiations and work streams, outstanding items relating to the proposed Merger Agreement, including the closing
date purchase price mechanism, updates with respect to the Capital Raise Transaction, a general update with respect to the Ardachon Proceedings, H2B2’s project pipeline and other H2B2-related topics, such as H2B2 technology, products and the
current H2B2 regulatory landscape.
On April 26, 2023, representatives of Latham, on behalf of H2B2,
emailed to representatives of Skadden, on behalf of RMG III, initial drafts of the Registration Rights Agreement, the Lock-Up Agreement and the Sponsor Support Agreement. Pursuant to the Registration Rights Agreement, RMG III will agree to
register for resale, pursuant to Rule 415 under the Securities Act, certain shares of Surviving Corporation Common Stock and other equity securities of the Surviving Corporation that are held by the parties from time to time. Pursuant to the
Lock-Up Agreement, the parties thereto, including the Sponsor and H2B2 Stockholders, agree to restrict the transfer of their Surviving Corporation Common Stock and other equity securities of the Surviving Corporation following the Closing.
Pursuant to the Sponsor Support Agreement, the Sponsor would agree to, among other
TABLE OF CONTENTS
things, vote in favor of the Merger Agreement and the transactions contemplated
thereby. During the following weeks, the parties negotiated the terms of the Registration Rights Agreement, the Lock-Up Agreement and the Sponsor Support Agreement, exchanging multiple drafts prior to finalization of the agreements on May 9,
2023. See the sections titled “Other Agreements—Registration Rights Agreement”, “Other Agreements—Sponsor Support Agreement” and “Other Agreements—Lock-Up Agreement” for more information.
On April 27, 2023, representatives of RMG III, H2B2, Skadden and
Latham met via videoconference to discuss outstanding items relating to the proposed Merger Agreement and other transaction-related items.
On May 2, 2023, the RMG III Board held a meeting via videoconference,
with representatives from Skadden present. At this meeting, representatives of Skadden gave a presentation on transaction structuring and key provisions of the Merger Agreement. Discussions relating to the proposed terms of the Merger Agreement
followed, including questions from the RMG III Board regarding such terms of the Merger Agreement.
On May 5, 2023, the RMG III Board held a meeting via videoconference,
with representatives from Skadden present. Representatives of Skadden presented a further update to the RMG III Board on the status of negotiations and revisions of the key provisions of the proposed Merger Agreement. Discussions relating to
the revised terms followed, including questions from the RMG III Board regarding the revisions and deviations from the terms that were previously presented to and reviewed by the RMG III Board.
On May 5, 2023, May 6, 2023 and May 7, 2023, representatives from RMG
III, H2B2, Skadden and Latham met over videoconference and discussed the several revisions to the proposed Merger Agreement, the related outstanding items and the expected timing for the execution of definitive transaction documents.
Over the course of the several exchanges between April 7, 2023 to May
9, 2023 relating to the terms of the Merger Agreement, the parties negotiated and agreed the following terms deviating from and adding to certain material commercial terms outlined in the January LOI:
•
|
Adjustment of RMG III Warrants’ exchange ratio. In order to further incentivize H2B2
Stockholders to approve the Business Combination, RMG III and H2B2 agreed that the RMG III Warrants’ exchange ratio would be adjusted such that, following the Business Combination, each RMG III Warrant would be exercisable for 0.075
shares of Surviving Corporation Common Stock;
|
•
|
H2B2 termination right. RMG III and H2B2 agreed that H2B2 would have a right to
terminate the Merger Agreement in the event that certain Capital Raise Investors participating in the Capital Raise Transaction object to the Merger, in exchange for the payment of a reimbursement fee amounting to $3,300,000 by H2B2 to
RMG III to cover costs and expenses incurred by RMG III relating to efforts and resources expended and opportunities foregone while negotiating the Merger Agreement;
|
•
|
Closing date purchase price. After discussions between RMG III and H2B2, the parties
agreed to a base purchase price of $750,000,000 to be adjusted upwards or downwards on a dollar-for-dollar basis:
|
i.
|
if H2B2 raises capital in an equity or equity-linked Capital Raise Transaction, an amount equal to the difference between the
base purchase price and the actual pre-money valuation in the Capital Raise Transaction, plus the amount raised in the Capital Raise Transaction, plus $2,000,014 which amount accounts for exercise of H2B2 stock options by the H2B2
chairperson, Mr. Antonio Vázquez at the Closing; and
|
ii.
|
If H2B2 raises capital in a debt raise transaction (other than in a transaction solely involving traditional senior debt) an
amount equal to the difference between the base purchase price and the actual debt transaction pre-money valuation, plus the $2,000,014;
|
in the case of each of (i) and (ii), the resulting purchase price to be increased by
10% if the amount raised in the Capital Raise Transaction exceeds $15,000,000;
•
|
No earnout shares. No earnout shares would be issued to H2B2 Stockholders;
|
•
|
No founder shares' vesting schedule. After discussions between RMG III and
H2B2, RMG III agreed to accept H2B2's proposal on the vesting of the Founder Shares. At Closing, only a number of shares of Domesticated RMG III Class B Stock equal to the Founder Consideration Shares would convert into Surviving
Corporation Common Stock with the remainder of such shares of Domesticated RMG III Class B Stock being cancelled with no vesting schedule; and
|
TABLE OF CONTENTS
•
|
Observer on the Surviving Corporation’s board of directors: After discussions between
RMG III and H2B2, the parties agreed that RMG III will have the right, for a one-year period following the closing of the transaction, to appoint an observer to the Surviving Corporation’s board of directors in lieu of one independent
director.
|
See the section titled “The Merger Agreement” for more information.
On May 5, 2023, representatives of Skadden, on behalf of RMG III,
emailed representatives of Latham, on behalf of H2B2, an initial draft of the H2B2 Support Agreement, pursuant to which certain shareholders of H2B2 would agree to, among other things, vote in favor of the Merger Agreement and the transactions
contemplated thereby. During the following days, the parties negotiated the terms of the H2B2 Support Agreement exchanging multiple drafts prior to finalization of the agreement on May 9, 2023. See the section entitled “Other Agreements —H2B2 Support Agreement” for more information.
On May 7, 2023, the H2B2 Board held a meeting to review and approve
the terms of the business combination with RMG III and the substantially final versions of the Merger Agreement and the related ancillary documents.
On May 8, 2023, the RMG III Board, which included Messrs. Carpenter,
Mancini, and Kassin, held a meeting via videoconference, with Mr. Sima, Mr. Smith and Mr. Jones, and representatives from Skadden present. Representatives from Skadden presented an update to the RMG III Board of the revisions to the terms of
the Merger Agreement and the related ancillary documents. Discussion of the proposed terms followed, including questions from the RMG III Board regarding the terms of the proposed Merger Agreement that were previously provided to and reviewed
by the RMG III Board. After extended deliberation and discussion, the directors of RMG III present at the meeting unanimously determined that the Merger Agreement and the related ancillary documents were advisable and in the best interests of
RMG III and RMG III shareholders, approved the execution by RMG III of the Merger Agreement and the related ancillary documents and the transactions contemplated thereby, and recommended the approval by RMG III shareholders of the Merger
Agreement and the related ancillary documents and the transactions contemplated thereby. The RMG III Board also approved the extension of RMG III’s deadline to consummate a business combination by one additional month from May 9, 2023 to June
9, 2023, the first out of three one-month extensions up to August 9, 2023.
During the days leading up to May 9, 2023, representatives of Skadden
and representatives of Latham worked to finalize the drafts of the Merger Agreement, the ancillary documents to the Merger Agreement, which includes the Company Support Agreement, the Sponsor Support Agreement and the RMG III and H2B2
disclosure schedules.
On May 9, 2023, the proposed final drafts of the Merger Agreement,
the ancillary documents to the Merger Agreement, the Company Support Agreement, the Sponsor Support Agreement and the RMG III and H2B2 disclosure schedules were circulated to all parties.
Following the meeting of the H2B2 Board on May 7, 2023 and the
meeting of the RMG III Board on May 8, 2023, RMG III and H2B2 executed and delivered the Merger Agreement on May 9, 2023. On the same day, the Sponsor Support Agreement and the H2B2 Support Agreement were also executed by the parties thereto.
See the section titled “Proposal No. 1—The Business Combination Proposal” for more information.
On the evening of May 10, 2023, after the end of trading of the RMG
III Class A Ordinary Shares on Nasdaq, RMG III filed a Form 8-K announcing the execution of the Merger Agreement and the extension of RMG III’s deadline to consummate a business combination by one additional month from May 9, 2023 to June 9,
2023, the first out of three one-month extensions up to August 9, 2023.
On the evening of May 11, 2023, after the end of trading of the RMG
III and H2B2 Class A Ordinary Shares on Nasdaq, RMG III issued a joint press release publicly announcing the execution of the Merger Agreement and RMG III filed a Form 8-K summarizing the terms of the Merger Agreement, the Company Support
Agreement, the Sponsor Support Agreement as well the other ancillary documents to the Merger Agreement, and attached as exhibits to the Form 8-K copies of the Merger Agreement, the Company Support Agreement, and the Sponsor Support Agreement.
On August 4, 2023, RMG III held an extraordinary general meeting
pursuant to which RMG III shareholders approved amending and restating RMG III’s then-current amended and restated memorandum and
TABLE OF CONTENTS
articles of association to extend the date by which RMG III is required to
consummate a business combination from August 9, 2023 to February 9, 2024. RMG III shareholders approved the Second Extension Amendment and, as such, RMG III has until February 9, 2024 to consummate a business combination. On August 4, 2023,
the RMG III shareholders approved the Second Extension Amendment, amending the RMG III Governing Documents, notice of which was filed with the Cayman Islands Registrar of Companies. After the redemption of RMG III Class A Ordinary Shares in
connection with the extension vote, 635,778 RMG III Class A Ordinary Shares remained outstanding.
The RMG III Board’s Reasons for Approval of the Merger
The RMG III Board, in evaluating the Business Combination, consulted
with Skadden, legal counsel to RMG III, and other advisors. In reaching its conclusion (i) that the Merger Agreement and the transactions contemplated thereby are advisable and in the best interests of RMG III and RMG III shareholders and (ii)
to recommend that RMG III shareholders adopt the Merger Agreement and approve the Business Combination, the RMG III Board considered and evaluated a number of factors, including, but not limited to, the factors discussed below. In light of the
number and wide variety of factors considered in connection with its evaluation of the Business Combination, the RMG III Board did not consider it practicable to, and did not attempt to, quantify or otherwise assign relative weights to the
specific factors that it considered in reaching its determination and supporting its decision. The RMG III Board viewed its decision as being based on all of the information available and the factors presented to and considered by it. In
addition, individual directors may have given different weight to different factors. This explanation of RMG III’s reasons for the Business Combination and all other information presented in this section is forward-looking in nature and,
therefore, should be read in light of the factors discussed under “Cautionary Note Regarding Forward-Looking Statements.”
The RMG III Board did not obtain a third-party valuation or
fairness opinion in connection with its determination to approve the Business Combination. RMG III is not required to obtain an opinion from an independent investment banking firm that is a member of FINRA or from another independent firm
that the price it is paying is fair to RMG III from a financial point of view. The members of RMG III’s management team and the RMG III Board are well qualified to evaluate the transaction with H2B2. They have extensive transactional
experience, including substantial experience in evaluating the operating and financial merits of companies from a wide range of industries, including companies similar to H2B2. RMG III’s management team and the RMG III Board include
individuals with decades of experience across industries, at both the management and board level. In particular, the RMG III management team has decades of experience with mergers and acquisitions, including prior de-SPAC business
combinations. See “Management of RMG III — Directors and Executive Officers” for additional information on RMG III’s management’s and the RMG III Board’s experience and qualifications,
including the involvement of certain members of RMG III’s management and of the RMG III Board with the completed business combinations of three prior special purposes acquisition companies: RMG Acquisition Corp. in its business combination
with Romeo Systems, Inc., Property Solutions Acquisition Corp. in its business combination with Faraday Future Intelligent Electric Inc. and RMG Acquisition Corp. II in its business combination with ReNew Power Private Limited. The RMG III
Board concluded that its experience and backgrounds, together with the experience of RMG III’s management and its advisors, enabled them to perform the necessary analyses to make determinations regarding the Business Combination, and
therefore they decided that an opinion, from an independent investment banking firm or other independent entity that commonly renders valuation opinions, that the Business Combination is fair to RMG III from a financial point of view was not
necessary.
RMG III’s management, including its directors and advisors, has many
years of experience in both operational management and investment and financial management and analysis and, in the opinion of the RMG III Board, was suitably qualified to conduct the due diligence and other investigations and analyses required
in connection with the search for a business combination partner. A detailed description of the experience of RMG III’s executive officers and directors is included in the section of this proxy statement/prospectus entitled “Management of RMG III — Directors and Executive Officers.”
The RMG III Board considered a number of factors pertaining to the
Business Combination as generally supporting its decision to enter into the Merger Agreement and the transactions contemplated thereby, including, but not limited to, the following material factors:
•
|
Early mover advantage in high-growth hydrogen markets supported by global
regulatory tailwinds. The green hydrogen market has the potential to reach ~$10 trillion by 2030, and it is supported by
|
TABLE OF CONTENTS
regulators globally as evidenced by the IRA, the Green Industrial Plan in the European
Union, and hydrogen roadmaps discussed by a number of other countries. RMG III’s Board believed that H2B2 has a first mover advantage that positions them as an experienced competitor in a nascent industry in need of expertise across the value
chain, from project development to operations and maintenance. RMG III’s Board also believed that the Company’s favorable positioning is expected to allow H2B2 to grow rapidly with the market.
•
|
Vertically integrated business model. RMG III’s Board believed that
H2B2 approaches the green hydrogen market by leveraging its expertise across the value chain, including technological development, project development, electrolyzer manufacturing, EPC services, and operations and maintenance. RMG III’s
Board also believed that the green hydrogen market is in need of holistic solutions due to the lack of end-market maturity and internal customer know-how and therefore H2B2 is well positioned to address the key hurdle to customer
adoption of green hydrogen.
|
•
|
Demonstrated success in generating customer demand. RMG III’s Board
believed that H2B2 has evidenced its competitive market positioning with 82 MWs of projects under construction and recently awarded, as well as key customer partnerships, such as with Ecopetrol. The Company’s impressive pipeline
indicates management’s ability to provide tailored solutions to address key customer selection criteria. RMG III’s Board believed that H2B2’s early mover advantage in a growing market, paired with its vertically integrated solutions, is
expected to lead to further project awards.
|
•
|
Highly Experienced Management Team Ready to Commercialize Market
Opportunity. The RMG III Board believed that H2B2 has an experienced leadership team with a track record of successfully developing and deploying cutting edge technologies from product inception to successful market launch.
|
•
|
Results of Due Diligence Conducted by RMG III. The RMG III Board
considered the scope of the due diligence examinations conducted by RMG III’s management team and outside advisors and evaluated the results thereof and information available to it related to H2B2, including:
|
○
|
extensive virtual meetings and calls with H2B2’s management team regarding its
operations and projections and the proposed Business Combination;
|
○
|
in-person meetings at H2B2’s locations; and
|
○
|
review of materials related to H2B2 made available, including with respect to financial,
accounting, tax, legal (including corporate governance, indebtedness, real property, intellectual property, executive compensation and labor, anti-trust/regulatory and litigation), industry, management background and technical due
diligence matters.
|
•
|
Terms of the Transaction Documents. The RMG III Board reviewed and
considered the terms of the Merger Agreement and the other related agreements, including the parties’ conditions to their respective obligations to complete the transactions contemplated therein and their ability to terminate the Merger
Agreement. See the sections entitled “The Merger Agreement” and “Other Agreements” for detailed discussions of the terms and conditions of these
agreements.
|
•
|
Redemption Rights Available for Public Shareholders. If the Business
Combination closes, the Public Shareholders may have all or any portion of their Public Shares redeemed for cash, regardless of whether they vote for or against the Business Combination Proposal. This redemption option will allow each
Public Shareholder to choose whether or not to invest in H2B2. This is an important decision, particularly given certain post-signing developments as noted in the negative factors, uncertainties and risks described below. If the
Business Combination fails to close, this redemption option will not be available until RMG III finds and closes an alternative transaction in the future, which could take substantial time and may never occur. Given the state of the
market, there are a more limited number of targets available for SPACs, and it will be more difficult for RMG III to identify and close an alternative transaction.
|
•
|
Consideration. The RMG III Board has substantial experience in
evaluating the operating and financial merits of companies from a wide range of industries and their experience and backgrounds, together
|
TABLE OF CONTENTS
with the experience and expertise of RMG III’s advisors, enabled them to make the
necessary analyses and determination that consideration being paid in the Business Combination, which amount was negotiated at arms-length, was in the best interests of RMG III and RMG III shareholders and appropriately reflected H2B2’s value.
•
|
No Better Alternatives. The RMG III Board believed, after
a thorough review of other business combination opportunities reasonably available to RMG III, that the proposed Business Combination represented the best potential business combination for RMG III that was currently available in the
market at the time the Business Combination announced.
|
•
|
Growth opportunities through capital investment. The RMG
III Board believed that H2B2 had prospects of benefiting from additional capital investment, particularly through the Capital Raise Transaction.
|
The RMG III Board also considered a variety of uncertainties and
risks and other potentially negative factors concerning the Business Combination, including, but not limited to, the following:
•
|
Limited Management Experience in Operating a Public Company. H2B2’s
management has limited experience in operating a U.S. public company. The requirements of being a public company may strain H2B2’s resources and divert management’s attention, and the increases in legal, accounting and compliance
expenses that will result from the Merger may be greater than H2B2 anticipates.
|
•
|
Uncertainty Regarding Post-Closing Trading Price and Float. The RMG
III Board believed that there is a meaningful risk that shares of Surviving Corporation Common Stock may trade below $10.00 per share immediately post-Closing, and that a substantial percentage of holders of Public Shares may choose to
redeem their shares rather than remain invested in H2B2.
|
•
|
Valuation Depends on Future Performance. The valuation of H2B2
agreed to in the Business Combination depended in large part on H2B2’s performance in calendar years 2023 and 2024. There is a risk that, if H2B2 does not perform as was expected, the valuation used in the Business Combination may not
reflect the fair market value of H2B2 at the time of Closing.
|
•
|
Limitations of Due Diligence. Although RMG III and its outside
advisors conducted due diligence on H2B2, the scope of review was limited by the time available, the materials provided by H2B2 and the inherent uncertainties in any due diligence process. Accordingly, there can be no assurance that RMG
III discovered all material issues that may be present with regard to H2B2’s business, or that issues outside of RMG III’s or H2B2’s control will not later arise.
|
•
|
Benefits not achieved. The RMG III Board considered the risk that
the potential benefits of the Business Combination may not be fully achieved or may not be achieved within the expected timeframe.
|
•
|
No Third-Party Valuation. The RMG III Board considered the risk that
it did not obtain an opinion from an independent investment banking firm or other independent entity that commonly renders valuation opinions in connection with the Business Combination. As disclosed in RMG III’s IPO Registration
Statement, the RMG III Board is required to obtain an opinion, from an independent investment banking firm or other independent entity that commonly renders valuation opinions, that the Business Combination is fair to RMG III from a
financial point of view only if the Business Combination is with a target that is affiliated with the Sponsor or RMG III’s officers or directors. Because H2B2 is not an affiliate of the Sponsor or RMG III’s officers or directors, RMG
III is not required to obtain such an opinion for the proposed Business Combination.
|
•
|
Liquidation of RMG III. The RMG III Board considered the risks and
costs to RMG III if the Business Combination is not completed, including the risk of diverting management focus and resources from other businesses combination opportunities, which could result in RMG III being unable to effect a
business combination by the Completion Window and being forced to liquidate.
|
•
|
Exclusivity. The RMG III Board considered the fact that the Merger
Agreement includes an exclusivity provision that prohibits RMG III from soliciting other business combination proposals and restricts RMG III’s ability to consider other potential business combinations so long as the Merger Agreement is
in effect.
|
TABLE OF CONTENTS
•
|
Post-Business Combination Corporate Governance. The RMG III Board
considered the corporate governance provisions of the Merger Agreement and the proposed material provisions of the Proposed Organizational Documents and the effect of those provisions on the governance of the company post-Business
Combination. Given that the existing stockholders of H2B2 will collectively control shares representing a majority of the outstanding shares of Surviving Corporation Common Stock upon completion of the Business Combination, the existing
stockholders of H2B2 may be able to elect future directors and make other decisions (including approving certain transactions involving the Surviving Corporation and other corporate actions) without the consent or approval of any of RMG
III’s current shareholders, directors or management team. See the sections entitled “The Merger Agreement,” “Management of the Surviving Corporation Following
the Business Combination” for detailed discussions.
|
•
|
Closing Conditions. The RMG III Board considered the fact that
completion of the Business Combination is conditioned on the satisfaction or waiver of certain closing conditions that are not within RMG III’s control.
|
•
|
Litigation. The RMG III Board considered the possibility of
litigation challenging the Business Combination or that an adverse judgment granting permanent injunctive relief could indefinitely delay consummation of the Business Combination.
|
•
|
Potential Conflicts. The RMG III Board considered the potential
additional or different conflicts of interests of RMG III’s directors, executive officers, the Sponsor and its affiliates, as described in the sections entitled “—Interests of RMG III’s Directors,
Executive Officers and the Sponsor and its Affiliates in the Business Combination” and “Certain Relationships and Related Party Transactions.” The RMG III Board, including RMG III’s
independent directors, with their outside counsel, reviewed and considered these interests during the negotiation of the Business Combination and in evaluating and approving, as members of the RMG III Board, the Merger Agreement and the
transactions contemplated thereby, including the Merger.
|
•
|
Fees and Expenses. The RMG III Board considered the fees and
expenses associated with completing the Business Combination.
|
•
|
Other Risks. The RMG III Board considered various other risks
associated with the Business Combination, the business of RMG III and the business of H2B2 described under the section entitled “Risk Factors.”
|
The RMG III Board concluded that the potential benefits that it
expected RMG III and RMG III shareholders to achieve as a result of the Business Combination outweighed the potentially negative factors associated with the Business Combination. Accordingly, the RMG III Board determined that the Merger
Agreement and the Business Combination were advisable and in the best interests of RMG III and RMG III shareholders.
Certain Unaudited H2B2 Prospective
Financial Information
Prior to approval by the RMG III Board of the transaction and
execution of the Business Combination and related agreements, H2B2 provided RMG III with internally prepared forecasts dated April 2023, including for calendar years 2023 and 2024. The prospective financial information was not prepared with a
view towards compliance with published guidelines of the SEC or the guidelines established by the American Institute of Certified Public Accountants for preparation and presentation of prospective financial information of GAAP with respect to
forward looking financial information.
H2B2 does not as a matter of course make public long-term forecasts
or internal projections as to future performance, revenues, earnings or other operating results. The forecasts were initially prepared solely for internal use, capital budgeting and other management purposes. The forecasts are subject to change
and are susceptible to varying interpretations and the need for periodic revision based on actual experiences and business developments. The inclusion of the forecasted information should not be regarded as an indication that H2B2 or any other
recipient of this information considered, or now considers, it to be predictive of actual future results.
H2B2 prepared certain non-public financial forecasts based on
available information at the time of preparation and assumptions and estimates that it believed were reasonable at the time they were provided to
TABLE OF CONTENTS
RMG III. In preparing the forecast, H2B2’s management relied on a number of factors,
including formulating the numerous assumptions for the purposes of its preparation of such prospective financial and operational information, H2B2 has reviewed, analyzed and considered its current project pipeline, including its installed
projects, projects under construction, awarded projects and potential pipeline projects for 2023 and 2024 forecasts following a bottom-up approach, pricing, costs and investments based on its experience in bidding and developing projects and
electrolyzers, and contracts with equipment vendors and suppliers. The projections were prepared by H2B2’s management who are experienced in preparing such forecasts for project bids and building large energy EPC projects. The forecasts reflect
the consistent application of the accounting policies of H2B2 and should be read in conjunction with the accounting policies included in Note 2 - “Summary of Significant Accounting Policies and New Accounting Pronouncements” accompanying the
historical audited financial statements of H2B2 and included elsewhere in this proxy statement/prospectus.
The selected forecasted financial and operating information dated
April 2023 included in this proxy statement/prospectus was prepared in good faith by and is the responsibility of H2B2’s management. The forecasts were based on favorable market trends supporting the development of the hydrogen economy and the
achievability of identified pipeline projects, driven by proven capabilities and a leading management team. The forecasts do not take into account the effect of any failure of the Business Combination to be completed and should not be viewed as
accurate or continuing in that context.
H2B2 prepared its forecasts based on a variety of sources, including
inputs and market data from third-party data providers, work with external consultants and management’s experience in the hydrogen and broader renewable energy segment. These forecasts are based on a number of assumptions, including the
following assumptions that H2B2 management believed to be material:
•
|
Revenue growth forecasted in 2023 is mainly expected to come from projects under construction or awarded projects and revenue
growth forecasted in 2024 is also based on projects under construction or awarded projects as well as projects currently in the pipeline of identified opportunities, with H2B2’s Conventional Products expected to be the main near-term
revenue growth drivers, complemented by H2B2’s Integrated Products;
|
•
|
Bookings and market size (GW) growth based on H2B2’s bottom-up pipeline, including contracted projects and contracts under
discussion. H2B2’s pipeline is compromised solely of projects that H2B2 has identified and had at least preliminary discussions with the relevant counterparty about the scope of the project and expected services, bookings and timing,
among other things;
|
•
|
The growth of EPC and O&M services as projects under construction or awarded projects are begun or completed;
|
•
|
Increased investment in research and development to increase the efficiency of electrolyzers and increase breadth of the H2B2
product portfolio, including developing next-generation SOEC and AEM technologies;
|
•
|
Expanded spare parts inventory to meet PG requirements;
|
•
|
Expanded minority investments in projects developed by H2B2;
|
•
|
Increased investment in personnel, with a focus on business development, engineering and project development;
|
•
|
Receipt of government funds through additional grants, subsidies and awards; and
|
•
|
Improved economies of scale in general and administrative functions.
|
In making the foregoing assumptions, which imply a revenue compound
annual growth rate of 471% between 2022 and 2024, H2B2’s management relied on a number of factors, including:
•
|
As of April 2023, H2B2’s pipeline of identified opportunities consisted of more than 200 potential projects, with
approximately 13 of the projects being projects under construction or awarded projects;
|
•
|
For the year ended December 31, 2022, 100% of H2B2’s revenue was from H2B2’s Conventional Products and 0% of H2B2’s revenue
was from H2B2’s Integrated Products;
|
TABLE OF CONTENTS
•
|
92% of the revenue forecasted in 2023 is based on projects that are under construction or awarded projects;
|
•
|
Estimated new project revenue for fiscal years 2023 and 2024 is expected to be split 100% and 55.5% from H2B2’s Conventional
Products and 0% and 44.5% from H2B2’s Integrated Products, respectively;
|
•
|
EPC revenue is forecasted on the expected CapEx cost of the renewable source, EPC costs of the hydrogen plant, plus a margin;
|
•
|
EPC revenue is expected to grow as Integrated Product projects are completed and H2B2 wins projects for solely EPC services;
|
•
|
O&M services revenue is expected to grow as new Conventional Product and Integrated Product projects are under
construction or installed, which H2B2 expects 75% of Conventional Products and 100% of Integrated Products projects will enter into O&M services contracts;
|
•
|
The average price per electrolyzer is expected to drop 5% annual over time until a unit prove of $750k per MW electrolyzer is
achieved, driven by economies of scale and technology improvements;
|
•
|
The establishment of regional manufacturing facilities in target markets throughout EMEA, the Americas and APAC;
|
•
|
An estimated green hydrogen demand outlook of 9.1 (MT) in 2030, annual electrolyzer installations of 85 GW in 2030, including an
expected boost in electrolyzer capacity from 2 GW worldwide to 242 GW in 2030, which would represent an 82% CAGR, and annual investment in electrolyzer deployment of $36 billion in 2030; and
|
•
|
Management forecasts for hydrogen industry growth.
|
Cost assumptions underlying the forecasts dated April 2023 were based
on management’s estimates of costs related to the operation of the business, including hydrogen production costs, guarantees during the construction phase to include coverage for costs, delays, and/or potential performance variances, capital
investment, operation, and maintenance costs, manufacturing costs and building additional manufacturing facilities, operating expenses, engineering, research and development, distribution, retail and service operating costs and general and
administrative costs associated with growing the H2B2 business. The cost assumptions were based on management’s two decades of hydrogen production, processing and technology development experience, including significant experience in building
large energy EPC projects, current supplier arrangements and the seven years of electrolyzer development and declining manufacturing costs as electrolysis technologies advance. The estimates also include assumptions on, among other things, the
price of commodities and other inputs, guarantees, wages, inflation, logistics and manufacturing costs, the costs of specialized equipment and components, research and development and manufacturing facilities costs. The cost of manufacturing
assumes, among other things, that H2B2 will increase manufacturing capacity 200% from 2022 to 2024, reaching 600 MW by 2024. The cost structure assumes, among other things, that electrolyzer technology will mature and that increased MWs will
drive a scale advantage and bring down the per MW cost as H2B2 gains operational efficiencies and improves leverage with suppliers. The cost estimates assume, among other things, that distribution will expand across the target markets
throughout EMEA, the Americas and APAC and includes the costs to build out the manufacturing footprint.
TABLE OF CONTENTS
The weight that H2B2 management gave of the foregoing
assumptions in preparing the H2B2 prospective financial information reflect the views of H2B2 management, and the Surviving Corporation does not anticipate that the foregoing metrics will be publicly reported on a go-forward basis. The
reasonableness of the foregoing assumptions was evaluated in context of prior performance, business and commercial diligence conducted by H2B2, H2B2’s current pipeline, and inputs and market data from third-party data providers. In
particular, with respect to the foregoing assumptions, H2B2 management considered that:
•
|
The ability to convert potential pipeline projects into projects under construction or awarded projects was based on H2B2’s
historical project conversion rate, the current stage of the process of each identified pipeline project and the expected growth in green hydrogen demand and annual electrolyzer installations;
|
•
|
The revenue split between H2B2’s Conventional Products and Integrated Products was based on H2B2’s estimated pipeline
projects that are under construction or awarded for 2023 and 2024; and
|
•
|
The growth in EPC services was based on management's estimates at the time, trended in pipeline projects, third party market
growth data and H2B2 diligence.
|
In determining the appropriate period to reference for historical
and expected figures, H2B2 management acknowledged that H2B2 had experienced significant business transformations over the past few years, including but not limited to significant growth in Conventional Products projects, entry into new
markets, new government grants, significant investment in manufacturing and technology capabilities, and expansion to new product offerings such as EPC and O&M services, among others. In addition, H2B2 has entered into several joint
ventures in recent years, and expects to enter into addition joint ventures in the future, which is expected to continue to drive H2B2’s growth. Accordingly, H2B2 determined that it was reasonable to use a continuation of historical main
factors affecting its results of operations from recent periods for the projections as those periods best reflect business performance after the business transformation and are inclusive of the initiatives that are underway.
Neither RSM US LLP nor any other independent accountant has compiled,
reviewed, examined, performed any other assurance procedures, or expressed any form of assurance with respect to the prospective financial information included in this proxy statement/prospectus. The report of RSM US LLP included in this proxy
statement/prospectus relates to H2B2’s historical audited financial statements and does not extend to the unaudited prospective financial information and should not be read to do so.
Prospective Financial Information as of April
2023
The following table presents the selected forecasted financial
information dated April 2023:
Revenue
|
|
|
$25.8
|
|
|
$114.0
|
Net loss
|
|
|
($11.5)
|
|
|
($8.9)
|
Adjusted EBITDA(1)
|
|
|
($11.9)
|
|
|
($10.1)
|
Further Adjusted EBITDA(2)
|
|
|
($2.7)
|
|
|
$2.8
|
(1)
|
Adjusted EBITDA is defined as net loss before interest and other expense, net, income tax expense, other income and
depreciation of long-lived asset. Please see the section titled “The Business Combination—Certain Unaudited H2B2 Prospective Financial Information—Non-GAAP Financial Measures”
|
(2)
|
Further Adjusted EBITDA is defined net loss before interest and other expense, net, income tax expense, other income,
depreciation of long-lived asset, and one-off expenses, and include grant funding and dividends from minority investments in projects. Please see the section titled “The Business Combination—Certain
Unaudited H2B2 Prospective Financial Information—Non-GAAP Financial Measures”
|
Updated Prospective Financial Information as of
June 2023
Following H2B2 management’s April 2023 preparation of financial
projections for 2023 and 2024 for the RMG III Board, as summarized on page
257 of this proxy statement/prospectus, H2B2 has continued to evaluate the assumptions used to prepare the financial projections
originally prepared for the RMG III Board. In June 2023, H2B2 further evaluated its financial projections in light of its operating and financial results to date as well as the developing trends set forth below and under “
H2B2 Management’s Discussion and Analysis of Financial Condition and Results of Operations—Main Factors Affecting our Results of Operations”.
TABLE OF CONTENTS
During the second quarter of 2023, H2B2 gained additional
visibility into its pipeline, including the status of projects under construction and awarded projects. Based on H2B2’s assessment of its pipeline, it has revised its projected revenue for 2023 and 2024, as set forth in the table below, to
account for delays in the completion of certain Conventional Product projects in 2023, that will also impact revenue in 2024. Additionally, H2B2’s projected revenue for 2024 was revised to reflect delays for certain Integrated Product
projects due to longer development and permitting processes. H2B2’s revised projection of revenue for 2023 and 2024 in turn results in a change in Net loss, Adjusted EBITDA and Further Adjusted EBITDA, as set forth in the table below.
Additionally, H2B2 has provided selected 2025 financial results to assist the RMG III Board in continuing to evaluate H2B2’s business, which have been prepared using the same sources and assumptions as the selected 2023 and 2024 financial
results.
The table below sets forth H2B2 revised projection for selected 2023
and 2024 financial results as of June 2023, as well as the selected 2025 financial results as of June 2023.
Revenue
|
|
|
$15.8
|
|
|
$78.4
|
|
|
$206.8
|
Net loss
|
|
|
($16.6)
|
|
|
($17.1)
|
|
|
$7.4
|
Adjusted EBITDA(1)
|
|
|
($17.1)
|
|
|
($17.8)
|
|
|
$8.6
|
Further Adjusted EBITDA(2)
|
|
|
($8.0)
|
|
|
($4.8)
|
|
|
$20.5
|
(1)
|
Adjusted EBITDA is defined as net loss before interest and other expense, net, income tax expense, other income and
depreciation of long-lived asset. Please see the section titled “The Business Combination—Certain Unaudited H2B2 Prospective Financial Information—Non-GAAP Financial Measures”
|
(2)
|
Further Adjusted EBITDA is defined net loss before interest and other expense, net, income tax expense, other income,
depreciation of long-lived asset, and one-off expenses, and include grant funding and dividends from minority investments in projects. Please see the section titled “The Business
Combination—Certain Unaudited H2B2 Prospective Financial Information—Non-GAAP Financial Measures”
|
Consistent with the projections originally prepared in April 2023,
H2B2 expects projects under construction and awarded projects to drive revenue growth in 2023, and projects under construction or awarded projects as well as projects currently in the pipeline of identified opportunities, with H2B2’s
Conventional Products expected to be the main near-term revenue growth drivers, complemented by H2B2’s Integrated Products to drive revenue growth in 2024 and 2025. Sourcing new projects involves lengthy discussions and challenging selection
process and once a project is awarded, converting the awarded project into a completed projects numerous risks and uncertainties. See “Risk Factors—The growth of our business depends upon sourcing new projects
and our ability to continue to take pipeline projects to completion.”
General
This summary of the forecasts is not being included in this proxy
statement/prospectus to influence your decision whether to vote in favor of any proposal presented at the Special Meeting but is being included because such forecasts were made available by H2B2’s management to RMG III’s management and the RMG
III Board. None of H2B2, RMG III or their respective affiliates, advisors, officers, directors, partners or representatives can give you any assurance that actual results will not differ from the forecasts, and none of them undertake any
obligation to update or otherwise revise or reconcile the forecasts to reflect circumstances existing after the date the forecasts were generated, including in respect of the potential impact of COVID-19 (or any escalation thereof), or to
reflect the occurrence of events that have taken place since the date the forecasts were generated or may take place in the future even in the event that any or all of the assumptions underlying the forecasts are shown to be in error, in each
case, except as may be required under applicable law. While presented with numerical specificity, these forecasts were based on numerous variables and assumptions known to H2B2 and RMG III at the time of preparation. These variables and
assumptions are inherently uncertain, and many are beyond the control of H2B2 and RMG III. Important factors that may affect actual results and cause the forecasts to not be achieved include, but are not limited to, risks and uncertainties
relating to the businesses of H2B2 (including its ability to achieve strategic goals, objectives and targets over applicable periods), industry performance, the competitive environment, changes in technology, general business and economic
conditions and other factors described or referenced under the sections entitled “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements” in this
proxy statement/prospectus. Various assumptions underlying the forecasts may prove to not have been, or may no longer be, accurate, and the inclusion of the forecasted information should not be regarded as an indication that the RMG III Board,
RMG III, H2B2 (or any of their respective
TABLE OF CONTENTS
affiliates, officers, directors, advisors or other representatives) or any other
recipient of this information considered, or now considers, it to be necessarily predictive of actual future results of Surviving Corporation or H2B2’s operations or results and should not be relied upon as such. The forecasts are subjective in
many respects. The forecasts may not be realized, and actual results may be significantly higher or lower than projected in the forecasts. The forecasts cover multiple years and such information by its nature becomes less predictive with each
successive year. The forecasts also reflect assumptions as to certain business strategies or plans that are subject to change. As a result, the inclusion of the forecasts in this proxy statement/prospectus should not be relied on as “guidance”
or otherwise predictive of actual future events, and actual results may differ materially from the forecasts. For all of these reasons, the forward-looking financial information described above and the assumptions upon which they are based
(i) are not guarantees of future results, (ii) are inherently speculative and (iii) are subject to a number of risks and uncertainties, and readers of this proxy statement/prospectus are cautioned not to rely on them.
Non-GAAP Financial Measures
The forecasts were prepared solely for internal use and not
prepared with a view to publicly disclose such information. The forecasts contain certain non-GAAP financial measures, including Adjusted EBITDA and Further Adjusted EBITDA. Adjusted EBITDA is defined as net loss, determined in accordance
with GAAP, for the period presented, before interest and other expense, net, income tax expense, other income and depreciation of long-lived assets. Further Adjusted EBITDA is defined as net loss, determined in accordance with GAAP, for the
period presented, before interest and other expense, net, income tax expense, other income and depreciation of long-lived assets, and includes grant funding and dividends from minority investments in projects. These measures are not
measurements of H2B2’s financial performance under GAAP and should not be considered in isolation or as alternatives to net income or any other performance measures derived in accordance with GAAP. H2B2 believes Adjusted EBITDA and Further
Adjusted EBITDA provides useful information to management and investors regarding certain financial and business trends relating to H2B2’s financial condition and results of operations. H2B2 believes that the use of Adjusted EBITDA and
Further Adjusted EBITDA provides an additional tool for investors to use in evaluating projected operating results and trends in and in comparing H2B2’s financial measures with other similar companies, many of which present similar non-GAAP
financial measures to investors. Management does not consider Adjusted EBITDA or Further Adjusted EBITDA in isolation or as alternatives to financial measures determined in accordance with GAAP. The use of Adjusted EBITDA or Further Adjusted
EBITDA instead of GAAP measures has limitations as analytical tools, and you should not consider Adjusted EBITDA or Further Adjusted EBITDA in isolation or as a substitute for analysis of H2B2’s results of operations and operating cash flows
as reported under GAAP. For example, Adjusted EBITDA does not reflect H2B2’s cash expenditures or future requirements for capital expenditures; does not reflect changes in, or cash requirements for, H2B2’s working capital needs; does not
reflect interest expense; and does not reflect any cash income taxes that H2B2’s may be required to pay. In addition, Adjusted EBITDA does not reflect depreciation or amortization of assets over their estimated useful lives or any cash
requirements for the replacement of such assets and does not reflect non-cash income or expense items that are reflected in H2B2’s statements of cash flows. For example, in addition to the limitations of Adjusted EBITDA, Further Adjusted
EBITDA includes the addition of grant funding and does not reflect certain one-time expenses. H2B2’s definitions of and methods of calculating these non-GAAP financial measures vary from the definitions and methods used by other companies,
which may limit their usefulness as comparative measures.
Set forth below are reconciliations of net income, the most
directly comparable GAAP measure, to Adjusted EBITDA and Further Adjusted EBITDA, based on financial information available to or projected by H2B2.
TABLE OF CONTENTS
Reconciliation of Net Income to Adjusted EBITDA and Further
Adjusted EBITDA as of April 2023:
Net loss
|
|
|
($11.5)
|
|
|
($8.9)
|
(–) Income tax expense
|
|
|
0.2
|
|
|
1.0
|
(+) Interest and other expense, net
|
|
|
—
|
|
|
0.1
|
(–) Other income
|
|
|
0.6
|
|
|
1.9
|
(+) Depreciation of long-lived assets
|
|
|
0.4
|
|
|
1.5
|
Adjusted EBITDA
|
|
|
($11.9)
|
|
|
($10.1)
|
(+) Grant funding
|
|
|
6.0
|
|
|
13.0
|
(+) One-off expenses
|
|
|
3.2
|
|
|
—
|
(+) Dividends from Minority Interest Projects
|
|
|
—
|
|
|
—
|
Further Adjusted EBITDA
|
|
|
($2.7)
|
|
|
$2.8
|
Reconciliation of Net Income to Adjusted EBITDA and Further
Adjusted EBITDA as of June 2023:
Net loss
|
|
|
($16.6)
|
|
|
($17.1)
|
|
|
$7.4
|
(+) Income tax expense
|
|
|
—
|
|
|
—
|
|
|
0.4
|
(+) Interest and other expense, net
|
|
|
—
|
|
|
0.1
|
|
|
0.3
|
(-) Other income
|
|
|
0.6
|
|
|
1.9
|
|
|
3.1
|
(+) Depreciation of long-lived assets
|
|
|
0.1
|
|
|
1.2
|
|
|
3.8
|
Adjusted EBITDA
|
|
|
($17.1)
|
|
|
($17.8)
|
|
|
$8.6
|
(+) Grant funding
|
|
|
6.0
|
|
|
13.0
|
|
|
11.8
|
(+) One-off expenses
|
|
|
3.1
|
|
|
—
|
|
|
—
|
(-) Dividends from Minority Interest Projects
|
|
|
—
|
|
|
—
|
|
|
(0.1)
|
Further Adjusted EBITDA
|
|
|
($8.0)
|
|
|
($4.8)
|
|
|
$20.5
|
Note: Figures may not sum due to rounding.
Satisfaction of the 80% Test
It is a requirement under the Nasdaq listing requirements that any
business acquired by RMG III have a fair market value equal to at least 80% of the balance of the funds in the Trust Account (excluding the deferred underwriting commissions and taxes payable on the income earned on the Trust Account) at the
time of the execution of a definitive agreement for an initial business combination. Based on the pre-money valuation of $ million for H2B2 compared to the approximately $10 million in the Trust Account, the RMG III Board determined that this
requirement was met. The RMG III Board determined that the consideration that will be paid in the Business Combination, which amount was negotiated at arms-length, was fair to and in the best interests of RMG III and RMG III shareholders and
appropriately reflects H2B2’s value. In reaching this determination, the RMG III Board considered several factors including those identified in the section titled “The Business Combination Proposal — The RMG
III Board’s Reasons for Approval of the Merger.” The RMG III Board believes that the financial skills and background of its members qualify it to conclude that the Business Combination met this requirement.
Interests of RMG III’s Directors,
Executive Officers and the Sponsor and its Affiliates in the Business Combination
In considering the recommendation of the RMG III Board to vote in
favor of approval of the Proposals, RMG III shareholders and RMG III warrant holders should keep in mind that the Sponsor and its affiliates and RMG III’s directors and officers have interests in such Proposals that are different from or in
addition to (and which may conflict with) those of RMG III shareholders. RMG III shareholders and RMG III warrant holders
TABLE OF CONTENTS
should take these interests into account in deciding whether to approve the Proposals
presented at the Special Meeting, including the Business Combination Proposal, and the Warrant Holder Proposals presented at the Warrant Holders Meeting, including the Warrant Amendment Proposal. These interests include, among other things:
•
|
The Sponsor paid an aggregate of $12,349,495 for its purchases of the Founder Shares and the RMG III Private Placement Warrants.
Prior to the Initial Public Offering, the Sponsor purchased 10,062,500 Founder Shares for an aggregate purchase price of $25,000. Subsequently, RMG III effectuated a 5-for-6 share split of the RMG III Class B Ordinary Shares, resulting
in an aggregate outstanding amount of 12,075,000 Founder Shares outstanding. Simultaneously with the consummation of the Initial Public Offering, the Sponsor purchased 8,216,330 RMG III Private Placement Warrants for an aggregate
purchase price of $12,324,495 in a private placement. A portion of the proceeds from the sale of the RMG III Private Placement Warrants were added to the net proceeds from the Initial Public Offering held in the Trust Account. If the
Business Combination with H2B2 or another business combination is not consummated within the Completion Window, RMG III will cease all operations except for the purpose of winding up, redeeming the outstanding Public Shares for cash
and, subject to the approval of its remaining RMG III shareholders and the RMG III Board, dissolving and liquidating. In such event, the 12,075,000 Founder Shares held by the Initial Shareholders would be worthless because the Initial
Shareholders are not entitled to participate in any redemption or distribution with respect to such shares. Additionally, in such event, the 8,216,330 RMG III Private Placement Warrants will also expire worthless. The Founder Shares had
an aggregate market value of $ based upon the closing price of $ per share of RMG III Class A Ordinary Shares on Nasdaq on the RMG III Record Date. The RMG III Private Placement Warrants had an aggregate market value of
approximately $ based upon the closing price of $ per Public Warrant on the Nasdaq on the RMG III Record Date.
|
•
|
In order to finance transaction costs in connection with a business combination, the Sponsor, members of the RMG III founding
team or any of their affiliates may, but are not obligated to (other than pursuant to the January 2022 Note and the July 2022 Note), make certain working capital loans as may be required. On January 19, 2022, RMG Acquisition
Management agreed to lend RMG III up to an aggregate of $500,000 for working capital purposes, pursuant to the January 2022 Note. The January 2022 Note is due and payable in full by RMG III upon the consummation of a business
combination. On July 27, 2022, RMG Acquisition Management agreed to lend RMG III up to $475,000 for working capital purposes, pursuant to the July 2022 Note. The July 2022 Note is due and payable in full by RMG III upon the
consummation of a business combination. In the event that the Business Combination does not close, RMG III may use a portion of proceeds held outside the Trust Account to repay the January 2022 Note and the July 2022 Note, but no
proceeds held in the Trust Account would be used to repay the January 2022 Note or the July 2022 Note. The January 2022 Note and the July 2022 Note will be repaid in cash upon consummation of the Business Combination. As of the date
hereof, RMG III has borrowed $500,000 under the January 2022 Note and $350,000 under the July 2022 Note. If RMG III does not complete a business combination by the Completion Window, there will not be sufficient assets to repay the
outstanding balance under the January 2022 Note and the July 2022 Note, and the January 2022 Note and the July 2022 Note will be worthless.
|
•
|
There will be no finder’s fees, reimbursements or cash payments made by RMG III to the Sponsor or RMG III’s officers or
directors, or RMG III’s or any of their affiliates, for services rendered to RMG III prior to or in connection with the completion of the Business Combination, other than payment of the amount described below for office space,
utilities, administrative and support services described below and repayments of any outstanding balance of the January 2022 Note and the July 2022 Note, as described below. RMG III’s directors and officers and their affiliates are
entitled to reimbursement of out-of-pocket expenses incurred by them in connection with certain activities on RMG III’s behalf, such as identifying and investigating possible business targets and business combinations. There is no cap
or ceiling on the reimbursement of out-of-pocket expenses incurred by such persons in connection with activities on RMG III’s behalf. However, if RMG III fails to consummate a business combination by the Completion Window, RMG III’s
directors and officers will not have any claim against the Trust Account for reimbursement. Accordingly, RMG III may not be able to reimburse these expenses if the Business Combination or another business combination is not
|
TABLE OF CONTENTS
consummated within the Completion Window. As of , 2023, $ was outstanding
in out-of-pocket expense reimbursements. Additionally, under the Administrative Services Agreement, RMG Acquisition Management is entitled to $20,000 per month for office space, utilities, administrative and support services provided to RMG
III’s management team, which commenced on February 4, 2021 and will continue through the earlier of consummation of a business combination and RMG III’s liquidation. For the three months ended March 31, 2023 and 2022 $60,000 of administrative
support expenses were incurred. As of March 31, 2023 and December 31, 2022, respectively the Company had $180,000 and $120,000, related to the Administrative Services Agreement was recorded in accounts payable — related party.
•
|
The Sponsor (including RMG III’s directors, officers and Initial Shareholders and their permitted transferees) owns RMG III
Private Placement Warrants which, in the event the Warrant Amendment Proposal is approved prior to the Effective Time, will be converted into the right to receive 0.075 shares of Surviving Corporation Common Stock per RMG III Private
Placement Warrant.
|
•
|
RMG III’s existing directors and officers will be eligible for continued indemnification and continued coverage under RMG III’s
directors’ and officers’ liability insurance after the Business Combination pursuant to the Merger Agreement.
|
•
|
In the event of the liquidation of the Trust Account, the Sponsor has agreed, under the Letter Agreement, dated February 4,
2021, among RMG III, the Sponsor and RMG III’s officers and directors, to indemnify and hold harmless RMG III against any and all losses, liabilities, claims, damages and expenses to which RMG III may become subject as a result of any
claim by (i) any third party for services rendered or products sold to RMG III or (ii) a prospective target business with which RMG III has entered into an acquisition agreement; provided that
such indemnification of RMG III by the Sponsor will apply only to the extent necessary to ensure that such claims by a third party for services rendered or products sold to RMG III or a target do not reduce the amount of funds in the
Trust Account to below (i) $10.00 per share of RMG III Class A Ordinary Shares or (ii) such lesser amount per RMG III Class A Ordinary Share held in the Trust Account due to reductions in the value of the trust assets as of the date of
the liquidation of the Trust Account, in each case, net of the amount of interest earned on the property in the Trust Account, which may be withdrawn to pay taxes, expenses related to the administration of the Trust Account and limited
withdrawals for working capital, except as to any claims by a third party (including a target) who executed a waiver of any and all rights to seek access to the Trust Account and except as to any claims under RMG III’s indemnity of the
IPO Underwriters against certain liabilities, including liabilities under the Securities Act. If RMG III consummates the Business Combination, on the other hand, RMG III will be liable for all such claims.
|
•
|
Pursuant to the Sponsor Support Agreement, the Sponsor has agreed to, subject to certain exceptions, among other things, vote in
favor of the Merger Agreement and the transactions contemplated thereby, in each case, subject to the terms and conditions contemplated by the Sponsor Support Agreement.
|
•
|
Subject to certain limited exceptions, the Surviving Corporation Common Stock will not be transferrable following the Closing
until the date that is 180 days after the Closing.
|
•
|
Certain of RMG III’s officers and directors presently have, and any of them in the future may have additional, fiduciary or
contractual obligations to other entities pursuant to which such officer or director is or will be required to present business combination opportunities to such entity. Accordingly, in the future, if any of RMG III’s officers or
directors becomes aware of a business combination opportunity which is suitable for an entity to which he or she has then-current fiduciary or contractual obligations, he or she will honor his or her fiduciary or contractual obligations
to present such opportunity to such entity. RMG III does not believe, however, that any fiduciary duties or contractual obligations of its officers or directors would materially undermine RMG III’s ability to complete a business
combination. The Existing Articles provide that RMG III’s renounces any interest or expectancy in, or in being offered, any corporate opportunity offered to any director or officer, but no director or officer of RMG III’s has any duty,
except and to the extent expressly assumed by contract, to communicate or offer any such corporate opportunity to RMG III’s and shall not be in breach of any fiduciary duty as a director or officer, solely by reason of fact that such
party pursues or acquires such corporate opportunity for itself, himself or herself, directs such corporate opportunity to another person,
|
TABLE OF CONTENTS
or does not communicate information regarding such corporate opportunity to RMG III’s.
This waiver allows the Sponsor and its affiliates to allocate opportunities based on a combination of the objectives and fundraising needs of the target, as well as the investment objectives of the entity. However, RMG III does not believe that
the waiver of the corporate opportunities doctrine otherwise had a material impact on its search for an acquisition target.
Given the interests described above, the Sponsor and its affiliates
may earn a positive rate of return on their investment even if the Surviving Corporation Common Stock trades below the price initially paid for the RMG III Units in the Initial Public Offering and the Public Shareholders and Public Warrant
holders experience a negative rate of return following the completion of the Business Combination. As such, the Sponsor and its affiliates may have more of an economic incentive for RMG III to, rather than liquidate if it fails to complete an
initial business combination by the Completion Window, enter into an initial business combination on potentially less favorable terms with a potentially less favorable, riskier, weaker-performing or financially unstable business, or an entity
lacking an established record of revenues or earnings, than would be the case if such parties had paid the full offering price for their Founder Shares.
The RMG III Board was aware of and considered these interests to the
extent such interests existed at the time, among other matters, in approving the Merger Agreement and in recommending that the Business Combination and the Warrant Amendment be approved by RMG III shareholders and RMG III warrant holders. See
the section entitled “The Business Combination—Interests of RMG III’s Directors and Executive Officers and the Sponsor and its Affiliates in the Business Combination.” The RMG III Board concluded that
the Merger Agreement and the Business Combination are fair from a financial point of view to and in the best interests of RMG III and RMG III shareholders. In view of the wide variety of factors considered by the RMG III Board in connection
with its evaluation, negotiation and recommendation of the Business Combination and related transactions and the complexity of these matters, the RMG III Board did not consider it practical to, nor did it attempt to, quantify, rank or otherwise
assign relative weights to the specific factors that it considered in reaching its decision. Rather, the RMG III Board based its evaluation, negotiation and recommendation of the Business Combination and the Warrant Amendment on the totality of
the information presented to and considered by it. The RMG III Board evaluated the reasons described above with the assistance of RMG III’s outside advisors. In considering the factors described above and any other factors, individual members
of the RMG III Board may have viewed factors differently or given different weights to other or different factors.
After careful consideration, the RMG III Board unanimously
(i) declared the advisability of the Business Combination and the other transactions contemplated by the Merger Agreement and (ii) determined that the Business Combination and the other transactions contemplated by the Merger Agreement are in
the best interests of RMG III and RMG III shareholders. The RMG III Board further unanimously (i) declared the advisability of the Warrant Amendment and the other transactions contemplated thereby and (ii) determined that the Warrant Amendment
and the other transactions contemplated thereby are in the best interests of RMG III and RMG III warrant holders.
Interests of H2B2’s Directors and
Executive Officers in the Business Combination
H2B2’s directors and officers have interests in the Business
Combination that are different from or in addition to (and which may conflict with) those of H2B2’s stockholders. These interests include, among other things:
•
|
Certain of H2B2’s directors and officers hold outstanding H2B2 Options which, pursuant to the terms of the Merger Agreement,
will be converted into options to purchase shares of Surviving Corporation Common Stock, based on the Exchange Ratio (each, a “Converted Option”). Each Converted Option will otherwise be subject
to the same terms and conditions as applied to the underlying H2B2 Option immediately prior to the Effective Time, including with respect to vesting and termination-related provisions. The following table sets forth, for each of H2B2’s
officers, the number of shares of H2B2
|
TABLE OF CONTENTS
Common Stock subject to vested and unvested H2B2 Options held by the director or
officer as of , 2023, the latest practicable date to determine such amounts before the filing of this proxy statement/prospectus; none of our non-employee directors currently hold H2B2 Options:
Executive Officers
|
|
|
|
|
|
|
Anselmo Andrade Fernández de Mesa
|
|
|
|
|
|
|
Florencio Ferrera Saldaña
|
|
|
|
|
|
|
Felipe Benjumea Llorente
|
|
|
|
|
|
|
Javier Brey Sánchez
|
|
|
|
|
|
|
Blanca Benjumea de Porres
|
|
|
|
|
|
|
Felipe Benjumea de Porres
|
|
|
|
|
|
|
África Castro Rosende
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Directors
|
|
|
|
|
|
|
Antonio Vázquez Romero(1)
|
|
|
|
|
|
|
Ignacio Solis
|
|
|
|
|
|
|
Gonzalo Hidalgo
|
|
|
|
|
|
|
Guillermo Delclaux
|
|
|
|
|
|
|
Manuel Delclaux
|
|
|
|
|
|
|
Fernando Franco
|
|
|
|
|
|
|
Juan Suarez
|
|
|
|
|
|
|
(1)
|
In 2023, Mr. Vázquez Romero exercised the First Romero H2B2 Option in full, subject to and conditioned upon the closing of the
Business Combination. Pursuant to his service agreement with H2B2, in December 2022, Mr. Vázquez Romero was granted the Second Romero H2B2 Option. The number of shares of H2B2 Common Stock subject to the Second Romero H2B2 Option will
be determined by dividing $750,000 by the exchange price of the Company’s shares in the Business Combination.
|
Board of Directors and Executive Officers Upon Completion of the
Business Combination
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For a complete list of the individuals expected to serve on the
Surviving Corporation Board or as an executive officer of the Surviving Corporation, as well as the respective biography of each such individual, see the section entitled “Management of the Surviving
Corporation Following the Business Combination – Management and Board of Directors.”
Sources and Uses of Funds for the Business Combination
The following table summarizes the sources and uses for funding the
Business Combination assuming no further redemptions. Where actual amounts are not known or knowable, the figures below represent H2B2 and RMG III’s good faith estimate of such amounts assuming a Closing as of March 31, 2023.
RMG III Cash*
|
|
|
$6,620
|
|
|
Repay Loan Agreement***
|
|
|
$16,046
|
Cash from H2B2
|
|
|
$5,120
|
|
|
Purchase Ardachon Option Shares***
|
|
|
$5,909
|
New Equity to H2B2**
|
|
|
$127,000
|
|
|
Transaction Accounting Costs****
|
|
|
$22,222
|
|
|
|
|
|
|
Cash to Balance Sheet
|
|
|
$94,563
|
Total Sources
|
|
|
$138,740
|
|
|
Total Uses
|
|
|
$138,740
|
TABLE OF CONTENTS
The following table summarizes the sources and uses for funding
the Business Combination assuming RMG III shareholders exercise their redemption rights and assuming maximum redemptions. Where actual amounts are not known or knowable, the figures below represent H2B2 and RMG III’s good faith estimate of
such amounts assuming a Closing as of March 31, 2023.
RMG III Cash*
|
|
|
$6,620
|
|
|
Repay Loan Agreement***
|
|
|
$16,046
|
Cash from H2B2
|
|
|
$5,120
|
|
|
Purchase Ardachon Option Shares***
|
|
|
$5,909
|
New Equity to H2B2**
|
|
|
$127,000
|
|
|
Transaction Accounting Costs****
|
|
|
$22,222
|
Total Sources
|
|
|
$138,740
|
|
|
Cash to Balance Sheet
|
|
|
$87,943
|
|
|
|
|
|
|
Maximum Right’s Redemption
|
|
|
$6,620
|
|
|
|
|
|
|
Total Uses
|
|
|
$138,740
|
*
|
The amount of RMG III Cash reflects the amount in RMG III’s Trust Account and RMG III’s cash on the balance sheet, each as of
August 7, 2023.
|
**
|
See Footnotes (3) and (5) to the Unaudited Pro Forma Combined Balance Sheet as of March 31, 2023 included as part of the section
entitled “Unaudited Pro Forma Combined Financial Information” for further detail.
|
***
|
See the section entitled “Certain Relationships and Related Party
Transactions—H2B2—Ardachon Share Acquisition” for further detail.
|
****
|
See the Footnotes to the Unaudited Pro Forma Combined Balance Sheet as of March 31, 2023 included as part of the section
entitled “Unaudited Pro Forma Combined Financial Information” for further detail.
|
Anticipated Accounting Treatment of the Business Combination
The Business Combination will be accounted for as a reverse
recapitalization in accordance with U.S. GAAP. Under this method of accounting, RMG III, will be treated as the acquired company for accounting purposes, whereas H2B2 will be treated as the accounting acquirer. In accordance with this method of
accounting, the Business Combination will be treated as the equivalent of H2B2 issuing shares for the net assets of RMG III, accompanied by a recapitalization.
Restrictions on the Sale of Shares of Surviving Corporation Common
Stock Received in the Business Combination
Following the completion of the Business Combination, any holders of
RMG III Ordinary Shares will become holders of Surviving Corporation Common Stock. The securities laws restrict the resale of securities that are deemed to be “restricted” securities. Restricted securities are securities which are acquired in
an unregistered, private sale from the issuing company or from an affiliate of the issuing company. Affiliates are people or entities who control, are controlled by, or are under common control with the issuer. There are no restrictions on
resale of securities that are not restricted securities. Securities sold by RMG III to the public in the Initial Public Offering are not restricted securities.
Rule 144 provides a safe harbor for the resale of securities. Rule
144 provides that a person who has beneficially owned restricted Surviving Corporation Common Stock for at least six months would be entitled to sell their securities provided that (i) such person is not deemed to have been an affiliate of the
Surviving Corporation at the time of, or at any time during the three months preceding, a sale and (ii) the Surviving Corporation satisfies the requirements for former shell companies described below.
Persons who have beneficially owned restricted shares of Surviving
Corporation Common Stock for at least six months but who are affiliates of the Surviving Corporation at the time of, or at any time during the three months preceding, a sale, would be subject to additional restrictions, by which such person
would be entitled to sell within any three-month period only a number of securities that does not exceed the greater of:
•
|
1% of the total number of the shares of Surviving Corporation Common Stock then outstanding; or
|
•
|
the average weekly reported trading volume of Surviving Corporation Common Stock during the four calendar weeks preceding the
filing of a notice on Rule 144 with respect to the sale.
|
Sales by affiliates of the Surviving Corporation under Rule 144 are
also limited by manner of sale provisions and notice requirements and to the availability of current public information about the Surviving Corporation.
TABLE OF CONTENTS
Restrictions on the Use of Rule 144 by Shell
Companies or Former Shell Companies
Rule 144 is not available for the resale of restricted securities
issued by shell companies such as RMG III or for the Surviving Corporation (which was previously a special purpose acquisition company, and therefore a shell company). However, Rule 144 also includes an important exception to this prohibition
if the following conditions are met:
•
|
the issuer of the securities that was formerly a shell company has ceased to be a shell company (which the Surviving Corporation
will cease to be upon completion of the Business Combination);
|
•
|
the issuer of the securities is subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act (which the
Surviving Corporation will be following the Business Combination);
|
•
|
the issuer of the securities has filed all Exchange Act reports and material required to be filed, as applicable, during the
preceding 12 months (or such shorter period that the issuer was required to file such reports and materials), other than Form 8-K reports; and
|
•
|
at least one year has elapsed from the time that the issuer filed current Form 10 type information with the SEC reflecting its
status as an entity that is not a shell company.
|
In addition to potential sales pursuant to Rule 144, holders of
restricted shares may be able to sell pursuant to an effective registration statement.
No Appraisal Rights
None of RMG III shareholders, RMG
III unit holders or RMG III warrant holders have appraisal rights in connection with the Business Combination or the Domestication under the DGCL. None of RMG III shareholders have dissenters' rights in connection with the Business Combination
or the Domestication under Cayman Islands law.
TABLE OF CONTENTS
The RMG III Class A Ordinary Shares are listed on the Nasdaq under
the symbol “RMGC.” The RMG III Public Warrants are listed on the Nasdaq under the symbol “RMGCW.” The RMG III Units are listed on Nasdaq under the symbol “RMGCU.” Following the consummation of the Business Combination, Surviving Corporation
Common Stock (including common stock issuable in the Business Combination) is expected to be listed on the Nasdaq under the symbol “HHBB”. RMG III Units and the RMG III Public Warrants will be delisted and deregistered following the Closing.
TABLE OF CONTENTS
RMG III is asking RMG III shareholders to adopt
the Merger Agreement and approve the Business Combination. This section describes the material terms of the Merger Agreement. The description in this section and elsewhere in this proxy statement/prospectus is qualified in its entirety by
reference to the complete text of the Merger Agreement, a copy of which is attached to this proxy statement/prospectus as Annex A. This summary does not purport to be complete and may not contain all of the information about the Merger
Agreement that is important to you. You are encouraged to read the Merger Agreement carefully and in its entirety. This section is not intended to provide you with any factual information about RMG III or H2B2. Such information can be found
elsewhere in this proxy statement/prospectus.
The Merger Agreement summary below is included in
this proxy statement/prospectus only to provide you with information regarding the terms and conditions of the Merger Agreement and not to provide any other factual information regarding RMG III or H2B2, or their respective businesses.
Accordingly, the provisions of the Merger Agreement should not be read alone, but instead should be read only in conjunction with the information provided elsewhere in this proxy statement/prospectus. The Merger Agreement contains
representations, warranties and covenants that the respective parties thereto made to each other as of the date of the Merger Agreement and/or other specific dates. The assertions and obligations embodied in those representations, warranties
and covenants were made for purposes of the contract among the respective parties and are subject to important qualifications and limitations agreed to by the parties thereto in connection with negotiating the Merger Agreement. The
representations, warranties and covenants in the Merger Agreement are also modified in part by the underlying disclosure schedules, which are not filed publicly and which are subject to a contractual standard of materiality different from that
generally applicable to RMG III shareholders and were used for the purpose of allocating risk among the parties rather than establishing matters as facts. Additionally, the representations and warranties of the parties to the Merger Agreement
may or may not have been accurate as of any specific date and do not purport to be accurate as of the RMG III Record Date or any other date. Accordingly, no person should rely on the representations and warranties in the Merger Agreement or the
summaries thereof in this proxy statement/prospectus as characterizations of the actual state of facts about RMG III, H2B2, or any other matter.
Structure of the Business Combination
On May 9, 2023, RMG III entered into the Merger Agreement with H2B2,
pursuant to which, among other things, following the Domestication, (i) H2B2 will merge with and into RMG III, the separate corporate existence of H2B2 will cease and RMG III will be the surviving corporation following the Closing and
(ii) RMG III will change its name to “H2B2 Electrolysis Technologies, Inc”.
Prior to and as a condition of the Merger, pursuant to the
Domestication, RMG III will change its jurisdiction of incorporation by effecting a deregistration under the Cayman Islands Companies Act and a domestication under Section 388 of the DGCL, pursuant to which RMG III’s jurisdiction of
incorporation will be changed from the Cayman Islands to the State of Delaware. See the section entitled “Proposal No. 2—The Domestication Proposal” for more information.
Merger Consideration; Conversion of
Shares
Aggregate Closing Date Merger Consideration
As a result of and upon the Closing, among other things, the H2B2
Stockholders will receive a number of shares of Surviving Corporation Common Stock equal to the quotient obtained by dividing (i) the Closing Date Purchase Price by (ii) $10.00.
The Closing Date Purchase Price will be calculated prior to the
Closing by adjusting the Base Purchase Price upwards or downwards solely as follows:
(a)
|
In the event H2B2 raises capital in any Capital Raise Transaction (other than a Debt Raise Transaction) based on a pre-money
valuation at or exceeding the Base Purchase Price, the Base Purchase Price will be increased on a dollar for dollar basis by an amount equal to (i) the difference between the Base Purchase Price and the actual pre-money valuation of
such Capital Raise Transaction, plus (ii) the Capital Raise Amount, plus (iii) the AVR Option Amount;
|
TABLE OF CONTENTS
(b)
|
In the event H2B2 raises capital in any Capital Raise Transaction (other than a Debt Raise Transaction) based on a pre-money
valuation below the Base Purchase Price, the Base Purchase Price will be (i) decreased by an amount equal to the difference between the Base Purchase Price and the actual pre-money valuation of such Capital Raise Transaction, and
increased by (ii) the Capital Raise Amount, plus (iii) the AVR Option Amount, in each case on a dollar for dollar basis;
|
(c)
|
In the event H2B2 raises capital in any Debt Raise Transaction based on a Debt Transaction Pre-Money Valuation at or exceeding
the Base Purchase Price, the Base Purchase Price will be increased on a dollar for dollar basis by an amount equal to (i) the difference between the Base Purchase Price and the actual Debt Transaction Pre-Money Valuation, plus (ii) the
AVR Option Amount; or
|
(d)
|
In the event H2B2 raises capital in any Debt Raise Transaction based on a Debt Transaction Pre-Money Valuation below the Base
Purchase Price, the Base Purchase Price will be (i) decreased by an amount equal to the difference between the Base Purchase Price and the actual Debt Transaction Pre-Money Valuation and (ii) increased by the AVR Option Amount, in each
case on a dollar for dollar basis;
|
provided, that, solely in the event that the Capital Raise Amount
exceeds $15,000,000, following any adjustment pursuant to the foregoing clauses (a), (b), (c) or (d), the Closing Date Purchase Price will be further increased by an additional ten percent (10%); and
provided, further, that in the event the Company raises capital in
any Debt Raise Transaction where such Debt Raise Transaction consists exclusively of senior debt or any other form of debt for which a pre-money valuation has not been provided, then for a period of fifteen (15) business days following
execution of definitive agreements relating to such Debt Raise Transaction, the parties will work together in good faith to agree a Closing Date Purchase Price. If, after such period, the parties are unable to agree upon the Closing Date
Purchase Price, then the provisions in the Merger Agreement will apply with respect to engaging an independent valuation firm.
Conversion of Shares
At the Effective Time:
(a)
|
each share of H2B2 Common Stock issued and outstanding immediately prior to the Effective Time (other than (i) shares of H2B2
Common Stock subject to H2B2 Options, (ii) any shares of H2B2 Common Stock held in the treasury of H2B2 and (iii) any Dissenting Shares) will be canceled and converted into the right to receive the applicable portion of the Aggregate
Closing Date Merger Consideration based on the Exchange Ratio;
|
(b)
|
each treasury share of H2B2 issued and outstanding immediately prior to the Effective Time will be canceled without
consideration;
|
(c)
|
each share of Domesticated RMG III Class A Stock issued and outstanding immediately prior to the Effective Time will remain as
an issued and outstanding share of Surviving Corporation Common Stock;
|
(d)
|
a number of shares of Domesticated RMG III Class B Stock equal to the number of Founder Consideration Shares will convert into
issued and outstanding shares of Surviving Corporation Common Stock and the remaining shares of Domesticated RMG III Class B Stock issued and outstanding will be canceled without consideration; and
|
(e)
|
each H2B2 Option will be canceled and will convert into the right to receive an option to purchase, upon substantially the same
terms and conditions, a whole number of shares of Surviving Corporation Common Stock (rounded down to the nearest whole share) equal to the number of shares of H2B2 Common Stock subject to such H2B2 Option immediately prior to the
Effective Time multiplied by the Exchange Ratio (each, a “Surviving Corporation Option”), except that the exercise price per share of each such Surviving Corporation Option will be equal to the
exercise price per share of such H2B2 Option in effect immediately prior to the Effective Time, divided by the Exchange Ratio (rounded up to the nearest full cent).
|
TABLE OF CONTENTS
Material Adverse Effect
Under the Merger Agreement, certain representations and warranties of
H2B2 are qualified in whole or in part by a material adverse effect standard for purposes of determining whether a breach of such representations and warranties has occurred. Under the Merger Agreement, certain representations and warranties of
RMG III are qualified in whole or in part by a material adverse effect on the ability of RMG III to enter into and perform its obligations under the Merger Agreement standard for purposes of determining whether a breach of such representations
and warranties has occurred.
Pursuant to the Merger Agreement, an H2B2 Material Adverse Effect
means any event, state of facts, development, circumstance, occurrence or effect (collectively, “Events”) that (i) has had, or would reasonably be expected to have, individually or in the aggregate, a
material adverse effect on the business, assets, results of operations or financial condition of H2B2 and its subsidiaries, taken as a whole or (ii) does or would reasonably be expected to, individually or in the aggregate, prevent the ability
of H2B2 to consummate the Merger. However, in no event would any of the following, alone or in combination, be deemed to constitute, or be taken into account in determining whether there has been or will be an H2B2 Material Adverse Effect:
(a)
|
any change in applicable laws or GAAP or any interpretation thereof following the date of the Merger Agreement;
|
(b)
|
any change in interest rates or economic, political, business or financial market conditions generally;
|
(c)
|
the taking of any action required by the Merger Agreement or any Ancillary Agreement;
|
(d)
|
any natural disaster (including hurricanes, storms, tornados, flooding, earthquakes, volcanic eruptions or similar occurrences),
pandemic or change in climate;
|
(e)
|
any acts of terrorism or war, the outbreak or escalation of hostilities, geopolitical conditions, local, national or
international political conditions;
|
(f)
|
any failure of H2B2 to meet any projections or forecasts (provided that the foregoing will not prevent a determination that any
Event not otherwise excluded from the definition of H2B2 Material Adverse Effect underlying such failure to meet projections or forecasts has resulted in a H2B2 Material Adverse Effect);
|
(g)
|
any Events generally applicable to the industries or markets in which H2B2 and its subsidiaries operate (including increases in
the cost of products, supplies, materials or other goods purchased from third-party suppliers);
|
(h)
|
the announcement of the Merger Agreement and the Ancillary Agreements and consummation of the transactions contemplated thereby,
including any termination of, reduction in or similar adverse impact (but in each case only to the extent attributable to such announcement or consummation) on relationships, contractual or otherwise, with any landlords, customers,
suppliers, distributors, partners, employees, workers or officers of H2B2 and its subsidiaries (it being understood that the foregoing will be disregarded for purposes of the representation and warranty set forth in the section of the
Merger Agreement titled “No Conflicts” and the corresponding condition to Closing);
|
(i)
|
any matter set forth on H2B2’s disclosure letter;
|
(j)
|
any Events to the extent actually known by certain individuals identified in RMG III’s disclosure letter on or prior to the date
of the Merger Agreement; or
|
(k)
|
any action taken by, or at the request of, RMG III or taken or not taken by H2B2 as required by the Merger Agreement or any
Ancillary Agreement.
|
Any Event referred to in clauses (a), (b), (d), (e) or (g) above may
be taken into account in determining if a H2B2 Material Adverse Effect has occurred to the extent it has a disproportionate and adverse effect on the business, assets, results of operations or condition (financial or otherwise) of H2B2 and its
subsidiaries, taken as a whole, relative to similarly situated companies in the industry in which H2B2 and its subsidiaries conduct their respective operations, but only to the extent of the incremental disproportionate effect on H2B2 and its
subsidiaries, taken as a whole, relative to similarly situated companies in the industry in which H2B2 and its subsidiaries conduct their respective operations.
TABLE OF CONTENTS
Closing and Effective Time of the Business Combination
In accordance with the terms and subject to the conditions of the
Merger Agreement, the Closing will take place electronically by exchange of the closing deliverables as promptly as reasonably practicable, but in no event later than the date which is five (5) business days after the first date on which all
closing conditions set forth in the Merger Agreement have been satisfied or waived (other than those conditions that by their terms are to be satisfied at the Closing, but subject to the satisfaction or waiver of such conditions) or such other
time and place as RMG III and H2B2 may mutually agree in writing.
Conditions to Closing of the Business
Combination
The consummation of the Merger is conditioned upon the satisfaction
or waiver by the applicable parties to the Merger Agreement of the conditions set forth below. Therefore, unless these conditions are waived or satisfied by the applicable parties to the Merger Agreement, the Merger may not be consummated.
There can be no assurance that the H2B2 or RMG III would waive any
such provisions of the Merger Agreement.
Conditions to Each Party’s Obligations
The obligations of each party to the Merger Agreement to consummate,
or cause to be consummated, the Merger are subject to the satisfaction of the following conditions at or prior to Closing, any one or more of which may be waived in writing by either party:
•
|
the RMG III Shareholder Approval having been obtained;
|
•
|
the adoption and approval of the Merger Agreement and the transactions contemplated thereby by the H2B2 Stockholders having been
obtained;
|
•
|
the approval of the Warrant Amendment and the Warrant Exchange by RMG III warrant holders having been obtained;
|
•
|
the waiting period or periods (and any extension thereof) under the HSR Act applicable to the transactions contemplated by the
Merger Agreement and the Ancillary Agreements having expired or been terminated;
|
•
|
there will not be in force any order or law enjoining, preventing, prohibiting or making illegal the consummation of the Merger;
provided that the governmental authority issuing such order or law has jurisdiction over the parties with respect to the transactions contemplated by the Merger Agreement;
|
•
|
RMG III having at least $5,000,001 of net tangible assets (as determined in accordance with Rule 3a51- 1(g)(1) of the Exchange
Act);
|
•
|
this Registration Statement becoming effective in accordance with the Securities Act, no stop order suspending the effectiveness
of this Registration Statement having been issued by the SEC that remains in effect, and no proceedings for that purpose will have been initiated or threatened by the SEC and not withdrawn;
|
•
|
the shares of Surviving Corporation Common Stock to be issued in connection with the Merger having been approved for listing on
Nasdaq; and
|
•
|
the Capital Raise Transaction having been consummated with an aggregate Capital Raise Amount equal to at least the Minimum
Investment Amount.
|
Conditions to the Obligations of RMG III
The obligation of RMG III to consummate, or cause to be consummated,
the Merger are subject to the satisfaction of the following additional conditions, any one or more of which may be waived in writing by RMG III:
•
|
the representations and warranties of H2B2 regarding its capitalization, as provided for in the Merger Agreement, having been
true and correct in all but de minimis respects as of the Closing Date, except with respect to such representations and warranties which speak as to an earlier date, which
|
TABLE OF CONTENTS
representations and warranties having been true and correct in all but de minimis respects at and as of such date, except for changes after the date of the Merger Agreement which are contemplated or expressly permitted by the Merger Agreement or the Ancillary Agreements;
•
|
the H2B2 Fundamental Representations (as defined below) (other than those portions of the capitalization representations
referenced above) having been true and correct in all material respects, in each case as of the Closing Date, except with respect to such representations and warranties which speak as to an earlier date, which representations and
warranties having been true and correct in all material respects at and as of such date, except for changes after the date of the Merger Agreement that are contemplated or expressly permitted by the Merger Agreement or the Ancillary
Agreements;
|
•
|
the remaining representations and warranties of H2B2 contained in the Merger Agreement (disregarding any qualifications and
exceptions contained therein relating to materiality, material adverse effect and H2B2 Material Adverse Effect or any similar qualification or exception) having been true and correct as of the Closing Date, except with respect to such
representations and warranties which speak as to an earlier date, which representations and warranties having been true and correct at and as of such date, except for, in each case, inaccuracies or omissions that would not, individually
or in the aggregate, reasonably be expected to have a H2B2 Material Adverse Effect;
|
•
|
each of the covenants of H2B2 to be performed as of or prior to the Closing having been performed in all material respects;
|
•
|
there will not have occurred a H2B2 Material Adverse Effect after the date of the Merger Agreement that is continuing; and
|
•
|
the following documentation having been delivered to RMG III pursuant to the Merger Agreement: (i) a certificate signed by an
officer of H2B2, dated as of the Closing Date, certifying that, to the knowledge and belief of such officer, certain conditions to the obligations of RMG III specified in the Merger Agreement have been fulfilled, (ii) the written
resignations of all of the directors of H2B2 (other than any such persons identified as initial directors of the Surviving Corporation pursuant to the Merger Agreement), effective as of the Effective Time, (iii) written evidence
(reasonably satisfactory to RMG III) of the termination of the H2B2 Stockholders Agreement according to its terms, (iv) the Registration Rights Agreement, duly executed by the H2B2 Stockholders party thereto, (v) the Lock-Up Agreement,
duly executed by the H2B2 stockholders representing eighty percent (80%) of the shares of H2B2 Common Stock outstanding immediately prior to the Effective Time, (vi) if the Ardachon Proceedings will not have been terminated prior to
Closing, a letter agreement addressing the obligations set forth on H2B2’s disclosure letter, and (vii) a certificate on behalf of H2B2, prepared in a manner consistent and in accordance with the requirements of Treasury Regulation
Sections 1.897-2(g), (h) and 1.1445-2(c)(3), certifying that no interest in the Company is, or has been during the relevant period specified in Section 897(c)(1)(A)(ii) of the Code, a “U.S. real property interest” within the meaning of
Section 897(c) of the Code, and a form of notice to the Internal Revenue Service prepared in accordance with the provisions of Treasury Regulations Section 1.897-2(h)(2).
|
Conditions to the Obligations of H2B2
The obligation of H2B2 to consummate, or cause to be consummated, the
Merger is subject to the satisfaction of the following additional conditions any one or more of which may be waived in writing by H2B2:
•
|
the representations and warranties of RMG III regarding its capitalization, as provided for in the Merger Agreement, having been
true and correct in all but de minimis respects as of the Closing Date, except with respect to such representations and warranties which speak as to an earlier date, which representations and
warranties having been true and correct in all but de minimis respects at and as of such date, except for changes after the date of the Merger Agreement which are contemplated or expressly
permitted by the Merger Agreement;
|
•
|
the RMG III Fundamental Representations (as defined below) (other than the capitalization representations referenced above)
having been true and correct in all material respects, in each case as of the Closing Date, except with respect to such representations and warranties which speak as to an
|
TABLE OF CONTENTS
earlier date, which representations and warranties will be true and correct in all
material respects at and as of such date, except for changes after the date of the Merger Agreement which are contemplated or expressly permitted by this Agreement or the Ancillary Agreements;
•
|
the remaining representations and warranties of RMG III contained in the Merger Agreement (disregarding any qualifications and
exceptions contained therein relating to materiality, material adverse effect or any similar qualification or exception) having been true and correct in all material respects, in each case as of the Closing Date, except with respect to
such representations and warranties which speak as to an earlier date, which representations and warranties will be true and correct in all material respects at and as of such date, except for changes after the date of the Merger
Agreement which are contemplated or expressly permitted by the Merger Agreement or the Ancillary Agreements;
|
•
|
each of the covenants of RMG III to be performed as of or prior to the Closing having been performed in all material respects;
|
•
|
the Domestication having been completed as contemplated by the Merger Agreement and a time-stamped copy of the certificate
issued by the Secretary of State of the State of Delaware in relation to such certificate having been delivered to H2B2. See the section entitled “Proposal No. 2—The Domestication Proposal” for
more information; and
|
•
|
the following documentation having been delivered, or caused to be delivered, by RMG III pursuant to the Merger Agreement:
(i) to the Exchange Agent, the Aggregate Closing Date Merger Consideration for further distribution to H2B2 Stockholders pursuant to the Merger Agreement, (ii) to H2B2, a certificate signed by an officer of RMG III, dated the Closing
Date, certifying that, to the knowledge and belief of such officer, certain conditions to the obligations of H2B2 have been fulfilled, (iii) to H2B2, the Registration Rights Agreement and each Lock-Up Agreement, duly executed by duly
authorized representatives of RMG III and the Sponsor, and the other parties thereto, (iv) to H2B2, the written resignations of all of the directors and officers of RMG III (other than those persons identified as the initial directors
and officers, respectively, of the Surviving Corporation after the Effective Time, in accordance with the Merger Agreement), effective as of the Effective Time, (v) to H2B2, a time-stamped copy of the certificate issued by the Secretary
of State of the State of Delaware in relation to the Domestication and (vi) to H2B2, an Internal Revenue Service Form W-9.
|
Representations and Warranties
The Merger Agreement contains representations and warranties of RMG
III and H2B2, certain of which are qualified by materiality and material adverse effect or H2B2 Material Adverse Effect and may be further modified and limited by the RMG III and H2B2 disclosure letters. See the section entitled “The Merger Agreement—Material Adverse Effect” for more information. The representations and warranties of RMG III are also qualified by information included in RMG III’s public filings, filed or submitted to
the SEC on or prior to the date of the Merger Agreement (subject to certain exceptions contemplated by the Merger Agreement).
Representations and Warranties of H2B2
H2B2 has made representations and warranties relating to, among other
things, company organization, subsidiaries (including Spanish subsidiaries), insolvency, due authorization, no conflict, governmental authorities and consents, capitalization of H2B2 and its subsidiaries, financial statements, books and
records, undisclosed liabilities, litigation and proceedings, legal compliance, contracts and no defaults, H2B2 benefit plans, labor relations and employees, taxes, brokers’ fees, insurance, licenses, equipment and other tangible personal
property, real property, intellectual property, privacy and cybersecurity, environmental matters, absence of changes, anti- corruption compliance, sanctions and international trade compliance, this proxy statement and registration statement,
customers and vendors, grants and government contracts, sufficiency of assets, transactions with related persons and no additional representations or warranties.
The representations and warranties of H2B2 identified as fundamental
under the terms of the Merger Agreement are those made pursuant to: (i) the first and second sentences of Section 4.1 of the Merger Agreement (Company Organization), the first and second sentences of
Section 4.2 of the Merger Agreement (Subsidiaries), Section 4.3 of the Merger Agreement (Spanish Subsidiaries) Section 4.5 of the Merger Agreement (Due Authorization), Section 4.9 of the Merger Agreement (Capitalization of the Company), Section 4.10 of the Merger Agreement (Capitalization
of Subsidiaries) and Section 4.20 of the Merger Agreement (Brokers’ Fees).
TABLE OF CONTENTS
Representations and Warranties of RMG III
RMG III has made representations and warranties relating to, among
other things, company organization, due authorization, no conflict, litigation and proceedings, SEC filings, internal controls, listing and financial statements, governmental authorities and consents, the Trust Account, absence of changes, no
undisclosed liabilities, capitalization, brokers’ fees, indebtedness, taxes, business activities, benefit plans, Nasdaq stock market quotation, this proxy statement and registration statement, no outside reliance and no additional
representations or warranties.
H2B2 has made covenants relating to, among other things, conduct of
business, inspection, confidentiality, preparation and delivery of financial statements and acquisition proposals.
RMG III has made covenants relating to, among other things, Trust
Account, Nasdaq listing, no solicitation by RMG III, conduct of business, domestication, indemnification and insurance, RMG III public filings, approval and adoption of the Incentive Plan, extension of the deadline by which RMG III must
complete a business combination and the Warrant Amendment.
Conduct of Business by H2B2
H2B2 has agreed that from the Interim Period except as set forth in
H2B2’s disclosure letter, as contemplated by the Merger Agreement or the Ancillary Agreements, in connection with any Capital Raise Transaction, as consented to by RMG III in writing (which consent will not be unreasonably conditioned,
withheld, delayed or denied) or as required by applicable law, H2B2 will, and will cause its subsidiaries to use reasonable best efforts to operate the business of H2B2 in the ordinary course consistent with past practice.
Except as set forth in H2B2’s disclosure letter, as contemplated by
the Merger Agreement or the Ancillary Agreements, in connection with any Capital Raise Transaction, as consented to by RMG III in writing (which consent will not be unreasonably conditioned, withheld, delayed or denied) or as required by
applicable law, during the Interim Period, H2B2 has also agreed not to, and to cause its subsidiaries not to:
•
|
change or amend the H2B2 Stockholders Agreement;
|
•
|
change or amend the governing documents of H2B2 or any of its subsidiaries other than in connection with the matters set forth
in H2B2’s disclosure letter;
|
•
|
form or cause to be formed any new subsidiary of H2B2;
|
•
|
make or declare any dividend or distribution to the H2B2 Securityholders or make any other distributions in respect of any of
the H2B2 Common Stock or equity interests;
|
•
|
split, combine, reclassify, recapitalize or otherwise amend any terms of any shares of H2B2 Common Stock or any of the H2B2’s
subsidiaries’ capital stock or equity interests, except for any such transaction by a wholly-owned subsidiary of H2B2 that remains a wholly-owned subsidiary of H2B2 after consummation of such transaction;
|
•
|
purchase, repurchase, redeem or otherwise acquire any issued and outstanding share capital, outstanding shares of capital stock,
membership interests or other equity interests of H2B2 or its subsidiaries, except for: (i) the acquisition by H2B2 or any of its subsidiaries of any shares of capital stock, membership interests or other equity interests (other than
H2B2 Options) of H2B2 or its subsidiaries in connection with the forfeiture or cancellation of such interests, including, for the avoidance of doubt, redemptions of equity securities from former employees, workers or officers of H2B2 or
any of its subsidiaries upon the terms set forth in the underlying agreements governing such equity securities; (ii) the Ardachon Share Acquisition; (iii) transactions between H2B2 and any wholly-owned subsidiary of H2B2 or between
wholly-owned subsidiaries of H2B2; (iv) the acquisition by H2B2 of shares of H2B2 Common Stock in connection with the surrender of shares of H2B2 Common Stock by holders of H2B2 Options in order to pay the exercise price of such H2B2
Options; and (v) the withholding of shares of H2B2 Common Stock to satisfy tax obligations with respect to H2B2 Options, in each of clauses (iv) and (v), solely to the extent in accordance with their terms as previously disclosed to
RMG III;
|
TABLE OF CONTENTS
•
|
enter into, modify in any material respect or terminate (other than expiration in accordance with its terms) any material
contracts, or any real property lease, in each case, other than entry into such agreements in connection with the (i) the Ardachon Share Acquisition, (ii) the Capital Raise Transaction, or (iii) in the ordinary course of business
consistent with past practice or as required by law;
|
•
|
sell, assign, transfer, convey, lease or otherwise dispose of any material portion of tangible assets or properties of H2B2 or
its subsidiaries, except for (i) dispositions of obsolete or worthless equipment (ii) transactions among H2B2 and its wholly-owned subsidiaries or among its wholly-owned subsidiaries and (iii) transactions in the ordinary course of
business consistent with past practice;
|
•
|
acquire any ownership interest in any real property;
|
•
|
except as otherwise required by law, an existing H2B2 benefit plan or certain contractual obligations, (i) grant any material
severance, retention, change in control or termination or similar pay to any employee, worker or officer of H2B2 or any of its subsidiaries, (ii) make any change in the key management structure of H2B2 or any of its subsidiaries,
(iii) hire or engage, or make an offer to hire or engage, any employee, worker or officer with an annual base compensation of $250,000 or more, (iv) terminate the employment or engagement of any employee, worker or officer with an
annual base compensation of $250,000 or more, other than terminations for cause or due to death or disability, (v) terminate, adopt, enter into or materially amend any H2B2 benefit plan, except in the ordinary course of business
consistent with past practice, (vi) materially increase the cash compensation or bonus opportunity of any employee, worker or officer of H2B2 or any of its subsidiaries, except in the ordinary course of business consistent with past
practice, (vii) establish any trust or take any other action to secure the payment of any compensation payable by H2B2 or any of its subsidiaries, (viii) take any action to amend or waive any performance or vesting criteria or to
accelerate the time of payment or vesting of any compensation or benefit payable by H2B2 or any of its subsidiaries or (ix) grant any equity or equity-based compensation to any employee, worker or officer of H2B2 or any of its
subsidiaries;
|
•
|
acquire by merger or consolidation with, or merge or consolidate with, or purchase substantially all or a material portion of
the assets of, any corporation, partnership, association, joint venture or other business organization or division thereof;
|
•
|
(i) issue or sell any debt securities or warrants or other rights to acquire any debt securities of H2B2 or any of its
subsidiaries or otherwise incur or assume any indebtedness, or (ii) guarantee any indebtedness of another person, the sum of (i) and (ii) not to be in excess of $10,000,000 in the aggregate, in each case, other than in the ordinary
course of business consistent with past practice, other than in connection with the Ardachon Share Acquisition;
|
•
|
(i) make or change any material election in respect of material taxes, (ii) materially amend any filed material tax return,
(iii) adopt or request permission of any taxing authority to change any accounting method in respect of material taxes, (iv) enter into any “closing agreement” as described in Section 7121 of the Code (or any similar provision of state,
local, or foreign law) with any governmental authority in respect of material taxes executed on or prior to the Closing Date or enter into any tax sharing or similar agreement (other than any such agreement solely between H2B2 and its
existing subsidiaries and customary commercial contracts (or contracts entered into in the ordinary course of business) not primarily related to taxes), (v) settle any claim or assessment in respect of material taxes or (vi) consent to
any extension or waiver of the limitation period applicable to any claim or assessment in respect of material taxes (other than automatic extensions to file tax returns), in each case, if such action would be reasonably expected to have
an adverse effect on H2B2, RMG III or any of their subsidiaries after the Closing Date;
|
•
|
take any action, or knowingly fail to take any action, where such action or failure to act would reasonably be expected to
prevent the Merger from qualifying as a “reorganization” within the meaning of Section 368(a) of the Code and the Treasury Regulations promulgated thereunder or as a “fusión” within the meaning
of Section 76.1 of the Spanish CIT Act benefiting from the tax treatment provided in Title VII, Chapter VII, of the Spanish CIT Act, and in particular, Section 77.1.e), 78.1 and 81 thereunder;
|
•
|
discharge any secured or unsecured obligation or liability (whether accrued, absolute, contingent or otherwise) in excess of
$10,000,000, except as such obligations become due in the ordinary course and
|
TABLE OF CONTENTS
subject to the terms of each applicable contract, other than in connection with the
Ardachon Share Acquisition or in connection with the Capital Raise Transaction;
•
|
issue any additional shares of H2B2 Common Stock or securities exercisable for or convertible into H2B2 Common Stock, other than
(i) the issuance of H2B2 Common Stock upon the exercise of H2B2 Options in the ordinary course of business or (ii) in connection with the Capital Raise Transaction;
|
•
|
adopt a plan of, or otherwise enter into or effect a, complete or partial liquidation, dissolution, restructuring,
recapitalization or other reorganization of H2B2 or its subsidiaries (other than the Merger);
|
•
|
waive, release, settle, compromise or otherwise resolve any inquiry, investigation, claim, litigation or other actions or legal
proceedings, except where such waivers, releases, settlements or compromises involve only the payment of monetary damages in an amount less than $250,000 in the aggregate;
|
•
|
assign, transfer, pledge, sell or license to any person rights to any intellectual property owned by H2B2 or any of its
subsidiaries, or dispose of, abandon, permit to lapse or fail to renew such intellectual property, except for the expiration of intellectual property rights in accordance with the applicable statutory term, or for the grant of
non-exclusive licenses in the ordinary course of business, consistent with past practice;
|
•
|
modify in any material respect any of H2B2’s privacy policies, or any administrative, technical or physical safeguards related
to privacy or cybersecurity, except (i) to remediate any security issue, (ii) to enhance data security or integrity, (iii) to comply with applicable law, or (iv) as otherwise directed or required by a governmental authority;
|
•
|
disclose or agree to disclose to any person (other than RMG III or any of its representatives) any material trade secret or any
other material confidential or proprietary information of H2B2 or any of its subsidiaries other than to persons who are subject to a contractual, legal, or enforceable ethical obligation to maintain the confidentiality thereof;
|
•
|
except as set forth on H2B2’s disclosure letter, make or commit to make any capital expenditures in an amount greater than
$250,000 in the aggregate;
|
•
|
manage H2B2’s and its subsidiaries’ working capital (including paying amounts payable in a timely manner when due and payable)
in a manner other than in the ordinary course of business consistent with past practice;
|
•
|
other than as required by applicable law, modify, enter into or extend any collective bargaining agreement or any other
labor-related agreements or arrangements with any labor union, labor organization or works council, or recognize or certify any labor union, labor organization, works council or group of employees, workers or officers of H2B2 or its
subsidiaries as the bargaining representative for any employees, workers or officers of H2B2 or its subsidiaries;
|
•
|
terminate without replacement or fail to use reasonable efforts to maintain any license material to the conduct of the business
of H2B2 and its subsidiaries, taken as a whole;
|
•
|
waive the restrictive covenant obligations of any current or former employee, worker or officer of H2B2 or any of its
subsidiaries;
|
•
|
(i) limit the right of H2B2 or any of the its subsidiaries to engage in any line of business or in any geographic area, to
develop, market or sell products or services, or to compete with any person or (ii) grant any exclusive rights to any person, in each case, except where such limitation or grant does not, and would not be reasonably likely to,
individually or in the aggregate, materially and adversely affect, or materially disrupt, the ordinary course operation of the businesses of H2B2 and its subsidiaries, taken as a whole;
|
•
|
terminate without replacement or amend in a manner materially detrimental to H2B2 and its subsidiaries, taken as a whole, any
insurance policy insuring the business of H2B2 or any of its subsidiaries; or
|
•
|
enter into any agreement to do any action specified above.
|
TABLE OF CONTENTS
Conduct of Business by RMG III
RMG III has agreed that during the Interim Period, except as set
forth in RMG III’s disclosure letter, as otherwise contemplated by the Merger Agreement (including in connection with any financing arrangement or efforts contemplated by the Merger Agreement or in connection with the Domestication) or the
Ancillary Agreements, as consented to by H2B2 in writing (which consent will not be unreasonably conditioned, withheld, delayed or denied) or as required by law, RMG III will operate its business in the ordinary course and consistent with past
practice.
Except as set forth in RMG III’s disclosure letter, as otherwise
contemplated by the Merger Agreement (including in connection with any financing arrangement or efforts contemplated by the Merger Agreement or in connection with the Domestication) or the Ancillary Agreements, as consented to by H2B2 in
writing (which consent will not be unreasonably conditioned, withheld, delayed or denied) or as required by law, during the Interim Period, RMG III has also agreed not to:
•
|
change, modify or amend the Trust Agreement or the RMG III Governing Documents, except as otherwise contemplated by the
Proposals;
|
•
|
(i) make or declare any dividend or distribution to RMG III shareholders or make any other distributions in respect of any of
RMG III’s share capital, (ii) split, combine, reclassify, recapitalize or otherwise amend any terms of any shares or series of RMG III’s share capital or equity interests, or (iii) purchase, repurchase, redeem or otherwise acquire any
issued and outstanding share capital, outstanding shares of capital stock, share capital or membership interests, warrants or other equity interests of RMG III, other than a redemption of RMG III Class A Ordinary Shares effected in
connection with the Proposals;
|
•
|
(i) make or change any material election in respect of material taxes, (ii) amend any filed material tax return, (iii) adopt or
request permission of any taxing authority to change any accounting method in respect of material taxes, (iv) enter into any “closing agreement” as described in Section 7121 of the Code (or any similar provision of state, local, or
foreign law) with any governmental authority in respect of material taxes or enter into any tax sharing or similar agreement, (v) settle any claim or assessment in respect of material taxes, or (vi) consent to any extension or waiver of
the limitation period applicable to any claim or assessment in respect of material taxes;
|
•
|
take any action, or knowingly fail to take any action, where such action or failure to act would reasonably be expected to
prevent the Merger from qualifying as a “reorganization” within the meaning of Section 368(a) of the Code and the Treasury Regulations promulgated thereunder or as a “fusión” within the meaning
of Section 76.1 of the Spanish CIT Act benefiting from the tax treatment provided in Title VII, Chapter VII, of the Spanish CIT Act, and in particular, Section 77.1.e), 78.1 and 81 thereunder;
|
•
|
other than as expressly required by the Sponsor Support Agreement, enter into, renew or amend in any material respect, any
transaction or contract with an affiliate of RMG III (including, for the avoidance of doubt, (i) the Sponsor and (ii) any person in which the Sponsor has a direct or indirect legal, contractual or beneficial ownership interest of 5% or
greater;
|
•
|
except as contemplated by the Incentive Plan, (i) enter into, adopt or amend any RMG III benefit plan, or enter into any
employment contract or collective bargaining agreement that would cover employees of RMG III following Closing or (ii) hire any employee or any other individual to provide services to RMG III following Closing;
|
•
|
incur or assume any indebtedness or guarantee any indebtedness of another person, issue or sell any debt securities or warrants
or other rights to acquire any debt securities of H2B2 or any of its subsidiaries or guaranty any debt securities of another person, or otherwise knowingly and purposefully incur, guarantee or otherwise become liable for (whether
directly, contingently or otherwise) any other material liabilities, debts or obligations, other than (i) fees and expenses, including finder’s fees, for professional services incurred in support of the transactions contemplated by the
Merger Agreement and the Ancillary Agreements or in support of the ordinary course operations of RMG III (which the parties agree will include any indebtedness in respect of any Working Capital Loans outstanding as of the
|
TABLE OF CONTENTS
Effective Time) or (ii) any indebtedness for borrowed money or guarantee incurred in
the ordinary course of business consistent with past practice;
•
|
(i) issue any RMG III securities or securities exercisable for or convertible into RMG III securities, other than the issuance
(x) of the Aggregate Closing Date Merger Consideration, (y) of Surviving Corporation Options, in connection with the Merger, and (z) in connection with any financing arrangement or efforts contemplated by the Merger Agreement,
(ii) grant any options, warrants or other equity-based awards with respect to RMG III securities not outstanding on the date hereof, or (iii) amend, modify or waive any of the material terms or rights set forth in any RMG III Warrant or
the Warrant Agreement, including any amendment, modification or reduction of the warrant price set forth therein; or
|
•
|
enter into any agreement to do any action specified above.
|
Other Covenants
The Merger Agreement also contains additional covenants of the
parties, including, among other things, covenants providing for:
Other Covenants of RMG III
•
|
RMG III to take certain actions so that, among other things, (i) the trustee of the Trust Account will pay when due all amounts
payable to RMG III shareholders following any RMG III shareholder redemptions, and pay all remaining amounts, less the fees and costs incurred by the trustee under the Trust Agreement then available in the Trust Account to RMG III for
immediate use t and thereafter the Trust Account will terminate, in each case, pursuant to the terms and subject to the terms and conditions of the Trust Agreement;
|
•
|
during the Interim Period, RMG III to ensure it remains listed as a public company on Nasdaq and to use reasonable best efforts
to obtain approval for the listing of Surviving Corporation Common Stock on Nasdaq from and after the Effective Time;
|
•
|
RMG III to approve and adopt the Incentive Plan, which provides for grants of awards to eligible service providers, with an
initial share reserve that is reasonably satisfactory to RMG III;
|
•
|
during the Interim Period, (i) RMG III not, and to instruct its representatives not to, (x) make any proposal or offer relating
to certain alternative or proposed transactions, (y) initiate any discussions or negotiations with any person with respect to such alternative or proposed transactions or (z) enter into any acquisition agreement, business combination,
merger agreement or similar definitive agreement, or any letter of intent, memorandum of understanding or agreement in principle, or any other agreement relating to such alternative or proposed transactions, in each case, other than to
or with H2B2 and its respective representatives and (ii) RMG III to, and to instruct its officers and directors to, and to instruct its representatives to, to immediately cease and terminate any such negotiations with any persons that
may ongoing with respect to any such alternative or proposed transactions as of the date of the Merger Agreement;
|
•
|
subject to obtaining the RMG III Shareholder Approval, cause the Domestication to become effective at least one (1) business day
prior to the Effective Time (see the section entitled “Proposal No. 2—The Domestication Proposal” for more information);
|
•
|
the Surviving Corporation to provide customary indemnification of, and provision of insurance with respect to, present and
former officers and directors of RMG III, H2B2 and each of H2B2’s subsidiaries;
|
•
|
during the Interim Period, RMG III to keep current and timely file all reports required to be filed or furnished with the SEC
and otherwise comply in all material respects with its reporting obligations under applicable law;
|
•
|
if the Closing has not occurred by June 28, 2023, and unless the Merger Agreement has been validly terminated, RMG III to take,
in accordance with applicable law and the RMG III Governing Documents, all commercially reasonable actions necessary to (i) establish a record date for, give,
|
TABLE OF CONTENTS
publish the notice of, convene, schedule and hold a meeting of RMG III shareholders to
consider the adoption and approval of an extension of the deadline by which RMG III must complete a business combination, in each case, on a month-to-month basis up to the earlier of the Closing or the valid termination of the Merger Agreement
and (ii) obtain approval of such extension by RMG III shareholders, in each case of clauses (i) and (ii) prior to August 9, 2023;
•
|
on the Closing Date, RMG III to amend, or cause to be amended, the Warrant Agreement to provide that each outstanding RMG III
Warrant represents the right to receive 0.075 shares of Surviving Corporation Common Stock.
|
Other Covenants of H2B2
•
|
during the Interim Period, H2B2 to grant RMG III and its accountants, counsel and other representatives reasonable access to its
properties, books, contracts, commitments, tax returns, records and appropriate officers and employees of H2B2 and its subsidiaries and to furnish such representatives with all financial and operating data and other information
concerning the affairs of H2B2 and its subsidiaries;
|
•
|
H2B2 (i) to deliver to RMG III, as soon as reasonably practicable and no later than the dates set forth in the Merger Agreement,
certain audited and unaudited financial statements which comply in all material respects with applicable accounting requirements and with the rules and regulations of the SEC, the Exchange Act and the Securities Act, (ii) to deliver to
RMG III, as soon as reasonably practicable, any additional financial or other information reasonably requested by RMG III to prepare pro forma financial statements required under federal securities laws to be included in RMG III’s
filings with the SEC (including this proxy statement) which comply with the rules and regulations of the SEC, (iii) to cooperate with RMG III to prepare such pro forma financial statements and (iv) to use reasonable best efforts to
cause its independent auditors to provide any necessary consents to the inclusion of H2B2’s financial statements in RMG III’s filings with the SEC in accordance with the applicable requirements of federal securities laws;
|
•
|
during the Interim Period, H2B2 not to, and to instruct and use reasonable best efforts to cause its representatives not to,
(i) initiate any negotiations with any person with respect to certain alternative or proposed transactions, (ii) enter into an agreement with respect to any such alternative or proposed transactions, (iii) grant any waiver, amendment or
release under any confidentiality agreement or the anti-takeover laws of any state, or (iv) otherwise knowingly facilitate any inquiries, proposals, discussions, or negotiations or any effort or attempt by any person to make a proposal
with respect to any such alternative or proposed transactions;
|
Joint Covenants of RMG III and H2B2
•
|
each of RMG III and H2B2 to (and, to the extent required, to cause its affiliates to) comply promptly with the notification and
reporting requirements of the HSR Act and to use reasonable best efforts to comply with any information or document requests;
|
•
|
each of RMG III and H2B2 to (and to cause its affiliates to) exercise its reasonable best efforts to (i) obtain termination or
expiration of any applicable waiting periods under the HSR Act, (ii) prevent the entry, in any action brought by an antitrust authority or any other person, of any governmental order which would prohibit, make unlawful or delay the
consummation of the transactions contemplated hereby and (iii) if any such governmental order is issued in any such action, cause such governmental order to be lifted;
|
•
|
each of RMG III and H2B2 to (i) use reasonable best efforts to obtain any necessary or advisable clearance, approval, consent,
or governmental authorization under laws prescribed or enforceable by any governmental authority for the transactions contemplated by the Merger Agreement and to resolve any objections as may be asserted by any governmental authority
with respect to the transactions contemplated by the Merger Agreement and (ii) cooperate fully with each other in the defense of such matters;
|
•
|
RMG III and H2B2 to jointly prepare and RMG III to file with the SEC this Registration Statement and proxy statement to be sent
to RMG III shareholders relating to the Special Meeting;
|
TABLE OF CONTENTS
•
|
RMG III and H2B2 to, and to cause its subsidiaries to, use reasonable best efforts to obtain all material consents and approvals
of third parties that any of RMG III, H2B2, or its respective affiliates are required to obtain in order to consummate the Merger;
|
•
|
each of RMG III and H2B2 to take certain actions to effect the Intended U.S. Tax Treatment and Intended Spanish Tax Treatment
(as such terms are defined in the Merger Agreement);
|
•
|
each of RMG III and H2B2 to, prior to the Effective Time, take all such steps as may be required to cause any dispositions of
shares of H2B2 Common Stock or acquisitions of shares of RMG III Ordinary Shares (including, in each case, securities deliverable upon exercise, vesting or settlement of any derivative securities) resulting from the transactions
contemplated by the Merger Agreement by each individual who may become subject to the reporting requirements of Section 16(a) of the Exchange Act in connection with the transactions contemplated thereby to be exempt under Rule B-3
promulgated under the Exchange Act;
|
•
|
each of RMG III and H2B2 to, and to cause its subsidiaries (in the case of H2B2) and its and their representatives to, prior to
the Closing, reasonably cooperate in a timely manner in connection with any financing arrangement the parties mutually agree to seek in connection with the transactions contemplated by the Merger Agreement;
|
•
|
each of RMG III and H2B2 to take all such action within their power, subject to the Surviving Corporation Governing Documents,
so that immediately following the Effective Time, (i) the Surviving Corporation Board will consist of nine (9) directors, which will initially include (x) five (5) director nominees, each of whom will be independent directors for the
purposes of Nasdaq, to be mutually designated by H2B2 as set forth in the Merger Agreement, and all of whom will be proposed by H2B2 pursuant to written notice to RMG III as soon as reasonably practicable following the date of the
Merger Agreement and (y) four (4) director nominees to be designated by H2B2, (ii) the Chief Executive Officer of the Surviving Corporation will be Mr. Anselmo Andrade Fernández de Mesa, and (iii) RMG III will be entitled, for a one
year period following the Closing, to appoint one person as an observer to the Surviving Corporation Board; and
|
•
|
prior to Closing, each of RMG III and H2B2 to (i) promptly notify the other party of, and keep such other party reasonably
informed of, the status of any litigation related to the Merger Agreement, any Ancillary Agreement or the transactions contemplated thereby brought, or, to the knowledge of a party, threatened in writing, against a party or the board of
directors of such party by any of such party’s stockholders or shareholders prior to the Closing and (ii) provide such other party the opportunity to participate in (subject to a customary joint defense agreement), but not control, the
defense of any such litigation and give due consideration to such other party’s advice with respect to such litigation and not settle any such litigation without prior written consent of such other party, such consent not to be
unreasonably withheld, conditioned, delayed or denied.
|
The Merger Agreement may be terminated and the transactions
contemplated by the Merger Agreement abandoned at any time prior to the Closing:
•
|
by written consent of H2B2 and RMG III;
|
•
|
by H2B2 or RMG III if any governmental authority has enacted, issued, promulgated, enforced or entered any law or governmental
order which has become final and non-appealable and has the effect of making consummation of the transactions contemplated by the Merger Agreement and the Ancillary Agreements illegal or otherwise enjoining, preventing or prohibiting
the consummation of the transactions contemplated by the Merger Agreement and the Ancillary Agreements (provided that such party did not cause such enactment);
|
•
|
by H2B2 or RMG III if the Closing has not occurred on or prior to March 31, 2024, subject to certain automatic extensions, for
reasons not primarily due to the terminating party’s breach or violation of the terms of the Merger Agreement;
|
•
|
by H2B2 or RMG III if such party disagrees with the final determination of the Closing Date Purchase Price by the valuation firm
as further described in the Merger Agreement;
|
TABLE OF CONTENTS
•
|
by H2B2 if there has been a modification in recommendation of the RMG III Board with respect to any of the Proposals;
|
•
|
by H2B2 if the RMG III Shareholder Approval has not been obtained by reason of the failure to obtain the required vote at a
meeting of RMG III shareholders;
|
•
|
by H2B2 if (i) prior to completion of a Capital Raise Transaction, a Capital Raise Investor or group of Capital Raise Investors,
with legal, valid and binding commitments to fund in such Capital Raise Transaction represent in the aggregate at least the Minimum Investment Amount object to the Merger and the other transactions contemplated by the Merger Agreement
by delivering a written notice to the board of directors of H2B2 by no later than fifteen days following execution of definitive agreements relating to the Capital Raise Transaction after which time no Capital Raise Investor will be
entitled to object to the Merger and the other transactions contemplated by the Merger Agreement; provided that, upon receipt of the written notice described above, H2B2 will be required to terminate the Merger Agreement on the tenth
business day following receipt of the written notice
|
•
|
by H2B2 in the event of an uncured breach of any representation, warranty, covenant or agreement on the part of RMG III, except
if the breach is curable by RMG III through the exercise of its reasonable best efforts, then, for a period of up to thirty (30) days after receipt by RMG III of notice from H2B2 of such breach, but only as long as RMG III continues to
exercise such reasonable best efforts to cure such breach, such termination will not be effective, and such termination will be effective only if such breach is not cured within the thirty-day period;
|
•
|
by RMG III in the event of an uncured breach of any representation, warranty, covenant or agreement on the part of H2B2, except
if the breach is curable by H2B2 through the exercise of its reasonable best efforts, then, for a period of up to thirty (30) days after receipt by H2B2 of notice from RMG III of such breach, but only as long as H2B2 continues to
exercise such reasonable best efforts to cure such breach, such termination will not be effective, and such termination will be effective only if such breach is not cured within the thirty-day period;
|
•
|
by RMG III if the H2B2 Stockholder Approval has not been obtained; and
|
•
|
by RMG III if an H2B2 Stockholder exercises any right or takes any action or fails to take any action required to satisfy the
conditions or any closing deliverables required to be delivered under the Merger Agreement that prevents consummation of the Merger and the other transactions contemplated by the Merger Agreement and the Ancillary Agreements.
|
In the event of the termination of the Merger Agreement, the Merger
Agreement will become void and have no effect, without any liability on the part of any party thereto or its respective affiliates, officers, directors or stockholders, other than liability of H2B2 or RMG III, as the case may be, for any
willful breach of the Merger Agreement occurring prior to such termination, other than with respect to certain exceptions contemplated by the Merger Agreement that will survive any termination of the Merger Agreement.
H2B2 will be required to pay RMG III a reimbursement fee amounting to
$3,300,000 on the terms described in the Merger Agreement in the following circumstances: (a) if H2B2 terminates the Merger Agreement (i) because it disagrees with the final determination of the Closing Date Purchase Price by an independent
valuation firm, or (ii) pursuant to a written notice from a Capital Raise Investor or a group of Capital Raise Investors to the H2B2 board of directors, as described above, and, in each of (i) and (ii), following termination of the Merger
Agreement, H2B2 consummates a Capital Raise Transaction resulting in proceeds that are equal to or exceed the Minimum Investment Amount; (b) if RMG III terminates the Merger Agreement because either (i) certain approvals of the H2B2
Stockholders were not obtained, or (ii) any H2B2 Stockholder exercises any right, takes an action, or fails to take any action, required to satisfy the conditions or closing deliverables set forth in the Merger Agreement, that prevents the
consummation of the Business Combination, and, in each of (i) and (ii), following termination of the Merger Agreement, H2B2 consummates a Capital Raise Transaction resulting in proceeds that are equal to or exceed the Minimum Investment Amount;
or (c) if the Capital Raise Transaction is not consummated with a Capital Raise Amount of at least the Minimum Investment Amount, and the Merger Agreement is terminated by written consent of the parties or because Closing did not occur by the
Agreement End Date, but within six months following termination, H2B2 obtains commitments from Capital
TABLE OF CONTENTS
Raise Investor(s) which, when aggregated to any Capital Raise Transaction entered
into prior to termination of the Merger Agreement and completed thereafter, is equal or exceeds the Minimum Investment Amount.
If the Closing does not occur, each party will be responsible for and
pay its own expenses incurred in connection with the Merger Agreement and the transactions contemplated hereby, including all fees of its legal counsel, financial advisers and accountants. If the Closing occurs, the Surviving Corporation will,
upon consummation of the Merger and release of proceeds from the Trust Account, pay or cause to be paid all accrued and unpaid transaction expenses of H2B2 and RMG III. Regardless of whether Closing occurs, each of RMG III and H2B2 will bear
fifty percent (50%) of any and all fees, costs and expenses paid or payable by RMG III or H2B2 or any of its subsidiaries, as the case may be, as a result of or in connection with or arising from (i) filing this proxy statement and registration
statement with the SEC, (ii) submitting a listing application to Nasdaq (including any filing fees arising therefrom) and (iii) any regulatory filings required under the Merger Agreement, including in connection with the requirements of the HSR
Act (including any filing fees payable to any governmental authority in connection therewith). If following the date of the Merger Agreement, RMG III files with the SEC a proxy statement pursuant to which it will seek the approval of RMG III
shareholders to amend the RMG III Governing Documents to extend the deadline by which RMG III must complete a business combination, any and all reasonable and documented fees, costs and expenses incurred by RMG III or any of its affiliates in
connection with obtaining such an extension (including any filing fees payable by RMG III or any of its affiliates to any governmental authority in connection therewith) will be allocated between the Parties as follows: H2B2 will bear fifty
percent (50%) of such costs and expenses up to a maximum amount of $250,000 if the extension is required for reasons that: (i) are not predominantly attributable to RMG III; or (ii) that are not predominantly attributable to either party,
including delay by the SEC in reviewing and declaring the this registration statement effective (other than where such delay is related to any delay by H2B2 in delivering certain financial statements pursuant to the Merger Agreement) or delay
in the consummation of the Capital Raise Transaction.
Waiver; Amendments
Either RMG III or H2B2 may, at any time prior to the Closing, by
action taken by its respective board of directors or other officers or people duly authorized, (a) extend the time for the performance of the obligations or acts of the other party, (b) waive any inaccuracies in the representations and
warranties (of the other party) that are contained in the Merger Agreement or (c) waive compliance by the other party with any of the agreements or conditions contained in the Merger Agreement, but such extension or waiver will be valid only if
set forth in an instrument in writing signed by the party granting such extension or waiver.
The Merger Agreement may be amended or modified in whole or in part,
only by a duly authorized agreement in writing that is executed in the same manner as the Merger Agreement and which makes reference to the Merger Agreement.
Enforcement
Each of RMG III or H2B2 is entitled to an injunction or injunctions
to prevent breaches of the Merger Agreement and to specific enforcement of the terms and provisions of the Merger Agreement, in addition to any other remedy to which either party is entitled at law or in equity.
Non-Recourse
Except in the case of claims against a person in respect of such
person’s actual fraud, (i) the Merger Agreement may only be enforced against, and any claim or cause of action based upon, arising out of, or related to the Merger Agreement or the transactions contemplated thereby may only be brought against,
H2B2 and RMG III as named parties to the Merger Agreement and (ii) except to the extent a party is a named party to the Merger Agreement (and then only to the extent of the specific obligations undertaken by such party), (x) no past, present or
future director, officer, employee, incorporator, member, partner, stockholder, shareholder affiliate, agent, attorney, advisor or other representative or affiliate of H2B2 or RMG III and (y) no past, present or future director, officer,
employee, incorporator, member, partner, stockholder, shareholder, affiliate, agent, attorney, advisor or other representative or affiliate of any of the foregoing shall have any liability (whether in contract, tort, equity or otherwise) for
any one or more of the representations, warranties, covenants, agreements or other obligations or liabilities of H2B2 or RMG III under the Merger Agreement for any claim based on, arising out of, or related to the Merger Agreement or the
transactions contemplated thereby.
TABLE OF CONTENTS
Non-Survival of Representations, Warranties and Covenants
Except (i) for H2B2’s obligation to pay RMG III the reimbursement fee
in an amount of $3,300,000 in the event of termination of the Merger Agreement in the certain circumstances as described above in the section entitled “The Merger Agreement—Termination”or (ii) in the
case of claims against a person in respect of such person’s actual fraud, none of the representations, warranties, covenants, obligations or other agreements in the Merger Agreement or in any certificate, statement or instrument delivered
pursuant to the Merger Agreement, including any rights arising out of any breach of such representations, warranties, covenants, obligations, agreements and other provisions, will survive the Closing and will terminate and expire upon the
occurrence of the Effective Time (and there will be no liability after the Closing in respect thereof), except for (i) those covenants and agreements contained in the Merger Agreement that by their terms expressly apply in whole or in part
after the Closing and then only with respect to any breaches occurring after the Closing and (ii) the non-survival provision.
No Solicitation
H2B2
Between the date of the Merger Agreement and the Closing, H2B2 and
its subsidiaries will use reasonable best efforts to cause its representatives not to, (i) initiate any negotiations with any person with respect to certain alternative transactions, (ii) enter into an agreement with respect to any such
alternative transactions or proposed transactions, (iii) grant any waiver, amendment or release under any confidentiality agreement or the anti-takeover laws of any state, or (iv) otherwise knowingly facilitate any inquiries, proposals,
discussions, or negotiations or any effort or attempt by any person to make a proposal with respect to any such alternative transaction, except, in each case, in relation to the Capital Raise Transaction.
RMG III
Between the date of the Merger Agreement and the Closing, RMG III
will not, and will instruct its representatives not to, (i) (x) make any proposal or offer that constitutes an initial business combination, (y) initiate any discussions or negotiations with any person with respect to such initial business
combination or (z) enter into any acquisition agreement, business combination agreement, merger agreement or similar definitive agreement, or any letter of intent, memorandum of understanding or agreement in principle, or any other agreement
relating to such initial business combination, in each case, other than to or with H2B2 and its respective representatives and (ii) immediately cease and terminate any such negotiations ongoing as of the date of the Merger Agreement.
Governing Law and Jurisdiction
The Merger Agreement is governed by the laws of the State of
Delaware. Any action based upon, arising out of or related to the Merger Agreement or the transactions contemplated thereby will be brought in federal and state courts located in the State of Delaware. Each of RMG III and H2B2 has waived its
rights to trial by jury in any action based upon, arising out of or related to the Merger Agreement or the transactions contemplated thereby.
TABLE OF CONTENTS
Registration Rights Agreement
The Merger Agreement contemplates that, at the
Closing, the Surviving Corporation, the Sponsor and certain of the H2B2 Stockholders will enter into a Registration Rights Agreement (the “Registration Rights Agreement”), pursuant to which the Surviving
Corporation will agree to register for resale, pursuant to Rule 415 under the Securities Act, certain shares of Surviving Corporation Common Stock and other equity securities of the Surviving Corporation that are held by the parties thereto
from time to time.
A copy of the form of Registration Rights
Agreement is attached hereto as Annex D and is incorporated by reference into this proxy statement. You are encouraged to read the Registration Rights Agreement in its entirety.
Lock-Up Agreements
The Merger Agreement contemplates that, at the
Closing, the Surviving Corporation will enter into the Lock-Up Agreements with (i) the Sponsor, and (ii) certain former stockholders of H2B2, in each case, which will, restrict the transfer of (a) a number of shares of Surviving Corporation
Common Stock held by each person or entity executing a Lock-Up Agreement immediately after the Effective Time, (b) any shares of Surviving Corporation Common Stock held issuable upon the exercise or settlement, as applicable of Surviving
Corporation Options held by a securityholder after the Effective Time or (c) any other securities convertible into or exercisable or exchangeable for Surviving Corporation Common Stock held by such person immediately after the Effective Time
(the “Lock-Up Shares”). The restrictions under the Lock-Up Agreements with respect to the Surviving Corporation Common Stock, begin at the Closing and end on the date that is 180 days after the Closing.
The Lock-Up Agreements provide that certain of the parties entering into Lock-Up Agreements will have 80% of the shares of Surviving Corporation Common Stock held by them at Closing subject to the provisions of the Lock-Up Agreement, with the
remaining 20% of the shares of Surviving Corporation Common Stock held by them at Closing not subject to the Lock-Up Agreement. The remainder of the parties entering into Lock-Up Agreements will have 100% of the shares of Surviving Corporation
Common Stock held by them at Closing subject to the provisions of the Lock-Up Agreement.
A copy of the form of Lock-Up Agreement is
attached hereto as Annex E and is incorporated by reference into this proxy statements. You are encouraged to read the Lock-Up Agreement in its entirety.
Other Related Agreements
Sponsor Support Agreement
On May 9, 2023, RMG III entered into the Sponsor
Support Agreement, by and among RMG III, the Sponsor and H2B2, where, among other things, the Sponsor agreed to vote in favor of the Business Combination and the transactions contemplated by the Merger Agreement, in each case, subject to the
terms and conditions contemplated by the Sponsor Support Agreement.
The Sponsor Support Agreement will terminate and
be of no further force or effect upon the earliest of (a) the Expiration Time, (b) the liquidation of RMG III and (c) the written agreement of RMG III, Sponsor and H2B2.
A copy of the Sponsor Support Agreement is
attached hereto as Annex B and is incorporated by reference into this proxy statement. You are encouraged to read the Sponsor Support Agreement in its entirety.
Company Support Agreement
On May 9, 2023, in connection with the execution
of the Merger Agreement, RMG III entered into the Company Support Agreement with H2B2 and certain H2B2 Stockholders. The H2B2 Stockholders who have executed the Company Support Agreement hold a majority of the issued and outstanding shares of
H2B2 Common Stock and such shares exceed the minimum voting power required to approve the Business Combination.
The Company Support Agreement will terminate and
be of no further force or effect upon the earliest of (a) the Expiration Time, (b) the liquidation of RMG III, and (c) as to each H2B2 Stockholder, the written agreement of RMG III, H2B2 and such H2B2 Stockholder.
A copy of the Company Support Agreement is
attached hereto as Annex C and is incorporated by reference into this proxy statement. You are encouraged to read the Company Support Agreement in its entirety.
TABLE OF CONTENTS
U.S. FEDERAL INCOME TAX CONSIDERATIONS
The following is a discussion of U.S. federal income tax
considerations generally applicable to (i) holders of RMG III Class A Ordinary Shares and RMG III Warrants of the Domestication, Warrant Amendment, and exercise of redemption rights and (ii) Non-U.S. Holders (as defined below) of the ownership
and disposition of Surviving Corporation’s securities received in connection with the Domestication or as a result of the Warrant Amendment. This section applies only to holders that hold their RMG III Class A Ordinary Shares or RMG III
Warrants as capital assets for U.S. federal income tax purposes (generally, property held for investment). This discussion does not discuss all aspects of U.S. federal income taxation that may be relevant to holders in light of their particular
circumstances or status including:
•
|
The Sponsor or RMG III’s officers or directors;
|
•
|
financial institutions or financial services entities;
|
•
|
taxpayers that are subject to the mark-to-market accounting rules;
|
•
|
governments or agencies or instrumentalities thereof;
|
•
|
regulated investment companies or real estate investment trusts;
|
•
|
expatriates or former long-term residents of the United States;
|
•
|
persons that actually or constructively own five percent or more of our voting shares or five percent or more of the total value
of all classes of our shares, except as specifically discussed under the caption heading “— Effects of Section 367 to U.S. Holders”;
|
•
|
persons that acquired our securities pursuant to an exercise of employee share options or upon payout of a restricted stock
unit, in connection with employee share incentive plans or otherwise as compensation;
|
•
|
persons that hold our securities as part of a straddle, constructive sale, hedging, conversion or other integrated or similar
transaction;
|
•
|
U.S. Holders (as defined below) whose functional currency is not the U.S. dollar;
|
•
|
controlled foreign corporations; and
|
•
|
passive foreign investment companies.
|
This discussion is based on the Code, proposed, temporary and final
Treasury Regulations promulgated under the Code, and judicial and administrative interpretations thereof, all as of the date hereof. All of the foregoing is subject to change, which change could apply retroactively and could affect the tax
considerations described herein. This discussion does not address U.S. federal taxes other than those pertaining to U.S. federal income taxation (such as estate or gift taxes, the alternative minimum tax or the Medicare tax on investment
income), nor does it address any aspects of U.S. state or local or non-U.S. taxation.
We have not and do not intend to seek any rulings from the IRS
regarding the Domestication or an exercise of redemption rights. There can be no assurance that the IRS will not take positions inconsistent with the considerations discussed below or that any such positions would not be sustained by a court.
This discussion does not consider the tax treatment of partnerships
or other pass-through entities or persons who hold our securities through such entities. If a partnership (or any entity or arrangement so characterized for U.S. federal income tax purposes) holds RMG III Class A Ordinary Shares or RMG III
Warrants, the tax treatment of such partnership and a person treated as a partner of such partnership will generally depend on the status of the partner and the activities of the partnership. Partnerships holding any RMG III Class A Ordinary
Shares or RMG III Warrants and persons that are treated as partners of such partnerships should consult their tax advisors as to the particular U.S. federal income tax consequences of the Domestication and an exercise of redemption rights to
them.
TABLE OF CONTENTS
EACH HOLDER SHOULD CONSULT ITS OWN TAX ADVISOR WITH RESPECT TO
THE PARTICULAR TAX CONSEQUENCES TO SUCH HOLDER OF THE DOMESTICATION, THE WARRANT AMENDMENT, AN EXERCISE OF REDEMPTION RIGHTS AND THE MERGER, INCLUDING THE EFFECTS OF U.S. FEDERAL, STATE AND LOCAL AND NON-U.S. TAX LAWS.
U.S. HOLDERS
As used herein, a “U.S. Holder” is a beneficial owner of RMG III
Class A Ordinary Shares or RMG III Warrants who or that is, for U.S. federal income tax purposes:
•
|
an individual citizen or resident of the United States,
|
•
|
a corporation (or other entity that is treated as a corporation for U.S. federal income tax purposes) that is created or
organized (or treated as created or organized) in or under the laws of the United States or any state thereof or the District of Columbia,
|
•
|
an estate whose income is subject to U.S. federal income tax regardless of its source, or
|
•
|
a trust if (1) a U.S. court can exercise primary supervision over the administration of such trust and one or more U.S. persons
have the authority to control all substantial decisions of the trust or (2) it has a valid election in place to be treated as a U.S. person.
|
Effects of the Domestication to U.S. Holders
Any RMG III Class A Ordinary Shares that are redeemed pursuant to the
redemption rights described herein will be canceled prior to the Domestication, and will not be exchanged for shares of Surviving Corporation Common Stock pursuant to the Domestication. Accordingly, shareholders that exercise their redemption
rights with respect to their RMG III Class A Ordinary Shares are not expected to be subject to the U.S. federal income tax consequences of the Domestication described below with respect to such redeemed shares.
The U.S. federal income tax consequences of the Domestication will
depend primarily upon whether the domestication qualifies as a “reorganization” within the meaning of Section 368 of the Code.
Under Section 368(a)(1)(F) of the Code, a reorganization is a “mere
change in identity, form, or place of organization of one corporation, however effected” (an “F Reorganization”). Pursuant to the Domestication, RMG III will change its jurisdiction of incorporation from
the Cayman Islands to Delaware.
Skadden, Arps, Slate, Meagher & Flom LLP has delivered an
opinion that the Domestication will qualify as an F Reorganization. Such opinion is filed by amendment as Exhibit 8.1 to the registration statement of which this proxy statement/prospectus forms part and is based on customary assumptions,
representations and covenants. If any of the assumptions, representations or covenants on which the opinion is based is or becomes incorrect, incomplete, inaccurate or is otherwise not complied with, the validity of the opinion described
above may be adversely affected and the tax consequences of the Domestication could differ from those described herein. An opinion of counsel is not binding on the IRS or any court, and there can be no certainty that the IRS will not
challenge the conclusions reflected in the opinion or that a court would not sustain such a challenge.
Assuming the Domestication qualifies as an F Reorganization, U.S.
Holders of RMG III Class A Ordinary Shares or RMG III Warrants will generally not recognize gain or loss for U.S. federal income tax purposes on the Domestication, except as provided below under the caption headings “— Effects of Section 367 to U.S. Holders” and “— PFIC Considerations,” and the Domestication will generally be treated for U.S. federal income tax purposes as if RMG III (i) transferred
all of its assets and liabilities to Domesticated RMG III in exchange for all of the outstanding common stock and warrants of Domesticated RMG III; and (ii) then distributed the common stock and warrants of Domesticated RMG III to the holders
of securities of RMG III in liquidation of RMG III. The taxable year of RMG III will be deemed to end on the date of the Domestication. Therefore, at the Effective Time (and thus, at the time of the consummation of the Business Combination),
RMG III will, as a matter of law, be a resident of the United States for U.S. federal income tax purposes. The remaining discussion under this section assumes that the Domestication qualifies as an F Reorganization.
All holders considering exercising redemption rights with respect to
their public shares should consult with their tax advisors with respect to the potential tax consequences to them of the Domestication and exercise of redemption rights.
TABLE OF CONTENTS
Basis and Holding Period Considerations
Assuming the Domestication qualifies as an F Reorganization: (i) the
tax basis of a share or warrant received by a U.S. Holder in the Domestication will generally equal the U.S. Holder’s tax basis in the RMG III Class A Ordinary Shares or RMG III Warrants surrendered in exchange therefor, increased by any amount
included in the income of such U.S. Holder as a result of Section 367 of the Code (as discussed below) and (ii) the holding period for a share or warrant received by a U.S. Holder will generally include such U.S. Holder’s holding period for the
RMG III Class A Ordinary Shares or RMG III Warrants surrendered in exchange therefor.
However, it is unclear whether the redemption rights with respect to
the RMG III Class A Ordinary Shares may prevent the holding period of the stock received by a U.S. Holder in the Domestication from commencing prior to the termination of such rights.
Effects of Section 367 to U.S. Holders
Section 367 of the Code applies to certain transactions involving
foreign corporations, including a domestication of a foreign corporation in an F Reorganization. Section 367 of the Code imposes United States federal income tax on certain United States persons in connection with transactions that would
otherwise be tax-free. Section 367(b) of the Code will generally apply to U.S. Holders on the date of the Domestication.
“U.S. Shareholders” of RMG III
A U.S. Holder who, on the date of the Domestication beneficially owns
(actually or constructively) 10% or more of the total combined voting power of all classes of RMG III stock entitled to vote or 10% or more of the total value of all classes of RMG III stock (a “U.S.
Shareholder”) must include in income as a dividend the “all earnings and profits amount” attributable to the RMG III Class A Ordinary Shares it directly owns, within the meaning of Treasury Regulations under Section 367 of the Code. A
U.S. Holder’s ownership of RMG III Warrants will be taken into account in determining whether such U.S. Holder is a U.S. Shareholder. Complex attribution rules apply in determining whether a U.S. Holder is a U.S. Shareholder and all U.S.
Holders should consult their tax advisors with respect to these attribution rules.
A U.S. Shareholder’s all earnings and profits amount with respect to
its RMG III Class A Ordinary Shares is the net positive earnings and profits of RMG III (as determined under Treasury Regulations under Section 367) attributable to such RMG III Class A Ordinary Shares (as determined under Treasury Regulations
under Section 367) but without regard to any gain that would be realized on a sale or exchange of such RMG III Class A Ordinary Shares. Treasury Regulations under Section 367 provide that the all earnings and profits amount attributable to a
shareholder’s stock is determined according to the principles of Section 1248 of the Code. In general, Section 1248 of the Code and the Treasury Regulations thereunder provide that the amount of earnings and profits attributable to a block of
stock (as defined in Treasury Regulations under Section 1248 of the Code) in a foreign corporation is the ratably allocated portion of the foreign corporation’s earnings and profits generated during the period the shareholder held the block of
stock.
RMG III does not expect to have significant, if any, cumulative net
earnings and profits on the date of the Domestication. If RMG III’s cumulative net earnings and profits through the date of the Domestication is less than or equal to zero, then a U.S. Holder should not be required to include in gross income an
all earnings and profits amount with respect to its RMG III Class A Ordinary Shares. It is possible, however, that the amount of RMG III’s cumulative net earnings and profits may be greater than expected through the date of the Domestication in
which case a U.S. Shareholder would be required to include all of its earnings and profits amount in income as a deemed dividend under Treasury Regulations under Section 367 as a result of the Domestication.
U.S. Holders that Own Less Than 10 Percent of RMG III
A U.S. Holder who, on the date of the Domestication, beneficially
owns (actually or constructively) RMG III Class A Ordinary Shares with a fair market value of $50,000 or more and is not a U.S. Shareholder will recognize gain (but not loss) with respect to its RMG III Class A Ordinary Shares in the
Domestication or, in the alternative, may elect to recognize the “all earnings and profits” amount attributable to such holder’s RMG III Class A Ordinary Shares as described below.
Unless a U.S. Holder makes the “all earnings and profits election” as
described below, such U.S. Holder generally must recognize gain (but not loss) with respect to shares received in the Domestication in an amount
TABLE OF CONTENTS
equal to the excess of the fair market value of such shares over the U.S. Holder’s
adjusted tax basis in the RMG III Class A Ordinary Shares deemed surrendered in exchange therefor.
In lieu of recognizing any gain as described in the preceding
paragraph, a U.S. Holder may elect to include in income the all earnings and profits amount attributable to its RMG III Class A Ordinary shares under Section 367(b). There are, however, strict conditions for making this election. This election
must comply with applicable Treasury Regulations and generally must include, among other things:
(i)
|
a statement that the Domestication is a Section 367(b) exchange (within the meaning of the applicable Treasury Regulations);
|
(ii)
|
a complete description of the Domestication;
|
(iii)
|
a description of any stock, securities or other consideration transferred or received in the Domestication;
|
(iv)
|
a statement describing the amounts required to be taken into account for U.S. federal income tax purposes;
|
(v)
|
a statement that the U.S. Holder is making the election that includes (A) a copy of the information that the U.S. Holder
received from RMG III establishing and substantiating the U.S. Holder’s all earnings and profits amount with respect to the U.S. Holder’s RMG III Class A Ordinary Shares and (B) a representation that the U.S. Holder has notified RMG III
(or the Surviving Corporation) that the U.S. Holder is making the election; and
|
(vi)
|
certain other information required to be furnished with the U.S. Holder’s tax return or otherwise furnished pursuant to the Code
or the Treasury Regulations.
|
In addition, the election must be attached by an electing U.S. Holder
to such U.S. Holder’s timely filed U.S. federal income tax return for the year of the Domestication, and the U.S. Holder must send notice of making the election to RMG III or the Surviving Corporation no later than the date such tax return is
filed. In connection with this election, RMG III intends to provide each U.S. Holder eligible to make such an election with information regarding RMG III’s earnings and profits upon request.
RMG III does not expect to have significant, if any, cumulative
earnings and profits through the date of the Domestication and if that proves to be the case, U.S. Holders who make this election are not expected to have a significant income inclusion under Section 367(b) of the Code, provided that the U.S.
Holder properly executes the election and complies with the applicable notice requirements. However, as noted above, if it were determined that RMG III had positive earnings and profits through the date of the Domestication, a U.S. Holder that
makes the election described herein could have an all earnings and profits amount with respect to its RMG III Class A Ordinary Shares, and thus could be required to include that amount in income as a deemed dividend under applicable Treasury
Regulations as a result of the Domestication.
U.S. HOLDERS SHOULD CONSULT THEIR TAX ADVISORS REGARDING WHEN AND
WHETHER TO MAKE THIS ELECTION AND, IF THE ELECTION IS DETERMINED TO BE ADVISABLE, THE APPROPRIATE FILING REQUIREMENTS WITH RESPECT TO THIS ELECTION AND THE CONSEQUENCES TO THEM OF MAKING AN ELECTION.
U.S. Holders that Own RMG III Class A Ordinary Shares with a Fair
Market Value of Less Than $50,000
A U.S. Holder who, on the date of the Domestication, beneficially
owns (actually or constructively) RMG III Class A Ordinary Shares with a fair market value less than $50,000 will generally not be required to recognize any gain or loss under Section 367 of the Code in connection with the Domestication, and
will generally not be required to include any part of the all earnings and profits amount in income.
U.S. Holders of Warrants
Subject to the considerations described above relating to a U.S.
Holder’s ownership of warrants being taken into account in determining whether such U.S. Holder is a U.S. Shareholder for purposes of Section 367(b) of the Code, and the considerations described below relating to PFIC considerations, a U.S.
Holder of warrants should not be subject to U.S. federal income tax with respect to the exchange of warrants for newly issued warrants in the Domestication.
ALL U.S. HOLDERS SHOULD CONSULT THEIR TAX ADVISORS WITH RESPECT TO
THE EFFECT OF SECTION 367 OF THE CODE TO THEIR PARTICULAR CIRCUMSTANCES.
TABLE OF CONTENTS
Effects of the Warrant Amendment to U.S. Holders
of Warrants
It is expected that, for U.S. federal income tax purposes, the
Warrant Amendment will be treated as a tax-free “recapitalization.” As a result of such treatment, U.S. Holders of RMG III Warrants (i) will generally not recognize gain or loss for U.S. federal income tax purposes on the Warrant Amendment
(ii) the aggregate tax basis of the Surviving Corporation Common Stock held by a U.S. Holder after the Warrant Amendment will generally equal the U.S. Holder’s aggregate tax basis in the RMG III Warrants prior to the Warrant Amendment, and
(iii) the holding period for the Surviving Corporation Common Stock held by a U.S. Holder after the Warrant Amendment will generally include such U.S. Holder’s holding period for the RMG III Warrants prior to the Warrant Amendment.
Effects to U.S. Holders of Exercising Redemption
Rights
Any RMG III Class A Ordinary Shares that are redeemed pursuant to the
redemption rights described herein will be canceled prior to the Domestication, and will not be exchanged for Surviving Corporation Common Stock pursuant to the Domestication. Accordingly, such an exercise of redemption rights is expected to be
treated as a redemption of RMG III Class A Ordinary Shares that may be subject to the PFIC rules, as further discussed below.
Subject to such PFIC rules, the U.S. federal income tax consequences
to a U.S. Holder of RMG III Class A Ordinary Shares that exercises its redemption rights to receive cash from the Trust Account in exchange for all or a portion of its RMG III Class A Ordinary Shares will depend on whether the redemption
qualifies as a sale of such shares redeemed under Section 302 of the Code or is treated as a distribution under Section 301 of the Code, as well as on whether such holder has made a timely QEF Election or mark-to-market election (each as
discussed below).
The redemption of RMG III Class A Ordinary Shares will generally
qualify as a sale of such shares redeemed if such redemption (i) is “substantially disproportionate” with respect to the redeeming U.S. Holder, (ii) results in a “complete termination” of such U.S. Holder’s interest in us or (iii) is “not
essentially equivalent to a dividend” with respect to such U.S. Holder. These tests are explained more fully below.
For purposes of such tests, a U.S. Holder takes into account not only
RMG III Class A Ordinary Shares actually owned by such U.S. Holder, but also shares of RMG III Class A Ordinary Shares that are constructively owned by such U.S. Holder. A redeeming U.S. Holder may constructively own, in addition to RMG III
Class A Ordinary Shares owned directly, RMG III Class A Ordinary Shares owned by certain related individuals and entities in which such U.S. Holder has an interest or that have an interest in such U.S. Holder, as well as any RMG III Class A
Ordinary Shares such U.S. Holder has a right to acquire by exercise of an option, which would generally include RMG III Class A Ordinary Shares which could be acquired pursuant to the exercise of the RMG III Warrants.
The redemption of RMG III Class A Ordinary Shares will generally be
“substantially disproportionate” with respect to a redeeming U.S. Holder if the percentage of the respective entity’s outstanding voting shares that such U.S. Holder actually or constructively owns immediately after the redemption is less than
80 percent of the percentage of the respective entity’s outstanding voting shares that such U.S. Holder actually or constructively owned immediately before the redemption. Prior to the Business Combination, the RMG III Class A Ordinary Shares
may not be treated as voting shares for this purpose and, consequently, this substantially disproportionate test may not be applicable. There will be a complete termination of such U.S. Holder’s interest if either (i) all of the RMG III Class A
Ordinary Shares actually or constructively owned by such U.S. Holder are redeemed or (ii) all of the RMG III Class A Ordinary Shares actually owned by such U.S. Holder are redeemed and such U.S. Holder is eligible to waive, and effectively
waives in accordance with specific rules, the attribution of any RMG III Class A Ordinary Shares owned by certain family members and such U.S. Holder does not constructively own any other shares of the respective entity. The redemption of RMG
III Class A Ordinary Shares will not be essentially equivalent to a dividend if it results in a “meaningful reduction” of such U.S. Holder’s proportionate interest in the respective entity. Whether the redemption will result in a meaningful
reduction in such U.S. Holder’s proportionate interest will depend on the particular facts and circumstances applicable to it. The IRS has indicated in a published ruling that even a small reduction in the proportionate interest of a small
minority shareholder in a publicly held corporation who exercises no control over corporate affairs may constitute such a “meaningful reduction.”
TABLE OF CONTENTS
Redemption Treated as a Sale Under Section 302 of RMG III Class A
Ordinary Shares
If any of the tests above is satisfied, the redemption will generally
be treated as sale of a U.S. Holder’s RMG III Class A Ordinary Shares. Subject to the PFIC rules discussed below, a U.S. Holder treated as selling RMG III Class A Ordinary Shares will generally recognize capital gain or loss. The amount of gain
or loss recognized will generally be equal to the difference between (i) the sum of the amount of cash and the fair market value of any property received in such sale and (ii) the U.S. Holder’s adjusted tax basis in the shares disposed of.
Under tax law currently in effect, long-term capital gains recognized
by non-corporate U.S. Holders are generally subject to U.S. federal income tax at a reduced rate of tax. Capital gain or loss will be long-term capital gain or loss if the U.S. Holder’s holding period for the relevant securities exceeds one
year. However, it is unclear whether the redemption rights with respect to the RMG III Class A Ordinary Shares may prevent the holding period of the shares from commencing prior to the termination of such rights. The deductibility of capital
losses is subject to limitations.
Redemption Treated as a Distribution Under Section 301
If none of the above tests is satisfied, a redemption will be treated
as a distribution under Section 301 of the Code with respect to RMG III Class A Ordinary Shares. Such distribution will generally be treated as a dividend for U.S. federal income tax purposes to the extent the distribution is paid out of RMG
III’s current or accumulated earnings and profits (as determined under U.S. federal income tax principles). Distributions in excess of any such earnings and profits will generally be applied against and reduce the U.S. Holder’s basis in its
other RMG III Class A Ordinary Shares (but not below zero) and, to the extent in excess of such basis, will be treated as capital gain from the sale or exchange of such redeemed shares. After the application of those rules, any remaining tax
basis a U.S. Holder has in the redeemed RMG III Class A Ordinary Shares will be added to the adjusted tax basis in such holder’s remaining RMG III Class A Ordinary Shares. If there are no remaining RMG III Class A Ordinary Shares, a U.S. Holder
should consult its tax advisors as to the allocation of any remaining basis.
ALL U.S. HOLDERS SHOULD CONSULT THEIR TAX ADVISORS AS TO THE TAX
CONSEQUENCES TO THEM OF A REDEMPTION OF ALL OR A PORTION OF THEIR RMG III CLASS A ORDINARY SHARES PURSUANT TO AN EXERCISE OF REDEMPTION RIGHTS.
PFIC Considerations
Following the Domestication, the we will not be a foreign corporation
subject to the PFIC rules. However, dispositions of RMG III Class A Ordinary Shares pursuant to either an exercise of redemption rights or the Domestication may be subject to the PFIC rules, as described below.
Definition of a PFIC
A foreign (i.e., non-U.S.) corporation will be classified as a PFIC
for U.S. federal income tax purposes if either (i) at least 75% of its gross income in a taxable year, including its pro rata share of the gross income of any corporation in which it is considered to own at least 25% of the shares by value, is
passive income or (ii) at least 50% of its assets in a taxable year (generally determined based on fair market value and averaged quarterly over the year) are held for the production of, or produce, passive income. Passive income generally
includes dividends, interest, rents and royalties (other than rents or royalties derived from the active conduct of a trade or business) and gains from the disposition of passive assets. For purposes of these rules, interest income earned by
RMG III would be considered to be passive income and cash held by RMG III would be considered to be a passive asset.
PFIC Status of RMG III
Based upon the composition of its income and assets, and upon a
review of its financial statements, RMG III believes that it likely was a PFIC for its most recent taxable year ended on December 31, 2022 and will likely be considered a PFIC for its current taxable year which ends as a result of the
Domestication.
Effects of the PFIC Rules
As discussed above, RMG III believes that it is likely classified as
a PFIC for U.S. federal income tax purposes. If RMG III is determined to be a PFIC for any taxable year (or portion thereof) that is included in a
TABLE OF CONTENTS
U.S. Holder’s holding period in its RMG III Class A Ordinary Shares or RMG III
Warrants, then such holder will generally be subject to special rules (the “Default PFIC Regime”) unless, with respect to its RMG III Class A Ordinary Shares, the U.S. Holder made (i) a
timely and effective QEF Election in respect of RMG III’s first taxable year as a PFIC in which the U.S. Holder held RMG III Class A Ordinary Shares, (ii) a QEF Election along with a purging election, or (iii) a “mark- to-market” election,
each as defined and further described below under “—QEF Election and Mark-to-Market Election” The Default PFIC Regime applies with respect to:
•
|
any gain recognized by the U.S. Holder on the sale or other disposition of its RMG III Class A Ordinary Shares or RMG III
Warrants; and
|
•
|
any “excess distribution” made to the U.S. Holder (generally, any distributions to such U.S. Holder during a taxable year of the
U.S. Holder that are greater than 125% of the average annual distributions received by such U.S. Holder in respect of its ordinary shares during the three preceding taxable years of such U.S. Holder or, if shorter, such U.S. Holder’s
holding period for such ordinary shares).
|
A disposition for these purposes generally includes any redemptions
pursuant to an exercise of redemption rights described in this proxy. It is also possible that, pursuant to certain proposed Treasury Regulations described below, the exchange of RMG III Class A Ordinary Shares for shares of Domesticated RMG
III Class A Stock in the Domestication may be a taxable disposition subject to the PFIC rules.
Section 1291(f) of the Code requires that, to the extent provided in
Treasury Regulations, a United States person who disposes of stock of a PFIC (including for this purpose exchanging warrants for newly issued warrants in the Domestication) recognizes gain notwithstanding any other provision of the Code. No
final Treasury Regulations are currently in effect under Section 1291(f) of the Code. However, proposed Treasury Regulations under Section 1291(f) of the Code have been promulgated with a retroactive effective date. If finalized in their
current form, those proposed Treasury Regulations would generally treat certain nonrecognition exchanges such as the exchange of RMG III Class A Ordinary Shares for shares of Domesticated RMG III Class A Stock in the Domestication as taxable
dispositions that, in the absence of certain elections described below, are subject to the Default PFIC Regime.
Under the Default PFIC Regime:
•
|
the U.S. Holder’s gain will be allocated ratably over the U.S. Holder’s holding period for such U.S. Holder’s RMG III Class A
Ordinary Shares or RMG III Warrants;
|
•
|
the amount of gain allocated to the U.S. Holder’s taxable year in which the U.S. Holder recognized the gain, or to the period in
the U.S. Holder’s holding period before the first day of the first taxable year in which RMG III was a PFIC, will be taxed as ordinary income;
|
•
|
the amount of gain allocated to other taxable years (or portions thereof) of the U.S. Holder and included in such U.S. Holder’s
holding period would be taxed at the highest tax rate in effect for that year and applicable to the U.S. Holder; and
|
•
|
an additional tax equal to the interest charge generally applicable to underpayments of tax will be imposed on the U.S. Holder
in respect of the tax attributable to each such other taxable year of such U.S. Holder.
|
Any “all earnings and profits amount” included in income by a U.S.
Holder as a result of the Domestication (discussed under the heading “—Effects of Section 367 to U.S. Holders” above) would generally be treated as gain subject to these rules.
It is difficult to predict whether, in what form and with what
effective date, final Treasury Regulations under Section 1291(f) of the Code may be adopted or how any such Treasury Regulations would apply. Therefore, U.S. Holders of RMG III Class A Ordinary Shares that have not made a timely QEF Election
(or a QEF Election along with a purging election) or a mark-to-market election (each as defined below) may, pursuant to the proposed Treasury Regulations, be subject to taxation under the PFIC rules on the Domestication with respect to their
RMG III Class A Ordinary Shares under the PFIC rules in the manner set forth above. An Electing Shareholder (as defined below) would generally not be subject to the adverse PFIC rules discussed above with respect to their RMG III Class A
Ordinary Shares but rather would include annually in gross income its pro rata share of the ordinary earnings and net capital gain of RMG III, whether or not such amounts are actually distributed.
TABLE OF CONTENTS
The application of the PFIC rules to RMG III Warrants is unclear.
A proposed Treasury Regulation issued under the PFIC rules generally treats an “option” (which would include an RMG III Warrant) to acquire the stock of a PFIC as stock of the PFIC, while a final Treasury Regulation issued under the PFIC rules
provides that the QEF Election does not apply to options and no mark-to-market election (as defined below) is currently available with respect to options. Therefore, it is possible that the proposed Treasury Regulations if finalized in their
current form would apply to cause gain recognition on the exchange of RMG III Warrants for Domesticated RMG III Warrants pursuant to the Domestication.
Any gain recognized by a U.S. Holder of RMG III Class A Ordinary
Shares or RMG III Warrants as a result of the Domestication pursuant to PFIC rules would be taxable income to such U.S. Holder, taxed under the PFIC rules in the manner set forth above, with no corresponding receipt of cash.
ALL U.S. HOLDERS SHOULD CONSULT THEIR TAX ADVISORS REGARDING THE
EFFECTS OF THE PFIC RULES ON AN EXERCISE OF REDEMPTION RIGHTS OR THE DOMESTICATION, INCLUDING THE IMPACT OF ANY PROPOSED OR FINAL TREASURY REGULATIONS.
QEF Election and Mark-to-Market Election
The impact of the PFIC rules on a U.S. Holder of RMG III Class A
Ordinary Shares (but not RMG III Warrants) will depend on whether the U.S. Holder has made a timely and effective election to treat RMG III as a “qualified electing fund” under Section 1295 of the Code for the taxable year that is the first
year in the U.S. Holder’s holding period of RMG III Class A Ordinary Shares during which RMG III qualified as a PFIC (a “QEF Election”) or, if in a later taxable year, the U.S. Holder made a QEF Election along with a purging election. A purging
election creates a deemed sale of the U.S. Holder’s RMG III Class A Ordinary Shares at their then fair market value and requires the U.S. Holder to recognize gain pursuant to the purging election subject to the special PFIC tax and interest
charge rules described above. As a result of any such purging election, the U.S. Holder would have additional basis (to the extent of any gain recognized in the deemed sale) and, solely for purposes of the PFIC rules, a new holding period in
its RMG III Class A Ordinary Shares. U.S. Holders should consult their tax advisors as to the application of the rules governing purging elections to their particular circumstances.
A U.S. Holder’s ability to make a QEF Election (or a QEF Election
along with a purging election) with respect to RMG III is contingent upon, among other things, the provision by RMG III of a “PFIC Annual Information Statement” to such U.S. Holder. If RMG III determines that it is a PFIC for any taxable year,
it will endeavor to provide PFIC Annual Information Statements to U.S. Holders of RMG III Class A Ordinary Shares, upon request. There is no assurance, however, that RMG III will timely provide such information. A U.S. Holder that made a QEF
Election (or a QEF Election along with a purging election) may be referred to as an “Electing Shareholder” and a U.S. Holder that did not make a QEF Election may be referred to as a “Non-Electing Shareholder.” As discussed further above, a U.S.
Holder is not able to make a QEF Election with respect to RMG III Warrants.
The impact of the PFIC rules on a U.S. Holder of RMG III Class A
Ordinary Shares may also depend on whether the U.S. Holder has made an election under Section 1296 of the Code. U.S. Holders who hold (actually or constructively) stock of a foreign corporation that is classified as a PFIC may annually elect to
mark such stock to its market value if such stock is “marketable stock,” generally, stock that is regularly traded on a national securities exchange that is registered with the SEC, including Nasdaq, or on a foreign exchange or market that the
IRS determines has rules sufficient to ensure that the market price represents a legitimate and sound fair market value (a “mark-to-market election”). No assurance can be given that the RMG III Class A
Ordinary Shares are considered to be marketable stock for purposes of the mark-to-market election or whether the other requirements of this election are satisfied. If such an election is available and has been made, such U.S. Holders will
generally not be subject to the Default PFIC Regime. However, if the mark-to-market election is made by a Non-Electing Shareholder after the beginning of its holding period for the PFIC stock, then the Default PFIC Regime will apply to certain
dispositions of, distributions on and other amounts taxable with respect to RMG III Class A Ordinary Shares. A mark-to-market election is not available with respect to warrants.
TABLE OF CONTENTS
THE RULES DEALING WITH PFICS ARE VERY COMPLEX AND ARE IMPACTED BY
VARIOUS FACTORS IN ADDITION TO THOSE DESCRIBED ABOVE. ALL U.S. HOLDERS SHOULD CONSULT THEIR TAX ADVISORS REGARDING THE CONSEQUENCES TO THEM OF THE PFIC RULES, INCLUDING, WITHOUT LIMITATION, WHETHER A QEF ELECTION (OR A QEF ELECTION ALONG WITH A
PURGING ELECTION), A MARK-TO-MARKET ELECTION OR ANY OTHER ELECTION IS AVAILABLE AND THE CONSEQUENCES TO THEM OF ANY SUCH ELECTION, AND THE IMPACT OF ANY PROPOSED OR FINAL PFIC TREASURY REGULATIONS.
NON-U.S. HOLDERS
As used herein, a “non-U.S. Holder” is a beneficial owner (other than
a partnership or entity treated as a partnership for U.S. federal income tax purposes) of RMG III Class A Ordinary Shares or RMG III Warrants that is not a U.S. Holder.
Effects of the Domestication to Non-U.S. Holders
We do not expect the Domestication to result in any U.S. federal
income tax consequences to non-U.S. Holders of RMG III Class A Ordinary Shares and RMG III Warrants.
Effects of the Warrant Amendment to Non-U.S.
Holders of Warrants
We do not expect the Warrant Amendment to result in any U.S. federal
income tax consequences to non-U.S. Holders of RMG III Warrants.
The following describes U.S. federal income tax considerations
relating to the ownership and disposition of Surviving Corporation Common Stock by a non-U.S. Holder after the Business Combination.
Distributions
In general, any distributions made to a non-U.S. Holder with respect
to Surviving Corporation Common Stock, to the extent paid out of the Surviving Corporation’s current or accumulated earnings and profits (as determined under U.S. federal income tax principles), will constitute dividends for U.S. federal income
tax purposes and, provided such dividends are not effectively connected with such non-U.S. Holder’s conduct of a trade or business within the United States (and, if required by an applicable income tax treaty, attributable to a U.S. permanent
establishment or fixed base maintained by such non-U.S. Holder), will be subject to withholding tax from the gross amount of the dividend at a rate of 30%, unless such non-U.S. Holder is eligible for a reduced rate of withholding tax under an
applicable income tax treaty and provides proper certification of its eligibility for such reduced rate (usually on an IRS Form W-8BEN or W-8BEN-E, as applicable). Any distribution not constituting a dividend will be treated first as reducing
(but not below zero) the non-U.S. Holder’s adjusted tax basis in its Surviving Corporation Common Stock and then, to the extent such distribution exceeds the non-U.S. Holder’s adjusted tax basis, as gain realized from the sale or other
disposition of such Surviving Corporation Common Stock, which will be treated as described under “—Sale, Exchange or Other Disposition of Surviving Corporation Common Stock” below.
Dividends paid by the Surviving Corporation to a non-U.S. Holder that
are effectively connected with such non-U.S. Holder’s conduct of a trade or business within the United States (and, if required by an applicable income tax treaty, attributable to a U.S. permanent establishment or fixed base maintained by such
non-U.S. Holder) will generally not be subject to U.S. withholding tax, provided such non-U.S. Holder complies with certain certification and disclosure requirements (usually by providing an IRS Form W-8ECI). Instead, such dividends will
generally be subject to U.S. federal income tax, net of certain deductions, at the same graduated individual or corporate rates applicable to U.S. Holders. If the non-U.S. Holder is a corporation, dividends that are effectively connected income
may also be subject to a “branch profits tax” at a rate of 30% (or such lower rate as may be specified by an applicable income tax treaty).
TABLE OF CONTENTS
Sale, Exchange or Other Disposition of Surviving
Corporation Common Stock
A non-U.S. Holder will generally not be subject to U.S. federal
income tax on gain realized on a sale or other disposition of Surviving Corporation Common Stock unless:
•
|
such non-U.S. Holder is an individual who was present in the United States for 183 days or more in the taxable year of such
disposition and certain other requirements are met, in which case any gain realized will generally be subject to a flat 30% U.S. federal income tax;
|
•
|
the gain is effectively connected with a trade or business of such non-U.S. Holder in the United States (and, if required by an
applicable income tax treaty, attributable to a U.S. permanent establishment or fixed base maintained by such non-U.S. Holder), in which case such gain will be subject to U.S. federal income tax, net of certain deductions, at the same
graduated individual or corporate rates applicable to U.S. Holders, and any such gain of a non-U.S. Holder that is a corporation may be subject to an additional “branch profits tax” at a rate of 30% (or such lower rate as may be
specified by an applicable income tax treaty); or
|
•
|
the Surviving Corporation is or has been a U.S. real property holding corporation at any time during the shorter of the
five-year period preceding such disposition and such non-U.S. Holder’s holding period and either (A) Surviving Corporation’s Common Stock has ceased to be regularly traded on an established securities market or (B) such non-U.S. Holder
has owned or is deemed to have owned, at any time during the shorter of the five-year period preceding such disposition and such non-U.S. Holder’s holding period, more than 5% of outstanding Surviving Corporation Common Stock.
|
If the third bullet point above applies to a non-U.S. Holder, gain
recognized by such non-U.S. Holder on the sale, exchange or other disposition of Surviving Corporation Common Stock will be subject to tax at generally applicable U.S. federal income tax rates. In addition, a buyer of such Surviving Corporation
Common Stock from a non-U.S. Holder may be required to withhold U.S. income tax at a rate of 15% of the amount realized upon such disposition. We will be classified as a U.S. real property holding corporation if the fair market value of our
“United States real property interests” equals or exceeds 50% of the sum of the fair market value of our worldwide real property interests and our other assets used or held for use in a trade or business, as determined for U.S. federal income
tax purposes. The Surviving Corporation does not expect to be classified as a U.S. real property holding corporation immediately following the Business Combination. However, such determination is factual in nature and subject to change and no
assurance can be provided as to whether the Surviving Corporation will be a U.S. real property holding corporation with respect to a non-U.S. Holder following the Business Combination or at any future time.
Effects to Non-U.S. Holders of Exercising
Redemption Rights
The characterization for U.S. federal income tax purposes of a
non-U.S. Holder’s exercise of redemption rights with respect to its RMG III Class A Ordinary Shares will generally be as described above under “U.S. Holders—Effects to U.S. Holders of Exercising Redemption
Rights.”
A non-U.S. Holder will generally not be subject to U.S. federal
income tax with respect to any redemption treated as either a sale of RMG III Class A Ordinary Shares, or a distribution received with respect to such shares, unless either of the first two bullet points described above under “Non-U.S. Holders—Sale, Exchange or Other Disposition of Surviving Corporation Common Stock” applies.
Foreign Account Tax Compliance Act
Section 1471 through 1474 of the Code and the Treasury Regulations
and administrative guidance promulgated thereunder (commonly referred as the “Foreign Account Tax Compliance Act” or “FATCA”) generally impose withholding at a rate of 30% in certain circumstances on dividends in respect of securities
(including Surviving Corporation Common Stock) which are held by or through certain foreign financial institutions (including investment funds), unless any such institution (i) enters into, and complies with, an agreement with the IRS to
report, on an annual basis, information with respect to interests in, and accounts maintained by, the institution that are owned by certain U.S. persons and by certain non-U.S. entities that are wholly or partially owned by U.S. persons and to
withhold on certain payments, or (ii) if required under an intergovernmental agreement between the United States and an applicable foreign country, reports such information to its local tax authority, which will exchange such information with
the U.S. authorities. An
TABLE OF CONTENTS
intergovernmental agreement between the United States and an applicable foreign
country may modify these requirements. Accordingly, the entity through which Surviving Corporation Common Stock are held will affect the determination of whether such withholding is required. Similarly, dividends in respect of Surviving
Corporation Common Stock held by an investor that is a non-financial non-U.S. entity that does not qualify under certain exceptions will generally be subject to withholding at a rate of 30%, unless such entity either (i) certifies to the
applicable withholding agent that such entity does not have any “substantial United States owners” or (ii) provides certain information regarding the entity’s “substantial United States owners,” which will in turn be provided to the U.S.
Department of Treasury.
All holders should consult their tax advisors regarding the possible
implications of FATCA on their investment in Surviving Corporation Common Stock.
TABLE OF CONTENTS
COMPARISON OF CORPORATE GOVERNANCE AND SHAREHOLDER
RIGHTS
RMG III is an exempted company incorporated under the Cayman Islands
Companies Act. The Cayman Islands Companies Act and the RMG III Governing Documents govern the rights of RMG III shareholders. The Cayman Islands Companies Act differs in some material respects from laws generally applicable to United States
corporations and their stockholders. In addition, the RMG III Governing Documents will differ in certain material respects from the Proposed Organizational Documents. As a result, when you become a stockholder of Surviving Corporation, your
rights will differ in some regards as compared to when you were a shareholder of RMG III shareholder.
Below is a summary chart outlining important similarities and
differences in the corporate governance and stockholder/shareholder rights associated with each of Surviving Corporation and RMG III according to applicable law or the respective organizational documents.
This summary is qualified by reference to the complete texts of the
RMG III Governing Documents, the Proposed Certificate of Incorporation and the Proposed Bylaws, as applicable, copies of which are attached to this proxy statement/prospectus as Annex F, Annex G and Annex H,
respectively. You should review each of the Proposed Organizational Documents, as well as the Delaware corporate law and corporate laws of the Cayman Islands, including the Cayman Islands Companies Act, to understand how these laws apply to
Surviving Corporation and RMG III, respectively.
Stockholder/Shareholder Approval of Business Combinations
|
|
|
Generally, approval of routine corporate matters that are put to a stockholder
vote require the affirmative vote of the majority of shares present in person or represented by proxy at the meeting and entitled to vote on the subject matter. The Proposed Organizational Documents will not alter this provision.
|
|
|
Under the Cayman Islands Companies Act and the RMG III Governing Documents,
routine corporate matters may be approved by an ordinary resolution (being a resolution passed by a simple majority of the shareholders as being entitled to do so).
|
|
|
|
|
|
|
|
Appraisal Rights
|
|
|
Generally, a stockholder of a publicly traded corporation does not have
appraisal rights in connection with a merger. The Proposed Organizational Documents will not provide for appraisal rights.
|
|
|
Minority shareholders that dissent from a merger are entitled to be paid the
fair market value of their shares, which, if necessary, may ultimately be determined by the court.
|
|
|
|
|
|
|
|
Inspection of Books and Records
|
|
|
Any stockholder may inspect the corporation’s books and records for a proper
purpose during the corporation’s usual hours of business.
|
|
|
Shareholders generally do not have any rights to inspect or obtain copies of
the register of shareholders or other corporate records of a company.
|
|
|
|
|
|
|
|
Stockholder/Shareholder Lawsuits
|
|
|
A stockholder may bring a derivative suit subject to procedural requirements
(including adopting Delaware as the exclusive forum as per the Organizational Documents Proposal D).
|
|
|
The decision to institute proceedings on behalf of a company is generally made
by the company’s board of directors. A shareholder may be entitled to bring a derivative action on behalf of the company, but only in certain limited circumstances.
|
TABLE OF CONTENTS
Fiduciary Duties of Directors
|
|
|
Directors must exercise a duty of care and duty of loyalty and good faith to
the company and its stockholders.
|
|
|
A director owes fiduciary duties to a company, including to exercise loyalty,
honesty, and good faith to the company as a whole.
In addition to fiduciary duties, directors owe a duty of care, diligence and
skill.
Such duties are owed to the company as a whole but may be owed to creditors or
shareholders in certain limited circumstances.
|
|
|
|
|
|
|
|
Indemnification of Directors and Officers
|
|
|
A corporation is generally permitted to indemnify its directors and officers
acting in good faith and in a manner reasonably believed to be in or not opposed to the best interests of the corporation. The Proposed Certificate of Incorporation will provide for indemnification of directors to the extent permissible
under Delaware law.
|
|
|
A company generally may indemnify its directors or officers except with regard
to fraud or willful default.
|
|
|
|
|
|
|
|
Limited Liability of Directors
|
|
|
Delaware law permits limiting or eliminating the monetary liability of a
director to a corporation or its stockholders, except with regard to breaches of duty of loyalty, intentional misconduct, unlawful repurchases or dividends or improper personal benefit. The Proposed Certificate of Incorporation will
limit a director’s liability to the extent permissible under Delaware law.
|
|
|
Liability of directors may be limited, except with regard to their own fraud or
willful default.
|
|
|
|
|
|
|
|
Corporate Opportunity
|
|
|
The Proposed Certificate of Incorporation will be silent on the issue of the
application of the doctrine of corporate opportunity.
|
|
|
The RMG III Governing Documents provide that RMG III renounces its interest in
any corporate opportunity offered to any director or officer of RMG III which may be an opportunity for such director, on the one hand, or RMG III, on the other hand.
|
TABLE OF CONTENTS
DESCRIPTION OF SECURITIES OF THE SURVIVING
CORPORATION
Authorized and Outstanding Stock
The total amount of Surviving Corporation’s authorized capital stock
will consist of shares of Surviving Corporation Common Stock, par value $0.0001 per share, and shares of Surviving Corporation Preferred Stock, par value $0.0001 per share. Surviving Corporation expects to have shares of
Surviving Corporation Common Stock outstanding immediately after the consummation of the Business Combination, assuming Surviving Corporation issues shares of Surviving Corporation Common Stock to H2B2 Stockholders, and shares of
Surviving Corporation Common Stock as a result of the Warrant Exchange and assuming no Public Shareholders exercise their redemption rights in connection with the Business Combination. Surviving Corporation has no present plan to issue any
shares of Surviving Corporation Preferred Stock.
The following summary describes all material provisions of Surviving
Corporation’s capital stock. Surviving Corporation urges you to read the Proposed Certificate of Incorporation and the Proposed Bylaws (copies of which are attached to this proxy statement as Annex G and Annex H,
respectively).
Surviving Corporation Common Stock
Surviving Corporation Common Stock is not entitled to preemptive or
other similar subscription rights to purchase any of Surviving Corporation’s securities. Surviving Corporation Common Stock is neither convertible nor redeemable. Unless the Surviving Corporation Board determines otherwise, Surviving
Corporation will issue all of Surviving Corporation’s capital stock in uncertificated form.
Voting Power
Each holder of Surviving Corporation Common Stock is entitled to one
vote for each share on all matters submitted to a vote of the stockholders, including the election of directors. Under the Proposed Certificate of Incorporation, Surviving Corporation stockholders will not have cumulative voting rights. Because
of this, the holders of a majority of the shares of common stock entitled to vote in any election of directors can elect all of the directors standing for election.
Dividends
Each holder of Surviving Corporation Common Stock is entitled to the
payment of dividends and other distributions as may be declared by the Surviving Corporation Board from time to time out of Surviving Corporation’s assets or funds legally available for dividends or other distributions. These rights are subject
to the preferential rights of the holders of Surviving Corporation Preferred Stock, if any, and any contractual limitations on Surviving Corporation’s ability to declare and pay dividends.
Liquidation, Dissolution and Winding Up
If Surviving Corporation is involved in voluntary or involuntary
liquidation, dissolution or winding up of Surviving Corporation’s affairs, or a similar event, each holder of Surviving Corporation Common Stock will participate pro rata in all assets remaining after payment of liabilities, in accordance with
the number of shares of Surviving Corporation Common Stock held by each such holder, subject to prior distribution rights of Surviving Corporation Preferred Stock, if any, then outstanding.
Preemptive or Other Rights
Each holder of Surviving Corporation Common Stock is subject to, and
may be adversely affected by, the rights of the holders of any series of Surviving Corporation Preferred Stock that Surviving Corporation may designate and issue in the future.
TABLE OF CONTENTS
Anti-Takeover Provisions
Section 203 of the Delaware General Corporation Law
As a Delaware corporation, Surviving Corporation is subject to
Section 203 of the DGCL, which generally prohibits a publicly held Delaware corporation from engaging in any business combination with any interested stockholder for a period of three years after the date that such stockholder became an
interested stockholder, with the following exceptions:
•
|
before such date, the board of directors of the corporation approved either the business combination or the transaction that
resulted in the stockholder becoming an interested stockholder;
|
•
|
upon completion of the transaction that resulted in the stockholder becoming an interested stockholder, the interested
stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction began, excluding for purposes of determining the voting stock outstanding, but not the outstanding voting stock owned by the
interested stockholder, those shares owned (i) by persons who are directors and also officers and (ii) employee stock plans in which employee participants do not have the right to determine confidentially whether shares held subject to
the plan will be tendered in a tender or exchange offer; or
|
•
|
on or after such date, the business combination is approved by the board of directors and authorized at an annual or special
meeting of the stockholders, and not by written consent, by the affirmative vote of at least two-thirds (66 and 2∕3%) of the outstanding voting stock that is not owned by the interested stockholder.
|
In general, Section 203 defines a “business combination” to include
the following:
•
|
any merger or consolidation involving the corporation and the interested stockholder;
|
•
|
any sale, transfer, pledge or other disposition of 10% or more of the assets of the corporation involving the interested
stockholder;
|
•
|
subject to certain exceptions, any transaction that results in the issuance or transfer by the corporation of any stock of the
corporation to the interested stockholder;
|
•
|
any transaction involving the corporation that has the effect of increasing the proportionate share of the stock or any class or
series of the corporation beneficially owned by the interested stockholder; or
|
•
|
the receipt by the interested stockholder of the benefit of any loans, advances, guarantees, pledges or other financial benefits
by or through the corporation.
|
In general, Section 203 defines an “interested stockholder” as an
entity or person who, together with the person’s affiliates and associates, beneficially owns or within three years prior to the time of determination of interested stockholder status did own, 15% or more of the outstanding voting stock of the
corporation.
A Delaware corporation may “opt out” of these provisions with an
express provision in its original certificate of incorporation or an express provision in its amended and restated certificate of incorporation or amended and restated bylaws resulting from a stockholders’ amendment approved by at least a
majority of the outstanding voting shares. Surviving Corporation has not opted out of these provisions. As a result, mergers or other takeover or change in control attempts of Surviving Corporation may be discouraged or prevented.
Proposed Certificate of Incorporation and Proposed Bylaws
Among other things, the Proposed Certificate of Incorporation and
Proposed Bylaws:
•
|
permit the Surviving Corporation Board to issue up to shares of preferred stock, with any rights, preferences and
privileges as they may designate, including the right to approve an acquisition or other change of control;
|
•
|
provide that the authorized number of directors may be changed only by resolution of the Surviving Corporation Board;
|
TABLE OF CONTENTS
•
|
provide that, subject to the rights of any series of preferred stock to elect directors, directors may only be removed for
cause, which removal may be effected, subject to any limitation imposed by law, by the holders of at least two-thirds (66 and 2∕3%) of the voting power of all of the then outstanding shares of voting stock of the corporation entitled to
vote at an election of directors.
|
•
|
provide that all vacancies, including newly created directorships, may, except as otherwise required by law, be filled by the
affirmative vote of the holders of a majority of directors then in office, even if less than a quorum, or by a sole remaining director (other than any directors elected by the separate vote of one or more outstanding series of preferred
stock), and shall not be filled by the stockholders;
|
•
|
require that any action to be taken by Surviving Corporation stockholders must be effected at a duly called annual or special
meeting of stockholders and not be taken by written consent or electronic transmission;
|
•
|
provide that stockholders seeking to present proposals before a meeting of stockholders or to nominate candidates for election
as directors at a meeting of stockholders must provide advance notice in writing, and also specify requirements as to the form and content of a stockholder’s notice;
|
•
|
provide that special meetings of our stockholders may be called only by the chairperson of the Surviving Corporation Board, its
chief executive officer, its president or by its board of directors pursuant to a resolution adopted by a majority of the total number of authorized directors; and
|
•
|
not provide for cumulative voting rights, therefore allowing the holders of a majority of the shares of common stock entitled to
vote in any election of directors to elect all of the directors standing for election, if they should so choose.
|
The amendment of any of these provisions would require approval by
the holders of at least two-thirds (66 and 2∕3%) of the voting power of all of the then-outstanding capital stock entitled to vote generally in the election of directors, voting together as a single class. The Surviving Corporation board may
also act without stockholder action to amend, adopt or repeal the Proposed Bylaws.
The combination of these provisions will make it more difficult for
the Surviving Corporation’s existing stockholders to replace the Surviving Corporation Board as well as for another party to obtain control of Surviving Corporation by replacing its board of directors. Since the Surviving Corporation Board has
the power to retain and discharge its officers, these provisions could also make it more difficult for existing stockholders or another party to effect a change in management. In addition, the authorization of undesignated preferred stock makes
it possible for the Surviving Corporation Board to issue preferred stock with voting or other rights or preferences that could impede the success of any attempt to change Surviving Corporation’s control.
These provisions are intended to enhance the likelihood of continued
stability in the composition of the Surviving Corporation Board and its policies and to discourage coercive takeover practices and inadequate takeover bids. These provisions are also designed to reduce Surviving Corporation’s vulnerability to
hostile takeovers and to discourage certain tactics that may be used in proxy fights. However, such provisions could have the effect of discouraging others from making tender offers for the Surviving Corporation’s capital stock and may have the
effect of delaying changes in Surviving Corporation’s control or management. As a consequence, these provisions may also inhibit fluctuations in the market price of Surviving Corporation Common Stock.
Limitations on Liability and Indemnification of
Officers and Directors
The Proposed Certificate of Incorporation contains provisions that
limit the liability of Surviving Corporation’s directors for monetary damages to the fullest extent permitted by Delaware law. Delaware law provides that directors of a corporation will not be personally liable for monetary damages for any
breach of fiduciary duties as directors, except to the extent such exemption from liability or limitation thereof is not permitted under the DGCL, including:
•
|
any breach of the director’s duty of loyalty to the corporation or its stockholders;
|
•
|
any act or omission not in good faith or that involves intentional misconduct or a knowing violation of law;
|
•
|
unlawful payments of dividends or unlawful stock repurchases or redemptions; or
|
•
|
any transaction from which the director derived an improper personal benefit.
|
TABLE OF CONTENTS
Such limitation of liability does not apply to liabilities arising
under federal securities laws and does not affect the availability of equitable remedies such as injunctive relief or rescission.
The Proposed Certificate of Incorporation authorizes Surviving
Corporation to indemnify its directors, officers, employees, and other agents to the fullest extent permitted by Delaware law. The Proposed Bylaws provide that Surviving Corporation is required to indemnify its directors and officers to the
fullest extent permitted by Delaware law and may indemnify its other employees and agents. The Proposed bylaws also provide that, on satisfaction of certain conditions, Surviving Corporation will advance expenses incurred by a director or
officer in advance of the final disposition of any action or proceeding, and secure insurance on behalf of any officer, director, employee, or other agent for any liability arising out of his or her actions in that capacity regardless of
whether Surviving Corporation would otherwise be permitted to indemnify him or her under the provisions of Delaware law. Surviving Corporation expects to enter into agreements to indemnify its directors and executive officers in connection with
the Business Combination. With certain exceptions, these agreements provide for indemnification for related expenses, including attorneys’ fees, judgments, fines, and settlement amounts incurred by any of these individuals in connection with
any action, proceeding or investigation. Surviving Corporation believes that the Proposed Certificate of Incorporation and Proposed Bylaw provisions and indemnification agreements are necessary to attract and retain qualified persons as
directors and officers. Surviving Corporation will also maintain customary directors’ and officers’ liability insurance.
The limitation of liability and indemnification provisions in the
Proposed Certificate of Incorporation and the Proposed Bylaws may discourage stockholders from bringing a lawsuit against Surviving Corporation’s directors for breach of their fiduciary duty. They may also reduce the likelihood of derivative
litigation against Surviving Corporation’s directors and officers, even though an action, if successful, might benefit us and other stockholders. Further, a stockholder’s investment may be adversely affected to the extent that Surviving
Corporation pays the costs of settlement and damage awards against directors and officers as required by these indemnification provisions.
Transfer Restrictions
Rule 144
Pursuant to Rule 144, a person who has beneficially owned restricted
Surviving Corporation Common Stock for at least six months would be entitled to sell their securities provided that (i) such person is not deemed to have been an affiliate of Surviving Corporation at the time of, or at any time during the three
months preceding, a sale and (ii) Surviving Corporation is subject to the Exchange Act periodic reporting requirements for at least three months before the sale and has filed all required reports under Section 13 or 15(d) of the Exchange Act
during the 12 months (or such shorter period as Surviving Corporation was required to file reports) preceding the sale.
Persons who have beneficially owned restricted Surviving Corporation
Common Stock for at least six months but who are affiliates of Surviving Corporation at the time of, or at any time during the three months preceding, a sale would be subject to additional restrictions, by which such person would be entitled to
sell within any three-month period only a number of securities that does not exceed the greater of:
•
|
1% of the total number of shares of Surviving Corporation Common Stock then outstanding; or
|
•
|
the average weekly reported trading volume of Surviving Corporation Common Stock during the four calendar weeks preceding the
filing of a notice on Form 144 with respect to the sale.
|
Sales by affiliates of Surviving Corporation under Rule 144 are also
limited by manner of sale provisions and notice requirements and to the availability of current public information about Surviving Corporation.
Restrictions on the Use of Rule 144
Rule 144 is not available for the resale of securities initially
issued by shell companies (other than business combination related shell companies) or issuers that have been at any time previously a shell company. However, Rule 144 also includes an important exception to this prohibition if the following
conditions are met:
•
|
the issuer of the securities that was formerly a shell company has ceased to be a shell company;
|
•
|
the issuer of the securities is subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act;
|
TABLE OF CONTENTS
•
|
the issuer of the securities has filed all Exchange Act reports and material required to be filed, as applicable, during the
preceding 12 months (or such shorter period that the issuer was required to file such reports and materials), other than Form 8-K reports; and
|
•
|
at least one year has elapsed from the time that the issuer filed current Form 10 type information with the SEC reflecting its
status as an entity that is not a shell company.
|
As a result, the Initial Shareholders will be able to sell their
Founder Shares and RMG III Private Placement Warrants, as applicable, pursuant to Rule 144 without registration one year after RMG III has completed the Business Combination.
RMG III anticipates that following the consummation of the Business
Combination, Surviving Corporation will no longer be a shell company, and so, once the conditions set forth in the exceptions listed above are satisfied, Rule 144 will become available for the resale of the above noted restricted securities.
Dissenters’ Rights of Appraisal and Payment
Under the DGCL, with certain exceptions, Surviving Corporation’s
stockholders will have appraisal rights in connection with a merger or consolidation of Surviving Corporation. Pursuant to Section 262 of the DGCL, stockholders who properly demand and perfect appraisal rights in connection with such merger or
consolidation have the right to receive payment of the fair value of their shares as determined by the Delaware Court of Chancery.
Forum Selection
The Proposed Certificate of Incorporation provides that the Court of
Chancery of the State of Delaware (or, in the event that the Chancery Court does not have jurisdiction, the federal district court for the District of Delaware or other state courts of the State of Delaware) is the sole and exclusive forum for
the following types of actions or proceedings under Delaware statutory or common law: (i) any derivative action, suit or proceeding brought on Surviving Corporation’s behalf; (ii) any action, suit or proceeding asserting a claim of breach of a
fiduciary duty owed by any of Surviving Corporation’s directors, officers, or stockholders to us or the Surviving Corporation’s stockholders; (iii) any action, suit or proceeding asserting a claim against Surviving Corporation or any of
Surviving Corporation’s directors, officers or other employees arising out of or pursuant to any provision of the Delaware General Corporation Law, the Proposed Certificate of Incorporation or the Proposed Bylaws; and (iv) any action or
proceeding asserting a claim against Surviving Corporation or any of Surviving Corporation’s directors, officers, or other employees that is governed by the internal affairs doctrine, in all cases to the fullest extent permitted by law and
subject to the court’s having personal jurisdiction over the indispensable parties named as defendants, unless Surviving Corporation consents in writing to the selection of an alternative forum. This choice of forum provision would not apply to
suits brought to enforce a duty or liability created by the Exchange Act or any other claim for which the federal courts have exclusive jurisdiction, or the Securities Act. The Proposed Certificate of Incorporation further provides that, unless
Surviving Corporation consents in writing to the selection of an alternative forum, to the fullest extent permitted by law, the federal district courts of the United States of America will be the exclusive forum for resolving any complaint
asserting a cause of action arising under the Securities Act, including all causes of action asserted against any defendant to such complaint. However, Section 22 of the Securities Act creates concurrent jurisdiction for federal and state
courts over all suits brought to enforce any duty or liability created by the Securities Act or the rules and regulations thereunder. Accordingly, both state and federal courts have jurisdiction to entertain such claims. As noted above, the
Proposed Certificate of Incorporation provides that the federal district courts of the United States will be the exclusive forum for the resolution of any complaint asserting a cause of action under the Securities Act. Due to the concurrent
jurisdiction for federal and state courts created by Section 22 of the Securities Act over all suits brought to enforce any duty or liability created by the Securities Act or the rules and regulations thereunder, there is uncertainty as to
whether a court would enforce the exclusive form provision. Additionally, the Proposed Certificate of Incorporation provides that any person or entity holding, owning or otherwise acquiring any interest in any of Surviving Corporation’s
securities shall be deemed to have notice of and consented to these provisions. Investors also cannot waive compliance with the federal securities laws and the rules and regulations thereunder.
Transfer Agent and Registrar
The transfer agent and registrar for the Surviving Corporation Common
Stock will be Continental.
TABLE OF CONTENTS
Trading Symbol and Market
RMG III will apply for listing, to be effective at the time of the
Business Combination, of Surviving Corporation Common Stock on Nasdaq under the proposed symbol “HHBB.”
Shares Eligible for Future Sale
Lock-Up Agreement
The Merger Agreement contemplates that, at the Closing, Surviving
Corporation, the Sponsor, certain directors and officers of RMG III and H2B2 Stockholders, will enter into the Lock-Up Agreement, pursuant to which each party will agree that it will not, without the prior written consent of Surviving
Corporation during a lock-up period of 180 days unless earlier released, and subject to customary exceptions, (i) sell, offer to sell, contract or agree to sell, hypothecate, pledge, grant any option, right or warrant to purchase or otherwise
transfer, dispose of or agree to transfer or dispose of, directly or indirectly, or establish or increase a put equivalent position or liquidate or decrease a call equivalent position any shares of Surviving Corporation Common Stock or any
securities convertible into or exercisable or exchangeable for the Surviving Corporation Common Stock (other than shares of Surviving Corporation Common Stock issued or issuable upon the exercise of RMG III Private Placement Warrants) issued or
issuable to such party pursuant to the Merger Agreement (collectively, the “Lock-Up Shares”), (ii) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the
economic consequences of ownership of the Lock-Up Shares or (iii) publicly announce any intention to effect any transaction specified in clause (i) or (ii). The Lock-Up Agreements provide that certain of the parties entering into Lock-Up
Agreements will have 80% of the shares of Surviving Corporation Common Stock held by them at Closing subject to the provisions of the Lock-Up Agreement, with the remaining 20% of the shares of Surviving Corporation Common Stock held by them at
Closing not subject to the Lock-Up Agreement. The remainder of the parties entering into Lock-Up Agreements will have 100% of the shares of Surviving Corporation Common Stock held by them at Closing subject to the provisions of the Lock-Up
Agreement. Notwithstanding the foregoing, if at any time before 180 days after the Closing (x) the closing of a merger, liquidation, stock exchange, reorganization or other similar transaction after the Closing results in all of the public
stockholders of H2B2 having the right to exchange their shares of Surviving Corporation Common Stock for cash securities or other property, or (y) the liquidation of H2B2, then each party’s Lock-Up Shares will be automatically released from the
lock-up restrictions. The lock-up restrictions contain customary exceptions, including for estate planning transfers, affiliates transfers, and transfers upon death or by will.
Registration Rights
The Merger Agreement contemplates that, at the Closing, Surviving
Corporation, the Sponsor, certain directors and officers of RMG III and the H2B2 Stockholders, will enter into the Registration Rights Agreement, pursuant to which Surviving Corporation will agree to register for resale, pursuant to Rule 415
under the Securities Act, certain shares of Surviving Corporation Common Stock and other equity securities of Surviving Corporation that are held by the parties thereto from time.
The Registration Rights Agreement will terminate on the earlier of
(a) the seven year anniversary of the date of the Registration Rights Agreement and (b) with respect to any Holder (as defined therein), on the date that such Holder no longer holds any Registrable Securities (as defined therein).
Rule 144
Pursuant to Rule 144, a person who has beneficially owned restricted
Surviving Corporation Common Stock for at least six months would be entitled to sell their securities provided that (i) such person is not deemed to have been an affiliate of Surviving Corporation at the time of, or at any time during the three
months preceding, a sale and (ii) Surviving Corporation is subject to the Exchange Act periodic reporting requirements for at least three months before the sale and has filed all required reports under Section 13 or 15(d) of the Exchange Act
during the 12 months (or such shorter period as Surviving Corporation was required to file reports) preceding the sale.
Persons who have beneficially owned restricted Surviving Corporation
Common Stock for at least six months but who are affiliates of Surviving Corporation at the time of, or at any time during the three months preceding, a sale would be subject to additional restrictions, by which such person would be entitled to
sell within any three-month period only a number of securities that does not exceed the greater of:
•
|
1% of the total number of shares of Surviving Corporation Common Stock then outstanding; or
|
TABLE OF CONTENTS
•
|
the average weekly reported trading volume of Surviving Corporation Common Stock during the four calendar weeks preceding the
filing of a notice on Form 144 with respect to the sale.
|
Sales by affiliates of Surviving Corporation under Rule 144 are also
limited by manner of sale provisions and notice requirements and to the availability of current public information about Surviving Corporation.
Restrictions on the use of Rule 144 by Shell
Companies or Former Shell Companies
Rule 144 is not available for the resale of securities initially
issued by shell companies (other than business combination related shell companies) or issuers that have been at any time previously a shell company. However, Rule 144 also includes an important exception to this prohibition if the following
conditions are met:
•
|
the issuer of the securities that was formerly a shell company has ceased to be a shell company;
|
•
|
the issuer of the securities is subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act;
|
•
|
the issuer of the securities has filed all Exchange Act reports and material required to be filed, as applicable, during the
preceding 12 months (or such shorter period that the issuer was required to file such reports and materials), other than Form 8-K reports; and
|
•
|
at least one year has elapsed from the time that the issuer filed current Form 10 type information with the SEC reflecting its
status as an entity that is not a shell company.
|
As a result, the Initial Shareholders will be able to sell their
Founder Shares pursuant to Rule 144 without registration one year after RMG III has completed the Business Combination.
RMG III anticipates that following the consummation of the Business
Combination, Surviving Corporation will no longer be a shell company, and so, once the conditions set forth in the exceptions listed above are satisfied, Rule 144 will become available for the resale of the above noted restricted securities.
Rule 701
Rule 701 under the Securities Act generally allows a stockholder who
purchases RMG III shares pursuant to a written compensatory plan or contract executed prior to the Closing and who is not deemed to have been an affiliate of RMG III during the immediately preceding 90 days to sell these shares in reliance upon
Rule 144, but without being required to comply with the public information, holding period, volume limitation, or notice provisions of Rule 144. Rule 701 also permits affiliates of RMG III to sell their Rule 701 shares under Rule 144 without
complying with the holding period requirements of Rule 144. However, the Rule 701 shares would remain subject to lock-up arrangements and would only become eligible for sale when the applicable lock-up period expires.
TABLE OF CONTENTS
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
Certain Relationships and Related Party Transactions—Surviving
Corporation
Registration Rights Agreement
The Merger Agreement contemplates that, at the Closing, RMG III,
Sponsor, and certain stockholders of H2B2 will enter into a Registration Rights Agreement, pursuant to which RMG III will agree to register for resale, pursuant to Rule 415 under the Securities Act, certain shares of Surviving Corporation
Common Stock and other equity securities of RMG III that are held by the parties thereto from time to time. See the section entitled “Other Agreements—Registration Rights Agreement” for more information.
Lock-Up Agreement
The Merger Agreement contemplates that, at the Closing, RMG III will
enter into lock-up agreements with (i) the Sponsor, and (ii) certain stockholders of H2B2, restricting the transfer of Surviving Corporation Common Stock from and after the Closing. The restrictions under the lock-up agreements with respect to
the Surviving Corporation Common Stock, begin at the Closing and end on the date that is 180 days after the Closing. See the section entitled “Other Agreements—Lock-Up Agreement” for more information.
Statement of Policy Regarding Transactions with Related Persons
Surviving Corporation will adopt a formal written policy that will be
effective upon the Closing providing that Surviving Corporation’s officers, directors, nominees for election as directors, beneficial owners of more than 5% of Surviving Corporation Common Stock, any member of the immediate family of any of the
foregoing persons and any firm, corporation or other entity in which any of the foregoing persons is employed or is a general partner or principal or in a similar position or in which such person has a 5% or greater beneficial ownership
interest, are not permitted to enter into a related party transaction with Surviving Corporation without the approval of Surviving Corporation’s audit committee, subject to certain exceptions.
Indemnification of Directors and Officers
The Proposed Bylaws will provide that Surviving Corporation will be
required to indemnify its directors and officers to the fullest extent permitted by the DGCL. In addition, the Proposed Certificate of Incorporation will provide that Surviving Corporation’s directors will not be liable for monetary damages for
breach of fiduciary duty to the fullest extent permitted by the DGCL.
Certain Relationships and Related Party Transactions—H2B2
H2B2 Stockholders Agreement
H2B2 is party to that certain amended and restated H2B2 Stockholders’
Agreement, dated August 27, 2021, by and among H2B2, Onatrium H2, SL, Tekpolio, S.L. and certain H2B2 Stockholders, that provides certain registration rights under the Securities Act along with other relevant provisions relating to the transfer
of shares and governance of H2B2. In connection with the Business Combination, the H2B2 Stockholders Agreement will be terminated at the Closing.
Commercial Agreement
H2B2 is party to that certain commercial agreement, dated January
7, 2023 (the “Commercial Agreement”), by and between H2B2 and Felipe Benjumea Llorente, H2B2’s former executive president, and father of Blanca Benjumea de Porres, our Chief Financial
Officer, and Felipe Benjumea de Porres, our Chief Investment Officer, for an indefinite time period, pursuant to which H2B2 engaged Felipe Benjumea Llorente as a senior advisor to H2B2.
Pursuant to the Commercial Agreement, Felipe Benjumea Llorente
provides advisor services to H2B2 in exchange for the payment by H2B2 of a yearly rate of approximately EUR 507,600 until September 2023, and then EUR 230,000 per year starting after September 2023.
Ardachon Share Acquisition
Ardachon owns a total of 1,806,667 shares of H2B2 Common Stock as of
the date of this proxy statement/prospectus. Ardachon is currently under insolvency proceedings and managed by the insolvency
TABLE OF CONTENTS
administration Arraut Y Sala Reixachs SLP (the “insolvency administration”), but was formerly controlled by Felipe Benjumea Llorente, its sole shareholder, H2B2’s former executive president, and father of Blanca Benjumea de Porres, our Chief Financial Officer, and
Felipe Benjumea de Porres, our Chief Investment Officer.
On April 10, 2023, H2B2 made an offer to the insolvency
administration to purchase 266,667 shares of H2B2 Common Stock from Ardachon for a price of EUR 20,000,025, at a price of EUR 75 per share. Other offers to acquire a larger amount of shares of H2B2 were made. Upon evaluation of all offers
received, the insolvency administration accepted the offer on April 12, 2023 on the grounds that such offer was the most beneficial for the creditors of H2B2.
On May 30, 2023, H2B2 acquired 193,333 shares of H2B2 Common Stock
from Ardachon for a total consideration of EUR 14,500,000 ($15.6 million) and H2B2 has the option to purchase 73,334 additional shares of H2B2 Common Stock from Ardachon for EUR 5,500,000 ($5.9 million), subject to the payment of the purchase
price prior to July 31, 2023. On July 28, 2023, H2B2 and the insolvency administration agreed to extend the date by which H2B2 could purchase the Ardachon Option Shares from July 31, 2023 to December 31, 2023.
The payment of the EUR 14,500,000 has been funded pursuant to an
unsecured loan agreement between H2B2 (as borrower) and Apenet, S.L.U. (as lender), dated May 30, 2023, for a principal amount of EUR 14,500,000 and subject to a 10% annual interest rate (the “Loan Agreement”).
Principal and interest are payable in one single installment on May 30, 2026. If H2B2 defaults under the terms of the Loan Agreement or fails to meet any other payment obligation with third parties, Apenet, S.L.U. may terminate the Loan
Agreement and demand payment of all amounts due and payable thereunder.
Furthermore, pursuant to a side-letter entered into by Mr. Felipe
Benjumea Llorente and Mrs. Blanca de Porres Guardiola (his wife), on the one hand, and H2B2, on the other hand, on April 10, 2023, it was agreed that in the event that the Capital Raise Transaction is closed at a price per share higher or
lower than EUR 75 per share, the H2B2 Common Stock purchased will be adjusted to reflect a total purchase price of EUR 20,000,025 to ensure that the purchase of shares of H2B2 Common Stock held by Ardachon is effected at the same price per
share as the Capital Raise Transaction.
In connection with the Loan Agreement, Mr. Felipe Benjumea
Llorente, Ms. Blanca de Porres Guardiola (his wife) and Apenet, S.L.U., entered into an agreement on May 30, 2023 (the “Apenet Agreement”), which contains, among others, the following undertakings: (i) the payment of a fee by Ardachon to
Apenet, S.L.U. in consideration for their intermediation services in financial transactions related to the Loan Agreement, once the Ardachon Proceedings have concluded; (ii) the granting of a pledge over all of the shares of H2B2 owned by Ms.
de Porres to secure the fulfillment of the payment obligations under the Loan Agreement and the Apenet Agreement; and (iii) the granting of a pledge over all of the shares of H2B2 owned by Ardachon and a real estate mortgage over certain
plots owned by Mr. Benjumea to secure the fulfillment of the payment obligations under the Loan Agreement and the Apenet Agreement, once the Ardachon Proceedings have concluded.
Certain Relationships and Related Party Transactions—RMG III
RMG III Founder Shares
In December 2020, the Sponsor paid an aggregate of $25,000 to cover
certain expenses on behalf of RMG III in exchange for issuance of 10,062,500 Class B ordinary shares of RMG III (the “Founder Shares”). On January 30, 2021, RMG III effectuated a 5-for-6 share split of
the Class B ordinary shares, resulting in an aggregate outstanding amount of 12,075,000 Class B ordinary shares. The holders of the Founder Shares agreed to forfeit up to an aggregate of 1,575,000 Founder Shares, on a pro rata basis, to the
extent that the option to purchase additional units was not exercised in full by the underwriters, so that the Founder Shares would represent 20% of RMG III’s issued and outstanding shares after the Initial Public Offering. The underwriter
exercised its over-allotment option in full on February 9, 2021; thus, the 1,575,000 Founder Shares were no longer subject to forfeiture.
The Initial Shareholders agreed not to transfer, assign or sell any
of their Founder Shares until the earlier to occur of (1) one year after the completion of the initial Business Combination; and (2) subsequent to the initial Business Combination (x) if the last reported sale price of Class A ordinary shares
equals or exceeds $12.00 per share (as adjusted for share sub-divisions, share dividends, rights issuances, consolidations, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at
least 150 days after the initial Business Combination or (y) the date on which RMG III completes a liquidation,
TABLE OF CONTENTS
merger, amalgamation, share exchange, reorganization or other similar transaction
that results in all of the Public Shareholders having the right to exchange their ordinary shares for cash, securities or other property.
RMG III Private Placement Warrants
Simultaneously with the closing of the Initial Public Offering,
RMG III consummated the Private Placement of 8,216,330 RMG III Private Placement Warrants at a price of $1.50 per RMG III Private Placement Warrant to the Sponsor, generating proceeds of approximately $12.3 million.
Each whole Private Placement Warrant is exercisable for one whole
share of Class A ordinary shares at a price of $11.50 per share. A portion of the proceeds from the sale of the RMG III Private Placement Warrants to the Sponsor was added to the proceeds from the Initial Public Offering held in the Trust
Account. If RMG III does not complete a Business Combination within the Combination Period, the RMG III Private Placement Warrants will expire worthless. The RMG III Private Placement Warrants will be non-redeemable for cash and exercisable on
a cashless basis so long as they are held by the Sponsor or its permitted transferees.
The Sponsor and RMG III’s officers and directors agreed, subject
to limited exceptions, not to transfer, assign or sell any of their RMG III Private Placement Warrants until 30 days after the completion of the initial Business Combination. In connection with the Business Combination, in the event the
Warrant Amendment Proposal is approved, at the Effective Time and pursuant to the Warrant Amendment, each Private Placement Warrant will be canceled and exchanged for the right to receive 0.075 shares of Surviving Corporation Common Stock per
RMG III Private Placement Warrant.
Related Party Loans
In order to finance transaction costs in connection with a Business
Combination, the Sponsor, members of RMG III’s founding team or any of their affiliates may, but are not obligated to (other than pursuant to the January 2022 Note and the July 2022 Note), lend RMG III funds as may be required (“Working Capital Loans”). If RMG III completes a Business Combination, RMG III would repay the Working Capital Loans out of the proceeds of the Trust Account released to RMG III. Otherwise, the Working
Capital Loans would be repaid only out of funds held outside the Trust Account. In the event that a Business Combination does not close, RMG III may use a portion of proceeds held outside the Trust Account to repay the Working Capital Loans but
no proceeds held in the Trust Account would be used to repay the Working Capital Loans.
On December 30, 2020, the Sponsor agreed to lend RMG III up to
$300,000 to be used for the payment of costs related to the Initial Public Offering pursuant to a promissory note. Such promissory note was non-interest bearing, unsecured and due upon the closing of the Initial Public Offering. The Company
repaid the balance under such promissory note in full on February 12, 2021.
On January 19, 2022, RMG Acquisition Management, an affiliate of the
Sponsor, agreed to lend RMG III up to $500,000, pursuant to the January 2022 Note, to be used for a portion of the expenses of RMG III. As of December 31, 2022, an aggregate of $500,000 had been funded under the January 2022 Note. Upon funding
of the loan, RMG III recognized the initial fair value of the option of RMG Acquisition Management to convert the unpaid principal balance under the July 2022 Note to warrants to purchase one RMG III Class A Share of approximately $7,900 as a
debt discount, which is classified as a component of the working capital loan and amortized to interest expense over the expected term of the loan. For the year ended December 31, 2022, RMG III amortized approximately $8,000, of the debt
discount, classified as interest expense in the accompanying statements of operations.
On July 27, 2022, RMG Acquisition Management agreed to lend RMG III
up to $475,000 pursuant to the July 2022 Note, to be used for a portion of the expenses of RMG III.
Each of the January 2022 Note and the July 2022 Note is due and
payable in full by RMG III upon the consummation of a business combination. In the event that the Business Combination does not close, RMG III may use a portion of proceeds held outside the Trust Account to repay the January 2022 Note and the
July 2022 Note, but no proceeds held in the Trust Account would be used to repay the January 2022 Note or the July 2022 Note. The January 2022 Note and the July 2022 Note will be repaid in cash upon consummation of the Business Combination.
TABLE OF CONTENTS
As of the date hereof, RMG III had $500,000 in borrowings
outstanding under the January 2022 Note and $250,000 in borrowings outstanding under the July 2022 Note. As of December 31, 2022, the carrying value and the principal value of the loan under the January 2022 Note was $500,000.
Administrative Services Agreement
Commencing on the effective date of the Registration Statement, RMG
III agreed to pay an affiliate of RMG Acquisition Management a total of $20,000 per month for office space, administrative and support services (including salaries). Upon RMG III’s liquidation, RMG III will cease paying these monthly fees. Upon
completion of the Initial Business Combination, RMG III will pay to such affiliate an amount equal to $20,000 multiplied by the number of whole months that have elapsed between the date of the completion of the Initial Business Combination and
the closing of the Initial Public Offering. The Company incurred $60,000 in expenses in connection with such services during the three months ended March 31, 2023 and 2022, as reflected in the accompanying unaudited condensed statements of
operations. The Company had $180,000 and $120,000 included in accrued expenses-related party in connection with such services as of March 31, 2023 and December 31, 2022, respectively.
RMG Acquisition Management, officers and directors, or any of their
respective affiliates, will be reimbursed for any out-of-pocket expenses incurred in connection with activities on RMG III’s behalf such as identifying potential target businesses and performing due diligence on suitable business combinations.
The audit committee will review on a quarterly basis all payments that were made by us to RMG Acquisition Management, directors, officers or RMG III’s or any of their respective affiliates.
In December 2022, RMG III engaged a capital market advisor to assist
with the completion of the business combination. The Company agreed to pay the advisor $500,000 in cash and $250,000 paid in equivalent dollar amount in common stock, solely in the event that RMG III completes its Business Combination. As of
December 31, 2022, RMG III determined that a Business Combination is not considered probable. If the fee is determined to be a transaction cost for the Business Combination then the amount payable to the advisor may be accounted for as an
expense in the period the liability is recorded.
BCW Engagement Letter
BCW Securities LLC, an affiliate of RMG III, and H2B2 entered into an
engagement letter dated January 24, 2023, as amended on March 2, 2023, pursuant to which H2B2 engaged BCW to act, together with Natixis as co-exclusive bookrunner or co-placement agent for the Capital Raise Transaction. In connection with such
engagement, H2B2 will pay to BCW (a) an amount in cash equal to 2.5% of the gross proceeds received by H2B2 from the sale of its securities in connection with the Capital Raise Transaction and (b) an additional amount in cash equal to 0.05% of
the pre-money valuation of H2B2 if (i) the gross proceeds received by H2B2 from the sale of its securities in connection with the Capital Raise Transaction are equal to or greater than $50,000,000 and (ii) the pre-money valuation of H2B2 is
equal to or greater than $500,000,000. The BCW Engagement Letter also provides that the fees payable to BCW, together with the fees payable to any additional placement agents, including Natixis in connection with the Capital Raise Transaction,
will not exceed, in aggregate, (a) 5.0% of the of the gross proceeds received by H2B2 from the sale its securities in connection with the Capital Raise Transaction, plus (b) 0.1% of the pre-money
valuation of H2B2, if (i) the gross proceeds received by H2B2 from the sale of its securities in connection with the Capital Raise Transaction are equal to or greater than $50,000,000 and (ii) the pre-money valuation of H2B2 is equal to or
greater than $500,000,000. The BCW Engagement Letter also provides that H2B2 may seek to obtain up to $10,000,000 in a funding round in parallel to or after the closing of the Capital Raise Transaction and that no fee will be payable by H2B2 to
BCW in connection with such funding round; provided, that, if the proceeds from such funding round are greater than $10,000,000, H2B2 will pay to BCW an additional amount in cash equal to 2.5% of the incremental gross proceeds in excess of
$10,000,000 from such funding round.
TABLE OF CONTENTS
STOCKHOLDER PROPOSALS AND NOMINATIONS
Stockholder Proposals
The Proposed Bylaws establish an advance notice procedure for
stockholders who wish to present a proposal before an annual meeting of stockholders. The Proposed Bylaws provide that the only business that may be conducted at an annual meeting of stockholders is business that is (i) specified in the notice
of such meeting (or any supplement or amendment thereto) given by or at the direction of the Surviving Corporation Board, (ii) otherwise properly brought before such meeting by or at the direction of the Surviving Corporation Board or the
chairperson of the board, or (iii) otherwise properly brought before such meeting by a stockholder present in person who (1) (a) was a record owner of shares of Surviving Corporation both at the time of giving the notice and at the time of such
meeting, (b) is entitled to vote at such meeting, and (c) has complied with notice procedures specified in the Proposed Bylaws in all applicable respects or (2) properly made such proposal in accordance with Rule 14a-8 under the Exchange Act.
To be timely for the Surviving Corporation’s annual meeting of stockholders, Surviving Corporation’s secretary must receive the written notice at Surviving Corporation’s principal executive offices:
•
|
not earlier than the 90th day; and
|
•
|
not later than the 120th day,
|
before the one-year anniversary of the preceding year’s annual
meeting.
In the event that no annual meeting was held in the previous year,
notice of a stockholder proposal must be not earlier than the 120th day prior to such annual meeting and not later than the 90th day prior to such annual meeting or, if later, the 10th day following the day on which public disclosure of the
date of such annual meeting was first made. In the event that Surviving Corporation holds its annual meeting of stockholders more than more than 30 days before or more than 60 days after the one-year anniversary of a preceding year’s annual
meeting, notice of a stockholder proposal must be not later than the 90th day prior to such annual meeting or, if later, the 10th day following the day on which public disclosure of the date of such annual meeting was first made.
Accordingly, for the Surviving Corporation’s annual meeting, assuming
the meeting is held on , notice of a nomination or proposal must be delivered to Surviving Corporation no later than and no earlier than . Nominations and proposals must also satisfy other requirements set forth in the bylaws.
Under Rule 14a-8 of the Exchange Act, a stockholder proposal to be
included in the proxy statement/prospectus and proxy card for the annual general meeting pursuant to Rule 14a-8, assuming the meeting is held on , must be received at Surviving Corporation’s principal office on or before and must
comply with Rule 14a-8.
Stockholder Director Nominees
The Proposed Bylaws permit stockholders to nominate directors for
election at an annual meeting or at a special meeting (but only if the election of directors is a matter specified in the notice of meeting given by or at the direction of the person calling such special meeting) of stockholders, subject to the
provisions of the Proposed Certificate of Incorporation. To nominate a director, the stockholder must provide the information required by the Proposed Bylaws. In addition, the stockholder must give timely notice to Surviving Corporation’s
secretary in accordance with the Proposed Bylaws, which, in general, require that the notice be received by Surviving Corporation’s secretary within the time periods described above under “—Stockholder
Proposals” for stockholder proposals.
TABLE OF CONTENTS
SHAREHOLDER COMMUNICATIONS
Shareholders and interested parties may communicate with the RMG III
Board, any committee chairperson, or the non-management directors as a group by writing to the board or committee chairperson in care of RMG III, 57 Ocean, Suite 403, 5775 Collins Avenue, Miami Beach, Florida 33140. Following the consummation
of Business Combination, such communications should be sent in care of Surviving Corporation, H2B2 Electrolysis Technologies, Inc., 300 Delaware Ave Ste 210-A, Wilmington, DE 1980. Each communication will be forwarded, depending on the subject
matter, to the board of directors, the appropriate committee chairperson, or all non-management directors.
Skadden, Arps, Slate, Meagher & Flom (UK) LLP has passed upon the
validity of the securities of Surviving Corporation offered by this proxy statement/prospectus and certain other legal matters related to this proxy statement/prospectus, and Skadden, Arps, Slate, Meagher & Flom (UK) LLP has represented RMG
III in connection with the Business Combination. Latham & Watkins LLP has represented H2B2 in connection with the Business Combination.
The financial statements of RMG Acquisition Corp. III as of
December 31, 2022 and 2021 and for the years ended December 31, 2022 and 2021 appearing in this proxy statement/prospectus have been audited by Marcum LLP, independent registered public accounting firm, as set forth in their report thereon
appearing elsewhere herein and have been included herein (which contains an explanatory paragraph relating to substantial doubt about the ability of RMG Acquisition Corp. III to continue as a going concern as described in Note 1 to the
financial statements). Such financial statements are included in reliance upon such report and upon the authority of such firm as experts in accounting and auditing.
The consolidated financial statements of H2B2 Electrolysis
Technologies, Inc. and its Subsidiaries as of December 31, 2022 and December 31, 2021, and for each of the years in the two-year period ended December 31, 2022 have been audited by RSM US LLP, an independent registered public accounting firm,
as stated in their report thereon (which report expresses an unqualified opinion and includes an explanatory paragraph relating to Going Concern), and included in this proxy statement/prospectus in reliance upon such report and upon on the
authority of such firm as experts in accounting and auditing.
TABLE OF CONTENTS
DELIVERY OF DOCUMENTS TO SHAREHOLDERS
Pursuant to the rules of the SEC, RMG III and the services that it
employs to deliver communications to RMG III shareholders and RMG III warrant holders are permitted to deliver to two or more RMG III shareholders and/or RMG III warrant holders sharing the same address a single copy of each of RMG III’s annual
report to RMG III shareholders and RMG III warrant holders and RMG III’s proxy statement/prospectus. Upon written or oral request, RMG III will deliver a separate copy of the annual report to RMG III shareholders and RMG III warrant holders or
proxy statement/prospectus to any RMG III shareholder or RMG III warrant holder at a shared address to which a single copy of each document was delivered and who wishes to receive separate copies of such documents. RMG III shareholders and RMG
III warrant holders receiving multiple copies of such documents may likewise request that RMG III deliver single copies of such documents in the future.
RMG III shareholders and RMG III warrant holders may notify RMG III
of their requests by writing RMG III at its principal executive offices at 57 Ocean, Suite 403, 5775 Collins Avenue, Miami Beach, Florida 33140 or by calling RMG III at (786) 359-4103.
ENFORCEABILITY OF CIVIL LIABILITY
RMG III is a Cayman Islands exempted company. If RMG III does not
change its jurisdiction of incorporation from the Cayman Islands to Delaware by effecting the Domestication, you may have difficulty serving legal process within the United States upon RMG III. You may also have difficulty enforcing, both in
and outside the United States, judgments you may obtain in U.S. courts against RMG III in any action, including actions based upon the civil liability provisions of U.S. federal or state securities laws. Furthermore, there is doubt that the
courts of the Cayman Islands would enter judgments in original actions brought in those courts predicated on U.S. federal or state securities laws. However, RMG III may be served with process in the United States with respect to actions against
RMG III arising out of or in connection with violation of U.S. federal securities laws relating to offers and sales of RMG III’s securities by serving RMG III’s U.S. agent irrevocably appointed for that purpose.
None of RMG III shareholders, RMG III unit holders or RMG III warrant
holders have appraisal rights in connection with the Business Combination or the Domestication under the DGCL. None of RMG III shareholders have dissenters’ rights in connection with the Business Combination or the Domestication under Cayman
Islands law.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for RMG III’s securities is
Continental.
TABLE OF CONTENTS
WHERE YOU CAN FIND MORE INFORMATION
RMG III files annual, quarterly and current reports, proxy statements
and other information with the SEC. The SEC maintains an internet web site that contains reports, proxy and information statements, and other information regarding issuers, including us, that file electronically with the SEC. The public can
obtain any documents that RMG III files electronically with the SEC at http://www.sec.gov.
You may obtain additional copies of this proxy statement/prospectus,
at no cost, and you may ask any questions you may have about the proposals by contacting RMG III at the following address and telephone number:
RMG Acquisition Corp. III
57 Ocean, Suite 403
5775 Collins Avenue
Miami Beach, Florida 33140
(786) 359-4103
You may also obtain these documents at no cost by requesting them in
writing or by telephone from RMG III’s proxy solicitation agent at the following address and telephone number:
Shareholders may call toll free:
Banks and Brokers may call collect:
In order to receive timely delivery of the documents in advance of
the Special Meetings, you must make your request for information no later than , 2023 ( prior to the date of the Special Meetings).
TABLE OF CONTENTS
INDEX TO FINANCIAL STATEMENTS
H2B2 ELECTROLYSIS TECHNOLOGIES, INC. AND SUBSIDIARIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RMG ACQUISITION CORP. III
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TABLE OF CONTENTS
H2B2 ELECTROLYSIS TECHNOLOGIES, INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
As of March 31, 2023 and December 31, 2022
(Unaudited)
Assets
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
$5,119,793
|
|
|
$5,044,949
|
Accounts receivable, net of allowance for doubtful
accounts of $64,825 and $47,758, respectively
|
|
|
3,968,220
|
|
|
2,099,177
|
Inventory
|
|
|
6,175,000
|
|
|
6,175,000
|
Prepaid expenses and other current assets
|
|
|
2,094,443
|
|
|
1,281,268
|
Grants receivable
|
|
|
890,827
|
|
|
742,837
|
Contract assets
|
|
|
303,391
|
|
|
2,197,730
|
Total current assets
|
|
|
18,551,674
|
|
|
17,540,961
|
Property, plant, and equipment, net
|
|
|
8,178,246
|
|
|
5,148,017
|
Operating lease – right of use asset, net
|
|
|
1,990,015
|
|
|
2,235,854
|
Intangible assets, net
|
|
|
104,648
|
|
|
87,301
|
Equity method investments
|
|
|
119,544
|
|
|
—
|
Other assets
|
|
|
173,154
|
|
|
173,055
|
Total assets
|
|
|
$29,117,281
|
|
|
$25,185,188
|
Liabilities and Stockholders’ Equity
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
Accounts payable
|
|
|
$9,675,171
|
|
|
$8,484,808
|
Current maturities of long-term debt
|
|
|
10,872
|
|
|
10,663
|
Current maturities of operating lease liabilities
|
|
|
230,645
|
|
|
230,645
|
Contract liabilities
|
|
|
4,995,692
|
|
|
1,735,716
|
Current provisions
|
|
|
84,480
|
|
|
44,378
|
Other current liabilities
|
|
|
21,979
|
|
|
21,179
|
Total current liabilities
|
|
|
15,018,839
|
|
|
10,527,389
|
Unearned grants
|
|
|
2,553,092
|
|
|
2,053,159
|
Long-term operating lease liabilities
|
|
|
1,912,823
|
|
|
2,111,530
|
Income taxes payable
|
|
|
1,811,603
|
|
|
1,787,968
|
Long-term debt, less current maturities
|
|
|
12,372
|
|
|
13,796
|
Other liabilities
|
|
|
263,271
|
|
|
208,912
|
Total liabilities
|
|
|
21,572,000
|
|
|
16,702,754
|
Commitments and contingent liabilities (Note 12)
|
|
|
—
|
|
|
|
Stockholders’ equity:
|
|
|
|
|
|
|
Common stock, $0.00001 par value per share; 10,346,314
shares authorized, 9,708,341 issued and outstanding at March 31, 2023 and December 31, 2022
|
|
|
103
|
|
|
103
|
Treasury stock, at cost, 637,973 shares at March 31, 2023
and December 31, 2022
|
|
|
(7)
|
|
|
(7)
|
Additional paid-in capital
|
|
|
16,856,969
|
|
|
16,851,455
|
Accumulated other comprehensive loss
|
|
|
(3,842)
|
|
|
(3,842)
|
Accumulated deficit
|
|
|
(9,307,942)
|
|
|
(8,365,275)
|
Total stockholders’ equity
|
|
|
7,545,281
|
|
|
8,482,434
|
Total liabilities and stockholders’ equity
|
|
|
$29,117,281
|
|
|
$25,185,188
|
The accompanying notes are an integral part of these interim unaudited condensed consolidated
financial statements.
TABLE OF CONTENTS
H2B2 ELECTROLYSIS TECHNOLOGIES, INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For Three Months Ended March 31, 2023 and 2022
(Unaudited)
Product sales
|
|
|
$866,913
|
|
|
$100,130
|
Cost of sales
|
|
|
974,046
|
|
|
83,997
|
Gross (loss) profit
|
|
|
(107,133)
|
|
|
16,133
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
Research and development
|
|
|
542,773
|
|
|
196,201
|
Selling, general and administrative
|
|
|
1,105,019
|
|
|
981,238
|
Depreciation of long-lived assets
|
|
|
40,581
|
|
|
5,803
|
Income from grants
|
|
|
350,127
|
|
|
90,007
|
Losses from our unconsolidated investments
|
|
|
(7,032)
|
|
|
—
|
Loss from operations
|
|
|
(1,452,411)
|
|
|
(1,077,102)
|
|
|
|
|
|
|
|
Other income (expense):
|
|
|
|
|
|
|
Other income
|
|
|
326,204
|
|
|
411,878
|
Interest and other income (expense), net
|
|
|
207,175
|
|
|
(98,121)
|
Total other expense, net
|
|
|
533,379
|
|
|
313,757
|
|
|
|
|
|
|
|
Loss before tax expense
|
|
|
(919,032)
|
|
|
(763,345)
|
Income tax expense
|
|
|
23,635
|
|
|
10,349
|
Net loss
|
|
|
(942,667)
|
|
|
(773,694)
|
|
|
|
|
|
|
|
Net loss per share:
|
|
|
|
|
|
|
Net loss per share – basic
|
|
|
$(0.10)
|
|
|
$(0.08)
|
Net loss per share – diluted
|
|
|
$(0.10)
|
|
|
$(0.08)
|
|
|
|
|
|
|
|
Weighted average shares outstanding – basic
|
|
|
9,708,341
|
|
|
9,734,728
|
Weighted average shares outstanding – diluted
|
|
|
9,708,341
|
|
|
9,734,728
|
The accompanying notes are an integral part of these interim unaudited condensed consolidated
financial statements.
TABLE OF CONTENTS
H2B2 ELECTROLYSIS TECHNOLOGIES, INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY
For Three Months Ended March 31, 2023 and 2022
(Unaudited)
January 1, 2022
|
|
|
10,346,314
|
|
|
$103
|
|
|
$16,835,962
|
|
|
$(3,842)
|
|
|
$(4,068,816)
|
|
|
(610,000)
|
|
|
$(6)
|
|
|
$12,763,401
|
|
|
$75,761
|
|
|
$12,839,162
|
Net (loss)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(773,694)
|
|
|
—
|
|
|
—
|
|
|
(773,694)
|
|
|
—
|
|
|
(773,694)
|
Repurchase of common stock
|
|
|
—
|
|
|
—
|
|
|
(7,718)
|
|
|
—
|
|
|
—
|
|
|
(1,929)
|
|
|
—
|
|
|
(7,718)
|
|
|
—
|
|
|
(7,718)
|
Purchase of noncontrolling interest
|
|
|
—
|
|
|
—
|
|
|
26,761
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
26,761
|
|
|
(75,761)
|
|
|
(49,000)
|
March 31, 2022
|
|
|
10,346,314
|
|
|
$103
|
|
|
$16,855,005
|
|
|
$(3,842)
|
|
|
$(4,842,510)
|
|
|
(611,929)
|
|
|
$(6)
|
|
|
$12,008,750
|
|
|
$—
|
|
|
$12,008,750
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
January 1, 2023
|
|
|
10,346,314
|
|
|
$103
|
|
|
$16,851,455
|
|
|
$(3,842)
|
|
|
$(8,365,275)
|
|
|
(637,973)
|
|
|
$(7)
|
|
|
$8,482,434
|
|
|
$—
|
|
|
$8,482,434
|
Net (loss)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(942,667)
|
|
|
—
|
|
|
—
|
|
|
(942,667)
|
|
|
—
|
|
|
(942,667)
|
Stock-based compensation
|
|
|
—
|
|
|
—
|
|
|
5,514
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,514
|
|
|
—
|
|
|
5,514
|
March 31, 2023
|
|
|
10,346,314
|
|
|
$103
|
|
|
$16,856,969
|
|
|
$(3,842)
|
|
|
$(9,307,942)
|
|
|
(637,973)
|
|
|
$(7)
|
|
|
$7,545,281
|
|
|
$—
|
|
|
$7,545,281
|
The accompanying notes are an integral part of these interim unaudited condensed consolidated
financial statements.
TABLE OF CONTENTS
H2B2 ELECTROLYSIS TECHNOLOGIES, INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
For Three Months Ended March 31, 2023 and 2022
(Unaudited)
Operating Activities
|
|
|
|
|
|
|
Net loss
|
|
|
$(942,667)
|
|
|
$(773,694)
|
Adjustments to reconcile net loss to net cash provided by
(used in) operating activities:
|
|
|
|
|
|
|
Depreciation of long-lived assets
|
|
|
40,581
|
|
|
5,803
|
Accrued employee benefits and other provisions
|
|
|
93,139
|
|
|
115,416
|
Noncash lease expense
|
|
|
47,050
|
|
|
9,022
|
Stock-based compensation
|
|
|
5,514
|
|
|
—
|
Foreign currency (gain) loss
|
|
|
(211,423)
|
|
|
80,033
|
Losses from our unconsolidated investments
|
|
|
7,032
|
|
|
—
|
Changes in operating assets and liabilities
|
|
|
|
|
|
|
Accounts receivable
|
|
|
(1,869,043)
|
|
|
34,541
|
Inventory
|
|
|
—
|
|
|
986
|
Prepaid expenses and other current assets
|
|
|
(327,532)
|
|
|
(14,939)
|
Grants receivable
|
|
|
(221,645)
|
|
|
(54,854)
|
Contract assets
|
|
|
1,894,339
|
|
|
31,809
|
Accounts payable
|
|
|
(34,996)
|
|
|
92,279
|
Contract liabilities
|
|
|
3,259,976
|
|
|
(178,977)
|
Lease liabilities
|
|
|
81
|
|
|
(7,343)
|
Income taxes payable
|
|
|
24,435
|
|
|
10,349
|
Net cash provided by (used in) operating activities
|
|
|
1,764,841
|
|
|
(649,569)
|
Investing Activities
|
|
|
|
|
|
|
Payments for assets under construction
|
|
|
(2,305,606)
|
|
|
(747,372)
|
Purchase of intangible assets
|
|
|
(19,692)
|
|
|
—
|
Purchase of property, plant, and equipment
|
|
|
(24,558)
|
|
|
—
|
Proceeds from grants for assets under construction
|
|
|
573,587
|
|
|
—
|
Purchase of equity investments
|
|
|
(126,576)
|
|
|
—
|
Proceeds from deposits and guarantees
|
|
|
—
|
|
|
574,813
|
Other assets
|
|
|
(100)
|
|
|
158,886
|
Net cash used in investing activities
|
|
|
(1,902,945)
|
|
|
(13,673)
|
Financing Activities
|
|
|
|
|
|
|
Payments of long-term debt, net
|
|
|
108
|
|
|
(4,591)
|
Acquisition of treasury shares
|
|
|
—
|
|
|
(7,719)
|
Net cash provided by (used in) financing activities
|
|
|
108
|
|
|
(12,310)
|
Effect of exchange rate changes on cash and cash equivalents
|
|
|
212,840
|
|
|
(80,031)
|
(Decrease) increase in cash and cash equivalents
|
|
|
74,844
|
|
|
(755,583)
|
Cash and cash equivalents beginning of period
|
|
|
5,044,949
|
|
|
11,545,081
|
Cash and cash equivalents end of period
|
|
|
$5,119,793
|
|
|
$10,789,498
|
|
|
|
|
|
|
|
Supplemental cash flow information:
|
|
|
|
|
|
|
Purchase of property and equipment by incurring current liabilities
|
|
|
$1,493,425
|
|
|
$227,752
|
Acquisition of non-controlling interest
|
|
|
$—
|
|
|
$49,000
|
Noncash recognition of lease modification
|
|
|
$(212,834)
|
|
|
$—
|
The accompanying notes are an integral part of these interim unaudited condensed consolidated
financial statements.
TABLE OF CONTENTS
H2B2 ELECTROLYSIS TECHNOLOGIES, INC. AND
SUBSIDIARIES
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1.1. Description of Business
H2B2 Electrolysis Technologies, Inc ("H2B2", the "Company", "we",
“our”, “us”) is an alternative energy technology provider focused on the development, financing, design, integration, construction, operation and maintenance of hydrogen production systems based on proton exchange membrane (“PEM”) water
electrolysis, providing solutions for the generation, compression, storage, marketing and other uses of green hydrogen.
1.2. Going Concern Disclosure
The Company is in the development stage and continues to incur net
losses including a net loss of $942,667 for the three months ended March 31, 2023. At March 31, 2023, the Company had net working capital of $3,532,835 and the Company’s principal source of liquidity consisted of $5,119,793 of cash and cash
equivalents which, without additional funding, will not be sufficient to meet the Company’s obligations within the next twelve months from the date of issuance of these interim unaudited condensed consolidated financial statements. These
factors give rise to substantial doubt about the Company's ability to continue as a going concern.
Management’s plan to mitigate these conditions include raising
additional capital, securing grant funding and developing profitable operations through the implementation of its current business initiatives which include the expansion of manufacturing facilities and broadening the Company’s sales pipeline.
The Company has historically funded its operations through capital
raises from third parties. There can be no assurance that the Company will be successful in obtaining third-party capital raises and funding from grants. If external financing sources are not available or are inadequate to fund operations, or
the Company is unable to develop profitable operations through implementation of its current business initiatives, the Company will be required to reduce operating costs, which could jeopardize future strategic initiatives and business plans.
Due to the uncertainty that exists in management’s plans, substantial doubt remains about the Company’s ability to continue as a going concern.
The accompanying interim unaudited condensed consolidated financial
statements have been prepared assuming the Company will continue to operate as a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. As such, the accompanying interim
unaudited condensed consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
2.
|
Summary of Significant Accounting Policies and New Accounting Pronouncements
|
2.1. Principles of Consolidation
The interim unaudited condensed consolidated financial statements
include the financial statements of the Company and its wholly owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.
2.2. Interim Financial Statements
The interim unaudited condensed consolidated financial statements
included herein have been prepared in U.S dollars and in accordance with accounting principles generally accepted in the United States of America (GAAP) for interim financial statements and the rules and regulations of the U.S. Securities and
Exchange Commission.
In the opinion of management, these interim unaudited consolidated
financial statements and related notes include all adjustments, including normal recurring adjustments, necessary to present fairly the Company’s financial position, results of operations and cash flows for the periods presented. The results of
operations for such interim periods are not necessarily indicative of the operating results to be expected for the full year.
Certain information and disclosures normally included in the notes to
the annual financial statements have been condensed or omitted from these interim financial statements. Accordingly, these interim unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited
consolidated financial statements and notes thereto for the year ended December 31, 2022. The December 31, 2022 balance sheet is derived from those statements.
TABLE OF CONTENTS
2.3. Use of Estimates
The preparation of the consolidated financial statements in
conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and
the reported amounts of revenues and expenses during the reporting period. On an on-going basis, we evaluate our estimates and judgments, including those related to revenue recognition, valuation of long-lived assets, operating leases,
stock-based compensation, income taxes and contingencies. We base our estimates and judgments on historical experience and on various other factors and assumptions that are believed to be reasonable under the circumstances. Actual results may
differ from these estimates under different assumptions or conditions.
2.4. Recent Accounting Pronouncements
Recently Adopted Accounting Guidance
In June 2016, the FASB issued ASU 2016-13, Financial Instruments –
Credit Losses (ASC Topic 326) requiring initial recognition of credit losses, as well as any subsequent change in the estimate, when it is probable that a loss has been incurred. The standard eliminates the threshold for initial recognition in
current U.S. GAAP and it covers a broad range of financial instruments, including trade and other receivables at each reporting date. The measurement of expected credit losses is based on historical experience, current conditions, and
reasonable and supportable forecasts that affect the collectability of the financial assets. The Company adopted this standard effective January 1, 2023 with no material effect on the financial statements.
Recent Accounting Guidance Not Yet Effective
All issued but not yet effective accounting and reporting standards
as of March 31, 2023 are either not applicable to the Company or are not expected to have a material impact on the Company.
2.4. Significant Accounting Policies
During the three months ended March 31, 2023, there were no changes
to our significant accounting policies as described in in our consolidated financial statements for the year ended December 31, 2022.
2.5. Revenue Recognition
For each identified periods, revenue was derived from the sales of
electrolyzer systems. Revenue from sales of electrolyzer systems represents sales of products used to generate hydrogen for various applications including mobility, power-to-gas, and other uses. As of March 31, 2023 and 2022, revenue from the
sale of electrolyzer systems amounted to $866,913 and $100,130, respectively.
The following table provides information about receivables, contract
assets and contract liabilities from contracts with customers:
Accounts receivable
|
|
|
$3,968,220
|
|
|
$2,099,177
|
Contract assets
|
|
|
303,391
|
|
|
2,197,730
|
Contract liabilities
|
|
|
(4,995,692)
|
|
|
(1,735,716)
|
Net contract assets/liabilities
|
|
|
$(724,081)
|
|
|
$2,561,191
|
Changes in the contract assets and the contract liabilities balances
on uncompleted contracts from December 31, 2022 to March 31, 2023 are as follows:
Transferred to receivables
|
|
|
$(2,197,730)
|
Revenue recognized and not billed
|
|
|
303,391
|
Net change in contract assets
|
|
|
$(1,894,339)
|
TABLE OF CONTENTS
Advanced billings
|
|
|
$4,995,692
|
Revenue recognized during the period
|
|
|
(1,735,716)
|
Net change in contract liabilities
|
|
|
$3,259,976
|
3.
|
Property, Plant and Equipment
|
Property, plant and equipment are summarized as follows:
Assets under construction
|
|
|
$7,891,083
|
|
|
$4,852,667
|
Machinery and equipment
|
|
|
357,142
|
|
|
357,142
|
Computer hardware
|
|
|
113,968
|
|
|
83,919
|
Furniture and other fixtures
|
|
|
2,038
|
|
|
2,038
|
Property, plant, and equipment
|
|
|
8,364,231
|
|
|
5,295,766
|
Less accumulated depreciation
|
|
|
(185,985)
|
|
|
(147,749)
|
Property, plant, and equipment, net
|
|
|
$8,178,246
|
|
|
$5,148,017
|
Assets under construction
Assets under construction pertain to the construction of SoHyCal, a
hydrogen facility in California. The construction of the facility is partially financed by grants received from the California Energy Commission (CEC).
Depreciation expense for the three months ended March 31, 2023 and
2022 was $38,236 and $4,700, respectively.
4.
|
Prepaid Expenses and Other Current Assets
|
Prepaid expenses and other current assets are summarized as follows:
Prepayments to suppliers
|
|
|
$1,802,018
|
|
|
$899,161
|
VAT receivables
|
|
|
236,299
|
|
|
371,315
|
Other current assets
|
|
|
56,126
|
|
|
10,792
|
Total Other Current Assets
|
|
|
$2,094,443
|
|
|
$1,281,268
|
5.
|
Accounts Payable and other payables
|
Accounts payable are summarized as follows:
Accrued employee benefits
|
|
|
$269,404
|
|
|
$221,827
|
Accounts payable
|
|
|
8,847,487
|
|
|
8,019,474
|
Other taxes
|
|
|
558,280
|
|
|
243,507
|
Total
|
|
|
$9,675,171
|
|
|
$8,484,808
|
We are required to comply with certain terms and conditions
applicable to each grant and, if a disqualifying event should occur as specified in the grant’s terms and conditions, we are required to repay the grant funds to the grantor. We believe we are in compliance with each grant’s terms and
conditions as of March 31, 2023 and December 31, 2022.
The amount recognized in the condensed consolidated statement of
operations during the three months ended March 31, 2023 and 2022 was $350,127 and $90,007, respectively, and corresponds in entirety to research and development grants in Spain.
TABLE OF CONTENTS
The changes in government grants recorded in unearned grants for
March 31, 2023 and December 31, 2022 correspond to the amounts received or pending to receive from the California Energy Commission and consisted of:
December 31, 2022
|
|
|
$2,053,159
|
Additions
|
|
|
499,933
|
Disposals
|
|
|
—
|
Recognized in income
|
|
|
—
|
March 31, 2023
|
|
|
$2,553,092
|
Grants receivable
The grants receivable balance corresponds to the amounts outstanding
from the time the eligible expenses are incurred until the grantor disburses those grants.
The amounts pending to be received from grants are reported in the
consolidated balance sheet in grants receivable and consist of the following:
Grants in Spain
|
|
|
$807,034
|
|
|
$585,390
|
Grants in U.S.
|
|
|
83,793
|
|
|
157,447
|
Grant receivable
|
|
|
$890,827
|
|
|
$742,837
|
Our Joint ventures are accounted for using the equity method of
accounting whereby the Company initially records its investment at cost (or fair value at the date of acquisition) and then subsequently adjusts the carrying value for the Company’s proportionate share of distributions and earnings or losses of
the joint ventures.
For these unconsolidated joint ventures, our investment balances are
included in equity method investments on the condensed consolidated balance sheets and our pro rata share of net income or loss is included in earnings from unconsolidated investment on the condensed consolidated statements of operations.
GreenH Electrolysis Private Limited
We have invested in a joint venture with Castlegreen Energy Private
Limited ("Castlegreen"), located in India, to expand the Company's operations and presence in Asian markets. The Company holds 50% of the stock in the joint venture entity, GreenH Electrolysis Private Limited ("GreenH”), and the remaining 50%
of stock is held by Castlegreen. The joint venture became operational as of March 15, 2023.
H2V2 Mexico, S.A. de C.V.
We have invested in a joint venture with HVMX de México S.A.
("HVMX"), located in Mexico, to expand the Company's operations and presence in the Mexican market. The Company holds 40% of the stock in the joint venture entity, H2V2 de Mexico SA (“H2V2”), and the remaining 60% of stock is held by HVMX (40%)
and individual investors. The joint venture became operational as of March 30, 2023.
Our equity method investments and accrued losses of the
aforementioned joint ventures are as follows:
Equity method investment
|
|
|
$126,576
|
Loss of unconsolidated investments
|
|
|
(7,032)
|
|
|
|
$119,544
|
The effective tax rate was a 3% expense on a pre-tax loss for the
three months ended March 31, 2023 (1% on a pre-tax loss for the three months ended March 31, 2022). The effective tax rate differs from the statutory rate mainly due to adjustments to the valuation allowance against deferred tax assets.
TABLE OF CONTENTS
9.
|
Stock-Based Compensations
|
There was no option activity for the three months period ended
March 31, 2023 for the granted stock-based compensation plans (“stock-option plan” or “SOP”) to the Company’s Chairman.
The Company’s stock option compensation expense was $5,514 for the
three months ended March 31, 2023, and there was no compensation expense in 2022. There was $106,930 of total unrecognized compensation costs related to outstanding stock options at March 31, 2023.
As of March 31, 2023, the Company determined that the performance
conditions related to the stock-based compensation awards to nine of its executives are not probable. Therefore, the Company has recorded a liability associated with the cash bonus component of the awards. The accrued liability amounts to
$85,758 and $72,745 as of March 31, 2023, and December 31, 2022, respectively recorded in Non-current Other liabilities.
As of December 31, 2022, the Company had operating leases primarily
associated with lands for a facility under construction in California and a facility in Seville, Spain. These leases expire in 2041 and 2043 (U.S.) and 2027 (Spain), respectively.
We recorded total operating lease expense for the three months ended
March 31, 2023 and 2022 of $81,216 and $37,005, respectively, which is classified within selling, general and administrative expenses within the condensed consolidated statements of operations.
In February 2023, the Company signed an addendum to modify future
rent payments for one of its land leases in California resulting in a reduction of $212,834 in the right-of-use asset and liability.
The following table summarizes the maturities of undiscounted cash
flows of lease commitments reconciled to the total lease liability as of March 31, 2023:
2023
|
|
|
$260,663
|
2024
|
|
|
350,374
|
2025
|
|
|
349,910
|
2026
|
|
|
350,977
|
2027
|
|
|
334,880
|
Thereafter
|
|
|
2,278,625
|
Total future minimum lease payments
|
|
|
3,925,429
|
Less imputed lease interest
|
|
|
(1,781,961)
|
Total lease liabilities
|
|
|
$2,143,468
|
Other information related to the operating leases are presented in
the following table:
Cash payments
|
|
|
$27,000
|
|
|
$27,000
|
Weighted average remaining lease term (years)
|
|
|
14.19
|
|
|
20.49
|
Weighted average discount rate
|
|
|
9.09%
|
|
|
7.00%
|
Noncash lease amount
|
|
|
$47,050
|
|
|
$9,022
|
11.
|
Commitments and Contingencies
|
11.1 Legal Matters
From time to time, we may be involved in litigation relating to
claims arising out of our operations in the normal course of business. As of March 31, 2023, there were no pending or threatened lawsuits that could reasonably be expected to have a material effect on the results of our operations.
11.2 Other Commitments
The Company enters into various contracts or agreements in the normal
course of business whereby such contracts or agreements may contain commitments.
TABLE OF CONTENTS
11.3 Concentrations
Credit Risk
Financial instruments that potentially subject the Company to
concentrations of credit risk consist of cash and accounts receivable.
The Company maintains its cash in banks in Spain and in the U.S. The
Company has not experienced any losses in such accounts from inception through March 31, 2023.
Major Customers
The Company continually assesses the financial strength of its
customers. For the three months ended March 31, 2023, two customers accounted for 43% and 35% of total revenues each. For the three months ended March 31, 2022, revenues from one customer accounted for 72% of total revenues. At March 31, 2023,
accounts receivable from two customers accounted for 59% and 28% of total accounts receivable with no other single customer accounting for more than 10% of the accounts receivable balance. At December 31, 2022, accounts receivable from three
customers accounted for 52%, 25% and 20% of total accounts receivable with no other single customer accounting for more than 10% of the accounts receivable balance.
Basic net loss per share is computed by dividing the net loss by the
weighted average number of shares of common stock outstanding during the periods presented. Diluted net loss per common share is computed using the weighted average number of common stock outstanding for the period, and, if dilutive, potential
common stock outstanding during the period. Potential common stock consists of the incremental shares of common stock issuable upon the exercise of stock options, or other common stock equivalents. Potentially dilutive securities are excluded
from the computation if their effect is anti-dilutive.
Options to purchase 87,716 shares of common stock were outstanding at
March 31, 2023. No options were outstanding at March 31, 2022. These shares were not included in the computation of diluted loss per share for the for the three months ended March 31, 2023 because the effects would have been anti-dilutive.
These options may dilute future earnings per share.
We operate in a single segment and that is the sale of electrolyzers,
including the design, engineering, manufacturing, integration, financing and operating and maintenance expenses for green hydrogen facilities. We have identified the Chief Executive Officer as the chief operating decision maker (CODM), and all
significant operating decisions are based on one-segment basis.
The following table sets forth product sales and long-lived assets
(includes property and equipment, net and operating lease assets) by geographic area:
North America
|
|
|
$—
|
|
|
$—
|
|
|
$9,190,101
|
|
|
$6,361,086
|
LATAM(1)
|
|
|
340,287
|
|
|
89,343
|
|
|
—
|
|
|
—
|
Europe
|
|
|
526,626
|
|
|
10,787
|
|
|
1,082,808
|
|
|
1,110,086
|
Total
|
|
|
$866,913
|
|
|
$100,130
|
|
|
$10,272,909
|
|
|
$7,471,172
|
(1)
|
LATAM comprises Central America, South America, and Mexico.
|
The Company has evaluated subsequent events through August 14,
2023, the date the consolidated financial statements were available to be issued and concluded the following were required to be disclosed.
TABLE OF CONTENTS
On May 9, 2023, the Company entered into an Agreement and Plan
of Merger (“Merger Agreement”) with RMG Acquisition Corp. III (“RMG III”), a publicly traded special purpose acquisition company. Under the terms of the Merger Agreement, the Company and RMG would become a combined entity, with H2B2’s
existing equity holders continuing to hold substantially all of their equity in the combined public company. We expect the merger agreement to be consummated in the third quarter of 2023.
On May 30, 2023, the Company purchased 193,333 shares of its
common stock from an existing stockholder for 14,500,000 Euro. The agreement included an option for the Company to purchase an additional 73,334 shares of its common stock for 5,500,000 Euro, on, or before, July 31, 2023. On July 28, 2023,
the Company and the insolvency administation agreed to extend the date by which the Company could purchase the additional shares from July 31, 2023 to December 31, 2023.
To fund the purchase of the 193,333 shares for 14,500,000 Euro on
May 30, 2023, the Company executed a loan agreement in the amount of 14,500,000 Euro. The loan bears an interest rate of 10% paid-in-kind (PIK) per annum. Unpaid principal and interest amounts are due at maturity on May 30, 2026. According to
the agreement, if the Company were to close a capital transaction of more than 40,000,000 Euro and/or were to generate free cash flow in excess of 10,000,000 Euro in any quarterly period, the excess amount must be used for early repayments of
the loan. The Company incurred debt issuance costs of 435,000 Euro in connection with the loan agreement.
In July 2023, the Company made an additional investment in its
joint venture with GreenH Electrolysis Private Limited of $150,000 for the construction of a factory in India to manufacture electolyzers.
In connection with the European Commission’s Important Project of
Common European Interest (IPCEI) Hy2Tech program, final resolution of the IPCEI advance was approved allowing the Company to request funding on the 12,000,000 Euro advance. As of August 14, 2023, the Company has requested 8,445,015 Euro on
the advance.
On August 2, 2023, the Company executed a 3,000,000 Euro working
capital facility agreement to fund the acquisition of five electrolyzers. The facility agreement expires October 28, 2024 and has been guaranteed by CESCE for up to 60% or 1,800,000 Euro.
TABLE OF CONTENTS
Report of Independent Registered Public Accounting
Firm (PCAOB ID #049)
To the Stockholders and the Board of Directors of H2B2 Electrolysis Technologies, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of H2B2 Electrolysis
Technologies, Inc, and its subsidiaries (the Company) as of December 31, 2022 and 2021, the related consolidated statements of operations and comprehensive loss, changes in stockholders’ equity, and cash flows for each of the two years in the
period ended December 31, 2022, and the related notes to the consolidated financial statements (collectively, the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position
of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2022, in conformity with accounting principles generally accepted in the United
States of America.
The Company’s Ability to Continue as a Going Concern
The accompanying financial statements have been prepared assuming the Company will
continue as a going concern. As discussed in Note 1.2 of the financial statements, the Company has suffered recurring losses and negative cash flows from operations and has stated that there is substantial doubt exists about the Company’s
ability to continue as a going concern. Management’s evaluation of the events and conditions and management’s plans regarding these matters are also described in Note 1.2. These financial statements do not include any adjustments that might
result from the outcome of this uncertainty. Our opinion is not modified with respect to this matter.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our
responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be
independent with respect to the Company in accordance with U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB and in
accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material
misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of
internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement
of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis
for our opinion.
/s/ RSM US LLP
We have served as the Company's auditor since 2021.
Austin, TX
July 5, 2023
TABLE OF CONTENTS
H2B2 ELECTROLYSIS TECHNOLOGIES, INC. AND
SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
As of December 31, 2022 and 2021
Assets
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
$5,044,949
|
|
|
$11,545,081
|
Accounts receivable, net of allowance for doubtful
accounts of $47,758 and $0, respectively
|
|
|
2,099,177
|
|
|
382,698
|
Inventory
|
|
|
6,175,000
|
|
|
986
|
Prepaid expenses and other current assets
|
|
|
1,281,268
|
|
|
2,100,391
|
Grants receivable
|
|
|
742,837
|
|
|
498,308
|
Contract assets
|
|
|
2,197,730
|
|
|
212,410
|
Total current assets
|
|
|
17,540,961
|
|
|
14,739,874
|
Property, plant, and equipment, net
|
|
|
5,148,017
|
|
|
858,149
|
Operating lease – right of use asset, net
|
|
|
2,235,854
|
|
|
1,553,135
|
Intangible assets, net
|
|
|
87,301
|
|
|
85,503
|
Other assets
|
|
|
173,055
|
|
|
210,105
|
Total assets
|
|
|
$25,185,188
|
|
|
$17,446,766
|
Liabilities and Equity
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
Accounts payable and accrued expenses
|
|
|
$8,484,808
|
|
|
$593,146
|
Current maturities of long-term debt
|
|
|
10,663
|
|
|
1,946
|
Current maturities of operating lease liabilities
|
|
|
230,645
|
|
|
106,773
|
Contract liabilities
|
|
|
1,735,716
|
|
|
257,061
|
Current provisions
|
|
|
44,378
|
|
|
17,348
|
Other current liabilities
|
|
|
21,179
|
|
|
3,792
|
Total current liabilities
|
|
|
10,527,389
|
|
|
980,066
|
Unearned grants
|
|
|
2,053,159
|
|
|
271,091
|
Long-term operating lease liabilities
|
|
|
2,111,530
|
|
|
1,489,869
|
Income taxes payable
|
|
|
1,787,968
|
|
|
1,729,227
|
Long-term debt, less current maturities
|
|
|
13,796
|
|
|
17,743
|
Other liabilities
|
|
|
208,912
|
|
|
119,608
|
Total liabilities
|
|
|
16,702,754
|
|
|
4,607,604
|
Commitments and contingencies (Note 11)
|
|
|
—
|
|
|
—
|
Equity
|
|
|
|
|
|
|
H2B2 Electrolysis Technologies, Inc. Stockholders’ equity:
|
|
|
|
|
|
|
Common stock, $0.00001 par value per share; 10,346,314
shares authorized, issued 9,708,341 and 9,736,314 outstanding at December 31, 2022 and 2021, respectively
|
|
|
103
|
|
|
103
|
Treasury stock, at cost, 637,973 and 610,000 shares at
December 31, 2022 and 2021, respectively
|
|
|
(7)
|
|
|
(6)
|
Additional paid-in capital
|
|
|
16,851,455
|
|
|
16,835,962
|
Accumulated other comprehensive loss
|
|
|
(3,842)
|
|
|
(3,842)
|
Accumulated deficit
|
|
|
(8,365,275)
|
|
|
(4,068,816)
|
Total H2B2 Electrolysis Technologies, Inc. Stockholders’
equity
|
|
|
8,482,434
|
|
|
12,763,401
|
Noncontrolling interests
|
|
|
—
|
|
|
75,761
|
Total equity
|
|
|
8,482,434
|
|
|
12,839,162
|
Total liabilities and equity
|
|
|
$25,185,188
|
|
|
$17,446,766
|
The accompanying notes are an integral part of these consolidated financial statements.
TABLE OF CONTENTS
H2B2 ELECTROLYSIS TECHNOLOGIES, INC. AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
For the years ended December 31, 2022 and 2021
Product sales
|
|
|
$3,491,673
|
|
|
$961,607
|
Cost of sales
|
|
|
3,042,412
|
|
|
815,956
|
Gross profit
|
|
|
449,261
|
|
|
145,651
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
Research and development
|
|
|
1,333,961
|
|
|
588,281
|
Selling, general and administrative
|
|
|
3,904,132
|
|
|
3,220,510
|
Depreciation of long-lived assets
|
|
|
88,257
|
|
|
24,178
|
|
|
|
|
|
|
|
Income from grants
|
|
|
801,991
|
|
|
242,170
|
|
|
|
|
|
|
|
Loss from operations
|
|
|
(4,075,098)
|
|
|
(3,445,148)
|
|
|
|
|
|
|
|
Other income (expense):
|
|
|
|
|
|
|
Other income
|
|
|
411,879
|
|
|
105,979
|
Interest and other expense, net
|
|
|
(557,112)
|
|
|
(757,444)
|
Total other expense, net
|
|
|
(145,233)
|
|
|
(651,465)
|
|
|
|
|
|
|
|
Loss before tax expense
|
|
|
(4,220,331)
|
|
|
(4,096,613)
|
|
|
|
|
|
|
|
Income tax expense
|
|
|
76,128
|
|
|
34,391
|
|
|
|
|
|
|
|
Net loss
|
|
|
(4,296,459)
|
|
|
(4,131,004)
|
Less: Net loss attributable to noncontrolling interests
|
|
|
—
|
|
|
(253)
|
Net loss attributable to Stockholders’
|
|
|
$(4,296,459)
|
|
|
$(4,130,751)
|
|
|
|
|
|
|
|
Net loss per share:
|
|
|
|
|
|
|
Net loss per share – basic
|
|
|
$(0.44)
|
|
|
$(0.50)
|
Net loss per share – diluted
|
|
|
$(0.44)
|
|
|
$(0.50)
|
|
|
|
|
|
|
|
Weighted average shares outstanding – basic
|
|
|
9,727,939
|
|
|
8,321,904
|
Weighted average shares outstanding – diluted
|
|
|
9,727,939
|
|
|
8,321,904
|
The accompanying notes are an integral part of these consolidated financial statements.
TABLE OF CONTENTS
H2B2 ELECTROLYSIS TECHNOLOGIES, INC. AND
SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY
For the years ended December 31, 2022 and 2021
January 1, 2021
|
|
|
8,241,050
|
|
|
$82
|
|
|
$7,257,573
|
|
|
$(3,842)
|
|
|
$61,936
|
|
|
(651,929)
|
|
|
$(7)
|
|
|
$7,315,742
|
|
|
$76,017
|
|
|
$7,391,759
|
Net (loss)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4,130,751)
|
|
|
—
|
|
|
—
|
|
|
(4,130,751)
|
|
|
(253)
|
|
|
(4,131,004)
|
Issuance of common stock
|
|
|
2,105,264
|
|
|
21
|
|
|
9,579,480
|
|
|
—
|
|
|
—
|
|
|
118,012
|
|
|
—
|
|
|
9,579,501
|
|
|
—
|
|
|
9,579,501
|
Repurchase of common stock
|
|
|
—
|
|
|
—
|
|
|
(1,091)
|
|
|
—
|
|
|
(1)
|
|
|
(76,083)
|
|
|
1
|
|
|
(1,091)
|
|
|
(3)
|
|
|
(1,094)
|
December 31, 2021
|
|
|
10,346,314
|
|
|
103
|
|
|
16,835,962
|
|
|
(3,842)
|
|
|
(4,068,816)
|
|
|
(610,000)
|
|
|
(6)
|
|
|
12,763,401
|
|
|
75,761
|
|
|
12,839,162
|
Net (loss)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4,296,459)
|
|
|
—
|
|
|
—
|
|
|
(4,296,459)
|
|
|
—
|
|
|
(4,296,459)
|
Repurchase of common stock
|
|
|
—
|
|
|
—
|
|
|
(11,887)
|
|
|
—
|
|
|
—
|
|
|
(27,973)
|
|
|
(1)
|
|
|
(11,888)
|
|
|
—
|
|
|
(11,888)
|
Purchase of noncontrolling interest
|
|
|
—
|
|
|
—
|
|
|
26,761
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
26,761
|
|
|
(75,761)
|
|
|
(49,000)
|
Stock-based compensation
|
|
|
—
|
|
|
—
|
|
|
619
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
619
|
|
|
—
|
|
|
619
|
December 31, 2022
|
|
|
10,346,314
|
|
|
$103
|
|
|
$16,851,455
|
|
|
$(3,842)
|
|
|
$(8,365,275)
|
|
|
(637,973)
|
|
|
$(7)
|
|
|
$8,482,434
|
|
|
$—
|
|
|
$8,482,434
|
The accompanying notes are an integral part of these consolidated financial statements.
TABLE OF CONTENTS
H2B2 ELECTROLYSIS TECHNOLOGIES, INC. AND
SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended December 31, 2022 and 2021
Operating Activities
|
|
|
|
|
|
|
Net loss
|
|
|
$(4,296,459)
|
|
|
$(4,131,004)
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
|
|
|
|
|
|
Depreciation of long-lived assets
|
|
|
88,256
|
|
|
24,178
|
Accrued employee benefits and other provisions
|
|
|
129,445
|
|
|
189,620
|
Noncash lease expense
|
|
|
55,646
|
|
|
—
|
Stock-based compensation
|
|
|
619
|
|
|
—
|
Foreign currency loss
|
|
|
526,839
|
|
|
737,442
|
Loss on disposal of assets
|
|
|
—
|
|
|
65,199
|
Changes in operating assets and liabilities
|
|
|
|
|
|
|
Accounts receivable
|
|
|
(1,716,479)
|
|
|
(629,486)
|
Inventory
|
|
|
(6,174,014)
|
|
|
—
|
Prepaid expenses and other current assets
|
|
|
(436,610)
|
|
|
—
|
Grants receivable
|
|
|
(358,173)
|
|
|
—
|
Contract assets
|
|
|
(1,985,320)
|
|
|
156,581
|
Accounts payable
|
|
|
7,891,662
|
|
|
(134,651)
|
Contract liabilities
|
|
|
1,478,655
|
|
|
236,101
|
Lease liabilities
|
|
|
7,168
|
|
|
—
|
Income taxes payable
|
|
|
76,128
|
|
|
(1,925,000)
|
Net cash used in operating activities
|
|
|
(4,712,637)
|
|
|
(5,411,020)
|
Investing Activities
|
|
|
|
|
|
|
Payments for assets under construction
|
|
|
(4,612,932)
|
|
|
(846,335)
|
Purchase of intangible assets
|
|
|
(6,113)
|
|
|
(44,452)
|
Purchase of property, plant, and equipment
|
|
|
(374,386)
|
|
|
(14,872)
|
Proceeds from grants for assets under construction
|
|
|
1,895,712
|
|
|
—
|
Proceeds from deposits and guarantees
|
|
|
1,869,239
|
|
|
(830,911)
|
Proceeds from other assets
|
|
|
(11,949)
|
|
|
—
|
Net cash used in investing activities
|
|
|
(1,240,429)
|
|
|
(1,736,570)
|
Financing Activities
|
|
|
|
|
|
|
Payments of notes payable
|
|
|
—
|
|
|
(564,174)
|
Payments of long-term debt
|
|
|
(8,340)
|
|
|
—
|
Proceeds from issuance of equity securities
|
|
|
—
|
|
|
9,579,501
|
Acquisition of Treasury Shares
|
|
|
(11,890)
|
|
|
(1,094)
|
Net cash (used in) provided by financing activities
|
|
|
(20,230)
|
|
|
9,014,233
|
Effect of exchange rate changes on cash and cash equivalents
|
|
|
(526,836)
|
|
|
(650,253)
|
(Decrease) increase in cash and cash equivalents
|
|
|
(6,500,132)
|
|
|
1,216,390
|
Cash and cash equivalents beginning of period
|
|
|
11,545,081
|
|
|
10,328,691
|
Cash and cash equivalents end of period
|
|
|
$5,044,949
|
|
|
$11,545,081
|
Cash paid for income taxes
|
|
|
—
|
|
|
$(1,925,000)
|
Cash paid for interest
|
|
|
—
|
|
|
$(7,145)
|
Purchase of property and equipment by incurring current liabilities
|
|
|
$268,065
|
|
|
$80,505
|
Acquisition of non-controlling interest
|
|
|
$49,000
|
|
|
—
|
Noncash recognition of new lease
|
|
|
$730,333
|
|
|
—
|
The accompanying notes are an integral part of these consolidated financial statements.
TABLE OF CONTENTS
H2B2 ELECTROLYSIS TECHNOLOGIES, INC. AND
SUBSIDIARIES
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2022 and 2021
1.1. Description of Business
H2B2 Electrolysis Technologies, Inc (“H2B2”, the “Company”, “we”,
“our”, “us”) is an alternative energy technology provider focused on the development, financing, design, integration, construction, operation and maintenance of hydrogen production systems based on Proton exchange membrane (“PEM”) water
electrolysis, providing solutions for the generation, compression, storage, marketing and other uses of green hydrogen.
The Company has different locations in the United States, Spain,
Uruguay and the United Kingdom.
The Company is comprised of the following wholly owned subsidiaries:
H2B2 USA, LLC, H2B2 Electrolysis Technologies, S.L., H2B2 QOF LLC, Green H2 LLC, SoHyCal LLC, H2B2 Corp, S.L., H2B2 O&M, S.L., H2B2 Uruguay and H2B2 UK Limited.
1.2. Going Concern Disclosure
The Company has determined that substantial doubt exists about the
Company’s ability to continue as a going concern as a result of continuing operating losses and negative cash flows from operations. The accompanying consolidated financial statements do not include any adjustments that might be necessary if
the Company is unable to continue as a going concern.
The Company is in the development stage and has incurred net losses
and negative operating cash flows including a net loss of $ 4,296,459 and cash used in operating activities of $ 4,712,637 for the year ended December 31, 2022. At December 31, 2022, the Company had net working capital of $ 7,013,572 and the
Company’s principal source of liquidity consisted of $5,044,949 of cash and cash equivalents which, without additional funding, will not be sufficient to meet the Company’s obligations within the next twelve months from the date of issuance of
these consolidated financial statements.
The accompanying consolidated financial statements have been prepared
assuming the Company will continue to operate as a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. Management’s plan to mitigate these conditions include raising
additional capital, securing grant funding and developing profitable operations through the implementation of its current business initiatives which include the expansion of manufacturing facilities and broadening the Company’s sales pipeline,
however, there can be no assurances that the Company will be able to do so.
The Company has historically funded its operations through capital
raises from third parties. There can be no assurance that the Company will be successful in obtaining third-party capital raises and funding from grants. If external financing sources are not available or are inadequate to fund operations, or
the Company is unable develop profitable operations through implementation of its current business initiatives, the Company will be required to reduce operating costs, which could jeopardize future strategic initiatives and business plans. Due
to the uncertainty that exists in management’s plans, substantial doubt remains about the Company’s ability to continue as a going concern.
2. Summary of Significant Accounting Policies and New Accounting
Pronouncements
2.1. Principles of Consolidation
The consolidated financial statements have been prepared in U.S
dollars and in accordance with accounting principles generally accepted in the United States (GAAP). The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All significant intercompany
balances and transactions have been eliminated in consolidation.
2.2. Use of Estimates
The preparation of the consolidated financial statements in
conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and
the reported amounts of
TABLE OF CONTENTS
H2B2 ELECTROLYSIS TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2022 and 2021
revenues and expenses during the reporting period. On an on-going basis, we evaluate our
estimates and judgments, including those related to revenue recognition, valuation of long-lived assets, operating leases, stock-based compensation, income taxes and contingencies. We base our estimates and judgments on historical experience
and on various other factors and assumptions that are believed to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions.
2.3. Reclassification of prior year presentation
Certain amounts in the prior year have been reclassified to conform
to the presentation adopted in the current year. In the Consolidated Statements of Operations, the Company reclassified $106,915 of cost from Selling, general and administrative to Cost of Sales and $241,170 of grant income from Other income to
Income from grants. In the Consolidated Balance Sheets $498,308 was reclassified from Accounts receivable ($271,091) and Prepaid expenses and other current assets ($227,217) to Grants receivable. Total Equity and Net Loss are unchanged due to
these reclassifications.
2.4. Cash and Cash Equivalents
For purposes of the consolidated statements of cash flows, the
Company considers all highly liquid debt instruments with original maturities of three months or less to be cash equivalents, as well as cash and bank accounts. As of December 31, 2022 and 2021 cash equivalents consist of money market accounts.
The Company’s cash and cash equivalents are deposited with financial institutions located in the U.S. and Spain.
2.5. Accounts Receivable
Accounts receivable are customer obligations due under normal trade
terms. Accounts receivable are stated at the amount billed or billable to customers and are ordinarily due between 30 and 60 days after the issuance of the invoice. Management reviews accounts receivable on a periodic basis to determine if any
receivables may become uncollectible. Receivables are reserved or written off based on individual credit evaluation and specific circumstances of the customer. The allowance for doubtful accounts and related receivable is reduced when the
amount is deemed uncollectible. The Company does not charge interest on past due receivables.
As of December 31, 2022, the allowance for doubtful accounts was
$47,758. There was no allowance for doubtful accounts recognized as of December 31, 2021.
2.6. Inventories
Inventory primarily relates to purchased raw materials and components
used in the manufacturing of our products, such as stacks and other related materials, which is valued at the lower of cost or net realizable value and accounted for on a first-in, first-out basis.
2.7. Property, Plant and Equipment
Property, plant and equipment (“PP&E”) is recorded at historical
cost. Expenditures for major additions and improvements are capitalized and minor replacements, maintenance and repairs are expensed as costs as incurred. Depreciation is calculated using the straight-line method over the estimated useful lives
of the assets. The Company records depreciation over the following estimated useful lives:
Machinery and equipment
|
|
|
4 years
|
Computer hardware
|
|
|
4 years
|
Furniture & Other Fixtures
|
|
|
4 - 10 years
|
Assets under construction
Development and construction of our facilities are carried out in
stages. We expense project costs during early-stage development activities. Once we achieve certain development milestones and it is probable that we can obtain future economic benefits from a project, we capitalize salaries and wages for
persons directly involved in the project, as well as engineering cost, permits, licenses, and other directly related costs. We periodically review development projects in construction for any indications of impairment.
TABLE OF CONTENTS
H2B2 ELECTROLYSIS TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2022 and 2021
2.8. Intangible Assets
Intangible assets acquired separately are initially measured at cost.
Following initial recognition, intangible assets are carried at cost less any accumulated amortization and impairment losses. Intangible assets consist of acquired technology, patents, licenses and similar rights. The useful lives of these
intangible assets are assessed as finite. Intangible assets are amortized on a straight-line basis over the following useful economic lives.
Technology
|
|
|
3 - 6 years
|
Patents, licenses and similar rights
|
|
|
20 years
|
2.9. Leases
The Company determines if an arrangement is or contains a lease at
contract inception and recognizes a right of use asset and a lease liability at the lease commencement date.
The Company is a lessee in two noncancelable operating leases; the
first is associated with a facility in Seville (Spain) where we develop our current products, and the second is associated with land in California (U.S.) where an additional facility is currently being constructed.
Key estimates and judgments used by management include how the
Company determines (1) the discount rate it uses to discount the unpaid lease payments to present value, (2) the lease term and (3) the lease payments.
•
|
Accounting Standards Codification (ASC) Topic 842 requires a lessee to discount its unpaid lease payments using the interest
rate implicit in the lease or, if that rate cannot be readily determined, its incremental borrowing rate. Generally, the Company cannot determine the interest rate implicit in the lease because it does not have access to the lessor’s
estimated residual value or the amount of the lessor’s deferred initial direct costs. Therefore, the Company uses its incremental borrowing rate as the discount rate for the lease. The Company’s incremental borrowing rate for a lease is
the rate of interest it would have to pay on a collateralized basis to borrow an amount equal to the lease payments under similar terms.
|
•
|
The lease term for the Company’s leases includes the noncancelable period of the lease, plus any additional periods covered by
either a Company’s option to extend (or not to terminate) the lease that the Company is reasonably certain to exercise, or an option to extend (or not to terminate) the lease controlled by the lessor.
|
•
|
Lease payments included in the measurement of the lease liability comprise fixed payments, and the exercise price of Company’s
option to purchase the underlying asset if the Company is reasonably certain to exercise the option.
|
The cost of the right of use asset consists of the initial amount of
the lease liability adjusted for lease payments made at or before the lease commencement date, plus any initial direct costs incurred less any lease incentives received. The right of use asset is subsequently measured throughout the lease term
at the carrying amount of the lease liability, plus initial direct costs, plus (minus) any prepaid (accrued) lease payments, less the unamortized balance of lease incentives received. Lease expense for lease payments is recognized on a
straight-line basis over the lease term. The Company’s leases do not contain variable lease payments.
The Company monitors for events or changes in circumstances that
require a reassessment of its leases. When a reassessment results in the remeasurement of the lease liability, a corresponding adjustment is made to the carrying amount of the associated right of use asset.
The Company has elected not to recognize right of use assets and
lease liabilities for short-term leases that have a lease term of 12 months or less. The Company recognizes the lease payments associated with its short-term leases as an expense on a straight-line basis over the lease term.
2.10. Impairment of Long-Lived Assets
Long-lived assets, such as property, plant, and equipment, right of
use assets, and finite-lived intangible assets, are reviewed for potential impairment whenever events or changes in circumstances indicate that the
TABLE OF CONTENTS
H2B2 ELECTROLYSIS TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2022 and 2021
carrying amount of an asset or asset group may not be recoverable. If circumstances
require a long-lived asset or asset group to be tested for impairment, the Company first compares undiscounted cash flows expected to be generated by the asset or asset group to it carrying amount. If the carrying amount of the long-lived asset
or asset group is not recoverable on an undiscounted cash flow basis, an impairment is recognized to the extent that the carrying amount exceeds its fair value. In making these determinations, the Company uses certain assumptions, including,
but not limited to: (i) estimated fair value of the assets; (ii) estimated, undiscounted future cash flows expected to be generated by these assets, which are based on additional assumptions such as asset utilization, and length of service the
asset will be used in the Company’s operations; and (iii) estimated residual values. Fair value is determined through various valuation techniques, including discounted cash flow models, quoted market values and third-party independent
appraisals, as considered necessary.
There was no impairment recognized for long-lived assets during the
years ended December 31, 2022 and 2021.
2.11. Revenue Recognition
Revenue is recognized when a customer obtains control of promised
goods or services at a point in time and over time. The amount of revenue recognized reflects the consideration that the Company expects to be entitled to receive in exchange for these goods or services.
The Company enters into contracts that involve the development,
manufacturing, and sale of electrolyzers. The Company's customers primarily consist of industrial companies that require hydrogen and oxygen gas for their operations. The Company sells its electrolyzers directly to these customers.
The Company does not include a right of return on its products other
than rights related to standard warranty provisions that permit repair or replacement of defective goods. The Company accrues for anticipated standard warranty costs at the same time that revenue is recognized for the related product, or when
circumstances indicate that warranty costs will be incurred, as applicable.
Revenue is measured based on the transaction price specified in a
contract with a customer, subject to the allocation of the transaction price to distinct performance obligations as discussed below. The Company recognizes revenue when it satisfies a performance obligation by transferring a product or service
to a customer.
Promises to the customer are separated into performance obligations
and are accounted for separately if they are (1) capable of being distinct and (2) distinct in the context of the contract. The Company considers a performance obligation to be distinct if the customer can benefit from the good or service
either on its own or together with other resources readily available to the customer and the Company’s promise to transfer the goods or service to the customer is separately identifiable from other promises in the contract. The Company
allocates revenue to each distinct performance obligation based on relative standalone selling prices.
Payment terms on electrolyzer systems are typically based on
achievement of milestones over the term of the contract with the customer. The Company does not adjust the transaction price for a significant financing component when the performance obligation is expected to be fulfilled within a year.
Nature of goods and services
The following is a description of principal activities from which the
Company generates its revenue.
(i) Sale of Electrolyzer Systems
Revenue from sales of electrolyzer systems represents sales of
products used to generate hydrogen for various applications including mobility, power-to-gas, and other uses.
The Company classifies the development, manufacturing, and sale of
electrolyzers as a single performance obligation, which is recognized over time as the performance obligation is satisfied. The Company recognizes revenue over time when contract performance results in the creation of a product for which we do
not have an alternative use and the contract includes an enforceable right to payment in an amount that corresponds directly with the value of the performance completed. In these instances, the Company uses an input measure of progress
TABLE OF CONTENTS
H2B2 ELECTROLYSIS TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2022 and 2021
(cost-to-total cost), which best reflects the transfer of control to our customers, to
determine the amount of revenue to recognize during each reporting period based on the costs incurred to satisfy the performance obligation.
As of December 31, 2022 and 2021, revenue from the sale of
electrolyzer systems amounted to $3,491,673 and $961,607, respectively.
Contracts assets and contract liabilities
The timing of when the Company bills their customers is generally
dependent upon agreed-upon contractual terms, which may include milestone billings based on the completion of certain phases of the work, or when services are provided. When billings occur subsequent to revenue recognition, this results in
unbilled revenue, which is recognized as a contract asset. Retainage for which the Company has an unconditional right to payment that is only subject to the passage of time is classified as accounts receivable. Retainage subject to conditions
other than the passage of time does not meet the definition of a receivable and is therefore included in contract assets, as determined on a contract-by-contract basis. Additionally, the Company may receive advances or deposits from customers
before revenue is recognized, resulting in deferred revenue, which is included in contract liabilities.
The following table provides information about receivables, contract
assets and contract liabilities from contracts with customers:
Accounts receivable
|
|
|
$2,099,177
|
|
|
$382,698
|
Contract assets
|
|
|
2,197,730
|
|
|
212,410
|
Contract liabilities
|
|
|
(1,735,716)
|
|
|
(257,061)
|
Net contract assets
|
|
|
$2,561,191
|
|
|
$338,047
|
Changes in the contract assets and the contract liabilities balances
during the period are as follows:
Transferred to receivables
|
|
|
$(212,410)
|
|
|
$ (368,991)
|
Revenue recognized and not billed
|
|
|
2,197,730
|
|
|
212,410
|
Net change in contract assets
|
|
|
$1,985,320
|
|
|
$(156,581)
|
Advanced billings
|
|
|
$1,735,716
|
|
|
$257,061
|
Revenue recognized during the period
|
|
|
(257,061)
|
|
|
(16,102)
|
Net change in contract liabilities
|
|
|
$1,478,655
|
|
|
$240,959
|
2.12. Research and Development
Costs related to research and development activities by the Company
are expensed when incurred and are included in operating expenses.
2.13. Government Grants
Our subsidiary, H2B2 Electrolysis Technologies, S.L., records
government grants related to research and development activities, and our subsidiary, H2B2 USA LLC, records government grants related to the construction and development of a hydrogen facility in California.
TABLE OF CONTENTS
H2B2 ELECTROLYSIS TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2022 and 2021
Grants not recorded until there is reasonable assurance that the
subsidiary will comply with the conditions attached to them and that the grants will be received. Receipt of a grant does not in itself provide conclusive evidence that the conditions attached to the grant have been or will be fulfilled.
Government grants are recognized in the consolidated statement of
operations on a systematic basis over the periods in which we recognize as expenses the related costs for which the grants are intended to compensate. For grants related to operating costs, amounts receivable are recognized as an income in the
period in which we incur the expenses. For grants related to depreciable assets, amounts received are recorded as an operating income over the asset’s useful life as the depreciation expense is recognized.
Unearned Grants consist of grants received in advance to the related
costs for which they are intended to compensate are expensed.
2.14. Income Taxes
The Company accounts for income taxes and related accounts under the
asset and liability method. Under the asset and liability approach, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing
assets and liabilities and their respective tax basis and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those
temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the period that includes the enactment date. Income tax expense, deferred tax assets and
liabilities, and liabilities for unrecognized tax benefits reflect management’s best assessment of estimated current and future taxes to be paid. Significant judgment is required in determining income tax provisions and evaluating tax
positions. A valuation allowance is recorded to reduce the carrying amounts of deferred tax assets if it is more likely than not that such assets will not be realized.
Positions taken or expected to be taken on tax returns, including the
decision to exclude certain income or transactions from a return, are recognized in the consolidated financial statements when it is more likely than not the tax position can be sustained based solely on the technical merits of the position.
The amount of a tax return position that is not recognized in the consolidated financial statements is disclosed as an unrecognized tax benefit. Changes in assumptions on tax benefits may also impact interest expense or interest income and may
result in the recognition of tax penalties.
Uncertain tax positions have been classified as non-current unless
expected to be paid within one year. We net our liability for uncertain tax positions against all deferred tax assets, net operating losses and tax credit carryforwards in the same jurisdiction. Our policy is to recognize interest and penalties
on uncertain tax positions as a component of income tax expense in the consolidated statements of income.
The Company files tax returns in the United States for both federal
and state taxes and in Spain. There are currently no pending income tax examinations. H2B2's tax years for 2019 and forward are subject to examination by the United States federal and state tax authorities. In Spain, the Company is also subject
to examination for tax years 2018 and forward. Additionally, the Spanish Tax Authorities can review the correctness of net operating losses for ten years after the filing of the return.
2.15. Foreign Currency Transactions
The reporting currency is the U.S. dollar. The Company has designated
the U.S. dollar as the functional currency of H2B2’s legal entities. Transaction gains and losses resulting from the effect of exchange rate changes on transactions denominated in currencies other than the functional currency of the Company’s
operations give rise to realized foreign currency transaction gains and losses. Foreign currency transaction gains and losses are reported in the consolidated statement of operations in interest and other expenses, net. Foreign currency
transaction losses were $528,760 and $737,442 for the years ending December 31, 2022, and 2021, respectively.
2.16. Stock-Based Compensation
The Company maintains employee stock-based compensation plans which
are described more fully in note 9. Stock-based compensation represents the cost related to stock-based awards granted to employees and
TABLE OF CONTENTS
H2B2 ELECTROLYSIS TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2022 and 2021
Directors. The Company measures stock-based compensation cost at the grant-date, based
on the fair value of the award, and recognizes the cost as expense using the straight-line attribution method over the award's requisite service period for plans with only service conditions. Forfeitures are recognized as they occur.
The Company estimates the fair value of stock-based awards using a
Black-Scholes valuation model. Stock-based compensation expense is recorded in selling, general and administrative expenses in the consolidated statements of operations based on the employees’ respective function.
2.17. Contingencies
Certain conditions may exist as of the date the financial statements
are issued which may result in a loss to the Company, but which will only be resolved when one or more future events occur or fail to occur. Company management and its legal counsel assess such contingent liabilities, and such assessment
inherently involves the exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company's legal counsel evaluates the
perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein. If the assessment of a contingency indicates that it is probable that a liability
has been incurred and the amount of the liability can be reasonably estimated, then the estimated liability would be accrued in the Company's consolidated financial statements. If the assessment indicates that a potentially material loss
contingency is not probable but is reasonably possible, or is probable but cannot be reasonably estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss if determinable would be disclosed.
The Company does not include legal costs in its estimates of amounts to accrue.
2.18. Fair Value Measurements
Fair value is based on the price that would be received to sell an
asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Inputs used to measure fair value are classified using a three-tier hierarchy: (i) Level 1, defined as observable inputs, such
as quoted prices in active markets; (ii) Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and (iii) Level 3, defined as unobservable inputs for which little or no market
data exists, therefore requiring an entity to develop its own assumptions.
The carrying amounts for cash and cash equivalents, accounts
receivable and accounts payable approximate their fair value due to the short maturity of these instruments.
2.19. Recent Accounting Pronouncements
In June 2016, the FASB issued ASU 2016-13, Financial Instruments –
Credit Losses (ASC Topic 326) requiring initial recognition of credit losses, as well as any subsequent change in the estimate, when it is probable that a loss has been incurred. The standard eliminates the threshold for initial recognition in
current U.S. GAAP and it covers a broad range of financial instruments, including trade and other receivables at each reporting date. The measurement of expected credit losses is based on historical experience, current conditions, and
reasonable and supportable forecasts that affect the collectability of the financial assets. The standard is effective for the Company beginning January 1, 2023. The adoption of this guidance is not expected to have a material effect on our
consolidated financial statements.
TABLE OF CONTENTS
H2B2 ELECTROLYSIS TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2022 and 2021
3. Property, Plant and Equipment
Property, plant and equipment as of December 31, 2022 and 2021
consists of the following:
Assets under construction
|
|
|
$4,852,667
|
|
|
$846,335
|
Machinery and equipment
|
|
|
357,142
|
|
|
23,923
|
Computer hardware
|
|
|
83,919
|
|
|
45,967
|
Furniture and other fixtures
|
|
|
2,038
|
|
|
5,730
|
Property, plant, and equipment
|
|
|
5,295,766
|
|
|
921,955
|
Less accumulated depreciation
|
|
|
(147,749)
|
|
|
(63,806)
|
Property, plant, and equipment, net
|
|
|
$5,148,017
|
|
|
$858,149
|
Assets under construction
Assets under construction pertain to the construction of SoHyCal, a hydrogen facility
in California. The construction of the facility is partially financed by grants received from the California Energy Commission (CEC). Refer to note 7 for further details.
Depreciation expense for 2022 and 2021 was $83,943 and $21,603, respectively.
4. Intangible Assets
Intangible assets as of December 31, 2022 and 2021 consist of the following:
Technology
|
|
|
$21,776
|
|
|
$21,776
|
Patents and other intangible assets
|
|
|
97,729
|
|
|
91,617
|
Intangible assets
|
|
|
119,505
|
|
|
113,393
|
Less accumulated amortization
|
|
|
(32,204)
|
|
|
(27,890)
|
Intangible assets, net
|
|
|
$87,301
|
|
|
$85,503
|
Technology
|
|
|
3
|
|
|
3
|
Patents and other intangible assets
|
|
|
20
|
|
|
20
|
Amortization expense for 2022 and 2021 was $4,314 and $2,575, respectively.
Amortization expense for intangible assets held as of December 31, 2022 will be $2,773 for 2023, and $11,093 for each of the years 2024 – 2027.
5. Prepaid Expenses and Other Current Assets
Prepaid expenses and other current assets as of December 31, 2022, and 2021 are
summarized as follows:
Prepayments to suppliers
|
|
|
$899,161
|
|
|
$—
|
Deposits and project guarantees
|
|
|
—
|
|
|
1,869,239
|
VAT receivables
|
|
|
371,315
|
|
|
222,695
|
Other current assets
|
|
|
10,792
|
|
|
8,457
|
Prepaid expenses and other current assets
|
|
|
$1,281,268
|
|
|
$2,100,391
|
TABLE OF CONTENTS
H2B2 ELECTROLYSIS TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2022 and 2021
6. Accounts Payable and other payables
Accounts payable as of December 31, 2022, and 2021 consist of the following:
Accrued employee benefits
|
|
|
$221,827
|
|
|
$133,541
|
Accounts payable
|
|
|
8,019,474
|
|
|
315,320
|
Other taxes
|
|
|
243,507
|
|
|
144,285
|
Accounts payable and other payables
|
|
|
$8,484,808
|
|
|
$593,146
|
7. Government grants
The nature and extent of the grants received are as follows:
•
|
Grants for research and development activities, which include the development of seasonal storage of renewable energy with green
hydrogen integrated in an intelligent network, research on Hybrid Storage Technologies and predictive models to Transform Industries into Delocalized Points of Renewable Energy Management, and research on new materials, technologies and
processes for the generation, storage, transport, and integration of renewable hydrogen and biomethane from biowaste. The grant is for a period of four years, beginning in 2021 and expiring in December 2024.
|
•
|
Grants from the California Energy Commission for the development and construction of the hydrogen facility, Sohycal (refer to
note 3). The grant is for a maximum amount of $3,965,000.
|
We are required to comply with certain terms and conditions
applicable to each grant and, if a disqualifying event should occur as specified in the grant’s terms and conditions, we are required to repay the grant funds to the grantor. We believe we are in compliance with each grant’s terms and
conditions as of December 31, 2022 and 2021.
The amount recognized in the consolidated statement of operations
during the years ended December 31, 2022 and 2021 was $802,032 and $242,170, respectively, and corresponds in entirety to research and development grants in Spain.
The changes in government grants recorded in unearned grants for the
years ended December 31, 2022 and 2021 correspond to the amounts received or pending to receive from the California Energy Commission and consisted of:
January 1, 2021
|
|
|
$—
|
Additions
|
|
|
271,091
|
Disposals
|
|
|
—
|
Recognized in income
|
|
|
—
|
December 31, 2021
|
|
|
271,091
|
Additions
|
|
|
1,782,068
|
Disposals
|
|
|
—
|
Recognized in income
|
|
|
—
|
December 31, 2022
|
|
|
$2,053,159
|
Grants receivable
The grants receivable balance corresponds to the amounts outstanding
from the time the eligible expenses are incurred until the grantor disburses those grants.
TABLE OF CONTENTS
H2B2 ELECTROLYSIS TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2022 and 2021
The amounts pending to be received from grants are reported in the
consolidated balance sheet in grants receivable and consist of the following:
Grants in Spain
|
|
|
$585,390
|
|
|
$227,217
|
Grants in U.S.
|
|
|
157,447
|
|
|
271,091
|
Grant receivable
|
|
|
$742,837
|
|
|
$498,308
|
8. Income Taxes
The following table summarizes our loss before tax expense:
Domestic
|
|
|
$(2,236,426)
|
|
|
$(1,823,321)
|
Foreign
|
|
|
(1,983,905)
|
|
|
(2,273,292)
|
Loss before tax expense
|
|
|
$(4,220,331)
|
|
|
$(4,096,613)
|
The provision for income taxes consisted of the following:
Domestic
|
|
|
$74,196
|
|
|
$33,240
|
State
|
|
|
1,932
|
|
|
800
|
Foreign
|
|
|
—
|
|
|
—
|
Total current taxes
|
|
|
76,128
|
|
|
34,040
|
Domestic
|
|
|
—
|
|
|
263
|
State
|
|
|
—
|
|
|
88
|
Foreign
|
|
|
—
|
|
|
—
|
Total deferred taxes
|
|
|
—
|
|
|
351
|
Total income tax expense
|
|
|
$76,128
|
|
|
$34,391
|
The reconciliation between the Company’s effective tax rate and the
statutory tax rate is as follows:
U.S. Statutory tax rate
|
|
|
$(886,270)
|
|
|
21.0%
|
|
|
$(860,215)
|
|
|
21.0%
|
State income taxes, less federal income tax benefits
|
|
|
(155,230)
|
|
|
3.7%
|
|
|
719
|
|
|
0.0%
|
Uncertain tax positions
|
|
|
58,741
|
|
|
(1.4)%
|
|
|
33,241
|
|
|
(0.8)%
|
Foreign rate differential
|
|
|
(75,779)
|
|
|
1.8%
|
|
|
(87,407)
|
|
|
2.1%
|
R&D credit
|
|
|
(100,939)
|
|
|
2.4%
|
|
|
—
|
|
|
0.0.%
|
Change in valuation allowance
|
|
|
1,102,817
|
|
|
(26.1)%
|
|
|
929,548
|
|
|
(22.7)%
|
Other
|
|
|
132,788
|
|
|
(3.1)%
|
|
|
18,505
|
|
|
(0.5)%
|
Total
|
|
|
$76,128
|
|
|
|
|
|
$34,391
|
|
|
|
Effective tax rate
|
|
|
%
|
|
|
(1.8)%
|
|
|
%
|
|
|
(0.8)%
|
TABLE OF CONTENTS
H2B2 ELECTROLYSIS TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2022 and 2021
Deferred income taxes reflect the net tax effects of temporary
differences between the carrying amounts of certain assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred tax assets and liabilities as of
December 31, 2022 and 2021 are as follows:
Tax loss carryforwards
|
|
|
$2,545,115
|
|
|
$2,153,239
|
Research and development expenditures
|
|
|
169,009
|
|
|
268,234
|
Unrealized gain/loss
|
|
|
294,001
|
|
|
106,288
|
All other assets
|
|
|
690,475
|
|
|
68,021
|
Total deferred tax assets
|
|
|
$3,698,600
|
|
|
2,595,782
|
Valuation allowances
|
|
|
(3,698,600)
|
|
|
(2,595,782)
|
Total net deferred tax assets
|
|
|
$—
|
|
|
$—
|
The deferred tax assets have been offset by a full valuation
allowance because, in management's judgment, it is more likely than not that the tax benefits of the net operating loss carryforwards and other deferred tax assets will not be realized due to cumulative losses.
As of December 31, 2022 the Company had U.S. federal and state net
operating loss carryforwards of $790,668 and $821,074, respectively, which may be available to offset future taxable income. The federal net operating loss can be carried forward indefinitely and the state net operating losses begin to expire
in 2041. As of December 31, 2022, the Company also had foreign net operating loss carryforwards of $8,914,282 which carries forward indefinitely. In Spain, the Company had research and development tax credit carryforwards of $100,939, which may
be available to offset future tax liabilities and can be carried forward indefinitely. The Company did not have any deferred tax liability as of December 31, 2022 and 2021.
The Company recognizes interest and penalties related to uncertain
tax positions as a component of income tax expense. As of December 31, 2022, and 2021, the federal and state accrued interest and penalties related to uncertain tax positions is $298,572 and $239,830, respectively. In connection with certain
federal and state tax matters, the Company has recorded a long-term liability in the amount of $1,787,968 as income taxes payable in the consolidated balance sheet . The Company files tax returns in the United States and various state
jurisdictions and Spain. There are currently no pending income tax examinations. The Company's tax years for 2019 and forward are subject to examination by the United States federal and state tax authorities. For Spain, the Company's is also
subject to examination for tax years 2019 and forward. Additionally, the Spanish Tax Authorities can review the correctness of the NOL for ten years after the filing of the return.
Unrecognized Tax Benefits
Beginning balance
|
|
|
$1,489,396
|
|
|
$1,056,236
|
Increase due to current year tax positions
|
|
|
—
|
|
|
—
|
Increase due to prior year tax positions
|
|
|
—
|
|
|
433,160
|
Ending balance
|
|
|
$1,489,396
|
|
|
$1,489,396
|
TABLE OF CONTENTS
H2B2 ELECTROLYSIS TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2022 and 2021
9. Stock-Based Compensation
The Company granted two stock-based compensation plans (“stock-option
plan” or “SOP”) in December 2022 to its Chairman of the Board.
Granted shares
|
|
|
68,966
|
|
|
18,750
|
|
|
|
|
|
|
|
Vesting conditions
|
|
|
None
|
|
|
Service and performance condition
|
|
|
|
|
|
|
|
Vesting period
|
|
|
At grant date
|
|
|
Ratably over 5 years
|
|
|
|
|
|
|
|
Classification
|
|
|
Equity
|
|
|
Equity
|
The fair value of each option is estimated on the date of grant using
the Black-Scholes option-pricing model. This model incorporates certain assumptions for inputs including a risk-free market interest rate, expected dividend yield of the underlying common stock, expected option life and expected volatility in
the market value of the underlying common stock. The Black-Scholes option-pricing model was developed for use in estimating the fair value of traded options, which have no vesting restrictions and are fully transferable. In addition, option
valuation models require the input of highly subjective assumptions including the expected stock price volatility because the Company’s stock options have characteristics different, and because changes in the subjective input assumptions can
materially affect the fair value estimate.
We used the assumptions in the table below:
Expected term of options (years)
|
|
|
2
|
|
|
5
|
Risk free interest rate (%)
|
|
|
4.23
|
|
|
3.50
|
Volatility (%)
|
|
|
25
|
|
|
30
|
Strike Price ($)
|
|
|
29
|
|
|
0.0001
|
Fair value ($)
|
|
|
0.000001
|
|
|
6.03
|
There was no expected dividend yield considered within the valuation
of the Stock Options granted. The expected term is based on the Company’s best estimate considering the service period and the grantee level within the Company. The interest rate used in the valuation is the Overnight Index Swap (OIS) interest
rate curve as of December 21, 2022, considering the expected term of each plan. The estimated stock price volatility is derived from the historical volatility of an appropriate group of peer entities considering a time-horizon equal to the
expected terms, which represents the Company’s best estimate of expected volatility.
The following table reflects the Stock Option activity for the year
ended December 31, 2022:
Outstanding at December 31, 2021
|
|
|
—
|
|
|
—
|
|
|
|
Granted
|
|
|
68,966
|
|
|
29
|
|
|
|
Exercised
|
|
|
—
|
|
|
—
|
|
|
|
Forfeited
|
|
|
—
|
|
|
—
|
|
|
|
Outstanding at December 31, 2022
|
|
|
68,966
|
|
|
29
|
|
|
2 years
|
Exercisable at December 31, 2022
|
|
|
68,966
|
|
|
29
|
|
|
2 years
|
TABLE OF CONTENTS
H2B2 ELECTROLYSIS TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2022 and 2021
Outstanding at December 31, 2021
|
|
|
—
|
|
|
—
|
|
|
|
Granted
|
|
|
18,750
|
|
|
0.0001
|
|
|
|
Exercised
|
|
|
—
|
|
|
—
|
|
|
|
Forfeited
|
|
|
—
|
|
|
—
|
|
|
|
Outstanding at December 31, 2022
|
|
|
18,750
|
|
|
0.0001
|
|
|
5 years
|
Exercisable at December 31, 2022
|
|
|
—
|
|
|
—
|
|
|
—
|
The Company’s stock option compensation expense was $619 and $0 for
the years ended December 31, 2022 and 2021, respectively. There were $112,444 of total unrecognized compensation costs related to outstanding stock options as of December 31, 2022 which will be recognized over 5 years. The total intrinsic value
of options outstanding for SOP 1 and SOP 2 was $113,063 and $0.01, respectively, as of December 31, 2022. The number of stock options vested and unvested as of December 31, 2022 were 68,966 and 18,750, respectively.
During 2021, the Company executed stock-based compensation awards to
nine of the Company’s executives. The awards entitle the executives to purchase up to 555,000 shares for a purchase price of $1.00 per employee award. The award become fully vested between January 1, 2026, and March 31, 2026, upon satisfaction
of both of the following performance conditions:
•
|
The Company’s stock is publicly traded prior to January 1, 2026
|
•
|
The executive maintains employment with the Company until March 31, 2026
|
In the event the conditions are not met, the awards shall be
terminated on December 31, 2025 and the executives shall be entitled to receive a cash bonus of 30% of their gross salary as of December 31, 2025.
As of December 31, 2022, and 2021, the Company determined that the
performance conditions are not probable. Therefore, the Company has recorded a liability associated with the cash bonus component of the awards. The accrued liability amounts to $ 72,745 and $ 35,767 as of December 31, 2022, and 2021,
respectively recorded in Non-current Other liabilities.
10. Leases
As of December 31, 2022, the Company had operating leases primarily
associated with lands for a facility under construction in California and a facility in Seville, Spain. These leases expire in 2041 and 2043 (U.S.) and 2027 (Spain), respectively.
We recorded total operating lease expense for the fiscal years ended
December 31, 2022 and 2021 of $163,646 and $108,186, respectively, which is classified within Selling, general and administrative expenses within the Consolidated Statements of Operations. Operating lease expense includes short-term leases
which are immaterial. There has been no cost to obtain leases capitalized on the Consolidated Balance Sheets as of December 31, 2022 and 2021. We have lease agreements with lease and non-lease components, and account for lease components and
associated non-lease components separate, for all classes of underlying assets.
TABLE OF CONTENTS
H2B2 ELECTROLYSIS TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2022 and 2021
The following table summarizes the maturities of lease commitments as
of December 31, 2022:
2023
|
|
|
$290,645
|
2024
|
|
|
344,984
|
2025
|
|
|
346,020
|
2026
|
|
|
347,087
|
2027
|
|
|
331,314
|
Thereafter
|
|
|
2,287,624
|
Total future minimum lease payments
|
|
|
3,947,674
|
Less imputed lease interest
|
|
|
(1,605,499)
|
Total lease liabilities
|
|
|
$2,342,175
|
Other information related to the operating leases are presented in
the following table:
Cash payments
|
|
|
$108,000
|
|
|
$63,000
|
Weighted average remaining lease term (years)
|
|
|
15.06
|
|
|
20
|
Weighted average discount rate
|
|
|
7.81%
|
|
|
7.00%
|
Noncash lease amount
|
|
|
55,646
|
|
|
—
|
11. Commitments and Contingencies
11.1 Litigation
Legal matters are innate in the ordinary course of business.
Liabilities for loss contingencies from claims, assessments, litigation, fines and penalties and other sources are recorded when it is probable that a liability has been incurred and the amount can be reasonably estimated. Legal costs incurred
in connection with loss contingencies are expensed as incurred.
11.2 Concentrations of risks
Financial instruments that potentially subject the Company to
concentrations of credit risk consist of cash and accounts receivable.
The Company maintains its cash in banks in Spain and in the U.S. The
Company has not experienced any losses in such accounts from inception through December 31, 2022.
The Company continually assesses the financial strength of its
customers. For the year ended December 31, 2022, one customer accounted for 94% of total product sales. For the year ended December 31, 2021, product sales from two customers accounted for 49% and 45% of total product sales. At December 31,
2022, accounts receivable from four customers accounted for 43%, 21%, 16% and 16% of total accounts receivable with no other single customer accounting for more than 10% of the accounts receivable balance. At December 31, 2021, accounts
receivable from two customers accounted for 80% and 12% of total accounts receivable with no other single customer accounting for more than 10% of the accounts receivable balance.
12. Related Parties
The Company entered into a $49,000 promissory note with a related
party in 2020 that was outstanding as of December 31, 2021 and liquidated in 2022. This amount was recorded against the non-controlling interests held by that related party.
13. Loss per Share
Basic net loss per share is computed by dividing the net loss by the
weighted average number of shares of common stock outstanding during the periods presented. Diluted net loss per common share is computed using
TABLE OF CONTENTS
H2B2 ELECTROLYSIS TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2022 and 2021
the weighted average number of common stock outstanding for the period, and, if
dilutive, potential common stock outstanding during the period. Potential common stock consists of the incremental shares of common stock issuable upon the exercise of stock options. Potentially dilutive securities are excluded from the
computation if their effect is anti-dilutive.
Options to purchase 87,716 shares of common stock were outstanding at
December 31, 2022. No options were outstanding at December 31, 2021. These shares were not included in the computation of diluted loss per share for the years ended December 31, 2022 because the effects would have been anti-dilutive. These
options may dilute future earnings per share.
The calculations of basic and diluted loss per share attributable to
H2B2 for the years ended December 31, 2022, and 2021, respectively, consisted of:
Net (loss) attributable to Stockholders’ of the parent
|
|
|
$(4,296,459)
|
|
|
$(4,130,751)
|
Total weighted average shares outstanding
|
|
|
9,727,939
|
|
|
8,321,904
|
Net loss per share (basic and diluted)
|
|
|
$(0.44)
|
|
|
$(0.50)
|
14. Segment Reporting
We operate in a single segment and that is the sale of electrolyzers,
including the design, engineering, manufacturing, integration, financing and operating and maintenance expenses for green hydrogen facilities. We have identified the Chief Executive Officer as the chief operating decision maker (CODM), and all
significant operating decisions are based on one-segment basis.
The following table sets forth product sales and long-lived assets
(includes property and equipment, net and operating lease assets) by geographic area, based on customer location, for each of the past two years:
North America
|
|
|
$—
|
|
|
$—
|
|
|
$6,361,086
|
|
|
$2,411,284
|
LATAM(1)
|
|
|
3,275,038
|
|
|
436,124
|
|
|
—
|
|
|
—
|
Europe
|
|
|
216,635
|
|
|
525,483
|
|
|
1,110,086
|
|
|
85,503
|
Total
|
|
|
$3,491,673
|
|
|
$961,607
|
|
|
$7,471,172
|
|
|
$2,496,787
|
(1)
|
LATAM comprises Central America, South America, and Mexico.
|
15. Subsequent events
The Company evaluates subsequent events at the date of the
consolidated balance sheet as well as conditions that arise after the consolidated balance sheet date but before the consolidated financial statements are issued. The effects of conditions that existed at the consolidated balance sheet date are
recognized in the consolidated financial statements. Events and conditions arising after the consolidated balance sheet date but before the consolidated financial statements are issued are evaluated to determine if disclosure is required.
The date through which subsequent events have been evaluated is the
date the consolidated financial statements were available to be issued, i.e., July 5, 2023.
During 2022, the European Commission approved, under European
Union state aid rules, an Important Project of Common European Interest (“IPCEI”) to support R&D and early industrial deployment, in the hydrogen technology value chain. H2B2 participated in the project and in January 2023, the Company
was awarded 25,000,000 Euro. The funds are available for the purposes of furthering the Company's technological and research and development advancement and to fund the construction of new manufacturing plants. Upon the satisfaction of
certain conditions, the Company is permitted to request an advance of up to 12,500,000 Euro which would be received during the third quarter of 2023.
TABLE OF CONTENTS
H2B2 ELECTROLYSIS TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2022 and 2021
On February 2023, the Company signed an addendum to the lease
agreement for one of the California lands, which involves an adjustment of the remaining rents. The Company has recorded on February 2023 a reduction of $212,834 adjustment in the right-of-use and lease liabilities related to that lease.
On May 9, 2023, the Company entered into an Agreement and Plan of
Merger (“Merger Agreement”) with RMG Acquisition Corp. III (“RMG III”), a publicly traded special purpose acquisition company. Under the terms of the Merger Agreement, the Company and RMG would be become a combined entity, with H2B2’s existing
equity holders continuing to hold substantially all of their equity in the combined public company. We expect the merger agreement to be consummated in the third quarter of 2023.
On May 30, 2023, the Company purchased 193,333 shares of its common
stock from an existing stockholder for 14,500,000 Euro. The agreement includes an option for the Company to purchase an additional 73,334 shares for EUR 5,500,000 on, or before, July 31, 2023. To fund the purchase, the Company executed a loan
agreement in the amount of 14,500,000 Euro. The loan bears an interest rate of 10% paid-in-kind (PIK) per annum. Unpaid principal and interest amounts are due at maturity on May 30, 2026. According to the agreement, if the Company were to close
a capital transaction of more than 40,000,000 Euro and/or were to generate free cash flow in excess of 10,000,000 Euro in any quarterly period, the excess amount must be used for early repayments of the loan. The Company incurred debt issuance
costs of 435,000 Euro in connection with the loan agreement.
To expand the Company’s operations and presence in the Mexican and
Asian markets, the Company entered into and invested in two joint ventures, and GreenH Electrolysis Private Limited with Castlegreen Energy Private Limited (located in India) and H2V2 de Mexico SA with HVMX de México S.A. (located in Mexico)
for $106,576 and $20,000, respectively during the first quarter of 2023. The joint ventures became operational as of March 15, 2023 and March 30, 2023, and respectively.
Assets:
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
Cash
|
|
|
$15,055
|
|
|
$22,339
|
Prepaid expenses
|
|
|
118,317
|
|
|
50,892
|
Total current assets
|
|
|
133,372
|
|
|
73,231
|
|
|
|
|
|
|
|
Cash and investments held in Trust Account
|
|
|
10,683,049
|
|
|
487,268,822
|
Total Assets
|
|
|
$10,816,421
|
|
|
$487,342,053
|
|
|
|
|
|
|
|
Liabilities, Class A Ordinary Shares
Subject to Possible Redemption and Shareholders’ Deficit:
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
Accounts payable
|
|
|
$350,547
|
|
|
$153,571
|
Accrued expenses
|
|
|
2,595,834
|
|
|
899,845
|
Accrued expenses - related party
|
|
|
180,000
|
|
|
120,000
|
Total current liabilities
|
|
|
3,126,381
|
|
|
1,173,416
|
|
|
|
|
|
|
|
Deferred legal fees
|
|
|
250,000
|
|
|
250,000
|
Deferred underwriting commissions
|
|
|
16,905,000
|
|
|
16,905,000
|
Convertible working capital loan - related party
|
|
|
750,000
|
|
|
500,000
|
Derivative warrant liabilities
|
|
|
2,592,068
|
|
|
536,300
|
Total liabilities
|
|
|
23,623,449
|
|
|
19,364,716
|
|
|
|
|
|
|
|
Commitments and Contingencies
|
|
|
|
|
|
|
Class A ordinary shares; 918,402 and 48,300,000
shares subject to possible redemption at $11.52 and $10.09 per share at March 31, 2023 and December 31, 2022, respectively
|
|
|
10,583,049
|
|
|
487,168,822
|
|
|
|
|
|
|
|
Shareholders’ Deficit:
|
|
|
|
|
|
|
Preference shares, $0.0001 par value; 5,000,000
shares authorized; none issued and outstanding at March 31, 2023 and December 31, 2022, respectively
|
|
|
—
|
|
|
—
|
Class A ordinary shares, $0.0001 par value; 500,000,000
shares authorized at March 31, 2023 and December 31, 2022, respectively
|
|
|
—
|
|
|
—
|
Class B ordinary shares, $0.0001 par value; 50,000,000
shares authorized; 12,075,000 shares issued and outstanding at March 31, 2023 and December 31, 2022, respectively
|
|
|
1,208
|
|
|
1,208
|
Additional paid-in capital
|
|
|
—
|
|
|
—
|
Accumulated deficit
|
|
|
(23,391,285)
|
|
|
(19,192,693)
|
Total shareholders’ deficit
|
|
|
(23,390,077)
|
|
|
(19,191,485)
|
Total Liabilities, Class A Ordinary
Shares Subject to Possible Redemption and Shareholders’ Deficit
|
|
|
$10,816,421
|
|
|
$487,342,053
|
The accompanying notes are an integral part of these unaudited condensed
financial statements.
RMG ACQUISITION CORP. III
UNAUDITED CONDENSED STATEMENTS OF OPERATIONS
General and administrative expenses
|
|
|
$2,142,881
|
|
|
$689,613
|
Loss from operations
|
|
|
(2,142,881)
|
|
|
(689,613)
|
|
|
|
|
|
|
|
Other (expense) income:
|
|
|
|
|
|
|
Change in fair value of derivative liabilities
|
|
|
(2,055,768)
|
|
|
6,418,128
|
Interest income - bank
|
|
|
57
|
|
|
—
|
Interest expense
|
|
|
—
|
|
|
(1,761)
|
Investment income earned on cash and investments held in
Trust Account
|
|
|
1,417,859
|
|
|
48,436
|
Total other (expense) income, net
|
|
|
(637,852)
|
|
|
6,464,803
|
Net (loss) income
|
|
|
$(2,780,733)
|
|
|
$5,775,190
|
|
|
|
|
|
|
|
Weighted average Class A ordinary shares, basic and diluted
|
|
|
6,709,486
|
|
|
48,300,000
|
Basic and diluted net (loss) income per ordinary share,
Class A
|
|
|
$(0.15)
|
|
|
$0.10
|
|
|
|
|
|
|
|
Weighted average Class B ordinary shares, basic and diluted
|
|
|
12,075,000
|
|
|
12,075,000
|
Basic and diluted net (loss) income per ordinary share,
Class B
|
|
|
$(0.15)
|
|
|
$0.10
|
The accompanying notes are an integral part of these unaudited condensed
financial statements.
RMG ACQUISITION CORP. III
UNAUDITED CONDENSED STATEMENTS OF CHANGES IN SHAREHOLDERS’ DEFICIT
FOR THE THREE MONTHS ENDED MARCH 31, 2023
Balance - December 31, 2022
|
|
|
—
|
|
|
$—
|
|
|
12,075,000
|
|
|
$1,208
|
|
|
$—
|
|
|
$(19,192,693)
|
|
|
$(19,191,485)
|
Remeasurement adjustment of Class A ordinary shares
subject to possible redemption
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,417,859)
|
|
|
(1,417,859)
|
Net loss
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,780,733)
|
|
|
(2,780,733)
|
Balance - March 31, 2023
|
|
|
—
|
|
|
$—
|
|
|
12,075,000
|
|
|
$1,208
|
|
|
$—
|
|
|
$(23,391,285)
|
|
|
$(23,390,077)
|
FOR THE THREE MONTHS ENDED MARCH 31, 2022
Balance - December 31, 2021
|
|
|
—
|
|
|
$—
|
|
|
12,075,000
|
|
|
$1,208
|
|
|
$—
|
|
|
$(30,899,948)
|
|
|
$(30,898,740)
|
Net income
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,775,190
|
|
|
5,775,190
|
Balance - March 31, 2022
|
|
|
—
|
|
|
$—
|
|
|
12,075,000
|
|
|
$1,208
|
|
|
$—
|
|
|
$(25,124,758)
|
|
|
$(25,123,550)
|
The accompanying notes are an integral part of these unaudited condensed
financial statements.
RMG ACQUISITION CORP. III
UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS
Cash Flows from Operating Activities:
|
|
|
|
|
|
|
Net (loss) income
|
|
|
$(2,780,733)
|
|
|
$5,775,190
|
Adjustments to reconcile net (loss) income to net cash
used in operating activities:
|
|
|
|
|
|
|
Change in fair value of derivative liabilities
|
|
|
2,055,768
|
|
|
(6,418,128)
|
Interest expense
|
|
|
—
|
|
|
1,761
|
Investment income earned on cash and investments held in
Trust Account
|
|
|
(1,417,859)
|
|
|
(48,436)
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
Prepaid expenses
|
|
|
(67,425)
|
|
|
72,999
|
Accounts payable
|
|
|
196,976
|
|
|
52,103
|
Accrued expenses - related party
|
|
|
60,000
|
|
|
—
|
Accrued expenses
|
|
|
1,695,989
|
|
|
329,840
|
Net cash used in operating activities
|
|
|
(257,284)
|
|
|
(234,671)
|
|
|
|
|
|
|
|
Cash Flows from Investing Activities:
|
|
|
|
|
|
|
Cash withdrawn from Trust Account in connection with redemption
|
|
|
478,003,632
|
|
|
—
|
Net cash provided by investing activities
|
|
|
478,003,632
|
|
|
—
|
|
|
|
|
|
|
|
Cash Flows from Financing Activities:
|
|
|
|
|
|
|
Proceeds from convertible promissory note - related party
|
|
|
250,000
|
|
|
—
|
Proceeds from promissory note
|
|
|
—
|
|
|
375,000
|
Redemption of common stock
|
|
|
(478,003,632)
|
|
|
—
|
Net cash (used in) provided by financing activities
|
|
|
(477,753,632)
|
|
|
375,000
|
|
|
|
|
|
|
|
Net (decrease) increase in cash
|
|
|
(7,284)
|
|
|
140,329
|
Cash - beginning of the period
|
|
|
22,339
|
|
|
93,599
|
Cash - end of the period
|
|
|
$15,055
|
|
|
$233,928
|
|
|
|
|
|
|
|
Supplemental disclosure of noncash
investing and financing activities:
|
|
|
|
|
|
|
Change Increase in value of Class A common stock subject
to possible redemption
|
|
|
$1,417,859
|
|
|
$—
|
The accompanying notes are an integral part of these unaudited condensed
financial statements.
RMG ACQUISITION CORP. III
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Note 1-Description of Organization and Business
Operations
RMG Acquisition Corp. III (the “Company”) is a blank check company, also referred to as
a special purpose acquisition company (“SPAC”), incorporated as a Cayman Islands exempted company on December 23, 2020. The Company was incorporated for the purpose of effecting a merger, share exchange, asset acquisition, share purchase,
reorganization or similar business combination with one or more businesses that the Company has not yet identified (“Business
Combination”).
As of March 31, 2023, the Company had not yet commenced operations. All activity for
the period from December 23, 2020 (inception) through March 31, 2023 relates to the Company’s formation and the initial public offering (the “Initial Public Offering”), and identifying a target company for an initial Business Combination, which
is described below. The Company will not generate any operating revenues until after the completion of its initial Business Combination, at the earliest. The Company will generate non-operating income in the form of interest income on cash and
cash equivalents from the proceeds derived from the Initial Public Offering. The Company has selected December 31 as its fiscal year end.
The Company’s sponsor is RMG Sponsor III, LLC, a Delaware limited liability company
(the “Sponsor”). The registration statement for the Company’s Initial Public Offering was declared effective on February 4, 2021. On February 9, 2021, the Company consummated its Initial Public Offering of 48,300,000 units (the “Units” and, with respect to the Class A ordinary shares included in the Units being offered, the “Public Shares”), including
6,300,000 additional Units to cover over-allotments (the “Over-Allotment Units”), at $10.00 per Unit, generating gross proceeds of $483.0 million,
and incurring offering costs of approximately $27.1 million, of which approximately $16.9 million was for deferred underwriting commissions and $250,000
was for deferred legal fees (Note 7).
Simultaneously with the closing of the Initial Public Offering, the Company consummated
the private placement (“Private Placement”) of 8,216,330 warrants (each, a “Private Placement Warrant” and collectively, the
“Private Placement Warrants”) at a price of $1.50 per Private Placement Warrant to the Sponsor, generating proceeds of approximately
$12.3 million (Note 5).
Upon the closing of the Initial Public Offering and the Private Placement, $483.0 million ($10.00 per Unit) of
the net proceeds of the Initial Public Offering and certain of the proceeds of the Private Placement was placed in a trust account (“Trust Account”) with Continental Stock Transfer & Trust Company acting as trustee and have been invested in
United States government treasury bills with a maturity of 185 days or less or in money market funds investing solely in U.S. Treasuries and meeting certain conditions under Rule 2a-7 under the Investment Company Act 1940, as amended, or the
Investment Company Act, as determined by the Company, until the earlier of: (i) the completion of a Business Combination and (ii) the distribution of the Trust Account as described below.
The Company’s management has broad discretion with respect to the specific application
of the net proceeds of its Initial Public Offering and the sale of Private Placement Warrants, although substantially all of the net proceeds are intended to be applied generally toward consummating a Business Combination. The Company’s initial
Business Combination must be with one or more operating businesses or assets with a fair market value equal to at least 80% of the
net assets held in the Trust Account (excluding the deferred underwriting commissions and taxes payable on the income earned on the Trust Account) at the time the Company signs a definitive agreement in connection with the initial Business
Combination. However, the Company will only complete a Business Combination if the post-transaction company owns or acquires 50% or
more of the outstanding voting securities of the target or otherwise acquires a controlling interest in the target sufficient for it not to be required to register as an investment company under the Investment Company Act.
The Company will provide its holders of Public Shares (the “Public Shareholders”) with
the opportunity to redeem all or a portion of their Public Shares upon the completion of a Business Combination either (i) in connection with a shareholder meeting called to approve the Business Combination or (ii) by means of a tender offer.
The decision as to whether the Company will seek shareholder approval of a Business Combination or conduct a tender offer will be made by the Company, solely in its discretion. The Public Shareholders will be entitled to redeem their Public
Shares for a pro rata portion of the amount then in the Trust Account (initially anticipated to be $10.00 per share, plus any pro rata interest earned on the funds held in the Trust Account and not previously released to the Company to pay its
tax obligations, expenses relating to the administration of the
TABLE OF CONTENTS
RMG ACQUISITION CORP. III
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
trust account and limited withdrawals for working capital). The per-share amount to be
distributed to Public Shareholders who redeem their Public Shares will not be reduced by the deferred underwriting commissions the Company will pay to the underwriters (as discussed in Note 7). These Public Shares will be recorded at a
redemption value and classified as temporary equity upon the completion of the Initial Public Offering, in accordance with the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing
Liabilities from Equity” (“ASC 480”). In such case, the Company will proceed with a Business Combination if the Company has net tangible assets of at least $5,000,001 upon such consummation of a Business Combination and a majority of the shares voted are voted in favor of the Business Combination. If a shareholder vote is not required by law
and the Company does not decide to hold a shareholder vote for business or other legal reasons, the Company will, pursuant to the amended and restated memorandum and articles of association which will be adopted by the Company upon the
consummation of the Initial Public Offering (the “Amended and Restated Memorandum and Articles of Association”), conduct the redemptions pursuant to the tender offer rules of the U.S. Securities and Exchange Commission (the “SEC”), and file
tender offer documents with the SEC prior to completing a Business Combination. If, however, a shareholder approval of the transactions is required by law, or the Company decides to obtain shareholder approval for business or legal reasons, the
Company will offer to redeem shares in conjunction with a proxy solicitation pursuant to the proxy rules and not pursuant to the tender offer rules. Additionally, each Public Shareholder may elect to redeem their Public Shares irrespective of
whether they vote for or against the proposed transaction. If the Company seeks shareholder approval in connection with a Business Combination, the holders of the Founder Shares prior to this Initial Public Offering (the “Initial Shareholders”)
agreed to vote their Founder Shares (as defined in Note 6) and any Public Shares purchased during or after the Initial Public Offering in favor of a Business Combination. In addition, the Initial Shareholders agreed to waive their redemption
rights with respect to their Founder Shares and Public Shares in connection with the completion of a Business Combination. In addition, the Company agreed not to enter into a definitive agreement regarding an initial Business Combination
without the prior consent of the Sponsor.
Notwithstanding the foregoing, the Company’s Amended and Restated Memorandum and
Articles of Association will provide that a Public Shareholder, together with any affiliate of such shareholder or any other person with whom such shareholder is acting in concert or as a “group” (as defined under Section 13 of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”)), will be restricted from redeeming its shares with respect to more than an aggregate of 15%
or more of the Class A ordinary shares sold in the Initial Public Offering, without the prior consent of the Company.
The Company’s Sponsor, executive officers and directors agreed not to propose an
amendment to the Company’s Amended and Restated Memorandum and Articles of Association that would affect the substance or timing of the Company’s obligation to provide for the redemption of its Public Shares in connection with a Business
Combination or to redeem 100% of its Public Shares if the Company does not complete a Business Combination, unless the Company
provides the Public Shareholders with the opportunity to redeem their Class A ordinary shares in conjunction with any such amendment.
On January 11, 2023, the Company held an extraordinary general meeting of shareholders
for the purpose of approving an amendment to the amended and restated memorandum and articles of association to extend the date by which the Company must complete a business combination from February 9, 2023, to May 9, 2023 (the “Extended
Date”), and to allow the Company, without another shareholder vote, to elect to further extend the date to consummate a business combination up to three times by an additional month each time after the Extended Date, upon two days’ advance
notice prior to the applicable deadline, for a total of up to six months, to August 9, 2023, if the Company has entered into a definitive business combination agreement (the “Extension”).
If the Company is unable to complete a Business Combination by August 9, 2023, (the
“Combination Period”), the Company will (1) cease all operations except for the purpose of winding up; (2) as promptly as reasonably possible but not more than 10 business days thereafter, redeem the Public Shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest (less
up to $100,000 of interest to pay dissolution expenses and which interest shall be net of taxes payable, expenses relating to the
administration of the trust account and limited withdrawals for working capital), divided by the number of then issued and outstanding Public Shares, which redemption will completely extinguish Public
TABLE OF CONTENTS
RMG ACQUISITION CORP. III
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Shareholders’ rights as shareholders (including the right to receive further
liquidating distributions, if any); and (3) as promptly as reasonably possible following such redemption, subject to the approval of the remaining shareholders and the board of directors, liquidate and dissolve, subject in each case to the
Company’s obligations under Cayman Islands law to provide for claims of creditors and the requirements of other applicable law.
The Initial Shareholders agreed to waive their liquidation rights with respect to the
Founder Shares if the Company fails to complete a Business Combination within the Combination Period. However, if the Initial Shareholders should acquire Public Shares in or after the Initial Public Offering, they will be entitled to
liquidating distributions from the Trust Account with respect to such Public Shares if the Company fails to complete a Business Combination within the Combination Period. The underwriters agreed to waive their rights to their deferred
underwriting commission (see Note 7) held in the Trust Account in the event the Company does not complete a Business Combination within the Combination Period and, in such event, such amounts will be included with the funds held in the Trust
Account that will be available to fund the redemption of the Company’s Public Shares. In the event of such distribution, it is possible that the per share value of the residual assets remaining available for distribution (including Trust
Account assets) will be only $10.00 per share initially held in the Trust Account. In order to protect the amounts held in the Trust
Account, the Sponsor agreed that it will be liable to the Company if and to the extent any claims by a third party for services rendered or products sold to the Company, or a prospective target business with which the Company has entered into a
written letter of intent, confidentiality or other similar agreement or business combination agreement, reduce the amount of funds in the Trust Account to below the lesser of (i) $10.00 per Public Share and (ii) the actual amount per Public Share held in the Trust Account as of the date of the liquidation of the Trust Account, if less than $10.00 per share due to
reductions in the value of the trust assets, less taxes payable, expenses relating to the administration of the trust account and limited withdrawals for working capital, provided that such liability will not apply to any claims by a third
party or prospective target business who executed a waiver of any and all rights to the monies held in the Trust Account (whether or not such waiver is enforceable) nor will it apply to any claims under the Company’s indemnity of the
underwriters of the Initial Public Offering against certain liabilities, including liabilities under the Securities Act of 1933, as amended (the “Securities Act”). In the event that an executed waiver is deemed to be unenforceable against a
third party, the Sponsor will not be responsible to the extent of any liability for such third-party claims. The Company will seek to reduce the possibility that the Sponsor will have to indemnify the Trust Account due to claims of creditors by
endeavoring to have vendors, service providers (except the Company’s independent registered public accounting firm), prospective target businesses or other entities with which the Company does business, execute agreements with the Company
waiving any right, title, interest or claim of any kind in or to monies held in the Trust Account.
Going Concern
As of March 31, 2023, the Company had approximately $15,000 in its operating bank account and a working capital deficit of approximately $3 million. Further, the Company has incurred and expects to continue to incur significant costs in pursuit of its financing and acquisition plans. These factors, among others, raise
substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the unaudited condensed financial statements are issued.
The Company’s liquidity needs to date have been satisfied through a payment of $25,000 from Sponsor to cover certain expenses in exchange for the issuance of the Founder Shares (as defined in Note 4), the loan of $135,000 from the Sponsor pursuant to the Note (as defined in Note 4), and the proceeds from the consummation of the Private Placement not held in
the Trust Account. The Company fully repaid the Note on February 12, 2021. In addition, in order to finance transaction costs in connection with a Business Combination, the Sponsor or an affiliate of the Sponsor, or certain of the Company’s
officers and directors may provide the Company Working Capital Loans (as defined in Note 4). As of March 31, 2023 and December 31, 2022, there was $750,000
and $500,000, respectively, outstanding under Working Capital Loan.
In connection with the Company’s assessment of going concern considerations in
accordance with FASB ASC Topic 205-40, “Presentation of Financial Statements-Going Concern,” management has determined that the working capital deficit and the mandatory liquidation date and subsequent dissolution raises substantial doubt about
the Company’s ability to continue as a going concern. If the Company is unable to complete a business combination by August 9, 2023, then the Company will cease all operations except for the purpose of
TABLE OF CONTENTS
RMG ACQUISITION CORP. III
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
liquidating. No adjustments have been made to the carrying amounts of assets or
liabilities should we be required to liquidate after August 9, 2023. The unaudited condensed financial statements do not include any adjustment that might be necessary if the Company is unable to continue as a going concern.
Note 2-Summary of Significant Accounting Policies
Basis of Presentation
The accompanying unaudited condensed financial statements of the Company are presented
in U.S. dollars and have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and Article 10 of Regulation S-X. Accordingly, certain
disclosures included in the annual financial statements have been condensed or omitted from these financial statements as they are not required for interim financial statements under GAAP and the rules of the SEC. In the opinion of management,
the unaudited condensed financial statements reflect all adjustments, which include only normal recurring adjustments necessary for the fair statement of the balances and results for the periods presented. Operating results for the three months
ended March 31, 2023 are not necessarily indicative of the results that may be expected for the year ended December 31, 2023.
The accompanying unaudited condensed financial statements should be read in conjunction
with the audited financial statements and notes thereto included in the Annual Report on Form 10-K filed by the Company with the SEC on April 18, 2023.
Emerging
Growth Company
The Company is an “emerging growth
company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable
to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the independent registered public accounting firm attestation requirements of Section 404 of the Sarbanes-Oxley
Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of
any golden parachute payments not previously approved.
Further, Section 102(b)(1) of the JOBS
Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do
not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that an emerging growth company can elect to opt out of the extended
transition period and comply with the requirements that apply to non-emerging growth companies but any such an election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period, which means that when
a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised
standard. This may make comparison of the Company’s financial statement with another public company that is neither an emerging growth company nor an emerging growth company that has opted out of using the extended transition period difficult
or impossible because of the potential differences in accounting standards used.
Concentration of Credit Risk
Financial instruments that potentially subject the Company to concentrations of credit
risk consist of cash accounts in a financial institution, which, at times, may exceed the Federal Depository Insurance Coverage limit of $250,000.
As of March 31, 2023 and December 31, 2022, the Company has not experienced losses on these accounts and management believes the Company is not exposed to significant risks on such accounts.
Cash and Cash Equivalents
The Company considers all short-term investments with an original maturity of three
months or less when purchased to be cash equivalents. The Company had no cash equivalents as of March 31, 2023 and December 31,
2022.
TABLE OF CONTENTS
RMG ACQUISITION CORP. III
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Cash and Investments Held in Trust Account
The Company’s portfolio of investments is comprised of cash and U.S. government
securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act, with a maturity of 185 days or less, or investments in money market funds that invest in U.S. government securities and generally have a readily
determinable fair value, or a combination thereof. When the Company’s investments held in the Trust Account are comprised of U.S. government securities, the investments are classified as trading securities. When the Company’s investments held
in the Trust Account are comprised of money market funds, the investments are recognized at fair value. Trading securities and investments in money market funds are presented on the balance sheets at fair value at the end of each reporting
period. Gains and losses resulting from the change in fair value of these securities is included in unrealized gain on investments held in Trust Account in the accompanying statements of operations. The estimated fair values of investments held
in the Trust Account are determined using available market information, other than for investments in open-ended money market funds with published daily net asset values (“NAV”), in which case the Company uses NAV as a practical expedient to
fair value. The NAV on these investments is typically held constant at $1.00 per unit. The Trust Account may also contain balances of
cash as result of investment activity.
Use of Estimates
The preparation of unaudited condensed financial statements in conformity with U.S.
GAAP requires the Company’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statement. Making estimates
requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the financial statement, which management
considered in formulating its estimate, could change in the near term due to one or more future confirming events. Accordingly, the actual results could differ significantly from those estimates.
Fair Value of Financial Instruments
The fair value of the Company’s assets and liabilities, which qualify as financial
instruments under the FASB ASC Topic 820, “Fair Value Measurements,” approximates the carrying amounts represented in the balance sheet.
Fair Value Measurements
Fair value is defined as the price that would be received for sale of an asset or paid
for transfer of a liability, in an orderly transaction between market participants at the measurement date. GAAP establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. The hierarchy gives the
highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). These tiers include:
•
|
Level 1, defined as observable inputs such as quoted prices for identical instruments in active markets;
|
•
|
Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as
quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and
|
•
|
Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its
own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.
|
In some circumstances, the inputs used to measure fair value might be categorized
within different levels of the fair value hierarchy. In those instances, the fair value measurement is categorized in its entirety in the fair value hierarchy based on the lowest level input that is significant to the fair value measurement.
Working Capital Loan Option
On January 19, 2022, the Sponsor agreed to loan the Company up to $500,000 to be used for a portion of the expenses of the Company. On July 27, 2022, the Sponsor agreed to loan the Company up to $475,000. The notes are due upon consummation of our Business Combination, without interest. At the option of the Sponsor, the
TABLE OF CONTENTS
RMG ACQUISITION CORP. III
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
outstanding principle of the notes may be converted into that number of warrants
(“Conversion Warrants”) equal to the outstanding principle of the note divided by $1.50. The option (“Working Capital Loan Option”)
to convert the working capital loans into warrants qualifies as an embedded derivative under ASC 815 and is required to be recognized at fair value with subsequent changes in fair value recognized in Company’s statements of operations each
reporting period until the loan is repaid or converted. As of March 31, 2023 and December 31, 2022, the fair value of the Working Capital Loan Option was $0, respectively, and the Working Capital Loan is held at cost of $750,000 and $500,000, respectively, see Note 9.
Derivative Warrant Liabilities
The Company does not use derivative instruments to hedge exposures to cash flow,
market, or foreign currency risks. The Company evaluates all of its financial instruments, including issued share purchase warrants, to determine if such instruments are derivatives or contain features that qualify as embedded derivatives,
pursuant to FASB ASC Topic 480 and ASC Topic 815, “Derivatives and Hedging” (“ASC 815”). The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is re-assessed at the end
of each reporting period.
The warrants issued in the Initial Public Offering (the “Public Warrants”) and the
Private Placement Warrants are recognized as derivative liabilities in accordance with ASC 815. Accordingly, the Company recognizes the warrant instruments as liabilities at fair value and adjust the instruments to fair value at each reporting
period. The liabilities are subject to remeasurement at each balance sheet date until exercised, and any change in fair value is recognized in the Company’s statement of operations. The fair value of warrants issued in connection with the
Initial Public Offering and Private Placement were initially measured at fair value using a Monte Carlo simulation model and subsequently, the fair value of the Private Placement warrants have been estimated using a Monte Carlo simulation model
each measurement date. The fair value of Warrants issued in connection with our Initial Public Offering have subsequently been measured based on the listed market price of such warrants.
Offering Costs Associated with the Initial Public
Offering
Offering costs consisted of legal, accounting, underwriting and other costs incurred in
connection with the Initial Public Offering that were directly related to the Initial Public Offering. Offering costs were allocated to the separable financial instruments issued in the Initial Public Offering based on a relative fair value
basis, compared to total proceeds received. Offering costs associated with derivative warrant liabilities were expensed as incurred and presented as non-operating expenses in the statements of operations. Offering costs associated with the
issuance of the Class A ordinary shares were charged against the carrying value of the Class A ordinary shares subject to possible redemption upon the completion of the Initial Public Offering. The Company classifies deferred underwriting
commissions as non-current liabilities as their liquidation is not reasonably expected to require the use of current assets or require the creation of current liabilities.
Class A Ordinary Shares Subject to Possible
Redemption
The Company accounts for its Class A ordinary shares subject to possible redemption in
accordance with ASC 480. Class A ordinary shares subject to mandatory redemption (if any) are classified as liability instruments and are measured at fair value. Conditionally redeemable Class A ordinary shares (including Class A ordinary
shares that feature redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control) are classified as temporary equity. At all other
times, Class A ordinary shares are classified as shareholders’ equity. The Company’s Class A ordinary shares feature certain redemption rights that are considered to be outside of the Company’s control and subject to the occurrence of uncertain
future events. Accordingly, as of March 31, 2023 and December 31, 2022, 918,402 and 48,300,000 Class A ordinary shares subject to possible redemption, respectively, are presented at redemption value as temporary equity, outside of the shareholders’ equity
section of the Company’s balance sheet.
Effective with the closing of the Initial Public Offering, the Company recognized the
accretion from initial book value to redemption amount, which resulted in charges against additional paid-in capital (to the extent available) and accumulated deficit.
TABLE OF CONTENTS
RMG ACQUISITION CORP. III
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Income Taxes
The Company complies with the accounting and reporting requirements of ASC Topic 740,
“Income Taxes” (“ASC 740”), which requires an asset and liability approach to financial accounting and reporting for income taxes. Deferred income tax assets and liabilities are computed for differences between the financial statement and tax
bases of assets and liabilities that will result in future taxable or deductible amounts, based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are
established, when necessary, to reduce deferred tax assets to the amount expected to be realized.
ASC 740 prescribes a recognition threshold and a measurement attribute for the
financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing
authorities. The Company’s management determined that the Cayman Islands is the Company’s only major tax jurisdiction. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. There were
no unrecognized tax benefits and no
amounts accrued for interest and penalties as of March 31, 2023. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position.
There is currently no taxation imposed on income by the government of the Cayman
Islands. In accordance with Cayman federal income tax regulations, income taxes are not levied on the Company. Consequently, income taxes are not reflected in the Company’s financial statement. The Company’s management does not expect that the
total amount of unrecognized tax benefits will materially change over the next twelve months.
Net Income (Loss) Per Ordinary Share
The Company has two classes of shares issued and outstanding: Class A ordinary shares
and Class B ordinary shares. Income and losses are shared pro rata between the two classes of shares. Net income (loss) per ordinary share is computed by dividing net income (loss) by the weighted-average number of ordinary shares outstanding
during the periods. The Company has not considered the effect of the warrants sold in the Initial Public Offering and the Private Placement to purchase an aggregate of 17,876,330, of the Company’s Class A ordinary shares in the calculation of diluted net income (loss) per share, because their exercise is contingent upon future events and
their inclusion would be anti-dilutive under the treasury stock method. As a result, diluted net income (loss) per share is the same as basic net income (loss) per share for the three months ended March 31, 2023 and 2022. Accretion associated
with the Class A ordinary shares subject to possible redemption is excluded from earnings per share, as the redemption value approximates fair value.
The following table presents a reconciliation of the numerator and denominator used to
compute basic and diluted net income (loss) per share for each ordinary share class.
Basic and diluted net (loss) income per common share:
|
|
|
|
|
|
|
|
|
|
|
|
|
Numerator:
|
|
|
|
|
|
|
|
|
|
|
|
|
Allocation of net (loss) income
|
|
|
$(993,229)
|
|
|
$(1,787,504)
|
|
|
$4,620,152
|
|
|
$1,155,038
|
Denominator:
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted weighted average common shares
outstanding
|
|
|
6,709,486
|
|
|
12,075,000
|
|
|
48,300,000
|
|
|
12,075,000
|
Basic and diluted net (loss) income per common share
|
|
|
$(0.15)
|
|
|
$(0.15)
|
|
|
$0.10
|
|
|
$0.10
|
Recent Accounting Pronouncements
The Company’s management does not believe there are any recently issued, but not yet
effective, accounting pronouncements if currently adopted would have a material effect on the Company’s unaudited condensed financial statements.
TABLE OF CONTENTS
RMG ACQUISITION CORP. III
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Note 3-Initial Public Offering
On February 9, 2021, the Company consummated its Initial Public Offering of 48,300,000 Units, including 6,300,000
Over-Allotment Units, at $10.00 per Unit, generating gross proceeds of $483.0 million, and incurring offering costs of approximately $27.1 million,
of which approximately $16.9 million was for deferred underwriting commissions and $250,000 was for deferred legal fees. Each Unit consists of one
Class A ordinary share and one-fifth of one redeemable warrant (“Public Warrant”). Each whole Public Warrant will entitle the holder
to purchase one Class A ordinary share at an exercise price of $11.50 per share, subject to adjustment (see Note 9).
Note 4-Related Party Transactions
Founder Shares
In December 2020, the Sponsor paid an aggregate of $25,000 to cover certain expenses on behalf of the Company in exchange for issuance of 10,062,500 ordinary shares (the “Founder Shares”). On January 30, 2021, the Company effectuated a 5-for-6 share split of the Class B ordinary shares, resulting in an aggregate outstanding amount of 12,075,000 Class B ordinary shares. The holders of the Founder Shares agreed to forfeit up to an aggregate of 1,575,000 Founder Shares, on a pro rata basis, to the extent that the option to purchase additional units was not exercised in full by the underwriters, so that the Founder Shares would
represent 20% of the Company’s issued and outstanding shares after the Initial Public Offering. The underwriter exercised its
over-allotment option in full on February 9, 2021; thus, the 1,575,000 Founder Shares were no longer subject to forfeiture.
The Initial Shareholders agreed not to transfer, assign or sell any of their Founder
Shares until the earlier to occur of (1) one year after the completion of the initial Business Combination; and (2) subsequent to the initial Business Combination (x) if the last reported sale price of Class A ordinary shares equals or exceeds
$12.00 per share (as adjusted for share sub-divisions, share dividends, rights issuances, consolidations, reorganizations,
recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after the initial
Business Combination or (y) the date on which the Company completes a liquidation, merger, amalgamation, share exchange, reorganization or other similar transaction that results in all of the Public Shareholders having the right to exchange
their ordinary shares for cash, securities or other property.
Private Placement Warrants
Simultaneously with the closing of the Initial Public Offering, the Company consummated
the Private Placement of 8,216,330 Private Placement Warrants at a price of $1.50 per Private Placement Warrant to the Sponsor, generating proceeds of approximately $12.3
million.
Each whole Private Placement Warrant is exercisable for one whole share of Class A
ordinary shares at a price of $11.50 per share. A portion of the proceeds from the sale of the Private Placement Warrants to the
Sponsor was added to the proceeds from the Initial Public Offering held in the Trust Account. If the Company does not complete a Business Combination within the Combination Period, the Private Placement Warrants will expire worthless. The
Private Placement Warrants will be non-redeemable for cash and exercisable on a cashless basis so long as they are held by the Sponsor or its permitted transferees.
The Sponsor and the Company’s officers and directors agreed, subject to limited
exceptions, not to transfer, assign or sell any of their Private Placement Warrants until 30 days after the completion of the
initial Business Combination.
Related Party Loans
In order to finance transaction costs in connection with a Business Combination, the
Sponsor, members of the Company’s founding team or any of their affiliates may, but are not obligated to, loan the Company funds as may be required (“Working Capital Loans”). If the Company completes a
Business Combination, the Company would repay the Working Capital Loans out of the proceeds of the Trust Account released to the Company. Otherwise, the Working Capital Loans would be repaid only out of funds held outside the Trust Account. In
the event that a Business Combination does not close, the Company may use a portion of proceeds held outside the Trust Account to repay the Working Capital Loans but no proceeds held in the Trust Account would be used to repay the Working
Capital Loans. The Working Capital Loans would either be repaid upon consummation of a
TABLE OF CONTENTS
RMG ACQUISITION CORP. III
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Business Combination, without interest, or, at the lenders’ discretion, up to $1,500,000 of such Working Capital Loans may be convertible into warrants of the post-Business Combination entity at a price of $1.50 per warrant. The warrants would be identical to the Private Placement Warrants.
On December 30, 2020, the Sponsor agreed to loan the Company up to $300,000 to be used for the payment of costs related to the Initial Public Offering pursuant to a promissory note (the “Note”). The Note was non-interest bearing, unsecured and due upon the closing of the Initial Public Offering. The Company repaid the Note balance in full on February 12, 2021.
On January 19, 2022, the Sponsor agreed to loan the Company up to $500,000 to be used for a portion of the expenses of the Company (the “January 2022 Note”). As of March 31,
2023 and December 31, 2022, an aggregate of $500,000 had been funded under the January 2022 Note. At the option of the Sponsor,
the outstanding principle of $500,000 may be converted into Conversion Warrants equal to the outstanding principle of the January
2022 Note divided by $1.50. Upon funding of the January 2022 Note, the Company recognized the initial fair value of the Working
Capital Loan Option of approximately $7,900 as a debt discount, which is classified as a component of the working capital loan and
amortized to interest expense over the expected term of the loan. For the three months ended March 31, 2023 and 2022, the Company amortized approximately $0 and $1,800, respectively, of the debt discount, classified as interest
expense in the accompanying statements of operations.
On July 27, 2022, the Sponsor agreed to loan the Company up to $475,000 pursuant to an unsecured, non-interest bearing promissory note (the “July 2022 Note”). The July
2022 Note is due upon the consummation of the Company’s Business Combination. In the event that a Business Combination does not close, the Company may use a portion of proceeds held outside the Trust Account to repay the July 2022 Note, but no
proceeds held in the Trust Account would be used to repay the July 2022 Note. The July 2022 Note will either be repaid in cash upon consummation of a Business Combination or, at the Sponsor’s discretion, up to $1,500,000 of the unpaid principal of the July 2022 Note may be converted into warrants of the post-Business Combination entity at a price of $1.50 per warrant. The warrants will be identical to the Private Placement Warrants. As of March 31, 2023 and December 31, 2022, the Company had
borrowed $250,000 and $0,
respectively, under this loan.
As of March 31, 2023 and December 31, 2022, the Company had $750,000 and $500,000, respectively,
in total borrowings outstanding under the Working Capital Loans. As of March 31, 2023 and December 31, 2022, the carrying value and the principal value of the loan was $750,000 and $500,000, respectively.
Administrative Services Agreement
Commencing on the effective date of the Registration Statement, the Company agreed to
pay an affiliate of the Sponsor a total of $20,000 per month for office space, administrative and support services (including
salaries). Upon the Company’s liquidation, the Company will cease paying these monthly fees. Upon completion of the Initial Business Combination, the Company will pay to such affiliate an amount equal to $20,000 multiplied by the number of whole months that have elapsed between the date of the completion of the Initial Business Combination and the
closing of the Initial Public Offering. The Company incurred $60,000 in expenses in connection with such services during the
three months ended March 31, 2023 and 2022, as reflected in the accompanying unaudited condensed statements of operations. The Company had $180,000
and $120,000 included in accrued expenses-related party in connection with such services as of March 31, 2023 and December 31, 2022,
respectively.
The Sponsor, officers and directors, or any of their respective affiliates, will be
reimbursed for any out-of-pocket expenses incurred in connection with activities on the Company’s behalf such as identifying potential target businesses and performing due diligence on suitable business combinations. The audit committee will
review on a quarterly basis all payments that were made by us to the Sponsor, directors, officers or the Company’s or any of their respective affiliates.
Note 5-Commitments &Contingencies
Registration and Shareholder Rights Agreement
The holders of the Founder Shares, Private Placement Warrants and any warrants that may
be issued upon conversion of Working Capital Loans (and any Class A ordinary shares issuable upon the exercise of the Private
TABLE OF CONTENTS
RMG ACQUISITION CORP. III
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Placement Warrants or warrants issued upon conversion of the Working Capital Loans and
upon conversion of the Founder Shares) were entitled to registration rights pursuant to a registration and shareholder rights agreement signed upon the effective date of the Initial Public Offering. The holders of these securities were entitled
to make up to three demands, excluding short form demands, that the Company registers such securities. In addition, the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent to the
completion of the initial Business Combination. The Company will bear the expenses incurred in connection with the filing of any such registration statements.
Underwriting Agreement
The Company granted the underwriters a 45-day option from the date of this prospectus to purchase up to 6,300,000
additional Units at the Initial Public Offering price less the underwriting discounts and commissions. The underwriter exercised its over-allotment option in full on February 9, 2021.
The underwriters were entitled to an underwriting discount of $0.20 per unit, or approximately $9.7
million in the aggregate, paid upon the closing of the Initial Public Offering. In addition, $0.35 per unit, or approximately $16.9 million in the aggregate will be payable to the underwriters for deferred underwriting commissions. The deferred fee will become payable to the
underwriters from the amounts held in the Trust Account solely in the event that the Company completes a Business Combination, subject to the terms of the underwriting agreement.
Contingent Fee Agreements
In December 2022, the Company engaged a capital market advisor to assist with the
completion of the business combination. The Company agreed to pay the advisor $500,000 in cash and $250,000 paid in equivalent dollar amount in common stock, solely in the event that the Company completes its Business Combination. As of March 31,
2023, the Company determined that a Business Combination is not considered probable. If the fee is determined to be a transaction cost for the Business Combination then the amount payable to the advisor may be accounted for as an expense in the
period the liability is recorded.
Risks and Uncertainties
Management continues to evaluate the impact of COVID-19 and has concluded that while it
is reasonably possible that the virus could have a negative effect on the Company’s financial position, results of its operations, and/or search for a target company, the specific impact is not readily determinable as of the date of these
unaudited condensed financial statements. These unaudited condensed financial statements do not include any adjustments that might result from the outcome of this uncertainty.
In February 2022, the Russian Federation and Belarus commenced a military action with
the country of Ukraine. As a result of this action, various nations, including the United States, have instituted economic sanctions against the Russian Federation and Belarus. Further, the impact of this action and related sanctions on the
world economy are not determinable as of the date of these unaudited condensed financial statements and the specific impact on the Company’s financial condition, results of operations, and cash flows is also not determinable as of the date of
these unaudited condensed financial statements.
Note 6-Class A Ordinary Shares Subject to Possible Redemption
The Company’s Class A ordinary shares feature certain redemption rights that are
considered to be outside of the Company’s control and subject to the occurrence of future events. The Company is authorized to issue 500,000,000
Class A ordinary shares with a par value of $0.0001 per share. As of March 31, 2023 and December 31, 2022, there were 918,402 and 48,300,000
Class A ordinary shares issued and outstanding, respectively, which were all subject to possible redemption and are classified outside of permanent equity in the balance sheets.
TABLE OF CONTENTS
RMG ACQUISITION CORP. III
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
The Class A ordinary shares issued in the Initial Public Offering were recognized in
Class A ordinary shares subject to possible redemption as follows:
Class A ordinary shares subject to possible redemption at
December 31, 2021
|
|
|
$483,000,000
|
Increase in redemption value of Class A ordinary shares subject to possible
redeem
|
|
|
4,168,822
|
Class A ordinary shares subject to possible redemption at
December 31, 2022
|
|
|
487,168,822
|
Decrease in redemption value of shares
|
|
|
(478,003,632)
|
Increase in redemption value of Class A ordinary shares subject to possible
redeem
|
|
|
1,417,859
|
Class A ordinary shares subject to possible redemption at
March 31, 2023
|
|
|
$10,583,049
|
Note 7-Shareholders’ Deficit
Preference Shares - The Company is authorized to issue 5,000,000 preference shares with a par value of $0.0001 per share. At March 31, 2023 and December 31, 2022, there were no preference shares issued or outstanding.
Class A Ordinary Shares - The Company is authorized to issue 500,000,000 Class A ordinary shares with
a par value of $0.0001 per share. Holders of the Company’s Class A ordinary shares are entitled to one vote for each share. At March 31, 2023 and December 31, 2022, there were 918,402 and 48,300,000 shares issued and outstanding, all of which
are subject to possible redemption and have been classified as temporary equity (see Note 7).
Class B Ordinary Shares - The Company is authorized to issue 50,000,000 Class B ordinary shares with a
par value of $0.0001 per share. On February 9, 2021, 10,062,500 Class B ordinary shares were issued and outstanding. On January 30, 2021, the Company effectuated a 5-for-6 stock split of the Class B ordinary shares, resulting in an aggregate outstanding amount of 12,075,000 Class B ordinary shares. Of the 12,075,000 Class B ordinary
shares outstanding, 1,575,000 Class B ordinary shares were subject to forfeiture, to the Company by the Initial Shareholders for
no consideration to the extent that the underwriters’ over-allotment option was not exercised in full or in part, so that the Initial Shareholders would collectively own 20% of the Company’s issued and outstanding ordinary shares after the Initial Public Offering. As of March 31, 2023 and December 31, 2022, there were 12,075,000 Class B ordinary shares issued and outstanding.
Only holders of Class B ordinary shares will have the right to vote on the election of
directors prior to the initial Business Combination. Holders of the Class A ordinary shares and holders of the Class B ordinary shares will vote together as a single class on all other matters submitted to a vote of the shareholders, except as
required by law. Each ordinary share will have one vote on all such matters.
The Class B ordinary shares will automatically convert into Class A ordinary shares at
the time of the initial business Combination, or earlier at the option of the holder, on a one-for-one basis, subject to adjustment for share sub-divisions, share dividends, rights issuances, consolidations, reorganizations, recapitalizations
and the like, and subject to further adjustment as provided herein. In the case that additional Class A ordinary shares, or equity-linked securities, are issued or deemed issued in excess of the amounts issued in the Initial Public Offering and
related to the closing of the initial Business Combination, the ratio at which the Class B ordinary shares will convert into Class A ordinary shares will be adjusted (unless the holders of a majority of the issued and outstanding Class B
ordinary shares agree to waive such anti-dilution adjustment with respect to any such issuance or deemed issuance) so that the number of Class A ordinary shares issuable upon conversion of all Class B ordinary shares will equal, in the
aggregate, on an as-converted basis, 20% of the sum of all ordinary shares issued and outstanding upon the completion of the Initial
Public Offering plus all Class A ordinary shares and equity-linked securities issued or deemed issued in connection with the initial Business Combination, excluding any shares or equity-linked securities issued, or to be issued, to any seller
in the initial Business Combination. In no event will the Class B ordinary shares convert into Class A ordinary shares at a rate of less than one to one.
Note 8-Derivative Warrant Liabilities
As of March 31, 2023 and December 31, 2022, the Company had 9,660,000 and 8,216,330
Public Warrants and Private Placement Warrants, respectively, outstanding. Public Warrants may only be exercised for a whole number of shares. No fractional Public Warrants will be issued upon separation of the Units and only whole
TABLE OF CONTENTS
RMG ACQUISITION CORP. III
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Public Warrants will trade. The Public Warrants will become exercisable on the later of
(a) 30 days after the completion of a Business Combination or (b) 12 months from the closing of the Initial Public Offering; provided in each case that the Company has an effective registration statement under the Securities Act covering
the issuance of the Class A ordinary shares issuable upon exercise of the warrants and a current prospectus relating to them is available and such shares are registered, qualified or exempt from registration under the securities, or blue sky,
laws of the state of residence of the holder (or the Company permits holders to exercise their warrants on a cashless basis under the circumstances specified in the warrant agreement). The Company agreed that as soon as practicable, but in no
event later than 20 business days after the closing of the initial Business Combination, the Company will use its commercially
reasonable efforts to file with the SEC a registration statement covering the issuance of the Class A ordinary shares issuable upon exercise of the warrants, and the Company will use its commercially reasonable efforts to cause the same to
become effective within 60 business days after the closing of the initial Business Combination and to maintain the effectiveness of
such registration statement and a current prospectus relating to those Class A ordinary shares until the warrants expire or are redeemed; provided that if the Class A ordinary shares are at the time of any exercise of a warrant not listed on a
national securities exchange such that they satisfy the definition of a “covered security” under Section 18(b)(1) of the Securities Act, the Company may, at its option, requires holders of Public Warrants who exercise their warrants to do so on
a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act and, in the event the Company so elects, it will not be required to file or maintain in effect a registration statement.
The warrants have an exercise price of $11.50 per share, subject to adjustments, and will expire five years
after the completion of a Business Combination or earlier upon redemption or liquidation. In addition, if (x) the Company issues additional Class A ordinary shares or equity-linked securities for capital raising purposes in connection with the
closing of the initial Business Combination at an issue price or effective issue price of less than $9.20 per ordinary share (with
such issue price or effective issue price to be determined in good faith by the board of directors and, in the case of any such issuance to the Sponsor or its affiliates, without taking into account any Founder Shares held by the Sponsor or
such affiliates, as applicable, prior to such issuance) (the “Newly Issued Price”), (y) the aggregate gross proceeds from such issuances represent more than 60% of the total equity proceeds, and interest thereon, available for the funding of the initial Business Combination on the date of the consummation of the initial Business Combination (net of redemptions),
and (z) the volume weighted average trading price of Class A ordinary shares during the 20 trading day period starting on the
trading day prior to the day on which the Company consummates its initial Business Combination (such price, the “Market Value”) is below $9.20
per share, the exercise price of the warrants will be adjusted (to the nearest cent) to be equal to 115% of the higher of the Market
Value and the Newly Issued Price, the $18.00 per share redemption trigger price described under “Redemption of warrants for cash when
the price per Class A ordinary share equals or exceeds $18.00” and “Redemption of warrants for Class A ordinary shares when the price
per Class A ordinary share equals or exceeds $10.00” will be adjusted (to the nearest cent) to be equal to 180% of the higher of the Market Value and the Newly Issued Price, and the $10.00 per share redemption trigger price described under the caption “Redemption of warrants when the price per Class A ordinary share equals or exceeds $10.00” will be adjusted (to the nearest cent) to be equal to the higher of the Market Value and the Newly Issued Price.
The Private Placement Warrants are identical to the Public Warrants underlying the
Units sold in the Initial Public Offering, except that the Private Placement Warrants and the Class A ordinary shares issuable upon exercise of the Private Placement Warrants will not be transferable, assignable or salable until 30 days after the completion of a Business Combination, subject to certain limited exceptions. Additionally, the Private Placement Warrants will be
non-redeemable so long as they are held by the initial purchasers or such purchasers’ permitted transferees. If the Private Placement Warrants are held by someone other than the Initial Shareholders or their permitted transferees, the Private
Placement Warrants will be redeemable by the Company and exercisable by such holders on the same basis as the Public Warrants.
TABLE OF CONTENTS
RMG ACQUISITION CORP. III
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Redemption of warrants for cash when the price per Class A ordinary
share equals or exceeds $18.00:
Once the warrants become exercisable, the Company may redeem the outstanding warrants
(except as described herein with respect to the Private Placement Warrants):
•
|
in whole and not in part;
|
•
|
at a price of $0.01
per warrant;
|
•
|
upon not less than 30
days’ prior written notice of redemption to each warrant holder; and
|
•
|
if, and only if, the last reported sale price (the “closing price”) of Class A ordinary shares equals or exceeds $18.00 per share (as adjusted) for any 20
trading days within a 30-trading day period ending on the third trading day prior to the date on which the Company sends the
notice of redemption to the warrant holders.
|
The Company will not redeem the warrants as described above unless a registration
statement under the Securities Act covering the issuance of the Class A ordinary shares issuable upon exercise of the warrants is then effective and a current prospectus relating to those Class A ordinary shares is available throughout the 30-day redemption period. If and when the warrants become redeemable by the Company, it may exercise its redemption right even if the company is
unable to register or qualify the underlying securities for sale under all applicable state securities laws.
Redemption of warrants for Class A ordinary shares when the price
per Class A ordinary share equals or exceeds $10.00:
Once the warrants become exercisable, the Company may redeem the outstanding
warrants:
•
|
in whole and not in part;
|
•
|
at $0.10 per
warrant upon a minimum of 30 days’ prior written notice of redemption provided that
holders will be able to exercise their warrants on a cashless basis prior to redemption and receive that number of shares determined by reference to an agreed table based on the redemption date and the “fair market value” of Class A
ordinary shares;
|
•
|
if, and only if, the closing price of Class A ordinary shares equals or exceeds $10.00 per Public Share (as adjusted) for any 20
trading days within the 30 - trading day period ending three trading days before the Company sends the notice of redemption
to the warrant holders; and
|
•
|
if the closing price of the Class A ordinary shares for any 20 trading days within a 30-trading day period
ending on the third trading day prior to the date on which the Company sends the notice of redemption to the warrant holders is less than $18.00
per share (as adjusted), the Private Placement Warrants must also be concurrently called for redemption on the same terms as the outstanding Public Warrants, as described above.
|
The “fair market value” of Class A ordinary shares shall mean the average reported last
sale price of Class A ordinary shares for the 10 trading days ending on the third trading day prior to the date on which the notice
of redemption is sent to the holders of warrants.
In no event will the Company be required to net cash settle any warrant. If the Company
is unable to complete a Business Combination within the Combination Period and the Company liquidates the funds held in the Trust Account, holders of warrants will not receive any of such funds with respect to their warrants, nor will they
receive any distribution from the Company’s assets held outside of the Trust Account with the respect to such warrants. Accordingly, the warrants may expire worthless.
TABLE OF CONTENTS
RMG ACQUISITION CORP. III
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Note 9-Fair Value Measurements
The following table presents information about the Company’s assets and liabilities
that are measured at fair value on a recurring basis as of March 31, 2023 and December 31, 2022 and indicates the fair value hierarchy of the valuation techniques that the Company utilized to determine such fair value.
March 31, 2023
Assets:
|
|
|
|
|
|
|
|
|
|
Cash held in Trust Account
|
|
|
$10,683,049
|
|
|
$—
|
|
|
$—
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
Derivative liabilities - Public Warrants
|
|
|
$1,400,700
|
|
|
$—
|
|
|
$—
|
Derivative liabilities - Private Warrants
|
|
|
$—
|
|
|
$—
|
|
|
$1,191,368
|
December 31, 2022
Assets:
|
|
|
|
|
|
|
|
|
|
Investments held in Trust Account - Money Market Funds
|
|
|
$487,268,822
|
|
|
$—
|
|
|
$—
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
Derivative liabilities - Public Warrants
|
|
|
$289,800
|
|
|
$—
|
|
|
$—
|
Derivative liabilities - Private Warrants
|
|
|
$—
|
|
|
$—
|
|
|
$246,500
|
There were no other transfers between levels for the period ended March 31, 2023 and December 31, 2022.
Level 1 assets include investments in cash, money market funds and U.S. Treasury
securities. The Company uses inputs such as actual trade data, benchmark yields, quoted market prices from dealers or brokers, and other similar sources to determine the fair value of its investments.
The fair value of the Public Warrants issued in connection with the Public Offering and
Private Placement Warrants were initially measured at fair value using a Monte Carlo simulation model and subsequently, the fair value of the Private Placement Warrants have been estimated using a Monte Carlo simulation model each measurement
date. For the period ended March 31, 2023 and December 31, 2022, the Company recognized a change to the statement of operations resulting from a decrease in the fair value of liabilities of approximately $2.1 million and $13.8 million,
respectively, presented as change in fair value of derivative warrant liabilities on the accompanying statement of operations.
The estimated fair value of the Private Placement Warrants, and the Public Warrants
prior to being separately listed and traded, is determined using Level 3 inputs. Inherent in a Monte Carlo simulation are assumptions related to expected share-price volatility, expected life, risk-free interest rate and dividend yield. The
Company estimates the volatility for its Private Placement Warrants based on the implied volatility from the Company’s traded warrants and from historical volatility of select peer companies ordinary shares that matches the expected remaining
life of the warrants. The risk-free interest rate is based on the U.S. Treasury zero-coupon yield curve on the grant date for a maturity similar to the expected remaining life of the warrants. The expected life of the warrants is assumed to be
equivalent to their remaining contractual term. The dividend rate is based on the historical rate, which the Company anticipates remaining at zero.
TABLE OF CONTENTS
RMG ACQUISITION CORP. III
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
The following table provides quantitative information regarding Level 3 fair value
measurements inputs at their measurement dates:
Private Warrants
Stock price
|
|
|
$10.09
|
|
|
$10.21
|
Volatility
|
|
|
6.9%
|
|
|
10.2%
|
Expected life of the options to convert
|
|
|
5.47
|
|
|
0.97
|
Risk-free rate
|
|
|
4.73%
|
|
|
4.66%
|
Dividend yield
|
|
|
—
|
|
|
—
|
Working Capital Loan Option
Strike price of debt conversion
|
|
|
$1.50
|
|
|
$1.50
|
Volatility
|
|
|
6.9%
|
|
|
10.2%
|
Expected life of the options to convert
|
|
|
5.47
|
|
|
5.46
|
Risk-free rate
|
|
|
4.72%
|
|
|
4.93%
|
Dividend yield
|
|
|
—
|
|
|
—
|
The change in the level 3 fair value of the derivative warrant liabilities for the
period ended March 31, 2023 and December 31, 2022 is summarized as follows:
Derivative warrant liabilities at December 31, 2021
|
|
|
$6,573,100
|
Change in fair value of derivative warrant liabilities
|
|
|
(2,946,400)
|
Derivative warrant liabilities at March 31, 2022
|
|
|
3,626,700
|
Change in fair value of derivative warrant liabilities
|
|
|
(3,380,200)
|
Derivative warrant liabilities at December 31, 2022
|
|
|
246,500
|
Change in fair value of derivative warrant liabilities
|
|
|
944,868
|
Derivative warrant liabilities at March 31, 2023
|
|
|
$1,191,368
|
The change in the fair value of the Working Capital Loan Option measured with Level 3
inputs for the period ended March 31, 2023 and December 31, 2022 is summarized as follows:
Balance at December 31, 2021
|
|
|
$—
|
Initial fair value of the Working Capital Loan Option
|
|
|
7,885
|
Change in fair value
|
|
|
(7,885)
|
Balance at December 31, 2022 and March 31, 2023
|
|
|
$—
|
Note 10-Subsequent Events
The Company evaluated subsequent events and transactions that occurred up to the date
unaudited condensed financial statements were available to be issued. Based upon this review, the Company determined that, except as disclosed below, there have been no events that have occurred that would require adjustments to the disclosures
in the unaudited condensed financial statements, except as disclosed below.
On April 16, 2023, one of the underwriters waived its entitlement to the payment of any deferred fee, of approximately $10,143,000, to be paid under the terms of the underwriting agreement and is no longer serving in any advisor capacity.
TABLE OF CONTENTS
RMG ACQUISITION CORP. III
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
On April 17, 2023, one of the underwriters waived its entitlement to the payment of any deferred fee, of approximately $6,762,000, to be paid under the terms of the underwriting agreement specifically to closing of the Merger Agreement with H2B2 Electrolysis Technologies (“H2B2”).
Proposed Business Combination
On May 9, 2023, the Company entered into an Agreement and Plan of Merger (the “Merger
Agreement”), by and between the Company and H2B2, which provides for, among other things, the deregistration of the Company under the Companies Act (as revised) of the Cayman Islands and the domestication of the Company as a Delaware
corporation (the “Domestication”) and, following the Domestication, the merger of H2B2 with and into the Company, with the Company continuing as the surviving corporation (the “Merger” and, together with the Domestication and the other
transactions contemplated by the Merger Agreement, the “Transactions”). As a result of the Transactions, H2B2 will cease to exist and the stockholders of H2B2 will become stockholders of the Company. The transactions set forth in the Merger
Agreement, including the Domestication and the Merger, will constitute a “Business Combination” as contemplated by the Company’s Amended and Restated Memorandum and Articles of Association.
Under the Merger Agreement, the stockholders of H2B2 will receive a number of shares of
the domesticated Company’s common stock based on an exchange ratio (the “Exchange Ratio”), the numerator of which is equal to $750
million (which amount will be subject to adjustment in the event that H2B2 issues debt or equity prior to the closing of the Transactions) divided by $10.00,
and the denominator of which is equal to the number of outstanding shares of H2B2, including shares that would be issuable upon the exercise in full of all H2B2 options. The holders of H2B2 options will receive the Company’s options equal to
the number of shares of H2B2 common stock subject to the H2B2 options multiplied by the Exchange Ratio at an exercise price per share divided by the Exchange Ratio.
In connection with the Transactions, the Company, Sponsor, certain of H2B2’s directors
and officers and certain former stockholders of H2B2 agreed to enter into lock-up agreements at the closing of the Merger, which will restrict the transfer of (i) a number of shares of the surviving corporation common stock held by such
securityholder, as set forth in the lock-up agreement, (ii) any shares of the surviving corporation common stock held issuable upon the exercise or settlement, as applicable, of surviving corporation options held by a securityholder, or
(iii) any other securities convertible into or exercisable or exchangeable for surviving corporation common stock held by a securityholder. The lock-up agreements will restrict the transfer until 180 days after the closing of the Merger, subject to limited exceptions and early release provisions set forth under the lock-up agreements.
The Merger Agreement contains certain representations and warranties of the parties to
the Merger Agreement and consummation of the Transactions is conditioned on approval thereof by the Company’s shareholders and is further conditioned upon, representations and warranties of the parties and other closing conditions.
The Merger Agreement may be terminated at any time, but not later than the closing of
the Merger, as follows:
•
|
by written consent of H2B2 and the Company;
|
•
|
by H2B2 or the Company if any governmental authority has enacted, issued, promulgated, enforced or entered any law or
governmental order which has become final and non-appealable and has the effect of making consummation of the transactions contemplated by the Merger Agreement and the Ancillary Agreements (as defined in the Merger Agreement) illegal or
otherwise enjoining, preventing or prohibiting the consummation of the transactions contemplated by the Merger Agreement and the Ancillary Agreements (provided that such party did not cause such enactment);
|
•
|
by H2B2 or the Company if the consummation of the Transactions has not occurred on or prior to March 31, 2024, subject to
certain automatic extensions, for reasons not primarily due to the terminating party’s breach or violation of the terms of the Merger Agreement;
|
•
|
by H2B2 or the Company if such party disagrees with the final determination of the Closing Date Purchase Price (as defined in
the Merger Agreement) by the valuation firm as further described in the Merger Agreement;
|
•
|
by H2B2 if there has been a modification in recommendation of the Company’s board of directors with respect to any of the
Proposals (as defined in the Merger Agreement);
|
TABLE OF CONTENTS
RMG ACQUISITION CORP. III
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
•
|
by H2B2 if the Company has not obtained shareholder approval for the Transactions by reason of the failure to obtain the
required vote at a meeting of the Company’s shareholders;
|
•
|
by H2B2 if (i) prior to completion of a Capital Raise Transaction (as defined in the Merger Agreement), a Capital Raise Investor
(as defined in the Merger Agreement) or group of Capital Raise Investors, with legal, valid and binding commitments to fund in such Capital Raise Transaction represent in the aggregate at least the Minimum Investment Amount (as defined
in the Merger Agreement) object to the Merger and the other transactions contemplated by the Merger Agreement by delivering a written notice to the board of directors of H2B2 by no later than fifteen days following execution of definitive agreements relating to the Capital Raise Transaction after which time no Capital Raise Investor will be entitled to
object to the Merger and the other transactions contemplated by the Merger Agreement; provided that, upon receipt of the written notice described above, H2B2 will be required to terminate the Merger Agreement on the tenth business day following receipt of the written notice;
|
•
|
by H2B2 in the event of an uncured breach of any representation, warranty, covenant or agreement on the part of the Company,
except if the breach is curable by the Company through the exercise of its reasonable best efforts, then, for a period of up to thirty (30)
days after receipt by the Company of notice from H2B2 of such breach, but only as long as the Company continues to exercise such reasonable best efforts to cure such breach, such termination will not be effective, and such termination
will be effective only if such breach is not cured within the thirty-day period;
|
•
|
by the Company in the event of an uncured breach of any representation, warranty, covenant or agreement on the part of H2B2,
except if the breach is curable by H2B2 through the exercise of its reasonable best efforts, then, for a period of up to thirty (30)
days after receipt by H2B2 of notice from the Company of such breach, but only as long as H2B2 continues to exercise such reasonable best efforts to cure such breach, such termination will not be effective, and such termination will be
effective only if such breach is not cured within the thirty-day period;
|
•
|
by the Company if the H2B2 Stockholder Approval has not been obtained; and
|
•
|
by the Company if an H2B2 stockholder exercises any right or takes any action or fails to take any action required to satisfy
the conditions or any closing deliverables required to be delivered under the Merger Agreement that prevents consummation of the Merger and the other transactions contemplated by the Merger Agreement and the Ancillary Agreements.
|
At the closing of the Merger, the Company, the Sponsor and certain of H2B2’s
stockholders will enter into an Amended and Restated Registration Rights Agreement (the “Registration Rights Agreement”) pursuant to which the Company agreed to file a shelf registration statement with respect to the registrable securities
under the Registration Rights Agreement. The Company also agreed to provide customary “piggyback” registration rights. The Registration Rights Agreement also provides that the Company will pay certain expenses relating to such registrations and
indemnify the stockholders against certain liabilities.
In connection with the execution of the Merger Agreement, the Sponsor and certain other
persons have entered into a Support Agreement (the “Sponsor Support Agreement”) with the Company, pursuant to holders of the Company’s Class B ordinary shares have agreed to, among other things, (i) vote at any meeting or pursuant to any action
of written resolution of our shareholders all of their Class B ordinary shares held of record or thereafter acquired in favor of the Transactions and (ii) be bound by certain other covenants and agreements related to the Transactions, in each
case, on the terms and subject to the conditions set forth in the Sponsor Support Agreement.
In connection with the execution of the Merger Agreement, certain stockholders of H2B2
who hold a majority of the outstanding stock of H2B2 have entered into support agreements pursuant to which they will agree to vote in favor of the Transactions at a meeting called to approve the Transactions by H2B2 stockholders (or to act by
written consent approving the Transactions).
The summaries of the Merger Agreement and the other agreements to be entered into by
the parties are qualified in their entirety by reference to the text of the Merger Agreement and agreements entered into in connection therewith.
TABLE OF CONTENTS
RMG ACQUISITION CORP. III
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Extension of Date to Consummate a Business Combination
The Company’s Amended and Restated Memorandum and Articles of Association previously
provided that the Company had until February 9, 2023 to complete a Business Combination. On January 11, 2023, at an extraordinary general meeting of shareholders, the shareholders of the Company voted to approve an amendment to the Company’s
Amended and Restated Memorandum and Articles of Association to extend the date by which the Company must complete a Business Combination (the “Extension”). In connection with the Extension, a total of 260 Public Shareholders elected to redeem an aggregate of 47,381,598
Class A ordinary shares, representing approximately 98.10% of the issued and outstanding Class A ordinary shares, for an aggregate
of approximately $478,003,632 in cash.
As of January 11, 2023, the Company’s Amended and Restated Memorandum and Articles of
Association previously provided that the Company must consummate its Business Combination by (i) May 9, 2023 or (ii) August 9, 2023, in the event the Company has signed a definitive agreement with respect to a Business Combination and has
elected to extend the amount of time to complete a Business Combination for up to three times for an additional one month each time. On August 4, 2023, at an extraordinary general meeting of shareholders, the shareholders of the Company voted
to approve an amendment to the Company’s Amended and Restated Memorandum and Articles of Association to extend the date by which the Company must complete a Business Combination to February 9, 2024 (the “Second Extension Amendment”). In
connection with the Second Extension Amendment, a total of 16 shareholders elected to redeem an aggregate of 282,624 Class A ordinary shares, representing approximately 30.77% of our issued and outstanding Class A ordinary shares, for an aggregate of approximately $2,942,663
in cash.
TABLE OF CONTENTS
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholders and Board of Directors of
RMG Acquisition Corp. III
Opinion on the Financial Statements
We have audited the accompanying balance sheets of RMG Acquisition Corp. III (the
“Company”) as of December 31, 2022 and 2021, the related statements of income, shareholders’ deficit and cash flows for each of the two years in the period ended December 31, 2022, and the related notes (collectively referred to as the
“financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows for each of
the two years in the period ended December 31, 2022, in conformity with accounting principles generally accepted in the United States of America.
Explanatory Paragraph - Going Concern
The accompanying financial statements have been prepared assuming that the Company will
continue as a going concern. As more fully described in Note 1, the Company’s business plan is dependent on the completion of a business combination and the Company’s cash and working capital as of December 31, 2022 are not sufficient to
complete its planned activities. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 1. The financial statements do not
include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our
responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be
independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards
require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not
required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose
of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement
of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis
for our opinion.
/s/ Marcum LLP
Marcum LLP
We have served as the Company’s auditor since 2021.
New York, NY
April 17, 2023
TABLE OF CONTENTS
RMG ACQUISITION CORP. III
BALANCE SHEETS
Assets:
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
Cash
|
|
|
$22,339
|
|
|
$93,599
|
Prepaid expenses
|
|
|
50,892
|
|
|
568,058
|
Total current assets
|
|
|
73,231
|
|
|
661,657
|
Investments held in Trust Account
|
|
|
487,268,822
|
|
|
483,012,312
|
Other assets
|
|
|
—
|
|
|
47,083
|
Total Assets
|
|
|
$487,342,053
|
|
|
$483,721,052
|
Liabilities, Class A Ordinary Shares
Subject to Possible Redemption and Shareholders’ Deficit:
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
Accounts payable
|
|
|
$153,571
|
|
|
$73,405
|
Accrued expenses
|
|
|
899,845
|
|
|
90,287
|
Accrued expenses - related party
|
|
|
120,000
|
|
|
—
|
Total current liabilities
|
|
|
1,173,416
|
|
|
163,692
|
Deferred legal fees
|
|
|
250,000
|
|
|
250,000
|
Deferred underwriting commissions
|
|
|
16,905,000
|
|
|
16,905,000
|
Convertible working capital loan - related party
|
|
|
500,000
|
|
|
—
|
Derivative warrant liabilities
|
|
|
536,300
|
|
|
14,301,100
|
Total liabilities
|
|
|
19,364,716
|
|
|
31,619,792
|
Commitments and Contingencies
|
|
|
|
|
|
|
Class A ordinary shares; 48,300,000 and no shares
subject to possible redemption at $10.09 and $10.00 per share at December 31, 2022 and 2021, respectively
|
|
|
487,168,822
|
|
|
483,000,000
|
Shareholders’ Deficit:
|
|
|
|
|
|
|
Preference shares, $0.0001 par value; 5,000,000
shares authorized; none issued and outstanding at December 31, 2022 and 2021, respectively
|
|
|
—
|
|
|
—
|
Class A ordinary shares, $0.0001 par value; 500,000,000
shares authorized at December 31, 2022 and 2021, respectively
|
|
|
—
|
|
|
—
|
Class B ordinary shares, $0.0001 par value; 50,000,000
shares authorized; 12,075,000 shares issued and outstanding at December 31, 2022 and 2021, respectively
|
|
|
1,208
|
|
|
1,208
|
Additional paid-in capital
|
|
|
—
|
|
|
—
|
Accumulated deficit
|
|
|
(19,192,693)
|
|
|
(30,899,948)
|
Total shareholders’ deficit
|
|
|
(19,191,485)
|
|
|
(30,898,740)
|
Total Liabilities, Class A Ordinary
Shares Subject to Possible Redemption and Shareholders’ Deficit
|
|
|
$487,342,053
|
|
|
$483,721,052
|
The accompanying notes are an integral part of these financial statements
TABLE OF CONTENTS
RMG ACQUISITION CORP. III
STATEMENTS OF INCOME
General and administrative expenses
|
|
|
$2,188,743
|
|
|
$1,842,337
|
Loss from operations
|
|
|
(2,188,743)
|
|
|
(1,842,337)
|
Other income (expense)
|
|
|
|
|
|
|
Change in fair value of derivative liabilities
|
|
|
13,772,685
|
|
|
9,503,810
|
Financing costs - warrant liabilities
|
|
|
—
|
|
|
(734,320)
|
Interest income
|
|
|
193
|
|
|
54
|
Interest expense
|
|
|
(7,885)
|
|
|
—
|
Unrealized gain on investments held in Trust Account
|
|
|
4,299,827
|
|
|
50,412
|
Total other income (expense)
|
|
|
18,064,820
|
|
|
8,819,956
|
Net income
|
|
|
$15,876,077
|
|
|
$6,977,619
|
Weighted average Class A ordinary shares, basic and diluted
|
|
|
48,300,000
|
|
|
43,139,178
|
Basic and diluted net income per ordinary share, Class A
|
|
|
$0.26
|
|
|
$0.13
|
Weighted average Class B ordinary shares, basic and diluted
|
|
|
12,075,000
|
|
|
11,906,712
|
Basic and diluted net income per ordinary share, Class B
|
|
|
$0.26
|
|
|
$0.13
|
The accompanying notes are an integral part of these financial statements
TABLE OF CONTENTS
RMG ACQUISITION CORP. III
STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
Balance - December 31, 2020
|
|
|
—
|
|
|
$—
|
|
|
12,075,000
|
|
|
$1,208
|
|
|
$23,792
|
|
|
$(14,779)
|
|
|
$10,221
|
Excess purchase price above fair value of private
placement warrants
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,383,265
|
|
|
—
|
|
|
1,383,265
|
Remeasurement adjustment of Class A ordinary shares
subject to possible redemption
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,407,057)
|
|
|
(37,862,788)
|
|
|
(39,269,845)
|
Net income
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6,977,619
|
|
|
6,977,619
|
Balance - December 31, 2021
|
|
|
—
|
|
|
$—
|
|
|
12,075,000
|
|
|
$1,208
|
|
|
$—
|
|
|
$(30,899,948)
|
|
|
$(30,898,740)
|
Remeasurement adjustment of Class A ordinary shares
subject to possible redemption
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4,168,822)
|
|
|
(4,168,822)
|
Net income
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
15,876,077
|
|
|
15,876,077
|
Balance - December 31, 2022
|
|
|
—
|
|
|
$—
|
|
|
12,075,000
|
|
|
$1,208
|
|
|
$—
|
|
|
$(19,192,693)
|
|
|
$(19,191,485)
|
The accompanying notes are an integral part of these financial statements
TABLE OF CONTENTS
RMG ACQUISITION CORP. III
STATEMENTS OF CASH FLOWS
Cash Flows from Operating Activities:
|
|
|
|
|
|
|
Net income
|
|
|
$15,876,077
|
|
|
$6,977,619
|
Adjustments to reconcile net income to net cash used in operating activities:
|
|
|
|
|
|
|
Change in fair value of derivative liabilities
|
|
|
(13,772,685)
|
|
|
(9,503,810)
|
Financing costs - warrant liabilities
|
|
|
—
|
|
|
734,320
|
Interest expense
|
|
|
7,885
|
|
|
—
|
Unrealized gain on investments held in Trust Account
|
|
|
(4,299,827)
|
|
|
(50,412)
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
Prepaid expenses and other assets
|
|
|
564,249
|
|
|
(604,920)
|
Accounts payable
|
|
|
80,166
|
|
|
73,405
|
Accrued expenses
|
|
|
809,558
|
|
|
20,287
|
Accrued expenses - related party
|
|
|
120,000
|
|
|
—
|
Net cash used in operating activities
|
|
|
(614,577)
|
|
|
(2,353,511)
|
Cash Flows from Investing Activities:
|
|
|
|
|
|
|
Cash deposited in Trust Account
|
|
|
—
|
|
|
(483,000,000)
|
Cash withdrawn from Trust Account
|
|
|
43,317
|
|
|
38,100
|
Net cash provided by (used in) investing activities
|
|
|
43,317
|
|
|
(482,961,900)
|
Cash Flows from Financing Activities:
|
|
|
|
|
|
|
Proceeds from note payable to related party
|
|
|
—
|
|
|
30,212
|
Repayment of note payable to related party
|
|
|
—
|
|
|
(135,000)
|
Proceeds from convertible working capital loan
|
|
|
500,000
|
|
|
—
|
Proceeds received from initial public offering, gross
|
|
|
—
|
|
|
483,000,000
|
Proceeds received from private placement
|
|
|
—
|
|
|
12,324,495
|
Offering costs paid
|
|
|
—
|
|
|
(9,810,697)
|
Net cash provided by financing activities
|
|
|
500,000
|
|
|
485,409,010
|
Net (decrease) increase in cash
|
|
|
(71,260)
|
|
|
93,599
|
Cash - beginning of the year
|
|
|
93,599
|
|
|
—
|
Cash - end of the year
|
|
|
$22,339
|
|
|
$93,599
|
Supplemental disclosure of noncash investing and financing
activities:
|
|
|
|
|
|
|
Increase in redemption value of Class A ordinary shares
subject to possible redemption
|
|
|
$4,168,822
|
|
|
$—
|
Offering costs included in accrued expenses
|
|
|
$—
|
|
|
$45,000
|
Offering costs paid by related party under promissory note
|
|
|
$—
|
|
|
$104,788
|
Deferred legal fees
|
|
|
$—
|
|
|
$250,000
|
Deferred underwriting commissions
|
|
|
$—
|
|
|
$16,905,000
|
Remeasurement of Class A ordinary shares to redemption amount
|
|
|
$—
|
|
|
$39,269,845
|
The accompanying notes are an integral part of these financial statements
TABLE OF CONTENTS
RMG Acquisition Corp. III
Notes to Financial Statements
December 31, 2022
Note 1-Description of Organization and Business Operations
RMG Acquisition Corp. III (the “Company”) is a
blank check company, also referred to as a special purpose acquisition company (“SPAC”), incorporated as a Cayman Islands exempted company on December 23, 2020. The Company was incorporated for the
purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one
or more businesses that the Company has not yet identified (“Business Combination”).
As of December 31, 2022, the Company had not yet commenced operations. All activity for
the period from December 23, 2020 (inception) through December 31, 2022 relates to the Company’s formation and the initial public offering (the “Initial Public Offering”), and identifying a target
company for an initial Business Combination, which is described below. The Company will not generate any operating revenues until after the completion of its initial Business Combination, at the earliest. The Company will generate non-operating
income in the form of interest income on cash and cash equivalents from the proceeds derived from the Initial Public Offering. The Company has selected December 31 as its fiscal year end.
The Company’s sponsor is RMG Sponsor III, LLC, a Delaware limited liability company
(the “Sponsor”). The registration statement for the Company’s Initial Public Offering was declared effective on February 4, 2021. On February 9, 2021, the Company consummated its Initial Public Offering
of 48,300,000 units (the “Units” and, with respect to the Class A ordinary shares included
in the Units being offered, the “Public Shares”), including 6,300,000 additional Units to
cover over-allotments (the “Over-Allotment Units”), at $10.00 per Unit, generating gross
proceeds of $483.0 million, and incurring offering costs of approximately $27.1 million, of which approximately $16.9 million was for deferred
underwriting commissions and $250,000 was for deferred legal fees (Note 7).
Simultaneously with the closing of the Initial Public Offering, the Company consummated
the private placement (“Private Placement”) of 8,216,330 warrants (each, a “Private Placement Warrant” and collectively, the “Private Placement Warrants”) at a price of $1.50 per Private Placement Warrant to the Sponsor, generating proceeds of approximately $12.3
million (Note 5).
Upon the closing of the Initial Public Offering and the Private Placement, $483.0 million ($10.00 per Unit) of
the net proceeds of the Initial Public Offering and certain of the proceeds of the Private Placement was placed in a trust account (“Trust Account”) with Continental Stock Transfer & Trust Company
acting as trustee and have been invested in United States government treasury bills with a maturity of 185 days or less or in money market funds investing solely in U.S. Treasuries and meeting certain conditions under Rule 2a-7 under the
Investment Company Act 1940, as amended, or the Investment Company Act, as determined by the Company, until the earlier of: (i) the completion of a Business Combination and (ii) the distribution of the Trust Account as described below.
The Company’s management has broad discretion with respect to the specific application
of the net proceeds of its Initial Public Offering and the sale of Private Placement Warrants, although substantially all of the net proceeds are intended to be applied generally toward consummating a Business Combination. The Company’s initial
Business Combination must be with one or more operating businesses or assets with a fair market value equal to at least 80% of the
net assets held in the Trust Account (excluding the deferred underwriting commissions and taxes payable on the income earned on the Trust Account) at the time the Company signs a definitive agreement in connection with the initial Business
Combination. However, the Company will only complete a Business Combination if the post-transaction company owns or acquires 50% or
more of the outstanding voting securities of the target or otherwise acquires a controlling interest in the target sufficient for it not to be required to register as an investment company under the Investment Company Act.
The Company will provide its holders of Public Shares (the “Public Shareholders”) with the opportunity to redeem all or a portion of their Public Shares upon the completion of a Business Combination either (i) in connection with a shareholder meeting called to approve the Business
Combination or (ii) by means of a tender offer. The decision as to whether the Company will seek shareholder approval of a Business Combination or conduct a tender offer will be made by the Company, solely in its discretion. The Public
Shareholders will be entitled to redeem their Public Shares for a pro rata portion of the amount then in the Trust Account (initially
TABLE OF CONTENTS
RMG Acquisition Corp. III
Notes to Financial Statements
December 31, 2022
anticipated to be $10.00 per share, plus any pro rata interest earned on the funds held in the Trust Account and not previously released to the Company to pay its tax obligations, expenses relating to the
administration of the trust account and limited withdrawals for working capital). The per-share amount to be distributed to Public Shareholders who redeem their Public Shares will not be reduced by the deferred underwriting commissions the
Company will pay to the underwriters (as discussed in Note 7). These Public Shares will be recorded at a redemption value and classified as temporary equity upon the completion of the Initial Public Offering, in accordance with the Financial
Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity” (“ASC 480”). In such case, the Company will proceed with a Business Combination if the Company has net tangible assets of at least $5,000,001
upon such consummation of a Business Combination and a majority of the shares voted are voted in favor of the Business Combination. If a shareholder vote is not required by law and the Company does not decide to hold a shareholder vote for
business or other legal reasons, the Company will, pursuant to the amended and restated memorandum and articles of association which will be adopted by the Company upon the consummation of the Initial Public Offering (the “Amended and Restated Memorandum and Articles of Association”), conduct the redemptions pursuant to the tender offer rules of the U.S. Securities and Exchange Commission (the “SEC”), and file tender offer documents with the SEC prior to completing a Business Combination. If, however, a shareholder approval of the transactions is required by law, or the Company decides to obtain shareholder approval
for business or legal reasons, the Company will offer to redeem shares in conjunction with a proxy solicitation pursuant to the proxy rules and not pursuant to the tender offer rules. Additionally, each Public Shareholder may elect to redeem
their Public Shares irrespective of whether they vote for or against the proposed transaction. If the Company seeks shareholder approval in connection with a Business Combination, the holders of the Founder Shares prior to this Initial Public
Offering (the “Initial Shareholders”) agreed to vote their Founder Shares (as defined in Note 6) and any Public Shares purchased during or after the Initial Public Offering in favor of a Business
Combination. In addition, the Initial Shareholders agreed to waive their redemption rights with respect to their Founder Shares and Public Shares in connection with the completion of a Business Combination. In addition, the Company agreed not
to enter into a definitive agreement regarding an initial Business Combination without the prior consent of the Sponsor.
Notwithstanding the foregoing, the Company’s Amended and Restated Memorandum and
Articles of Association will provide that a Public Shareholder, together with any affiliate of such shareholder or any other person with whom such shareholder is acting in concert or as a “group” (as defined under Section 13 of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”)), will be restricted from redeeming its shares with respect to more than an aggregate of 15% or more of the Class A ordinary shares sold in the Initial Public Offering, without the prior consent of the Company.
The Company’s Sponsor, executive officers and directors agreed not to propose an
amendment to the Company’s Amended and Restated Memorandum and Articles of Association that would affect the substance or timing of the Company’s obligation to provide for the redemption of its Public Shares in connection with a Business
Combination or to redeem 100% of its Public Shares if the Company does not complete a Business Combination, unless the Company
provides the Public Shareholders with the opportunity to redeem their Class A ordinary shares in conjunction with any such amendment.
If the Company is unable to complete a Business Combination by May 9, 2023 or, if the Company has entered into a definitive business combination agreement, August 9, 2023, (the “Combination
Period”), the Company will (1) cease all operations except for the purpose of winding up; (2) as promptly as reasonably possible but not more than 10 business days thereafter, redeem the Public Shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest (less
up to $100,000 of interest to pay dissolution expenses and which interest shall be net of taxes payable, expenses relating to the
administration of the trust account and limited withdrawals for working capital), divided by the number of then issued and outstanding Public Shares, which redemption will completely extinguish Public Shareholders’ rights as shareholders
(including the right to receive further liquidating distributions, if any); and (3) as promptly as
TABLE OF CONTENTS
RMG Acquisition Corp. III
Notes to Financial Statements
December 31, 2022
reasonably possible following such redemption, subject to the approval of the remaining
shareholders and the board of directors, liquidate and dissolve, subject in each case to the Company’s obligations under Cayman Islands law to provide for claims of creditors and the requirements of other applicable law (see Note 10 for
additional information).
The Initial Shareholders agreed to waive their liquidation rights with respect to the
Founder Shares if the Company fails to complete a Business Combination within the Combination Period. However, if the Initial Shareholders should acquire Public Shares in or after the Initial Public Offering, they will be entitled to
liquidating distributions from the Trust Account with respect to such Public Shares if the Company fails to complete a Business Combination within the Combination Period. The underwriters agreed to waive their rights to their deferred
underwriting commission (see Note 7) held in the Trust Account in the event the Company does not complete a Business Combination within the Combination Period and, in such event, such amounts will be included with the funds held in the Trust
Account that will be available to fund the redemption of the Company’s Public Shares. In the event of such distribution, it is possible that the per share value of the residual assets remaining available for distribution (including Trust
Account assets) will be only $10.00 per share initially held in the Trust Account. In order to protect the amounts held in the Trust
Account, the Sponsor agreed that it will be liable to the Company if and to the extent any claims by a third party for services rendered or products sold to the Company, or a prospective target business with which the Company has entered into a
written letter of intent, confidentiality or other similar agreement or business combination agreement, reduce the amount of funds in the Trust Account to below the lesser of (i) $10.00 per Public Share and (ii) the actual amount per Public Share held in the Trust Account as of the date of the liquidation of the Trust Account, if less than $10.00 per share due to
reductions in the value of the trust assets, less taxes payable, expenses relating to the administration of the trust account and limited withdrawals for working capital, provided that such liability will not apply to any claims by a third
party or prospective target business who executed a waiver of any and all rights to the monies held in the Trust Account (whether or not such waiver is enforceable) nor will it apply to any claims under the Company’s indemnity of the
underwriters of the Initial Public Offering against certain liabilities, including liabilities under the Securities Act of 1933, as amended (the “Securities Act”). In the event that an executed waiver is
deemed to be unenforceable against a third party, the Sponsor will not be responsible to the extent of any liability for such third-party claims. The Company will seek to reduce the possibility that the Sponsor will have to indemnify the Trust
Account due to claims of creditors by endeavoring to have vendors, service providers (except the Company’s independent registered public accounting firm), prospective target businesses or other entities with which the Company does business,
execute agreements with the Company waiving any right, title, interest or claim of any kind in or to monies held in the Trust Account.
Going Concern
As of December 31, 2022, the Company had approximately $22,000 in its operating bank account and a working capital deficit of approximately $1.1 million. Further, the Company has incurred and expects to continue to incur significant costs in pursuit of its financing and acquisition plans. These factors, among others, raise
substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the financial statements are issued.
The Company’s liquidity needs to date have been satisfied through a payment of $25,000 from Sponsor to cover certain expenses in exchange for the issuance of the Founder Shares (as defined in Note 4), the loan of $135,000 from the Sponsor pursuant to the Note (as defined in Note 4), and the proceeds from the consummation of the Private Placement not held in
the Trust Account. The Company fully repaid the Note on February 12, 2021. In addition, in order to finance transaction costs in connection with a Business Combination, the Sponsor or an affiliate of the Sponsor, or certain of the Company’s
officers and directors may provide the Company Working Capital Loans (as defined in Note 4). As of December 31, 2022 and 2021, there was $500,000
and $0, respectively, outstanding under any Working Capital Loan.
In connection with the Company’s assessment of going concern considerations in
accordance with FASB ASC Topic 205-40, “Presentation of Financial Statements-Going Concern,” management has determined that the working capital deficit and the mandatory liquidation date and subsequent dissolution raises substantial doubt about
the Company’s ability to continue as a going concern. If the Company is unable to complete a business
TABLE OF CONTENTS
RMG Acquisition Corp. III
Notes to Financial Statements
December 31, 2022
combination by May 9, 2023 (unless such a period is extended as described herein), then
the Company will cease all operations except for the purpose of liquidating. No adjustments have been made to the carrying amounts of assets or liabilities should we be required to liquidate after May 9, 2023 or, if we have entered into a
definitive business combination agreement, August 9, 2023. The financial statements do not include any adjustment that might be necessary if the Company is unable to continue as a going concern.
Note 2-Summary of Significant Accounting Policies
Basis of Presentation
The accompanying financial statements are presented in U.S. dollars in conformity with
accounting principles generally accepted in the United States of America (“GAAP”) for financial information and pursuant to the rules and regulations of the SEC and include all adjustments necessary for
the fair presentation of the Company’s financial position for the periods presented.
Emerging Growth Company
The Company is an “emerging growth company,” as defined in Section 2(a) of the
Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to
other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the independent registered public accounting firm attestation requirements of Section 404 of the Sarbanes-Oxley Act,
reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any
golden parachute payments not previously approved.
Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being
required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the
Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that an emerging growth company can elect to opt out of the extended transition period and comply with the requirements that
apply to non-emerging growth companies but any such an election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period, which means that when a standard is issued or revised and it has different
application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s
financial statement with another public company that is neither an emerging growth company nor an emerging growth company that has opted out of using the extended transition period difficult or impossible because of the potential differences in
accounting standards used.
Concentration of Credit Risk
Financial instruments that potentially subject the Company to concentrations of credit
risk consist of cash accounts in a financial institution, which, at times, may exceed the Federal Depository Insurance Coverage limit of $250,000.
As of December 31, 2022 and 2021, the Company has not experienced losses on these accounts and management believes the Company is not exposed to significant risks on such accounts.
Cash and Cash Equivalents
The Company considers all short-term investments with an original maturity of three
months or less when purchased to be cash equivalents. The Company had no cash equivalents as of December 31, 2022 and 2021.
Investments Held in Trust Account
The Company’s portfolio of investments is comprised of U.S. government securities,
within the meaning set forth in Section 2(a)(16) of the Investment Company Act, with a maturity of 185 days or less, or investments in money market funds that invest in U.S. government securities and generally have a readily determinable fair
TABLE OF CONTENTS
RMG Acquisition Corp. III
Notes to Financial Statements
December 31, 2022
value, or a combination thereof. When the Company’s investments held in the Trust
Account are comprised of U.S. government securities, the investments are classified as trading securities. When the Company’s investments held in the Trust Account are comprised of money market funds, the investments are recognized at fair
value. Trading securities and investments in money market funds are presented on the balance sheets at fair value at the end of each reporting period. Gains and losses resulting from the change in fair value of these securities is included in
unrealized gain on investments held in Trust Account in the accompanying statements of operations. The estimated fair values of investments held in the Trust Account are determined using available market information, other than for investments
in open-ended money market funds with published daily net asset values (“NAV”), in which case the Company uses NAV as a practical expedient to fair value. The NAV on these investments is typically held
constant at $1.00 per unit. The Trust Account may also contain balances of cash as result of investment activity.
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires the
Company’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statement. Making estimates requires management
to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the financial statement, which management considered in
formulating its estimate, could change in the near term due to one or more future confirming events. Accordingly, the actual results could differ significantly from those estimates.
Fair Value of Financial Instruments
The fair value of the Company’s assets and liabilities, which qualify as financial
instruments under the FASB ASC Topic 820, “Fair Value Measurements,” approximates the carrying amounts represented in the balance sheet.
Fair Value Measurements
Fair value is defined as the price that would be received for sale of an asset or paid
for transfer of a liability, in an orderly transaction between market participants at the measurement date. GAAP establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. The hierarchy gives the
highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). These tiers include:
•
|
Level 1, defined as observable inputs such as quoted prices for identical instruments in active markets;
|
•
|
Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as
quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and
|
•
|
Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its
own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.
|
In some circumstances, the inputs used to measure fair value might be categorized
within different levels of the fair value hierarchy. In those instances, the fair value measurement is categorized in its entirety in the fair value hierarchy based on the lowest level input that is significant to the fair value measurement.
Working Capital Loan Option
On January 19, 2022, the Sponsor agreed to loan the Company up to $500,000 to be used for a portion of the expenses of the Company. The note is due upon consummation of our Business Combination, without interest. At
the option of the Sponsor, the outstanding principle of $500,000 may be converted into that number of warrants (“Conversion Warrants”) equal to the outstanding principle of the note divided by $1.50. The
option (“Working
TABLE OF CONTENTS
RMG Acquisition Corp. III
Notes to Financial Statements
December 31, 2022
Capital Loan Option”) to convert the working
capital loans into warrants qualifies as an embedded derivative under ASC 815 and is required to be recognized at fair value with subsequent changes in fair value recognized in Company’s statements of operations each reporting period until the
loan is repaid or converted. As of December 31, 2022, the fair value of the Working Capital Loan Option was $500,000, see Note 9.
Derivative Warrant Liabilities
The Company does not use derivative instruments to hedge exposures to cash flow,
market, or foreign currency risks. The Company evaluates all of its financial instruments, including issued share purchase warrants, to determine if such instruments are derivatives or contain features that qualify as embedded derivatives,
pursuant to FASB ASC Topic 480 and ASC Topic 815, “Derivatives and Hedging” (“ASC 815”). The classification of derivative instruments, including whether such instruments should be recorded as liabilities
or as equity, is re-assessed at the end of each reporting period.
The warrants issued in the Initial Public Offering (the “Public Warrants”) and the Private Placement Warrants are recognized as derivative liabilities in accordance with ASC 815. Accordingly, the Company recognizes the warrant instruments as liabilities at fair value and adjust the
instruments to fair value at each reporting period. The liabilities are subject to remeasurement at each balance sheet date until exercised, and any change in fair value is recognized in the Company’s statement of operations. The fair value of
warrants issued in connection with the Initial Public Offering and Private Placement were initially measured at fair value using a Monte Carlo simulation model and subsequently, the fair value of the Private Placement warrants have been
estimated using a Monte Carlo simulation model each measurement date. The fair value of Warrants issued in connection with our Initial Public Offering have subsequently been measured based on the listed market price of such warrants.
Offering Costs Associated with the Initial Public
Offering
Offering costs consisted of legal, accounting, underwriting and other costs incurred in
connection with the Initial Public Offering that were directly related to the Initial Public Offering. Offering costs were allocated to the separable financial instruments issued in the Initial Public Offering based on a relative fair value
basis, compared to total proceeds received. Offering costs associated with derivative warrant liabilities were expensed as incurred and presented as non-operating expenses in the statements of operations. Offering costs associated with the
issuance of the Class A ordinary shares were charged against the carrying value of the Class A ordinary shares subject to possible redemption upon the completion of the Initial Public Offering. The Company classifies deferred underwriting
commissions as non-current liabilities as their liquidation is not reasonably expected to require the use of current assets or require the creation of current liabilities.
Class A Ordinary Shares Subject to Possible
Redemption
The Company accounts for its Class A ordinary shares subject to possible redemption in
accordance with ASC 480. Class A ordinary shares subject to mandatory redemption (if any) are classified as liability instruments and are measured at fair value. Conditionally redeemable Class A ordinary shares (including Class A ordinary
shares that feature redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control) are classified as temporary equity. At all other
times, Class A ordinary shares are classified as shareholders’ equity. The Company’s Class A ordinary shares feature certain redemption rights that are considered to be outside of the Company’s control and subject to the occurrence of uncertain
future events. Accordingly, as of December 31, 2022 and 2021, 48,300,000 Class A ordinary shares subject to possible redemption
are presented at redemption value as temporary equity, outside of the shareholders’ equity section of the Company’s balance sheet.
Effective with the closing of the Initial Public Offering, the Company recognized the
accretion from initial book value to redemption amount, which resulted in charges against additional paid-in capital (to the extent available) and accumulated deficit.
Income Taxes
The Company complies with the accounting and reporting requirements of ASC Topic 740,
“Income Taxes” (“ASC 740”), which requires an asset and liability approach to financial accounting and reporting for income
TABLE OF CONTENTS
RMG Acquisition Corp. III
Notes to Financial Statements
December 31, 2022
taxes. Deferred income tax assets and liabilities are computed for differences between
the financial statement and tax bases of assets and liabilities that will result in future taxable or deductible amounts, based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable
income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.
ASC 740 prescribes a recognition threshold and a measurement attribute for the
financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing
authorities. The Company’s management determined that the Cayman Islands is the Company’s only major tax jurisdiction. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. There were
no unrecognized tax benefits and no amounts accrued for interest and penalties as of December 31, 2022 and 2021. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material
deviation from its position.
There is currently no taxation imposed on income by the Government of the Cayman
Islands. In accordance with Cayman federal income tax regulations, income taxes are not levied on the Company. Consequently, income taxes are not reflected in the Company’s financial statement. The Company’s management does not expect that the
total amount of unrecognized tax benefits will materially change over the next twelve months.
Net Income per Ordinary Share
The Company has two classes of shares issued and outstanding: Class A ordinary shares
and Class B ordinary shares. Income and losses are shared pro rata between the two classes of shares. Net income per ordinary share is computed by dividing net income by the weighted-average number of ordinary shares outstanding during the
periods. The Company has not considered the effect of the warrants sold in the Initial Public Offering and the Private Placement to purchase an aggregate of 17,876,330, of the Company’s Class A ordinary shares in the calculation of diluted net income per share, because their exercise is contingent upon future events and their exercise is contingent upon future
events. As a result, diluted net income per share is the same as basic net income per share for the years ended December 31, 2022 and 2021. Accretion associated with the Class A ordinary shares subject to possible redemption is excluded from
earnings per share, as the redemption value approximates fair value.
The following table presents a reconciliation of the numerator and denominator used to
compute basic and diluted net income per share for each ordinary share class:
Basic and diluted net income per common share:
|
|
|
|
|
|
|
|
|
|
|
|
|
Numerator:
|
|
|
|
|
|
|
|
|
|
|
|
|
Allocation of net income (loss)
|
|
|
$12,700,862
|
|
|
$3,175,215
|
|
|
$5,468,324
|
|
|
$1,509,295
|
Denominator:
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted weighted average common shares
outstanding
|
|
|
48,300,000
|
|
|
12,075,000
|
|
|
43,139,178
|
|
|
11,906,712
|
Basic and diluted net income per common share
|
|
|
$0.26
|
|
|
$0.26
|
|
|
$0.13
|
|
|
$0.13
|
Recent Accounting Pronouncements
The Company’s management does not believe there are any recently issued, but not yet
effective, accounting pronouncements if currently adopted would have a material effect on the Company’s financial statements.
TABLE OF CONTENTS
RMG Acquisition Corp. III
Notes to Financial Statements
December 31, 2022
Note 3-Initial Public Offering
On February 9, 2021, the Company consummated its Initial Public Offering of 48,300,000 Units, including 6,300,000
Over-Allotment Units, at $10.00 per Unit, generating gross proceeds of $483.0 million, and incurring offering costs of approximately $27.1 million,
of which approximately $16.9 million was for deferred underwriting commissions and $250,000 was for deferred legal fees. Each Unit consists of one
Class A ordinary share and one-fifth of one redeemable warrant (“Public Warrant”). Each
whole Public Warrant will entitle the holder to purchase one Class A ordinary share at an exercise price of $11.50 per share, subject to adjustment (see Note 9).
Note 4-Related Party Transactions
Founder Shares
In December 2020, the Sponsor paid an aggregate of $25,000 to cover certain expenses on behalf of the Company in exchange for issuance of 10,062,500 ordinary shares (the “Founder Shares”). On January 30, 2021, the Company effectuated a 5-for-6 share split of the Class B ordinary shares, resulting in an aggregate outstanding amount of 12,075,000 Class B ordinary shares. The holders of the Founder Shares agreed to forfeit up to an aggregate of 1,575,000 Founder Shares, on a pro rata basis, to the extent that the option to purchase additional units was not exercised in full by the underwriters, so that the Founder
Shares would represent 20% of the Company’s issued and outstanding shares after the Initial Public Offering. The underwriter
exercised its over-allotment option in full on February 9, 2021; thus, the 1,575,000 Founder Shares were no longer subject to
forfeiture.
The Initial Shareholders agreed not to transfer, assign or sell any of their Founder
Shares until the earlier to occur of (1) one year after the completion of the initial Business Combination; and (2) subsequent to the initial Business Combination (x) if the last reported sale price of Class A ordinary shares equals or exceeds
$12.00 per share (as adjusted for share sub-divisions, share dividends, rights issuances, consolidations, reorganizations,
recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after the
initial Business Combination or (y) the date on which the Company completes a liquidation, merger, amalgamation, share exchange, reorganization or other similar transaction that results in all of the Public Shareholders having the right to
exchange their ordinary shares for cash, securities or other property.
Private Placement Warrants
Simultaneously with the closing of the Initial Public Offering, the Company consummated
the Private Placement of 8,216,330 Private Placement Warrants at a price of $1.50 per Private Placement Warrant to the Sponsor, generating proceeds of approximately $12.3 million.
Each whole Private Placement Warrant is exercisable for one whole share of Class A
ordinary shares at a price of $11.50 per share. A portion of the proceeds from the sale of the Private Placement Warrants to the
Sponsor was added to the proceeds from the Initial Public Offering held in the Trust Account. If the Company does not complete a Business Combination within the Combination Period, the Private Placement Warrants will expire worthless. The
Private Placement Warrants will be non-redeemable for cash and exercisable on a cashless basis so long as they are held by the Sponsor or its permitted transferees.
The Sponsor and the Company’s officers and directors agreed, subject to limited
exceptions, not to transfer, assign or sell any of their Private Placement Warrants until 30 days after the completion of the
initial Business Combination.
Related Party Loans
In order to finance transaction costs in connection with a Business Combination, the
Sponsor, members of the Company’s founding team or any of their affiliates may, but are not obligated to, loan the Company funds as may be required (“Working Capital Loans”). If the Company completes a
Business Combination, the Company would repay the Working Capital Loans out of the proceeds of the Trust Account released to the Company. Otherwise, the Working Capital Loans would be repaid only out of funds held outside the Trust Account. In
the
TABLE OF CONTENTS
RMG Acquisition Corp. III
Notes to Financial Statements
December 31, 2022
event that a Business Combination does not close, the Company may use a portion of
proceeds held outside the Trust Account to repay the Working Capital Loans but no proceeds held in the Trust Account would be used to repay the Working Capital Loans. The Working Capital Loans would either be repaid upon consummation of a
Business Combination, without interest, or, at the lenders’ discretion, up to $1,500,000 of such Working Capital Loans may be
convertible into warrants of the post-Business Combination entity at a price of $1.50 per warrant. The warrants would be identical to
the Private Placement Warrants.
On December 30, 2020, the Sponsor agreed to loan the Company up to $300,000 to be used for the payment of costs related to the Initial Public Offering pursuant to a promissory note (the “Note”). The Note was non-interest bearing, unsecured and due upon the closing of the Initial Public Offering. The Company repaid the Note balance in full on February 12, 2021.
On January 19, 2022, the Sponsor agreed to loan the Company up to $500,000 to be used for a portion of the expenses of the Company. As of December 31, 2022, an aggregate of $500,000 had been funded under the loan agreement. At the option of the Sponsor, the outstanding principle of $500,000 may be converted into Conversion Warrants equal to the
outstanding principle of the note divided by $1.50. Upon funding of the loan, the Company recognized the initial fair value of the
Working Capital Loan Option of approximately $7,900 as a debt discount, which is classified as a component of the working capital
loan and amortized to interest expense over the expected term of the loan. For the year ended December 31, 2022, the Company amortized approximately $8,000,
of the debt discount, classified as interest expense in the accompanying statements of operations.
On July 27, 2022, the Sponsor agreed to loan the Company up to $475,000 pursuant to an unsecured, non-interest bearing promissory note (the “July 2022 Note”). The July
2022 Note is due upon the consummation of the Company’s Business Combination. In the event that a Business Combination does not close, the Company may use a portion of proceeds held outside the Trust Account to repay the July 2022 Note, but no
proceeds held in the Trust Account would be used to repay the July 2022 Note. The July 2022 Note will either be repaid in cash upon consummation of a Business Combination or, at the Sponsor’s discretion, up to $1,500,000 of the unpaid principal of the July 2022 Note may be converted into warrants of the post-Business Combination entity at a price of $1.50 per warrant. The warrants will be identical to the Private Placement Warrants. As of December 31, 2022, the Company had not borrowed any amount under this loan.
As of December 31, 2022, the Company had $500,000 in borrowings outstanding under the Working Capital Loans. As of December 31, 2022, the carrying value and the principal value of the loan was $500,000.
Administrative Services Agreement
Commencing on the effective date of the Registration Statement, the Company agreed to
pay an affiliate of the Sponsor a total of $20,000 per month for office space, administrative and support services (including
salaries). Upon the Company’s liquidation, the Company will cease paying these monthly fees. Upon completion of the Initial Business Combination, the Company will pay to such affiliate an amount equal to $20,000 multiplied by the number of whole months that have elapsed between the date of the completion of the Initial Business Combination and the
closing of the Initial Public Offering. The Company incurred approximately $240,000 and $220,000 in expenses in connection with such services during the year ended December 31, 2022 and 2021, respectively, as reflected in the accompanying statements of
operations. The Company had $120,000 and $0 included in accrued expenses-related party in connection with such services as of December 31, 2022 and 2021, respectively.
The Sponsor, officers and directors, or any of their respective affiliates, will be
reimbursed for any out-of-pocket expenses incurred in connection with activities on the Company’s behalf such as identifying potential target businesses and performing due diligence on suitable business combinations. The audit committee will
review on a quarterly basis all payments that were made by us to the Sponsor, directors, officers or the Company’s or any of their respective affiliates.
In December 2022, the Company engaged a capital market advisor to assist with the
completion of the business combination. The Company agreed to pay the advisor $500,000 in cash and $250,000 paid in equivalent dollar
TABLE OF CONTENTS
RMG Acquisition Corp. III
Notes to Financial Statements
December 31, 2022
amount in common stock, solely in the event that the Company completes its Business
Combination. As of December 31, 2022, the Company determined that a Business Combination is not considered probable. If the fee is determined to be a transaction cost for the Business Combination then the amount payable to the advisor may be
accounted for as an expense in the period the liability is recorded.
Note 5-Commitments & Contingencies
Registration and Shareholder Rights Agreement
The holders of the Founder Shares, Private Placement Warrants and any warrants that may
be issued upon conversion of Working Capital Loans (and any Class A ordinary shares issuable upon the exercise of the Private Placement Warrants or warrants issued upon conversion of the Working Capital Loans and upon conversion of the Founder
Shares) were entitled to registration rights pursuant to a registration and shareholder rights agreement signed upon the effective date of the Initial Public Offering. The holders of these securities were entitled to make up to three demands,
excluding short form demands, that the Company registers such securities. In addition, the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent to the completion of the initial Business
Combination. The Company will bear the expenses incurred in connection with the filing of any such registration statements.
Underwriting Agreement
The Company granted the underwriters a 45-day option from the date of this prospectus to purchase up to 6,300,000
additional Units at the Initial Public Offering price less the underwriting discounts and commissions. The underwriter exercised its over-allotment option in full on February 9, 2021.
The underwriters were entitled to an underwriting discount of $0.20 per unit, or approximately $9.7
million in the aggregate, paid upon the closing of the Initial Public Offering. In addition, $0.35 per unit, or approximately $16.9 million in the aggregate will be payable to the underwriters for deferred underwriting commissions. The deferred fee will become payable to
the underwriters from the amounts held in the Trust Account solely in the event that the Company completes a Business Combination, subject to the terms of the underwriting agreement.
Risks and Uncertainties
Management continues to evaluate the impact of COVID-19 and has concluded that while it
is reasonably possible that the virus could have a negative effect on the Company’s financial position, results of its operations, and/or search for a target company, the specific impact is not readily determinable as of the date of these
financial statements. These financial statements do not include any adjustments that might result from the outcome of this uncertainty.
In February 2022, the Russian Federation and Belarus commenced a military action with
the country of Ukraine. As a result of this action, various nations, including the United States, have instituted economic sanctions against the Russian Federation and Belarus. Further, the impact of this action and related sanctions on the
world economy are not determinable as of the date of these financial statements and the specific impact on the Company’s financial condition, results of operations, and cash flows is also not determinable as of the date of these financial
statements.
Note 6-Class A Ordinary Shares Subject to Possible Redemption
The Company’s Class A ordinary shares feature certain redemption rights that are
considered to be outside of the Company’s control and subject to the occurrence of future events. The Company is authorized to issue 500,000,000
Class A ordinary shares with a par value of $0.0001 per share. As of December 31, 2022 and 2021, there were 48,300,000 Class A ordinary shares issued and outstanding, which were all subject to possible redemption and are classified outside of permanent
equity in the balance sheets.
TABLE OF CONTENTS
RMG Acquisition Corp. III
Notes to Financial Statements
December 31, 2022
The Class A ordinary shares issued in the Initial Public Offering were recognized in
Class A ordinary shares subject to possible redemption as follows:
Gross Proceeds
|
|
|
$483,000,000
|
Less:
|
|
|
|
Offering costs allocated to Class A shares subject to possible redemption
|
|
|
(26,406,165)
|
Proceeds allocated to Public Warrants at issuance
|
|
|
(12,863,680)
|
Plus:
|
|
|
|
Accrection on Class A ordinary shares subject to possible redemption amount
|
|
|
39,269,845
|
Class A ordinary shares subject to possible redemption at December 31, 2021
|
|
|
483,000,000
|
Increase in redemption value of Class A ordinary shares subject to possible
redem
|
|
|
4,168,822
|
Class A ordinary shares subject to possible redemption at
December 31, 2022
|
|
|
$487,168,822
|
Note 7-Shareholders’ Equity
Preference Shares - The Company is authorized to issue 5,000,000 preference shares with a par value of $0.0001 per share. At December 31, 2022 and 2021, there were no preference shares issued or outstanding.
Class A Ordinary Shares - The Company is authorized to issue 500,000,000 Class A ordinary shares with
a par value of $0.0001 per share. Holders of the Company’s Class A ordinary shares are entitled to one vote for each share. At December 31, 2022 and 2021, there were 48,300,000 shares issued and outstanding, all of which are subject to possible redemption and have been classified as temporary equity (see Note 7).
Class B Ordinary Shares - The Company is authorized to issue 50,000,000 Class B ordinary shares with a
par value of $0.0001 per share. On February 9, 2021, 10,062,500 Class B ordinary shares were issued and outstanding. On January 30, 2021, the Company effectuated a 5-for-6 stock split of the Class B ordinary shares, resulting in an aggregate outstanding amount of 12,075,000 Class B ordinary shares. Of the 12,075,000
Class B ordinary shares outstanding, 1,575,000 Class B ordinary shares were subject to forfeiture, to the Company by the Initial
Shareholders for no consideration to the extent that the underwriters’ over-allotment option was not exercised in full or in part, so that the Initial Shareholders would collectively own 20% of the Company’s issued and outstanding ordinary shares after the Initial Public Offering. As of December 31, 2022 and 2021, there were 12,075,000 Class B ordinary shares issued and outstanding.
Only holders of Class B ordinary shares will have the right to vote on the election of
directors prior to the initial Business Combination. Holders of the Class A ordinary shares and holders of the Class B ordinary shares will vote together as a single class on all other matters submitted to a vote of the shareholders, except as
required by law. Each ordinary share will have one vote on all such matters.
The Class B ordinary shares will automatically convert into Class A ordinary shares at
the time of the initial business Combination, or earlier at the option of the holder, on a one-for-one basis, subject to adjustment for share sub-divisions, share dividends, rights issuances, consolidations, reorganizations, recapitalizations
and the like, and subject to further adjustment as provided herein. In the case that additional Class A ordinary shares, or equity-linked securities, are issued or deemed issued in excess of the amounts issued in the Initial Public Offering and
related to the closing of the initial Business Combination, the ratio at which the Class B ordinary shares will convert into Class A ordinary shares will be adjusted (unless the holders of a majority of the issued and outstanding Class B
ordinary shares agree to waive such anti-dilution adjustment with respect to any such issuance or deemed issuance) so that the number of Class A ordinary shares issuable upon conversion of all Class B ordinary shares will equal, in the
aggregate, on an as-converted basis, 20% of the sum of all ordinary shares issued and outstanding upon the completion of the Initial
Public Offering plus all Class A ordinary shares and equity-linked securities issued or deemed issued in connection with the initial Business Combination, excluding any shares or equity-linked securities issued, or to be issued, to any seller
in the initial Business Combination. In no event will the Class B ordinary shares convert into Class A ordinary shares at a rate of less than one to one.
TABLE OF CONTENTS
RMG Acquisition Corp. III
Notes to Financial Statements
December 31, 2022
Note 8-Derivative Warrant Liabilities
As of December 31, 2022 and 2021, the Company had 9,660,000 and 8,216,330 Public
Warrants and Private Placement Warrants, respectively, outstanding. As of December 31, 2020, the Company did not have any Public
Warrants or Private Placement Warrants outstanding. Public Warrants may only be exercised for a whole number of shares. No fractional Public Warrants will be issued upon separation of the Units and only whole Public Warrants will trade. The
Public Warrants will become exercisable on the later of (a) 30 days after the completion of a Business Combination or (b) 12 months from the closing of the Initial Public Offering; provided in each case that the Company has an effective registration statement under the
Securities Act covering the issuance of the Class A ordinary shares issuable upon exercise of the warrants and a current prospectus relating to them is available and such shares are registered, qualified or exempt from registration under the
securities, or blue sky, laws of the state of residence of the holder (or the Company permits holders to exercise their warrants on a cashless basis under the circumstances specified in the warrant agreement). The Company agreed that as soon as
practicable, but in no event later than 20 business days after the closing of the initial Business Combination, the Company will use
its commercially reasonable efforts to file with the SEC a registration statement covering the issuance of the Class A ordinary shares issuable upon exercise of the warrants, and the Company will use its commercially reasonable efforts to cause
the same to become effective within 60 business days after the closing of the initial Business Combination and to maintain the
effectiveness of such registration statement and a current prospectus relating to those Class A ordinary shares until the warrants expire or are redeemed; provided that if the Class A ordinary shares are at the time of any exercise of a warrant
not listed on a national securities exchange such that they satisfy the definition of a “covered security” under Section 18(b)(1) of the Securities Act, the Company may, at its option, requires holders of Public Warrants who exercise their
warrants to do so on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act and, in the event the Company so elects, it will not be required to file or maintain in effect a registration statement.
The warrants have an exercise price of $11.50 per share, subject to adjustments, and will expire five years
after the completion of a Business Combination or earlier upon redemption or liquidation. In addition, if (x) the Company The warrants have an exercise price of $11.50 per share, subject to adjustments, and will expire five years after the
completion of a Business Combination or earlier upon redemption or liquidation. In addition, if (x) the Company issues additional Class A ordinary shares or equity-linked securities for capital raising purposes in connection with the closing of
the initial Business Combination at an issue price or effective issue price of less than $9.20 per ordinary share (with such issue
price or effective issue price to be determined in good faith by the board of directors and, in the case of any such issuance to the Sponsor or its affiliates, without taking into account any Founder Shares held by the Sponsor or such
affiliates, as applicable, prior to such issuance) (the “Newly Issued Price”), (y) the aggregate gross proceeds from such issuances represent more than 60% of the total equity proceeds, and interest thereon, available for the funding of the initial Business Combination on the date of the consummation of the initial
Business Combination (net of redemptions), and (z) the volume weighted average trading price of Class A ordinary shares during the 20
trading day period starting on the trading day prior to the day on which the Company consummates its initial Business Combination (such price, the “Market Value”) is below $9.20 per share, the exercise price of the warrants will be adjusted (to the nearest cent) to be equal to 115% of the higher of the Market Value and the Newly Issued Price, the $18.00
per share redemption trigger price described under “Redemption of warrants for cash when the price per Class A ordinary share equals or exceeds $18.00” and “Redemption of warrants for Class A ordinary shares when the price per Class A ordinary
share equals or exceeds $10.00” will be adjusted (to the nearest cent) to be equal to 180% of the higher of the Market Value and the
Newly Issued Price, and the $10.00 per share redemption trigger price described under the caption “Redemption of warrants when the
price per Class A ordinary share equals or exceeds $10.00” will be adjusted (to the nearest cent) to be equal to the higher of the Market Value and the Newly Issued Price.
The Private Placement Warrants are identical to the Public Warrants underlying the
Units sold in the Initial Public Offering, except that the Private Placement Warrants and the Class A ordinary shares issuable upon exercise of the Private Placement Warrants will not be transferable, assignable or salable until 30 days after the completion of a Business Combination, subject to certain limited exceptions. Additionally, the Private Placement
TABLE OF CONTENTS
RMG Acquisition Corp. III
Notes to Financial Statements
December 31, 2022
Warrants will be non-redeemable so long as they are held by the initial purchasers or
such purchasers’ permitted transferees. If the Private Placement Warrants are held by someone other than the Initial Shareholders or their permitted transferees, the Private Placement Warrants will be redeemable by the Company and exercisable
by such holders on the same basis as the Public Warrants.
Redemption of warrants for cash when the price per Class A ordinary
share equals or exceeds $18.00:
Once the warrants become exercisable, the Company may redeem the outstanding warrants
(except as described herein with respect to the Private Placement Warrants):
•
|
in whole and not in part;
|
•
|
at a price of $0.01
per warrant;
|
•
|
upon not less than 30 days’
prior written notice of redemption to each warrant holder; and
|
•
|
if, and only if, the last reported sale price (the “closing price”) of Class A ordinary shares equals or exceeds $18.00 per share (as adjusted) for any 20
trading days within a 30-trading day period ending on the third trading day prior to the date on which the Company sends the
notice of redemption to the warrant holders.
|
The Company will not redeem the warrants as described above unless a registration
statement under the Securities Act covering the issuance of the Class A ordinary shares issuable upon exercise of the warrants is then effective and a current prospectus relating to those Class A ordinary shares is available throughout the 30-day redemption period. If and when the warrants become redeemable by the Company, it may exercise its redemption right even if the company is
unable to register or qualify the underlying securities for sale under all applicable state securities laws.
Redemption of warrants for Class A ordinary shares when the price per
Class A ordinary share equals or exceeds $10.00:
Once the warrants become exercisable, the Company may redeem the outstanding warrants:
•
|
in whole and not in part;
|
•
|
at $0.10 per
warrant upon a minimum of 30 days’ prior written notice of redemption provided that
holders will be able to exercise their warrants on a cashless basis prior to redemption and receive that number of shares determined by reference to an agreed table based on the redemption date and the “fair market value” of Class A
ordinary shares;
|
•
|
if, and only if, the closing price of Class A ordinary shares equals or exceeds $10.00 per Public Share (as adjusted) for any 20
trading days within the 30 - trading day period ending three trading days before the Company sends the notice of redemption
to the warrant holders; and
|
•
|
if the closing price of the Class A ordinary shares for any 20 trading days within a 30-trading day period
ending on the third trading day prior to the date on which the Company sends the notice of redemption to the warrant holders is less than $18.00
per share (as adjusted), the Private Placement Warrants must also be concurrently called for redemption on the same terms as the outstanding Public Warrants, as described above.
|
The “fair market value” of Class A ordinary shares shall mean the average reported last
sale price of Class A ordinary shares for the 10 trading days ending on the third trading day prior to the date on which the notice
of redemption is sent to the holders of warrants.
In no event will the Company be required to net cash settle any warrant. If the Company
is unable to complete a Business Combination within the Combination Period and the Company liquidates the funds held in the Trust Account, holders of warrants will not receive any of such funds with respect to their warrants, nor will they
receive any distribution from the Company’s assets held outside of the Trust Account with the respect to such warrants. Accordingly, the warrants may expire worthless.
TABLE OF CONTENTS
RMG Acquisition Corp. III
Notes to Financial Statements
December 31, 2022
Note 9-Fair Value Measurements
The following table presents information about the Company’s assets and liabilities
that are measured at fair value on a recurring basis as of December 31, 2022 and 2021 and indicates the fair value hierarchy of the valuation techniques that the Company utilized to determine such fair value.
DECEMBER 31, 2022
Assets:
|
|
|
|
|
|
|
|
|
|
Investments held in Trust Account - Money Market Funds
|
|
|
$487,268,822
|
|
|
$—
|
|
|
$—
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
Derivative liabilities - Public Warrants
|
|
|
$289,800
|
|
|
$—
|
|
|
$—
|
Derivative liabilities - Private Warrants
|
|
|
$—
|
|
|
$—
|
|
|
$246,500
|
DECEMBER 31, 2021
Assets:
|
|
|
|
|
|
|
|
|
|
Investments held in Trust Account - U.S. Treasury Securities
|
|
|
$483,012,312
|
|
|
$—
|
|
|
$—
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
Derivative liabilities - Public Warrants
|
|
|
$7,728,000
|
|
|
$—
|
|
|
$—
|
Derivative liabilities - Private Warrants
|
|
|
$—
|
|
|
$—
|
|
|
$6,573,100
|
Transfers to/from Levels 1, 2, and 3 are recognized at the beginning of the reporting
period. The estimated fair value of the Public Warrants transferred from a Level 3 measurement to a Level 1 fair value measurement in March 2021, upon trading of the Public Warrants in an active market. There were no other transfers between levels for the years ended December 31, 2022 and 2021.
Level 1 assets include investments in money market funds and U.S. Treasury securities.
The Company uses inputs such as actual trade data, benchmark yields, quoted market prices from dealers or brokers, and other similar sources to determine the fair value of its investments.
The fair value of the Public Warrants issued in connection with the Public Offering and
Private Placement Warrants were initially measured at fair value using a Monte Carlo simulation model and subsequently, the fair value of the Private Placement Warrants have been estimated using a Monte Carlo simulation model each measurement
date. For the years ended December 31, 2022 and 2021, the Company recognized a change to the statement of operations resulting from a decrease in the fair value of liabilities of approximately $13.8 million and $9.5 million, respectively, presented as
change in fair value of derivative warrant liabilities on the accompanying statement of operations.
The estimated fair value of the Private Placement Warrants, and the Public Warrants
prior to being separately listed and traded, is determined using Level 3 inputs. Inherent in a Monte Carlo simulation are assumptions related to expected share-price volatility, expected life, risk-free interest rate and dividend yield. The
Company estimates the volatility for its Private Placement Warrants based on the implied volatility from the Company’s traded warrants and from historical volatility of select peer companies ordinary shares that matches the expected remaining
life of the warrants. The risk-free interest rate is based on the U.S. Treasury zero-coupon yield curve on the grant date for a maturity similar to the expected remaining life of the warrants. The expected life of the warrants is assumed to be
equivalent to their remaining contractual term. The dividend rate is based on the historical rate, which the Company anticipates remaining at zero.
TABLE OF CONTENTS
RMG Acquisition Corp. III
Notes to Financial Statements
December 31, 2022
The following table provides quantitative information regarding Level 3 fair value
measurements inputs at their measurement dates:
Private Warrants
Stock price
|
|
|
$10.09
|
|
|
$9.77
|
Volatility
|
|
|
6.9%
|
|
|
15.3%
|
Expected life of the options to convert
|
|
|
5.47
|
|
|
5.60
|
Risk-free rate
|
|
|
4.73%
|
|
|
1.32%
|
Dividend yield
|
|
|
—
|
|
|
—
|
Working Capital Loan Option
Strike price of debt conversion
|
|
|
$1.50
|
Volatility
|
|
|
6.9%
|
Expected life of the options to convert
|
|
|
5.47
|
Risk-free rate
|
|
|
4.72%
|
Dividend yield
|
|
|
—
|
The change in the level 3 fair value of the derivative warrant liabilities for the
years ended December 31, 2022 and 2021 is summarized as follows:
Derivative warrant liabilities at December 31, 2020
|
|
|
$—
|
|
|
$—
|
|
|
$—
|
Issuance of Public and Private Warrants
|
|
|
12,863,680
|
|
|
10,941,230
|
|
|
23,804,910
|
Transfer of Public Warrants to Level 1
|
|
|
(13,524,000)
|
|
|
—
|
|
|
(13,524,000)
|
Change in fair value of derivative warrant liabilities
|
|
|
660,320
|
|
|
(4,368,130)
|
|
|
(3,707,810)
|
Derivative warrant liabilities at December 31, 2021
|
|
|
—
|
|
|
6,573,100
|
|
|
6,573,100
|
Change in fair value of derivative warrant liabilities
|
|
|
—
|
|
|
(6,326,600)
|
|
|
(6,326,600)
|
Derivative warrant liabilities at December 31, 2022
|
|
|
$—
|
|
|
$246,500
|
|
|
$246,500
|
The change in the fair value of the Working Capital Loan Option measured with Level 3
inputs for the year ended December 31, 2022 is summarized as follows:
Balance at December 31, 2021
|
|
|
$—
|
Initial fair value of the Working Capital Loan Option
|
|
|
7,885
|
Change in fair value
|
|
|
(7,885)
|
Balance at December 31, 2022
|
|
|
$—
|
Note 10-Subsequent Events
The Company evaluated subsequent events and transactions that occurred up to the date
financial statements were available to be issued. Based upon this review, the Company determined that, except as disclosed below, there have been no events that have occurred that would require adjustments to the disclosures in the financial
statements, except as disclosed below.
On January 4, 2023, the Company entered into a non-binding letter of intent (“LOI”) for a business combination with H2B2 Electrolysis Technologies (“H2B2” or the “Target”), a vertically integrated
provider of hydrogen
TABLE OF CONTENTS
RMG Acquisition Corp. III
Notes to Financial Statements
December 31, 2022
energy systems, services, and equipment. Under the terms of the LOI, the Company and
H2B2 would be become a combined entity, with H2B2’s existing equity holders continuing to hold substantially all of their equity in the combined public company. We expect to announce additional details regarding the proposed business
combination when a definitive merger agreement is executed, which is expected in the first half of 2023.
On January 11, 2023, the Company held an extraordinary general meeting of shareholders
for the purpose of approving an amendment to the amended and restated memorandum and articles of association to extend the date by which the Company must complete a business combination from February 9, 2023, to May 9, 2023 (the “Extended Date”), and to allow the Company, without another shareholder vote, to elect to further extend the date to consummate a business combination up to three times by an additional month each time after
the Extended Date, upon two days’ advance notice prior to the applicable deadline, for a total of up to six months, to August 9, 2023, if the Company has entered into a definitive business combination agreement (the “Extension”).
In connection with the Extension, a total of 260 shareholders elected to redeem an aggregate of 47,381,598
Class A ordinary shares, representing approximately 98.10% of our issued and outstanding Class A ordinary shares, for an aggregate
of approximately $478,003,632 in cash. Subsequent to the redemption, 918,402 Class A ordinary shares remained outstanding.
In March 2023, the Company borrowed $250,000 under the July 2022 Note.
AGREEMENT AND PLAN OF MERGER
by and between
RMG ACQUISITION CORP. III,
and
H2B2 ELECTROLYSIS TECHNOLOGIES, INC.
TABLE OF CONTENTS
TABLE OF CONTENTS
ARTICLE I
|
|
|
|
|
|
|
|
CERTAIN DEFINITIONS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ARTICLE II
|
|
|
|
|
|
|
|
THE MERGER; CLOSING
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ARTICLE III
|
|
|
|
|
|
|
|
EFFECTS OF THE MERGER ON ACQUIROR AND COMPANY SECURITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ARTICLE IV
|
|
|
|
|
|
|
|
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TABLE OF CONTENTS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ARTICLE V
|
|
|
|
|
|
|
|
REPRESENTATIONS AND WARRANTIES OF ACQUIROR
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ARTICLE VI
|
|
|
|
|
|
|
|
COVENANTS OF THE COMPANY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TABLE OF CONTENTS
ARTICLE VII
|
|
|
|
|
|
|
|
COVENANTS OF ACQUIROR
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ARTICLE VIII
|
|
|
|
|
|
|
|
JOINT COVENANTS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ARTICLE IX
|
|
|
|
|
|
|
|
CONDITIONS TO OBLIGATIONS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ARTICLE X
|
|
|
|
|
|
|
|
TERMINATION/EFFECTIVENESS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ARTICLE XI
|
|
|
|
|
|
|
|
MISCELLANEOUS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TABLE OF CONTENTS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TABLE OF CONTENTS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TABLE OF CONTENTS
AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger, dated as of May 9, 2023 (this “Agreement”),
is made and entered into by and between RMG Acquisition Corp. III, a Cayman Islands exempted company limited by shares (which shall de-register as an exempted company incorporated in the Cayman Islands by way of continuation to the State of
Delaware and domesticate as a Delaware corporation prior to the Closing (as defined below)) (“Acquiror”) and H2B2 Electrolysis Technologies, Inc., a Delaware corporation (the “Company,” and together with Acquiror, the “Parties”
and each a “Party”).
RECITALS
WHEREAS, Acquiror
is a blank check exempted company with limited liability incorporated in the Cayman Islands for the purpose of effecting a merger, amalgamation, share exchange, asset acquisition, share purchase, reorganization or similar business combination
with one or more businesses or entities;
WHEREAS, at
least one (1) Business Day prior to the Effective Time (as defined below), upon the terms and subject to the conditions of this Agreement, Acquiror shall de-register as an exempted company incorporated in the Cayman Islands by way of
continuation to the State of Delaware and domesticate as a Delaware corporation in accordance with Section 388 of the Delaware General Corporation Law, as amended (the “DGCL”) and Part XII of the Companies Act (the “Domestication”);
WHEREAS, concurrently
with the Domestication, Acquiror shall file (a) a certificate of incorporation with the Secretary of State of Delaware and (b) adopt bylaws (in the forms attached as Exhibits A and B hereto, with such changes as may be agreed
in writing by Acquiror and the Company);
WHEREAS, in
connection with the Domestication, (a) each then-issued and outstanding Acquiror Class A Share (as defined below) shall convert automatically, on a one-for-one basis, into one (1) share of Class A stock, par value $0.0001 per share, of
Acquiror (the “Domesticated Acquiror Class A Stock”); (b) each then-issued and outstanding Acquiror Class B Share (as defined below) shall convert automatically, on a one-for-one basis, into one (1) share of Class B stock, par value
$0.0001 per share, of Acquiror (the “Domesticated Acquiror Class B Stock”); (c) each then-issued and outstanding Acquiror Public Warrant (as defined below) shall convert automatically into a public warrant to acquire one (1)
share of Domesticated Acquiror Class A Stock (“Domesticated Acquiror Public Warrant”), pursuant to the Warrant Agreement (as defined below); (d) each then-issued and outstanding Acquiror Private Warrant (as defined below) shall convert
automatically into a private warrant to acquire one (1) share of Domesticated Acquiror Class A Stock (“Domesticated Acquiror Private Warrant”), pursuant to the Warrant Agreement; and (e) each then-issued and outstanding
Acquiror Unit shall be canceled and will entitle the holder thereof to one (1) share of Domesticated Acquiror Class A Stock and one-fifth of one (1) Domesticated Acquiror Public Warrant;
WHEREAS, upon
the terms and subject to the conditions of this Agreement, and in accordance with the DGCL, (a) the Company will merge with and into Acquiror, the separate corporate existence of the Company will cease and Acquiror will be the Surviving
Corporation (as defined below) (the “Merger”) and (b) the Surviving Corporation will change its name to “H2B2 Electrolysis Technologies, Inc.”;
WHEREAS, the
Parties intend that, for United States federal and applicable state and local income tax purposes, the Merger will qualify as a “reorganization” within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (the “Code”)
and the Treasury Regulations promulgated thereunder (the “Intended U.S. Tax Treatment”), to which each of Acquiror and the Company are to be parties under Section 368(b) of the Code, and this Agreement is intended to constitute a “plan
of reorganization” within the meaning of Section 368 of the Code and Treasury Regulations Sections 1.368-2(g) and 1.368-3;
WHEREAS, the
Parties intend that, for Spanish tax purposes, the Merger will qualify as a “fusión” within the meaning of Section 76.1 of the Spanish
Corporate Income Tax Act (Law 27/2014, dated November 27, 2014, on Corporate Income Tax (Ley 27/2014, de 2 de noviembre, del Impuesto sobre Sociedades)) (the “Spanish CIT Act”), benefiting from the tax treatment provided in Title VII, Chapter VII, of the Spanish CIT Act, and in particular, Section 77.1.e), 78.1 and 81 thereunder (the “Intended
Spanish Tax Treatment”);
WHEREAS, the
Board of Directors of the Company (the “Company Board”) has: (a) determined that this Agreement and the other documents contemplated hereby to which the Company is a party and the transactions contemplated hereby and thereby are
advisable and in the best interests of the Company and the Company Stockholders; (b) authorized and approved the execution, delivery and performance by the Company of this
TABLE OF CONTENTS
Agreement and the other documents contemplated hereby to which the Company is a party
and the transactions contemplated hereby and thereby; and (c) recommended the adoption and approval of this Agreement and the other documents contemplated hereby to which the Company is a party and the transactions contemplated hereby and
thereby by the Company Stockholders;
WHEREAS, as a
condition and inducement to Acquiror’s willingness to enter into this Agreement, simultaneously with the execution and delivery of this Agreement, the Company and the Requisite Company Stockholders have executed and delivered to Acquiror a
company support agreement (the “Company Support Agreement”), pursuant to which the Requisite Company Stockholders have agreed to, among other things, vote in favor of the adoption and approval of this Agreement and the other
documents contemplated hereby for which the approval of the Requisite Company Stockholders is required, and the transactions contemplated hereby and thereby;
WHEREAS, the
Board of Directors of Acquiror (the “Acquiror Board”) has (a) determined that this Agreement and the other documents contemplated hereby to which Acquiror is a party and the transactions contemplated hereby and thereby are advisable
and in the best interests of Acquiror and Acquiror Shareholders (as defined below); (b) authorized and approved the execution, delivery and performance by Acquiror of this Agreement and the other documents contemplated hereby to which
Acquiror is a party and the transactions contemplated hereby and thereby; and (c) recommended the adoption and approval of this Agreement and the other documents contemplated hereby to which Acquiror is a party and the transactions
contemplated hereby and thereby by the Acquiror Shareholders;
WHEREAS, in
furtherance of the Merger and in accordance with the terms hereof and Acquiror’s Governing Documents (as defined below), Acquiror shall provide an opportunity to its shareholders to have their outstanding shares of Acquiror Common Stock (as
defined below) redeemed on the terms and subject to the conditions set forth in this Agreement and Acquiror’s Governing Documents in connection with obtaining the Acquiror Shareholder Approval (as defined below);
WHEREAS, as a
condition and inducement to the Company’s willingness to enter into this Agreement, simultaneously with the execution and delivery of this Agreement, RMG Sponsor III LLC, a Delaware limited liability company (the “Sponsor”), has
executed and delivered to the Company the Sponsor Support Agreement (as defined below), pursuant to which the Sponsor has agreed to, among other things, vote to adopt and approve this Agreement and the other documents contemplated hereby to
which Acquiror is a party and the transactions contemplated hereby and thereby; and
WHEREAS, at
the Closing, Acquiror, the Sponsor and certain of the Company Stockholders shall enter into (a) an Amended and Restated Registration Rights Agreement (the “Registration Rights Agreement”) substantially in the form attached hereto as Exhibit
C (with such changes as may be agreed in writing by Acquiror and the Company), which shall be effective as of the Closing, and (b) Lock-Up Agreements (the “Lock-Up Agreements”) substantially in the form attached hereto as
Exhibit D (with such changes as may be agreed in writing by Acquiror and the Company).
NOW, THEREFORE,
in consideration of the foregoing and the respective representations, warranties, covenants and agreements set forth in this Agreement and intending to be legally bound hereby, Acquiror and the Company agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
Section 1.1
Definitions.
As used herein, the following terms shall have the following meanings:
“Acquiror” has the meaning specified in the Preamble hereto.
“Acquiror Benefit Plan” has the meaning specified in Section 5.16.
“Acquiror Board” has the meaning specified in the Recitals
hereto.
“Acquiror Class A Shares” means, prior to the Domestication,
Class A ordinary shares, par value $0.0001 per share, of Acquiror.
TABLE OF CONTENTS
“Acquiror Class B Shares” means prior to the Domestication,
Class B ordinary shares, par value $0.0001 per share, of Acquiror.
“Acquiror Closing Statement” has the meaning specified in Section
2.4(c).
“Acquiror Common Stock” means (a) collectively, prior to the
Domestication, Acquiror Class A Shares and Acquiror Class B Shares, and (b) from and following the Domestication but prior to the Closing, Domesticated Acquiror Class A Stock and Domesticated Acquiror Class B Stock.
“Acquiror Cure Period” has the meaning specified in Section
10.1(c)(iv).
“Acquiror Disclosure Letter” has the meaning specified in
the introduction to Article V.
“Acquiror Financial Statements” means the audited balance
sheet as of December 31, 2022, and the related audited statements of operations, changes in shareholder’s equity (deficit) and cash flows of Acquiror for the year ended December 31, 2022, together with the auditor’s reports thereon.
“Acquiror Fundamental Representations” means the
representations and warranties made pursuant to Section 5.1 (Acquiror Organization), Section 5.2 (Due Authorization), Section 5.11 (Capitalization of Acquiror) and Section 5.12 (Brokers’ Fees).
“Acquiror Private Warrant” means, prior to the Domestication,
a warrant to purchase one (1) Acquiror Class A Share at an exercise price of $11.50 issued to the Sponsor.
“Acquiror Public Warrant” means, prior to the Domestication, a
warrant to purchase one (1) Acquiror Class A Share at an exercise price of $11.50 that was included in the Acquiror Units sold as part of Acquiror’s initial public offering.
“Acquiror SEC Filings” has the meaning specified in Section
5.5.
“Acquiror Securities” has the meaning specified in Section
5.11(a).
“Acquiror Share Redemption” means the election of an eligible
(as determined in accordance with Acquiror’s Governing Documents) holder of Acquiror Class A Shares to redeem all or a portion of Acquiror Class A Shares held by such holder at a per-share price, payable in cash, equal to a pro rata share of
the aggregate amount on deposit in the Trust Account (including any interest earned on the funds held in the Trust Account) (as determined in accordance with Acquiror’s Governing Documents) in connection with the Transaction Proposals.
“Acquiror Share Redemption Amount” means the aggregate amount
payable with respect to all Acquiror Share Redemptions.
“Acquiror Shareholder Approval” means the approval of (a)
those Transaction Proposals identified in clauses (i), (ii) and (iii) of Section 8.2(b), in each case, by a special resolution under Cayman Islands law, being the affirmative vote of the holders of at least
two-thirds (2/3) of the issued and outstanding shares of Acquiror Common Stock entitled to vote, who attend and vote thereupon (as determined in accordance with Acquiror’s Governing Documents) at the Acquiror Shareholders’ Meeting; (b) those
Transaction Proposals identified in clauses (iv), (v), (vi), and (x), of Section 8.2(b), in each case, by an ordinary resolution under Cayman Islands law, being the affirmative vote of the holders of at
least a majority of the issued and outstanding shares of Acquiror Common Stock entitled to vote, who attend and vote thereupon (as determined in accordance with Acquiror’s Governing Documents) at the Acquiror Shareholders’ Meeting; (c) the
Transaction Proposal identified in clause (vii) of Section 8.2(b), by an ordinary resolution of the Acquiror Class B Shares, being the affirmative vote of the holders of at least a majority of the issued and outstanding Acquiror
Class B Shares entitled to vote, who attend and vote thereupon (as determined in accordance with Acquiror’s Governing Documents) at the Acquiror Shareholders’ Meeting; and (d) those Transaction Proposals identified in clauses (viii) and
(ix) of Section 8.2(b) or any other proposals to be proposed to the Acquiror Shareholders, in each case, by the requisite approval required under Acquiror’s Governing Documents, the Companies Act or other applicable Law.
“Acquiror Shareholders” means the shareholders of Acquiror
as of immediately prior to the Effective Time.
“Acquiror Shareholders’ Meeting” has the meaning specified
in Section 8.2(b).
TABLE OF CONTENTS
“Acquiror Transaction Expenses” means the following
out-of-pocket fees, costs and expenses paid or payable by Acquiror or any of its Affiliates (whether or not billed or accrued for) as a result of or in connection with the negotiation, documentation and consummation of the transactions
contemplated hereby: (a) any and all fees, costs, expenses, brokerage fees, commissions, finders’ fees and disbursements of financial advisors, capital markets advisors, investment banks, attorneys, accountants and other advisors and service
providers, including, for the avoidance of doubt, any outstanding amounts under any Working Capital Loans (which, for the avoidance of doubt, shall be repaid in cash and not converted into warrants of the Surviving Corporation, in each case, of
Acquiror or any of its Affiliates as of the Closing) and the Administrative Services Agreement; (b) any premiums, costs and expenses incurred under Acquiror’s directors’ and officers’ liability insurance policies; (c) any fees, costs and
expenses relating to Acquiror’s due diligence on the Company and its Subsidiaries; (d) any fees, costs, expenses and disbursements of Acquiror’s accountants, Tax advisors and external auditors; (e) Acquiror’s ongoing SEC reporting and Nasdaq
listing and compliance costs and expenses (including any attorneys’ fees in connection therewith); (f) fees, costs and expenses in connection with any press releases or public announcements issued by Acquiror or any of its Affiliates; and (g)
accounting, tax and administrative costs and expenses of RMG Acquisition Management (but excluding any Taxes of RMG Acquisition Management), but excluding any Company Transaction Expenses, in each case as set forth on the Acquiror Closing
Statement to be delivered by Acquiror to the Company pursuant to Section 2.4(c).
“Acquiror Unit” means the units issued by Acquiror at the time
of the initial public offering of Acquiror, each consisting of one (1) Acquiror Class A Share and one-fifth (1/5th) of one Acquiror Public Warrant.
“Acquiror Warrants” means the Acquiror Public Warrants and
the Acquiror Private Warrants, collectively.
“Acquisition Proposal” means, with respect to the Company and
its Subsidiaries, other than the transactions contemplated hereby, including any Capital Raise Transaction, and other than the acquisition or disposition of equipment or other tangible personal property in the ordinary course of business, any
offer or proposal relating to: (a) any acquisition or purchase, direct or indirect, of (i) fifteen percent (15%) or more of the consolidated assets of the Company and its Subsidiaries or (ii) fifteen percent (15%) or more of any class of equity
or voting securities of (1) the Company or (2) one or more Subsidiaries of the Company holding assets constituting, individually or in the aggregate, fifteen percent (15%) or more of the consolidated assets of the Company and its Subsidiaries;
(b) any tender offer (including a self-tender offer) or exchange offer that, if consummated, would result in any Person beneficially owning fifteen percent (15%) or more of any class of equity or voting securities of (i) the Company or (ii) one
(1) or more Subsidiaries of the Company holding assets constituting, individually or in the aggregate, fifteen percent (15%) or more of the consolidated assets of the Company and its Subsidiaries; or (c) a merger, consolidation, share exchange,
business combination, sale of substantially all the assets, reorganization, recapitalization, liquidation, dissolution or other similar transaction involving the sale or disposition of (i) the Company or (ii) one (1) or more Subsidiaries of the
Company holding assets constituting, individually or in the aggregate, fifteen percent (15%) or more of the consolidated assets of the Company and its Subsidiaries.
“Action” means any claim, action, suit, audit, examination,
assessment, arbitration, mediation or inquiry, or any proceeding, investigation, subpoena or request for information, by or before any Governmental Authority.
“Administrative Services Agreement” means that certain
Administrative Services Agreement, dated as of February 4, 2021, by and between Acquiror and RMG Acquisition Management.
“Affiliate” means, with respect to any specified Person, any
Person that, directly or indirectly, controls, is controlled by, or is under common control with, such specified Person, whether through one or more intermediaries or otherwise. The term “control” (including the terms “controlling,” “controlled
by” and “under common control with”) means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by Contract or
otherwise.
“Aggregate Closing Date Merger Consideration” means a number
of shares of Surviving Corporation Common Stock equal to the quotient obtained by dividing (i) the Closing Date Purchase Price by (ii) $10.00.
“Aggregate Fully Diluted Company Common Stock” means, without
duplication, the aggregate (a) number of shares of Company Common Stock that are issued and outstanding immediately prior to the Effective Time
TABLE OF CONTENTS
including after giving effect to any Capital Raise Transaction, plus (b) maximum number of shares of Company Common Stock that would be issuable upon the exercise in full of all Company Options (whether vested or unvested) that are outstanding immediately prior to the
Effective Time.
“Agreement” has the meaning specified in the Preamble
hereto.
“Agreement End Date” has the meaning specified in Section
10.1(b)(ii).
“Ancillary Agreements” has the meaning specified in Section
11.10.
“Anti-Bribery Laws” means the anti-bribery provisions of the
Foreign Corrupt Practices Act of 1977, as amended, and all other applicable anti-corruption and bribery Laws in any jurisdiction.
“Antitrust Authority” means the Antitrust Division of the
United States Department of Justice, or the United States Federal Trade Commission.
“Ardachon Proceedings” has the meaning set forth on Section
1.1(a) of the Company Disclosure Letter.
“Ardachon Share Acquisition” means the acquisition of Company
Common Stock by the Company in connection with the Ardachon Proceedings.
“Audited Financial Statements” has the meaning specified in
Section 4.11(a).
“AVR Option Amount” means $2,000,014.
“Base Purchase Price” means $750,000,000.
“Business Combination” has the meaning set forth in Article 1
of Acquiror’s Governing Documents as in effect on the date hereof.
“Business Combination Proposal” means any offer, proposal or
indication of interest (whether written or oral, binding or non-binding, and other than an offer, proposal or indication of interest with respect to the transactions contemplated hereby), relating to a Business Combination.
“Business Day” means a day other than a Saturday, Sunday or
other day on which commercial banks in New York, New York, Madrid, Spain, or Governmental Authorities in the Cayman Islands (for so long as Acquiror remains incorporated in Cayman Islands) are authorized or required by Law to close.
“Capital Raise Amount” means the aggregate amount of capital
actually raised by the Company, any of its Subsidiaries, or any special purpose vehicle or other entity in which the Company holds, directly or indirectly any Equity Interest, at or prior to the Closing through any Capital Raise Transaction,
but excluding, for the avoidance of doubt, (a) any capital actually raised by the Company or any of its Subsidiaries utilized or to be utilized for the Ardachon Share Acquisition and (b) any cash available in the Trust Account following the
Acquiror Shareholder Meeting (after deducting the amount required to satisfy the Acquiror Share Redemption Amount).
“Capital Raise Investor” means any Person that has entered
into a legal, valid and binding commitment to acquire or subscribe securities of the Company, any of its Subsidiaries, or any special purpose vehicle or other entity in which the Company holds, directly or indirectly any Equity Interest, in
each case in any Capital Raise Transaction.
“Capital Raise Transaction” means (a) any sale or other
issuance of Equity Interests or any debt instruments exercisable for or convertible into Company Common Stock or other equity interests of the Company, any of its Subsidiaries, or any special purpose vehicle or other entity in which the Company
holds, directly or indirectly any Equity Interest (including, without limitation, any shares of capital stock, securities convertible into or exchangeable for shares of capital stock, or warrants, options or other rights for the purchase or
acquisition of such shares, and other ownership or profit interests, whether voting or non-voting, and convertible notes or similar convertible or exercisable debt instruments), for cash occurring at any time, whether in a single transaction or
a series of transactions, during the period commencing on or after the date of this Agreement and ending at or prior to the Closing, or (b) any Debt Raise Transaction, in each case involving BCW Securities LLC and/or Natixis Partners Iberia,
S.A.
“Cayman Registrar” means the Registrar of Companies of the
Cayman Islands.
TABLE OF CONTENTS
“CFIUS” means the Committee on Foreign Investment in the
United States and each member agency thereof acting in such capacity.
“CFIUS Approval” means (a) the Parties hereto have received
written notice from CFIUS that either (i) it has determined that the transactions contemplated by this Agreement do not constitute a “covered transaction” pursuant to the CFIUS regulations or (ii) CFIUS’ review (or, if applicable,
investigation) under the CFIUS regulations of the transactions contemplated by this Agreement in response to any notice or declaration submitted to CFIUS by the Parties, has concluded and CFIUS shall have determined that there are no unresolved
national security concerns with respect to the transactions contemplated by this Agreement, and advised that all action under the CFIUS regulations has concluded with respect to the transactions contemplated by this Agreement; or (b) CFIUS
shall have sent a report to the President of the United States (“President”) requesting the President’s decision on any notice submitted by the Parties and either (x) the period under the CFIUS regulations during which the President may
announce a decision to take action to suspend, prohibit or place any limitations on the transactions contemplated by this Agreement shall have expired without the President having taken or announced such a decision or (y) the President shall
have announced a decision not to take any action to suspend, prohibit, or place any limitations on the transactions contemplated by this Agreement.
“Change of Control Payment” has the meaning specified in Section
4.11(e).
“Closing” has the meaning specified in Section 2.3(a).
“Closing Date” has the meaning specified in Section
2.3(a).
“Closing Date Purchase Price” means the Base Purchase Price,
which shall be subject to upward or downward adjustment solely as follows:
(a) In the event the Company raises capital in any Capital Raise
Transaction (other than a Debt Raise Transaction) based on a pre-money valuation at or exceeding the Base Purchase Price, the Base Purchase Price shall be increased on a dollar for dollar basis by an amount equal to (i) the difference between
the Base Purchase Price and the actual pre-money valuation of such Capital Raise Transaction, plus (ii) the Capital Raise Amount, plus (iii) the AVR Option
Amount;
(b) In the event the Company raises capital in any Capital Raise
Transaction (other than a Debt Raise Transaction) based on a pre-money valuation below the Base Purchase Price, the Base Purchase Price shall be (i) decreased by an amount equal to the difference between the Base Purchase Price and the actual
pre-money valuation of such Capital Raise Transaction, and increased by (ii) the Capital Raise Amount, plus (iii) the AVR Option Amount, in each case on a dollar for dollar basis;
(c) In the event the Company raises capital in any Debt Raise
Transaction based on a Debt Transaction Pre-Money Valuation at or exceeding the Base Purchase Price, the Base Purchase Price shall be increased on a dollar for dollar basis by an amount equal to (i) the difference between the Base Purchase
Price and the actual Debt Transaction Pre-Money Valuation, plus (ii) the AVR Option Amount; or
(d) In the event the Company raises capital in any Debt Raise
Transaction based on a Debt Transaction Pre-Money Valuation below the Base Purchase Price, the Base Purchase Price shall be (i) decreased by an amount equal to the difference between the Base Purchase Price and the actual Debt Transaction
Pre-Money Valuation and (ii) increased by the AVR Option Amount, in each case on a dollar for dollar basis;
provided, that, solely in the event that the Capital
Raise Amount exceeds $15,000,000, following any adjustment pursuant to the foregoing clauses (a), (b), (c) or (d), the Closing Date Purchase Price shall be further increased by an additional ten percent (10%), and
provided, further, that in the event the Company
raises capital in any Debt Raise Transaction where such Debt Raise Transaction consists exclusively of senior debt or any other form of debt for which a pre-money valuation has not been provided (a “Senior Debt Raise Event”), then for a
period of fifteen (15) Business Days following execution of definitive agreements relating to such Debt Raise Transaction (the “Resolution Period”), the Parties shall work together in good faith to agree a Closing Date Purchase Price.
If, after the Resolution Period, the Parties are unable to agree upon the Closing Date Purchase Price, then the provisions set forth in Section 2.4(f) shall apply.
TABLE OF CONTENTS
“Closing Statement” has the meaning specified in Section 2.4(e).
“Code” has the meaning specified in the Recitals hereto.
“Companies Act” means the Companies Act (As Revised) of the
Cayman Islands.
“Company” has the meaning specified in the Preamble hereto.
“Company Benefit Plan” has the meaning specified in Section
4.17(a).
“Company Board” has the meaning specified in the Recitals
hereto.
“Company Closing Statement” has the meaning specified in Section
2.4(b).
“Company Common Stock” means the shares of common stock, par
value $0.00001 per share, of the Company.
“Company Cure Period” has the meaning specified in Section
10.1(d).
“Company Disclosure Letter” has the meaning specified in the
introduction to Article IV.
“Company Financial Statements” has the meaning specified in
Section 4.11(a).
“Company Fundamental Representations” means the
representations and warranties made pursuant to the first (1st) and second (2nd) sentences of Section 4.1 (Company Organization), the first (1st) and second (2nd)
sentences of Section 4.2 (Subsidiaries), Section 4.3 (Spanish Subsidiaries), Section 4.5 (Due
Authorization), Section 4.9 (Capitalization of the Company), Section 4.10 (Capitalization of Subsidiaries) and Section 4.20 (Brokers’ Fees).
“Company Indemnified Parties” has the meaning specified in Section
7.6(a).
“Company Material Adverse Effect” means any event, state of
facts, development, circumstance, occurrence or effect (collectively, “Events”) that (a) has had, or would reasonably be expected to have, individually or in the aggregate, a material adverse effect on the business, assets, results of
operations or financial condition of the Company and its Subsidiaries, taken as a whole or (b) does or would reasonably be expected to, individually or in the aggregate, prevent the ability of the Company to consummate the Merger; provided,
however, that in no event would any of the following, alone or in combination, be deemed to constitute, or be taken into account in determining whether there has been or will be, a “Company Material Adverse Effect”: (i) any change
in applicable Laws or GAAP or any interpretation thereof following the date of this Agreement; (ii) any change in interest rates or economic, political, business or financial market conditions generally; (iii) the taking of any action required
by this Agreement or any Ancillary Agreement; (iv) any natural disaster (including hurricanes, storms, tornados, flooding, earthquakes, volcanic eruptions or similar occurrences), pandemic or change in climate; (v) any acts of terrorism or war,
the outbreak or escalation of hostilities, geopolitical conditions, local, national or international political conditions; (vi) any failure of the Company to meet any projections or forecasts (provided that clause (vi) shall not
prevent a determination that any Event not otherwise excluded from this definition of Company Material Adverse Effect underlying such failure to meet projections or forecasts has resulted in a Company Material Adverse Effect); (vii) any Events
generally applicable to the industries or markets in which the Company and its Subsidiaries operate (including increases in the cost of products, supplies, materials or other goods purchased from third-party suppliers); (viii) the announcement
of this Agreement and the Ancillary Agreements and consummation of the transactions contemplated hereby and thereby, including any termination of, reduction in or similar adverse impact (but in each case only to the extent attributable to such
announcement or consummation) on relationships, contractual or otherwise, with any landlords, customers, suppliers, distributors, partners or Employees of the Company and its Subsidiaries (it being understood that this clause (viii)
shall be disregarded for purposes of the representation and warranty set forth in Section 4.6 and the condition to Closing with respect thereto); (ix) any matter set forth on the Company Disclosure Letter, (x) any Events to the extent
actually known by those individuals set forth on Section 1.3 of the Acquiror Disclosure Letter prior to the date hereof; or (xi) any action taken by, or at the request of, Acquiror or taken or not taken by the Company as required by
this Agreement or any Ancillary Agreement; provided, further, that any Event referred to in clauses (i), (ii), (iv), (v) or (vii) above may be taken into account in determining if a
Company Material Adverse Effect has occurred to the extent it has a disproportionate and adverse effect on the business, assets, results of operations or condition (financial or otherwise) of the Company and its Subsidiaries, taken as a
TABLE OF CONTENTS
whole, relative to similarly situated companies in the industry in which the Company
and its Subsidiaries conduct their respective operations, but only to the extent of the incremental disproportionate effect on the Company and its Subsidiaries, taken as a whole, relative to similarly situated companies in the industry in which
the Company and its Subsidiaries conduct their respective operations.
“Company Option” means any option to purchase shares of
Company Common Stock outstanding immediately prior to the Effective Time.
“Company Owned IP” means all Intellectual Property Rights
owned by the Company or any of its Subsidiaries.
“Company Registered IP” has the meaning specified in Section
4.25(a).
“Company Stockholder” means any holder of Company Common
Stock.
“Company Stockholder Approval” means the adoption and approval
of this Agreement and the transactions contemplated hereby (including the Merger) by the affirmative vote of the holders of at least a majority of the voting power of the issued and outstanding Company Common Stock pursuant to resolutions
adopted by the Requisite Company Stockholders at a duly called special meeting of the Company Stockholders in accordance with the terms and subject to the conditions of the Company’s Governing Documents, the Company Stockholders Agreement and
applicable Law.
“Company Stockholders Agreement” means that certain
Stockholders’ Agreement regarding H2B2 Electrolysis Technologies, Inc., dated as of August 27, 2021, by and among the Company, Onatrium H2, S.L., Tekpolio, S.L., the Subscribing Stockholders (as defined therein) and the Key Persons (as defined
therein).
“Company Support Agreement” has the meaning set forth in
Recitals hereto.
“Company Stockholder Meeting” has the meaning specified in Section
8.2(c).
“Company Transaction Expenses” means the following
out-of-pocket fees, costs and expenses paid or payable by the Company or any of its Subsidiaries (whether or not billed or accrued for) as a result of or in connection with the negotiation, documentation and consummation of the transactions
contemplated hereby: (a) any and all related fees, costs, expenses, brokerage fees, commissions, finders’ fees and disbursements of financial advisors, investment banks, data room administrators, vendor due diligence providers (including any
provider of vendor due diligence reports), attorneys, accountants and other advisors and service providers; (b) any and all filing fees payable to any Governmental Authority in connection with the transactions contemplated hereby; and (c) any
and all related fees, costs, expenses and premium incurred in order to obtain a tax insurance policy (including brokerage fees and costs and external legal counsel) to cover any liability that may accrue from a Spanish tax perspective due to
the tax structure implemented to carry out the transactions foreseen in this Agreement, in each case of (a), (b) and (c) as set forth on the Company Closing Statement to be delivered by the Company to Acquiror pursuant
to Section 2.4(a).
“Confidential Information” has the meaning specified in Section
6.3.
“Constituent Corporations” has the meaning specified in Section
2.1(a).
“Contracts” means any legally binding written contracts,
agreements, subcontracts, leases and purchase orders.
“D&O Indemnified Parties” has the meaning specified in Section
7.6(a).
“Debt Raise Transaction” means any sale or other issuance of
debt securities or instruments, or otherwise any incurrence of Indebtedness for borrowed money (including any issuance of senior secured or unsecured notes or junior subordinated notes), by the Company or any of its Subsidiaries, occurring at
any time, whether in a single transaction or a series of transactions, during the period commencing on or after the date of this Agreement and ending at or prior to the Closing.
“Debt Transaction Pre-Money Valuation” means an aggregate
amount equal to the weighted average of all pre-money valuations (or any subsequent revisions thereof) submitted by Capital Raise Investors in “Phase II” of a Debt Raise Transaction (as such term is defined in the Phase I Process Letter issued
in connection with such Debt Raise Transaction), as calculated pursuant to the Debt Transaction Pre-Money Valuation Schedule.
TABLE OF CONTENTS
“Debt Transaction Pre-Money Valuation Schedule” means a
schedule delivered by the Company to Acquiror pursuant to Section 2.4(a) setting out (a) each and all of the pre-money valuations (or any subsequent revisions thereof) submitted by Capital Raise Investors in “Phase II” of a Debt Raise
Transaction and (b) the Debt Transaction Pre-Money Valuation; provided, that, for the avoidance of doubt, if any valuation submitted by a Capital Raise Investor in “Phase II” of a Debt Raise Transaction is presented as a
valuation range (and not a fixed amount), the Company shall first calculate a weighted median of such valuation range before calculating the Debt Transaction Pre-Money Valuation.
“Derivative Rights” means, with respect to any Equity
Interests of any Person, any and all options, warrants, rights, convertible or exchangeable securities, “phantom” equity rights, equity appreciation rights, profits interests, equity-based performance units, commitments, Contracts, arrangements
or undertakings of any kind to which such Person is a party or is bound obligating such Person to issue, deliver or sell, or cause to be issued, delivered or sold, additional shares of capital stock of or other equity (or phantom equity)
interests in, or any security (including debt securities) convertible or exercisable for or exchangeable into any capital stock or other equity interest in, such Person.
“DGCL” has the meaning specified in the Recitals hereto.
“Disclosure Letter” means, as applicable, the Company
Disclosure Letter or the Acquiror Disclosure Letter.
“Dissenting Shares” has the meaning specified in Section
3.5.
“Dollars” or “$” means lawful money of the United
States.
“Domesticated Acquiror Class A Stock” has the meaning
specified in the Recitals hereto.
“Domesticated Acquiror Class B Stock” has the meaning
specified in the Recitals hereto.
“Domesticated Acquiror Private Warrant” has the meaning
specified in the Recitals hereto.
“Domesticated Acquiror Public Warrant” has the meaning
specified in the Recitals hereto.
“Domesticated Acquiror Warrants” means, collectively, the
Domesticated Acquiror Public Warrants and Domesticated Acquiror Private Warrants.
“Domestication” has the meaning specified in the Recitals
hereto.
“Effective Time” has the meaning specified in Section
2.3(b).
“Employee” means any employee, worker or officer of the
Company or any Subsidiary of the Company.
“Enforceability Exceptions” has the meaning specified in Section
4.5(a).
“Environmental Laws” means any Law relating to: (a) releases
or threatened releases of Hazardous Materials; (b) the presence, manufacture, refining, production, generation, handling, transport, use, treatment, recycling, storage, importing, labeling, testing, disposal, cleanup, or control of Hazardous
Materials; (c) pollution or protection of the environment or natural resources; or (d) human health and safety as it relates to the handling of or exposure to Hazardous Materials.
“Environmental Licenses” has the meaning specified in Section
4.27(a).
“Equity Incentive Plan” has the meaning specified in Section
7.8.
“Equity Interests” means with respect to any Person, any and
all shares, interests, participations, rights in, or other equivalents (however designated and whether voting or non-voting) of, such Person’s capital stock or other equity interests (including partnership or limited liability company interests
in a partnership or limited liability company or any other interest or participation right that confers on a Person the right to receive a share of the profits and losses, or distributions of assets, of the issuing Person), and all Derivative
Rights with respect to any of the foregoing.
“ERISA” means Employee Retirement Income Security Act of 1974,
as amended.
“Exchange Act” means the Securities Exchange Act of 1934, as
amended.
“Exchange Agent” has the meaning specified in Section
3.2(a).
TABLE OF CONTENTS
“Exchange Ratio” means the quotient obtained by dividing (a) the number of shares of Surviving Corporation Common Stock constituting the Aggregate Closing Date Merger Consideration, by (b) the number of Aggregate
Fully Diluted Company Common Stock.
“Export Approvals” has the meaning specified in Section
4.30(a).
“Extension” has the meaning specified in Section 11.6(a).
“Extension Costs” has the meaning specified in Section
11.6(a).
“Extension Proposal” has the meaning specified in Section
7.9.
“Founder Consideration Shares” means a number of shares of
Domesticated Acquiror Class B Stock equal to six percent (6%) of (a) (i) in the event there is a PIPE Transaction, the aggregate number of shares of Surviving Corporation Common Stock issued and outstanding on a fully diluted basis immediately
following the Effective Time (inclusive of the Founder Consideration Shares) after giving effect to the maximum potential dilution as a result of any Capital Raise Transaction or (ii) in the event there is no PIPE Transaction, the Aggregate
Closing Date Merger Consideration, in each case minus (b) the Warrant Exchange Shares issued in connection with the Warrant Exchange.
“GAAP” means generally accepted accounting principles in the
United States as in effect from time to time.
“Governing Documents” means the legal document(s) by which any
Person (other than an individual) establishes its legal existence, or which govern its internal affairs. For example, the “Governing Documents” of a corporation are its certificate of incorporation and bylaws or memorandum and articles of
association, the “Governing Documents” of a limited partnership are its limited partnership agreement and certificate of limited partnership, the “Governing Documents” of a limited liability company are its operating agreement and
certificate of formation and the “Governing Documents” of an exempted company are its memorandum and articles of association.
“Government Official” means any officer or employee of a
Governmental Authority, or anyone otherwise acting in an official capacity on behalf of a Governmental Authority.
“Governmental Authority” means any federal, state, national,
supranational (including the European Union), regional (including, in Spain, the Autonomous Communities), provincial, municipal, local, or foreign government, governmental authority, supervisory, standard setting, regulatory or administrative
agency, governmental commission, department, board, bureau, branch, minister, agency or instrumentality, court or tribunal.
“Governmental Authorization” has the meaning specified in Section
4.7.
“Governmental Order” means any order, judgment, injunction,
decree, writ, stipulation, determination, or award, in each case, entered by or with any Governmental Authority.
“Grants” means the public aid, grants, subsidies, and soft
loans identified in Section 4.33 of the Company Disclosure Letter.
“H2B2 Group” has the meaning specified in Section 11.18(b).
“Hazardous Material” means any (a) substance, material or
waste defined or regulated under Environmental Law as a pollutant or contaminant, or as toxic or hazardous, (b) petroleum or any fraction or product thereof, (c) asbestos or asbestos-containing material, (d) polychlorinated biphenyl, (e)
chlorofluorocarbons, (f) per- and polyfluoroalkyl substances, or (g) any other substance which is regulated or which could give rise to liability under Environmental Law due to its deleterious properties.
“HSR Act” means the Hart-Scott-Rodino Antitrust Improvement
Act of 1976, as amended, and the rules and regulations promulgated thereunder.
“Indebtedness” means with respect to any Person, without
duplication, any obligations, contingent or otherwise, in respect of (a) the principal of and premium (if any) in respect of all indebtedness for borrowed money, including accrued interest and any per diem interest accruals, (b) all obligations
of capitalized lease obligations under GAAP, (c) all obligations for the reimbursement of any obligor (including any accrued and unpaid interest) relating to letters of credit, bank guarantees, bankers’ acceptances and other similar instruments
(solely to the extent such amounts have actually been drawn), (d) all obligations in respect of banker’s
TABLE OF CONTENTS
acceptances issued, (e) the principal of and premium (if any) in respect of
obligations evidenced by bonds, debentures, notes, credit agreements and similar instruments, (f) the termination value of interest rate protection agreements and currency obligation swaps, hedges or similar arrangements (without duplication of
other indebtedness supported or guaranteed thereby), (g) all obligations to pay the deferred and unpaid purchase price of property and equipment which have been delivered, or services which have been rendered, including “earn outs” and “seller
notes”, (h) all obligations secured by a Lien, other than Permitted Liens, on any property of such Person and (i) breakage costs, prepayment or early termination premiums, penalties, or other fees or expenses payable as a result of the
consummation of the transactions contemplated hereby in respect of any of the items in the foregoing clauses (a) through (i), and (j) all Indebtedness of another Person referred to in clauses (a) through (j)
above guaranteed directly or indirectly, jointly or severally.
“Information or Document Request” means any request or demand
for the production, delivery or disclosure of documents or other evidence, or any request or demand for the production of witnesses for interviews or depositions or other oral or written testimony, by any Antitrust Authority relating to the
transactions contemplated hereby or by any third party challenging the transactions contemplated hereby, including any so called “second request” for additional information and documentary material or any civil investigative demand made or
issued by any Antitrust Authority or any subpoena, interrogatory or deposition.
“Intellectual Property Rights” means any rights in or to any
intellectual property throughout the world, including (a) patents, patent applications (including all continuations, continuations-in-part, divisionals, reissues, re-examinations, substitutions and extensions thereof), and supplementary
protection certificates; (b) registered and unregistered trademarks, service marks, trade dress, logos, trade names, business names, including any applications, registrations and renewals in connection therewith, and internet domain names; (c)
registered and unregistered designs, including any applications, registrations and renewals in connection therewith; (d) registered and unregistered copyrights and other intellectual property rights in works of authorship (whether or not
copyrightable), including any registrations and applications for registration, renewals and extensions thereof; (e) intellectual property rights in software; and (f) trade secrets and other intellectual property rights in know-how and
confidential or proprietary information (including, but not limited to, in ideas, formulas, compositions, inventions, whether or not patentable or reduced to practice, customer and supplier lists, improvements, protocols, processes, methods and
techniques, research and development information, industry analyses, algorithms, architectures, layouts, drawings, specifications, designs, plans, methodologies, proposals, industrial models, technical data, financial and accounting data
(including pricing and cost information)).
“Intended Spanish Tax Treatment” has the meaning specified
in the Recitals hereto.
“Intended U.S. Tax Treatment” has the meaning specified in
the Recitals hereto.
“Interim Period” has the meaning specified in Section
6.1.
“International Trade Laws” means all applicable Laws relating
to the import, export, re-export, deemed export, deemed re-export or transfer of information, data, goods and technology, including, the Export Administration Regulations administered by the United States Department of Commerce, the
International Traffic in Arms Regulations administered by the United States Department of State, customs and import Laws administered by United States Customs and Border Protection, any other export or import controls administered by an agency
of the United States government, the anti-boycott regulations administered by the United States Department of Commerce and the United States Department of the Treasury, and other Laws adopted by Governmental Authorities of other countries
relating to the same subject matter as the United States Laws described above, except to the extent inconsistent with U.S. law.
“Investor Objection Notice” has the meaning specified in Section
10.1(c)(iii).
“IRS Website Shutdown” means the shutdown or unavailability on
the Closing Date or date of the Domestication of the respective Internal Revenue Service online application portal for (a) Internal Revenue Service Form 8802 or (b) the request or delivery of a new employee identification number with respect to
Acquiror, as applicable, during the respective online application portal’s normal operation hours.
“IT Systems” means all computer systems, communications
systems, software and hardware (including firmware, peripherals, storage media, networking equipment) and any other information technology equipment owned, leased or licensed by the Company or any of its Subsidiaries and used in the conduct of
their business.
TABLE OF CONTENTS
“Key Persons” means individually each of the executives of
the Company listed in Section 1.1(b) of the Company Disclosure Letter.
“Latham” has the meaning specified in Section 11.18(b).
“Law” means any statute, law, treaty, convention, ordinance,
rule, regulation, ruling, order, Governmental Order, circular or action, in each case, of any Governmental Authority.
“Leased Real Property” means all real property leased,
licensed, subleased or otherwise used or occupied by the Company or any of its Subsidiaries.
“Letter of Transmittal” has the meaning specified in Section
3.2(b).
“Licenses” means any approvals, authorizations, consents,
licenses, registrations, permits or certificates of or from a Governmental Authority.
“Lien” means any lien, security interest, mortgage, deeds of
trust, pledge, adverse claim, reservation, lease, sublease, covenants, easements, usufruct, right-of-way, servitudes, collateral assignments, conditional sale or other sale agreements, title retention agreements, hypothecations, preemptive
right, community property interest, collateral assignment, charge, option, warrant, rights of first offer, rights of first refusal, proxies, voting trusts or similar agreements, or title or transfer restrictions under any equity holder or
similar agreement (including, without limitation, any restriction on the voting of any security, any restriction on the transfer of any security or other asset, any restriction on the possession, exercise or transfer or any other restriction
attributable of ownership of any asset), or any other encumbrance, restriction or limitation of any kind whatsoever.
“Lock-Up Agreements” has the meaning specified in the
Recitals.
“Merger” has the meaning specified in the Recitals hereto.
“Merger Certificate” has the meaning specified in Section
2.1(a).
“Minimum Investment Amount” means $40,000,000, which, for the
avoidance of doubt, shall exclude (i) the AVR Option Amount and (ii) any capital raised by the Company or any of its Subsidiaries at or prior to the Closing through any Capital Raise Transaction in connection with the Ardachon Share
Acquisition.
“Modification in Recommendation” has the meaning specified
in Section 8.2(b).
“Nasdaq” has the meaning specified in Section 5.17.
“Offer Documents” has the meaning specified in Section
8.2(a)(i).
“Open Source License” means any license meeting the Open
Source Definition (as promulgated by the Open Source Initiative) or the Free Software Definition (as promulgated by the Free Software Foundation), or any substantially similar license.
“Open Source Software” means any software distributed under
an Open Source License.
“Owned Real Property” means all real property owned by the
Company or any of its Subsidiaries.
“Party” or “Parties” has the meaning specified in the
Preamble hereto.
“PCAOB Financial Statements” has the meaning specified in Section
6.4(a).
“Permitted Liens” means (a) statutory or common law Liens of
mechanics, materialmen and other similar Liens arising in the ordinary course of business for amounts not yet due and delinquent or which are being contested in good faith through appropriate Actions and for which adequate reserves have been
established in accordance with GAAP, (b) Liens for Taxes not yet due and payable or which are being contested in good faith through appropriate Actions and are disclosed in the Company Financial Statements, (c) defects or imperfections of
title, easements, encroachments, covenants, rights-of-way, conditions, matters that would be apparent from a physical inspection or current, accurate survey of such real property, restrictions and other similar charges or encumbrances that do
not, in the aggregate, materially impair the value nor materially interfere with the present use of the Owned Real Property or Leased Real Property, and (d) ordinary course purchase money Liens and Liens securing rental payments under operating
or capital lease arrangements for amounts not yet due or payable.
TABLE OF CONTENTS
“Person” means any individual, firm, corporation,
partnership, limited liability company, incorporated or unincorporated association, joint venture, joint stock company, Governmental Authority or instrumentality or other entity of any kind.
“Personal Data” means any information identifying, or capable
in combination with other information of identifying, an individual or legal Person, the privacy of which is protected under applicable Law or any information that is defined as “personal data,” “personally identifiable information,” “personal
information” or similar term under any applicable Law.
“PIPE Transaction” means a transaction pursuant to which
Acquiror enters into subscription, purchase or similar agreements with investors, pursuant to which such investors will agree to purchase Equity Interests of Acquiror with such purchase to be consummated prior to or concurrently with the
Closing.
“Preliminary Closing Statement” has the meaning specified in
Section 2.4(d).
“Privacy Laws” means the following legislations to the extent
applicable from time to time: (a) the California Consumer Privacy Act, (b) the General Data Protection Regulation (2016/679) (the “GDPR”) and any national law supplementing the GDPR, (c) the UK General Data Protection Regulation as
defined by the Data Protection Act 2018 as amended by the Data Protection, Privacy and Electronic Communications (Amendments etc.) (EU Exit) Regulations 2019, (d) the Spanish Data Protection Act Organic (Law 3/2018, dated December 5, 2018, on
the Protection of Personal Data and Guarantee of Digital Rights), (e) the Spanish E-Commerce Act (Law 34/2002, dated July 11, 2002, on Information Society Services and Electronic Commerce), and (f) any other data protection or privacy laws,
regulations, regulatory requirements, or mandatory guidance applicable to the processing of Personal Data (as amended and/or replaced from time to time).
“Prospectus” has the meaning specified in Section 11.1.
“Proxy Statement” has the meaning specified in Section
8.2(a)(i).
“Proxy Statement/Registration Statement” has the meaning
specified in Section 8.2(a)(i).
“Q1 Unaudited Financial Statements” has the meaning
specified in Section 6.4(b).
“Q2 Unaudited Financial Statements” has the meaning
specified in Section 6.4(c).
“Real Property Leases” has the meaning specified in Section
4.24(b)(ii).
“Registration Rights Agreement” has the meaning specified in
the Recitals hereto.
“Registration Statement” has the meaning specified in Section
8.2(a)(i).
“Reimbursement Fee” means $3,300,000.
“Related Person” has the meaning specified in Section
4.35.
“Representative” means, as to any Person, any of the officers,
directors, managers, employees, counsel, accountants, financial advisors and consultants of such Person.
“Requisite Company Stockholders” means holders of Company
Common Stock representing the majority of the outstanding Company Common Stock.
“RMG Acquisition Management” means RMG Acquisition Management
LLC, a Delaware limited liability company and an Affiliate of Acquiror.
“RMG Group” has the meaning specified in Section
11.18(a).
“Sanctioned Country” means at any time, a country or territory
which is itself the subject or target of any Sanctions Laws (at the time of this Agreement, Cuba, Iran, North Korea, Syria, the Crimea region of Ukraine, the so-called Luhansk People’s Republic, and the so-called Donetsk People’s Republic).
“Sanctioned Person” means any Person that is the target of
Sanctions Laws, including any Person (a) identified in any Sanctions Laws-related list of Persons maintained by (i) the United States (including the United States Department of the Treasury’s Office of Foreign Assets Control and the United
States Department of State), (ii) the United Kingdom, (iii) the United Nations Security Council, or (iv) the European Union or any
TABLE OF CONTENTS
European Union member state, (b) any Person located, organized, or resident in, or a
Governmental Authority or government instrumentality of, any Sanctioned Country, and (c) any Person directly or indirectly owned or controlled by, or acting for the benefit or on behalf of, a Person described in clause (a) or (b),
either individually or in the aggregate.
“Sanctions Laws” means all applicable trade, economic and
financial sanctions Laws administered, enacted, or enforced from time to time by (a) the United States (including the Department of the Treasury’s Office of Foreign Assets Control), (b) the European Union and any European Union member state,
(c) the United Nations, or (d) the United Kingdom.
“Sarbanes-Oxley Act” means the Sarbanes-Oxley Act of 2002.
“SEC” means the United States Securities and Exchange
Commission.
“Securities Act” means the Securities Act of 1933, as
amended.
“Skadden” has the meaning specified in Section 11.18(a).
“Social Security” means any Governmental Authority in each
relevant jurisdiction which is in charge of (a) worker’s protection; (b) pensions; and (c) social welfare or equivalent functions, as applicable.
“Spanish CIT Act” has the meaning specified in the Recitals
hereto.
“Spanish Companies Act” means the Spanish Royal Legislative
Decree 1/2010, dated July 2, 2010, whereby the amended and restated Spanish Companies Act was approved (Real Decreto Legislativo 1/2010, de 2 de julio, por el que se aprueba el texto refundido de la Ley de
Sociedades de Capital).
“Spanish Insolvency Act” means the Spanish Royal Legislative
Decree 1/2020, dated May 5, 2010, whereby the amended and restated Spanish Insolvency Act was approved (Real Decreto Legislativo 1/2020, de 5 de mayo, por el que se aprueba el texto refundido de la Ley
Concursal).
“Spanish Subsidiaries” means, jointly or individually, as
applicable, H2B2 Electrolysis Technologies, S.L.U., H2B2 O&M, S.L.U., and H2B2 Corp, S.L.U.
“Sponsor” has the meaning specified in the Recitals hereto.
“Sponsor Support Agreement” means that certain Support
Agreement, dated as of the date hereof, by and among the Sponsor, Acquiror, the other Persons named therein and the Company, as amended or modified from time to time.
“Subsequent Capital Raise Transaction” has the meaning
specified in Section 10.2(b)(ii).
“Subsidiary” means, (a) with respect to a Person, any
corporation or other organization (including a limited liability company or a partnership), whether incorporated or unincorporated, of which such Person directly or indirectly owns or controls a majority of the securities or other interests
having by their terms ordinary voting power to elect a majority of the board of directors or others performing similar functions with respect to such corporation or other organization or any organization of which such Person or any of its
Subsidiaries is, directly or indirectly, a general partner or managing member and (b) with respect to the Company only, in addition to any Subsidiary falling under clause (a) above, any corporation, partnership, joint venture, business,
trust, special purpose vehicle or other Person owned, directly or indirectly, by the Company.
“Surviving Corporation” has the meaning specified in Section
2.1(b).
“Surviving Corporation Board” has the meaning specified in Section
8.7(a).
“Surviving Corporation Common Stock” means the shares of
common stock, par value $0.0001 per share, of the Surviving Corporation.
“Surviving Corporation Option” has the meaning specified in Section
3.3(a).
“Tax Return” means any return, declaration, report, statement,
information statement or other document filed or required to be filed with any Governmental Authority with respect to Taxes, including any claims for refunds of Taxes, any information returns and any schedules, attachments, amendments or
supplements of any of the foregoing.
TABLE OF CONTENTS
“Taxes” means any and all federal, state, local, foreign or
other taxes imposed by any Governmental Authority, including all income, gross receipts, license, payroll, recapture, net worth, employment, excise, severance, stamp, occupation, premium, windfall profits, environmental, customs duties, capital
stock, ad valorem, value added, inventory, franchise, profits, withholding, social security (or similar), unemployment, disability, real property, personal property, assessments, sales, use, transfer, registration, governmental charges, duties,
levies and other similar charges imposed by a Governmental Authority in the nature of a tax, alternative or add-on minimum, or estimated taxes, and including any interest, penalty, or addition thereto.
“Terminating Acquiror Breach” has the meaning specified in Section
10.1(c)(iv).
“Terminating Company Breach” has the meaning specified in Section
10.1(d).
“Top Customers” has the meaning specified in Section
4.32(a).
“Top Vendors” has the meaning specified in Section
4.32(b).
“Transaction Proposals” has the meaning specified in Section
8.2(b).
“Treasury Regulations” means the regulations promulgated under
the Code by the United States Department of the Treasury (whether in final, proposed or temporary form), as the same may be amended from time to time.
“Treasury Share” has the meaning specified in Section
3.1(a)(i).
“Trust Account” has the meaning specified in Section
11.1.
“Trust Agreement” has the meaning specified in Section
5.8.
“Trustee” has the meaning specified in Section 5.8.
“Valuation Firm” has the meaning specified in Section
2.4(f)(i).
“Warrant Agreement” means the Warrant Agreement, dated as of
February 4, 2021, between Acquiror and Continental Stock Transfer & Trust Company.
“Warrant Agreement Amendment” has the meaning specified in Section
7.10.
“Warrant Conversion Approval” means the adoption and approval
of the Warrant Agreement Amendment and the Warrant Exchange by the affirmative vote of (a) holders of at least sixty-five percent (65%) of the issued and outstanding Acquiror Public Warrants and (b) holders of at least sixty-five percent (65%)
of the issued and outstanding Acquiror Private Warrants, in each case pursuant to resolutions adopted at a duly called meeting of holders of Acquiror Public Warrants and Acquiror Private Warrants in accordance with the terms and subject to the
conditions of the Warrant Agreement.
“Warrant Exchange” has the meaning specified in Section
7.10.
“Warrant Exchange Shares” has the meaning specified in Section
7.10.
“Working Capital Loans” means the outstanding loans made to
Acquiror by the Sponsor, an Affiliate of the Sponsor, RMG Acquisition Management, or any of Acquiror’s officers or directors as of the Effective Time as set forth on Section 1.1 of the Acquiror Disclosure Letter, for the purpose of
financing costs and expenses incurred in connection with Acquiror’s initial public offering of its securities or a Business Combination as well as the continued working capital expenditures of Acquiror.
Section 1.2
Construction.
(a) Unless the context of this Agreement otherwise requires,
(i) words of any gender include each other gender; (ii) words using the singular or plural number also include the plural or singular number, respectively; (iii) the terms “hereof,” “herein,” “hereby,” “hereto” and derivative or similar words
refer to this entire Agreement; (iv) the terms “Article” or “Section” refer to the specified Article or Section of this Agreement; (v) the word “including” shall mean “including, without limitation” and (vi) the word “or” shall be disjunctive
but not exclusive.
(b) Unless the context of this Agreement otherwise requires,
references to statutes shall include all regulations promulgated thereunder and references to statutes or regulations shall be construed as including all statutory and regulatory provisions consolidating, amending or replacing the statute or
regulation.
TABLE OF CONTENTS
(c) Whenever this Agreement refers to a number of days, such
number shall refer to calendar days unless Business Days are specified. If any action is to be taken or given on or by a particular calendar day, and such calendar day is not a Business Day, then such action may be deferred until the next
Business Day.
(d) All accounting terms used herein and not expressly defined
herein shall have the meanings given to them under GAAP.
(e) The term “actual fraud” means, with respect to a Party to
this Agreement, an actual and intentional fraud with respect to the making of the representations and warranties pursuant to Article IV or Article V (as applicable); provided that such actual and intentional fraud of
such Person shall only be deemed to exist if any of the individuals included on Section 1.3 of the Company Disclosure Letter (in the case of the Company) or Section 1.3 of the Acquiror Disclosure Letter (in the case of Acquiror)
had actual knowledge (as opposed to imputed or constructive knowledge) that the representations and warranties made by such Person pursuant to, in the case of the Company, Article IV as qualified by the Company Disclosure Letter, or, in
the case of Acquiror, Article V as qualified by the Acquiror Disclosure Letter, were actually breached when made, with the express intention that the other Party to this Agreement rely thereon to its detriment.
Section 1.3
Knowledge. As
used herein, (i) the phrase “to the knowledge” of the Company means the knowledge of the individuals identified on
Section 1.3 of the Company Disclosure Letter and (ii) the phrase “to the knowledge” of Acquiror means the knowledge of
the individuals identified on
Section 1.3 of the Acquiror Disclosure Letter, in each case, as such individuals would have acquired in the exercise of a reasonable inquiry of direct reports.
ARTICLE II
THE MERGER; CLOSING
(a) Upon the terms and subject to the conditions set forth in this
Agreement, and at least one (1) Business Day following the Domestication, the Company shall be merged with and into Acquiror, with Acquiror being the surviving corporation in the Merger (Acquiror and the Company sometimes being referred to
herein as the “Constituent Corporations”). The Merger shall be consummated in accordance with this Agreement, and shall be evidenced by a certificate of merger with respect to the Merger (as so filed, the “Merger Certificate”),
executed by the Constituent Corporations in accordance with the relevant provisions of the DGCL, such Merger to be effective as of the Effective Time.
(b) Upon consummation of the Merger, the separate corporate
existence of the Company shall cease and Acquiror, as the surviving corporation of the Merger (hereinafter referred to for the periods at and after the Effective Time as the “Surviving Corporation”), shall continue its corporate
existence under the DGCL.
Section 2.2
Effects of the
Merger. At and after the Effective Time, the Surviving Corporation shall thereupon and thereafter possess all of the rights, privileges, powers and franchises, of a public as well as a private nature, of the Constituent Corporations, and
shall become subject to all the restrictions, disabilities and duties of each of the Constituent Corporations; and all rights, privileges, powers and franchises of each Constituent Corporation, and all property, real, personal and mixed, and
all debts due to each such Constituent Corporation, on whatever account, shall become vested in the Surviving Corporation; and all property, rights, privileges, powers and franchises, and all and every other interest shall become thereafter the
property of the Surviving Corporation as they are of the Constituent Corporations; and the title to any real property vested by deed or otherwise or any other interest in real estate vested by any instrument or otherwise in either of such
Constituent Corporations shall not revert or become in any way impaired by reason of the Merger;
provided,
however, that all Liens upon any property of a Constituent Corporation shall thereafter attach to the Surviving
Corporation and shall be enforceable against it to the same extent as if said debts, liabilities and duties had been incurred or contracted by it; all of the foregoing in accordance with the applicable provisions of the DGCL.
Section 2.3
Closing; Effective
Time.
(a) In accordance with the terms and subject to the conditions of
this Agreement, the closing of the Merger (the “Closing”) shall take place electronically by exchange of the closing deliverables as promptly as reasonably practicable, but in no event later than the date which is five (5) Business Days
after the
TABLE OF CONTENTS
first date on which all conditions set forth in Article IX shall have been
satisfied or waived (other than those conditions that by their terms are to be satisfied at the Closing, but subject to the satisfaction or waiver thereof) or such other time and place as Acquiror and the Company may mutually agree in writing.
The date on which the Closing actually occurs is referred to in this Agreement as the “Closing Date.”
(b) Subject to the satisfaction or waiver of all of the conditions
set forth in Article IX of this Agreement, and provided this Agreement has not theretofore been terminated pursuant to its terms, on the Closing Date, Acquiror and the Company shall cause the Merger Certificate to be executed
and duly submitted for filing with the Secretary of State of the State of Delaware in accordance with the applicable provisions of the DGCL. The Merger shall become effective at the time when the Merger Certificate has been accepted for filing
by the Secretary of State of the State of Delaware, or at such later time as may be agreed by Acquiror and the Company in writing and specified in the Merger Certificate (the “Effective Time”).
Section 2.4
Pre-Closing
Deliverables.
(a) As soon as reasonably practicable following completion of the
Capital Raise Transaction, the Company shall prepare and deliver to Acquiror a statement setting forth the Company’s good faith calculation of the (i) Capital Raise Amount and (ii) in the event that a Debt Raise Transaction has been
consummated, the Debt Transaction Pre-Money Valuation Schedule, in each case in reasonable detail to allow Acquiror to deliver the Preliminary Closing Statement pursuant to Section 2.4(d).
(b) At least five (5) Business Days prior to the Closing Date, the
Company shall prepare and deliver to Acquiror a statement setting forth the Company’s good faith estimate and calculation of the Company Transaction Expenses as of the Closing Date (in reasonable detail and with supporting documentation),
including the respective amounts and wire transfer instructions for the payment of all Company Transaction Expenses, together with corresponding invoices therefor (the “Company Closing Statement”).
(c) At least five (5) Business Days prior to the Closing Date,
Acquiror shall prepare and deliver to the Company a statement setting forth Acquiror’s good faith estimate and calculation of the (i) aggregate amount paid or payable in connection with all Acquiror Share Redemptions (and total cash proceeds
from the Trust Account remaining following the Acquiror Share Redemptions), (ii) the amount of Warrant Exchange Shares utilized in the Warrant Exchange, and (iii) Acquiror Transaction Expenses as of the Closing Date (in each case, in reasonable
detail and with reasonable supporting documentation), including the respective amounts and wire transfer instructions for the payment of all Acquiror Transaction Expenses, together with corresponding invoices therefor (the “Acquiror Closing
Statement”).
(d) At least four (4) Business Days prior to the Closing Date, the
Company shall prepare and deliver to Acquiror a certificate signed by an officer of the Company, dated as of the date of such certificate, setting forth the Company’s good faith calculations of: (A) the Aggregate Fully Diluted Company Common
Stock (including the calculation of each component thereof together with reasonable supporting detail and documentation); (B) the Closing Date Purchase Price (including the calculation of each component thereof together with reasonable
supporting detail and documentation); (C) the Aggregate Closing Date Merger Consideration (including the calculation of each component thereof together with reasonable supporting detail and documentation); (D) the Founder Consideration Shares;
(E) the Exchange Ratio (including the calculation of each component thereof together with reasonable supporting detail and documentation); (F) the number of shares of Surviving Corporation Common Stock that each applicable holder is entitled to
receive pursuant to Section 3.1(a) (including the calculation of each component thereof together with reasonable supporting detail and documentation); and (G) the number of shares subject to Surviving Corporation Options that each
applicable option holder is entitled to receive pursuant to Section 3.3(a) (including the calculation of each component thereof together with reasonable supporting detail and documentation) (collectively, the “Preliminary Closing
Statement”).
(e) Acquiror shall have the right to review and comment on the
calculations and estimates set forth in the Preliminary Closing Statement so delivered by the Company pursuant to Section 2.4(d). The Company shall consider in good faith any such comments made by Acquiror, and the Company and Acquiror
shall cooperate with each other through the Closing Date and use good faith efforts to resolve any differences regarding the calculations and estimates contained in the Preliminary Closing Statement (including any updates or revisions thereof).
The Company shall, and shall cause its Representatives to, cooperate in good
TABLE OF CONTENTS
faith with Acquiror and its Representatives in the review of the Preliminary Closing
Statement (including engaging in good faith discussions related thereto) and revise the Preliminary Closing Statement if necessary to reflect Acquiror’s comments. If the Preliminary Closing Statement is so revised, such revised Preliminary
Closing Statement, or if Acquiror had no such comments, then the initial Preliminary Closing Statement, shall be deemed to be the final, conclusive and binding “closing statement” of the Parties for the purposes of this Agreement (the “Closing
Statement”).
(f) In the event that a Senior Debt Raise Event has occurred in
connection with a consummated Debt Raise Transaction, and the Parties fail to reach an agreement with respect to the Closing Date Purchase Price, then:
(i) within ten (10) days of the expiration of the Resolution Period,
the Parties shall mutually select and engage a nationally recognized independent valuation firm (the “Valuation Firm”), who, acting as experts and not arbitrators, shall make a determination of the Closing Date Purchase Price. The
Parties shall cooperate with the Valuation Firm with the intent to fairly and in good faith resolve all disputes relating to the Closing Date Purchase Price as promptly as reasonably practicable;
(ii) in connection with the Valuation Firm’s review: (A) the Parties
shall furnish or cause to be furnished to the Valuation Firm such information and documents as each Party deems relevant, with copies of such submission and all such documents and information being promptly given to the other party; (B) the
Valuation Firm shall be permitted to submit written questions of either Party and ask for additional information from either Party relating to the dispute, and any responses by either Party shall be provided in writing to the Valuation Firm,
with copies of such responses being promptly given to the other Party; (C) no ex parte communications with the Valuation Firm shall be initiated by either Party; and (D) the Valuation Firm shall make
its determination based on the materials it receives in accordance with this Agreement and not pursuant to any independent review (provided that, the foregoing shall not preclude the Valuation Firm from independent research as to the terms of
this Agreement). The Valuation Firm may conduct a conference concerning the objections of, and disagreements between, the Parties, at which conference each party shall have the right to (1) present its documents, materials and other evidence
(previously provided to the Valuation Firm and the other Party), and (2) have present its advisors, accountants, counsel and other representatives; and
(iii) The Parties shall request that the determination by the
Valuation Firm be delivered in a detailed written report to the Parties within thirty (30) days of the engagement of the Valuation Firm, which report shall set forth the Closing Date Purchase Price. The fees and expenses of the Valuation Firm
incurred in connection with the final determination of the Closing Date Purchase Price by the Valuation Firm shall be borne by the Acquiror on the one hand, and by the Company, on the other hand, based upon the percentage of the aggregate
disputed amounts that is resolved in favor of Acquiror and the Company, respectively, as determined by the Valuation Firm.
Section 2.5
Closing
Deliverables.
(a) At the Closing, the Company will deliver or cause to be
delivered:
(i) to Acquiror, a certificate signed by an officer of the Company,
dated as of the Closing Date, certifying that, to the knowledge and belief of such officer, the conditions specified in Section 9.2(a) and Section 9.2(b) have been fulfilled;
(ii) to Acquiror, the written resignations of all of the directors
of the Company (other than any such Persons identified as initial directors of the Surviving Corporation, in accordance with Section 2.7 and Section 8.7), effective as of the Effective Time;
(iii) to Acquiror, written evidence (reasonably satisfactory to
Acquiror) of the termination of the Company Stockholders Agreement according to its terms;
(iv) to Acquiror, the Registration Rights Agreement, duly executed
by the Company Stockholders party thereto;
(v) to Acquiror, the Lock-Up Agreement, duly executed by the Company
Stockholders representing eighty percent (80%) of the shares of Company Common Stock outstanding immediately prior to the Effective Time,
TABLE OF CONTENTS
(vi) to Acquiror, if the Ardachon Proceedings shall not have been
terminated prior to Closing, a letter agreement addressing the obligations set forth on Section 2.5(a)(vi) of the Company Disclosure Letter; and
(vii) to Acquiror, a certificate on behalf of the Company, prepared
in a manner consistent and in accordance with the requirements of Treasury Regulation Sections 1.897-2(g), (h) and 1.1445-2(c)(3), certifying that no interest in the Company is, or has been during the relevant period specified in Section
897(c)(1)(A)(ii) of the Code, a “U.S. real property interest” within the meaning of Section 897(c) of the Code, and a form of notice to the Internal Revenue Service prepared in accordance with the provisions of Treasury Regulations Section
1.897-2(h)(2).
(b) At the Closing, Acquiror will deliver or cause to be delivered:
(i) to the Exchange Agent, the Aggregate Closing Date Merger
Consideration for further distribution to the Company Stockholders pursuant to Section 3.2;
(ii) to the Company, a certificate signed by an officer of Acquiror,
dated the Closing Date, certifying that, to the knowledge and belief of such officer, the conditions specified in Section 9.3(a) and Section 9.3(b) have been fulfilled;
(iii) to the Company, the Registration Rights Agreement and each
Lock-Up Agreement, duly executed by duly authorized Representatives of Acquiror and the Sponsor, and the other parties thereto;
(iv) to the Company, the written resignations of all of the
directors and officers of Acquiror (other than those Persons identified as the initial directors and officers, respectively, of the Surviving Corporation after the Effective Time, in accordance with the provisions of Section 2.7 and Section
8.7), effective as of the Effective Time;
(v) to the Company, a time-stamped copy of the certificate issued by
the Secretary of State of the State of Delaware in relation to the Domestication; and
(vi) to the Company, an Internal Revenue Service Form W-9.
Section 2.6
Governing
Documents. The certificate of incorporation and bylaws of Acquiror as of immediately prior to the Effective Time (which shall be in substantially the form attached as
Exhibits A and
B hereto upon effectiveness of the
Domestication), shall be amended and restated in their entirety at the Effective Time and, as so amended and restated, shall be the certificate of incorporation and bylaws of the Surviving Corporation from and after the Effective Time, until
thereafter amended or modified as provided therein and under the DGCL.
Section 2.7
Directors and
Officers of the Surviving Corporation. The Parties shall take all actions necessary to ensure that, from and after the Effective Time, the Persons identified as the initial post-Closing directors and officers of the Surviving Corporation
in accordance with the provisions of
Section 8.7 shall be the directors and officers (and in the case of such officers, holding such positions as are set forth on
Section 2.7 of the Company Disclosure Letter), respectively, of
the Surviving Corporation, each to hold office in accordance with the Governing Documents of the Surviving Corporation.
ARTICLE III
EFFECTS OF THE MERGER ON ACQUIROR AND COMPANY SECURITIES
Section 3.1
Conversion of
Acquiror and Company Securities.
(a) At the Effective Time, by virtue of the Merger and without any
action on the part of Acquiror, the Company or holders of any of the following securities:
(i) each share of Company Common Stock issued and outstanding
immediately prior to the Effective Time (other than (1) any shares of Company Common Stock subject to Company Options (which shall be subject to Section 3.3(a)), (2) any shares of Company Common Stock held in the treasury of the Company
(each such share, a “Treasury Share”) and (3) any Dissenting Shares (which shall be subject to Section 3.5)), shall be canceled and converted into the right to receive the applicable portion of the Aggregate Closing Date Merger
Consideration as determined pursuant to Section 3.1(b);
TABLE OF CONTENTS
(ii) each Treasury Share issued and outstanding immediately prior
to the Effective Time shall be canceled as part of the Merger and no consideration shall be paid in respect thereto;
(iii) each share of Domesticated Acquiror Class A Stock issued and
outstanding immediately prior to the Effective Time shall remain as an issued and outstanding share of Surviving Corporation Common Stock; and
(iv) a number of shares of Domesticated Acquiror Class B Stock equal
to the number of Founder Consideration Shares shall convert into issued and outstanding shares of Surviving Corporation Common Stock and the remaining shares of Domesticated Acquiror Class B Stock issued and outstanding shall be canceled as
part of the Merger and no consideration shall be paid thereof.
(b) Each holder of issued and outstanding shares of Company Common
Stock as of immediately prior to the Effective Time (other than (i) any shares of Company Common Stock subject to Company Options, (ii) Treasury Shares and (iii) Dissenting Shares) shall be entitled to receive a portion of the Aggregate Closing
Date Merger Consideration equal to (A) the Exchange Ratio, multiplied by (B) the number of shares of Company Common Stock held by such holder as of immediately prior to the Effective Time.
(c) Notwithstanding anything in this Agreement to the contrary, no
fractional shares of Surviving Corporation Common Stock shall be issued in the Merger, and each Person who would otherwise be entitled to a fraction of a share of Surviving Corporation Common Stock (after aggregating all fractional shares of
Surviving Corporation Common Stock that otherwise would be received by such Person in connection with the Closing) shall instead have the number of shares of Surviving Corporation Common Stock issued to such Person rounded up to the nearest
whole shares of Surviving Corporation Common Stock.
Section 3.2
Exchange
Procedures.
(a) Prior to the Closing, Acquiror shall appoint an exchange agent
(the “Exchange Agent”) to act as the agent for the purpose of paying the Aggregate Closing Date Merger Consideration to the Company Stockholders. At or before the Effective Time, Acquiror shall deposit with the Exchange Agent the number
of shares of Domesticated Acquiror Class A Stock equal to the portion of the Aggregate Closing Date Merger Consideration to be paid in shares of Surviving Corporation Common Stock.
(b) Reasonably promptly after the date hereof and prior to the
Effective Time, the Surviving Corporation shall send or shall cause the Exchange Agent to send, to each record holder of shares of Company Common Stock entitled to receive a portion of the Aggregate Closing Date Merger Consideration, as of
immediately prior to the Effective Time, whose Company Common Stock will be converted pursuant to Section 3.1(a) into the right to receive a portion of the Aggregate Closing Date Merger Consideration, a letter of transmittal and
instructions (which shall specify that the delivery shall be effected, and the risk of loss and title shall pass, only upon proper transfer of each share of Company Common Stock to the Exchange Agent, and which letter of transmittal will be in
customary form and have such other provisions as Acquiror may reasonably specify) for use in such exchange (each, a “Letter of Transmittal”).
(c) Each holder of shares of Company Common Stock that have been
converted into the right to receive a portion of the Aggregate Closing Date Merger Consideration, pursuant to Section 3.1(a), shall be entitled to receive such portion of the Aggregate Closing Date Merger Consideration, upon receipt of
an “agent’s message” by the Exchange Agent (or such other evidence, if any, of transfer as the Exchange Agent may reasonably request), together with a duly completed and validly executed Letter of Transmittal and such other documents as may
reasonably be requested by the Exchange Agent. No interest shall be paid or accrued upon the transfer of any share.
(d) Promptly following the date that is one (1) year after the
Effective Time, the Surviving Corporation shall instruct the Exchange Agent to deliver to the Surviving Corporation all documents in its possession relating to the transactions contemplated hereby, and the Exchange Agent’s duties shall
terminate. Thereafter, any portion of the Aggregate Closing Date Merger Consideration that remains unclaimed shall be returned to the Surviving Corporation, and any Person that was a holder of shares of Company Common Stock as of immediately
prior to the Effective Time that has not exchanged such shares of Company Common Stock for an applicable portion of the Aggregate Closing Date Merger Consideration in accordance with this Section 3.2 prior to the date that is one (1)
year after the Effective Time, may transfer such shares of Company Common Stock to the Surviving Corporation and (subject to applicable abandoned property,
TABLE OF CONTENTS
escheat and similar Laws) receive in consideration therefor, and the Surviving
Corporation shall promptly deliver, such applicable portion of the Aggregate Closing Date Merger Consideration without any interest thereupon. None of Acquiror, the Company, the Surviving Corporation or the Exchange Agent shall be liable to any
Person in respect of any of the Aggregate Closing Date Merger Consideration delivered to a public official pursuant to and in accordance with any applicable abandoned property, escheat or similar Laws. If any such shares of Company Common Stock
shall not have not been transferred immediately prior to such date on which any amounts payable pursuant to this Article III would otherwise escheat to or become the property of any Governmental Authority, any such amounts shall, to the
extent permitted by applicable Law, become the property of the Surviving Corporation, free and clear of all claims or interest of any Person previously entitled thereto.
Section 3.3
Treatment of
Company Options.
(a) As of the Effective Time, each Company Option that is then
outstanding shall be canceled and converted into the right to receive an option to purchase shares of Surviving Corporation Common Stock upon substantially the same terms and conditions as are in effect with respect to the corresponding Company
Option immediately prior to the Effective Time, including with respect to vesting and termination-related provisions (each, a “Surviving Corporation Option”), except that (x) such Surviving Corporation Option shall relate to that whole
number of shares of Surviving Corporation Common Stock (rounded down to the nearest whole share) equal to the number of shares of Company Common Stock subject to such Company Option immediately prior to the Effective Time, multiplied by the Exchange Ratio, and (y) the exercise price per share for each such Surviving Corporation Option shall be equal to the exercise price per share of such Company Option in effect immediately
prior to the Effective Time, divided by the Exchange Ratio (rounded up to the nearest full cent); provided, however, that the conversion of the Company Options will be made in a manner
consistent with Treasury Regulation Section 1.424-1, such that such conversion will not constitute a “modification” of such Company Options for purposes of Section 409A or Section 424 of the Code.
(b) The Company shall take all necessary actions to effect the
treatment of the Company Options pursuant to Section 3.3(a) and the Surviving Corporation shall use commercially reasonable efforts to ensure that no Surviving Corporation Option may be exercised prior to the effective date of an
applicable Form S-8 (or other applicable registration statement, including Form S-3) of the Surviving Corporation.
Section 3.4
Withholding.
Notwithstanding any other provision to this Agreement, Acquiror, the Company, the Surviving Corporation and the Exchange Agent, as applicable, shall be entitled to deduct and withhold from any amount payable pursuant to this Agreement such
Taxes as are required to be deducted and withheld from such amounts under the Code or any other applicable Law;
provided, that upon becoming aware of any such deduction or withholding obligation (other than where such deduction or
withholding is in respect of amounts treated as compensation under the Code), Acquiror, the Company, the Surviving Corporation or the Exchange Agent, as applicable, shall use reasonable best efforts to provide reasonable advance notice of such
withholding to the Person in respect of whom such amounts are intended to be deducted or withheld and shall reasonably cooperate with the relevant Parties in good faith to eliminate or reduce any such required deduction or withholding. To the
extent that any amounts are so deducted and withheld, such deducted and withheld amounts shall be (a) timely remitted to the appropriate Governmental Authority and (b) to the extent duly remitted, treated for all purposes of this Agreement as
having been paid to the Person in respect of which such deduction and withholding was made.
Section 3.5
Dissenting Shares.
Notwithstanding any provision of this Agreement to the contrary, shares of Company Common Stock issued and outstanding immediately prior to the Effective Time and held by a holder who has not voted in favor of adoption and approval of this
Agreement or consented thereto in writing and who is entitled to demand and has properly exercised appraisal rights of such shares in accordance with Section 262 of the DGCL (such shares of Company Common Stock being referred to collectively as
the “
Dissenting Shares” until such time as such holder fails to perfect or otherwise waives, withdraws, or loses such holder’s appraisal rights under the DGCL with respect to such shares) shall not be converted into a right to receive a
portion of the Aggregate Closing Date Merger Consideration, but instead shall be entitled to only such rights as are granted by Section 262 of the DGCL;
provided,
however, that if, after the Effective Time, such holder fails to
perfect, waives, withdraws or loses such holder’s right to appraisal pursuant to Section 262 of the DGCL, or if a court of competent jurisdiction shall determine that such holder is not entitled to the relief provided by Section 262 of the
DGCL, such shares of Company Common Stock shall be treated as if they had been converted as of the
TABLE OF CONTENTS
Effective Time into the right to receive the Aggregate Closing Date Merger
Consideration in accordance with Section 3.1(a) upon transfer of such shares. The Company shall provide Acquiror prompt written notice of any demands received by the Company for appraisal of shares of Company Common Stock, any waiver or
withdrawal of any such demand, and any other demand, notice, or instrument delivered to the Company prior to the Effective Time that relates to such demand. Except with the prior written consent of Acquiror (which consent shall not be
unreasonably conditioned, withheld, delayed or denied), the Company shall not make any payment with respect to, or settle, or offer to settle, any such demands.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the disclosure letter delivered to Acquiror by
the Company on the date of this Agreement (the “Company Disclosure Letter”) (each section of which, subject to Section 11.9, qualifies the correspondingly numbered and lettered representations in this Article IV), in each
case, the Company represents and warrants to Acquiror as follows:
Section 4.1
Company
Organization. The Company has been duly incorporated and is validly existing under the Laws of its jurisdiction of incorporation, and has the requisite corporate power and authority to own, lease or operate all of its properties and
assets and to conduct its business as it is now being conducted. The Governing Documents of the Company, as amended to the date of this Agreement and as previously made available by or on behalf of the Company to Acquiror, are true, correct and
complete. The Company is duly licensed or qualified and in good standing as a foreign or extra-provincial corporation (or other entity, if applicable) in each jurisdiction in which its ownership of property or the character of its activities is
such as to require it to be so licensed or qualified or in good standing, as applicable, except where the failure to be so licensed or qualified or in good standing would not be material to the business of the Company and its Subsidiaries,
taken as a whole.
Section 4.2
Subsidiaries.
A complete list of each Subsidiary of the Company, including with respect to each Subsidiary (a) its jurisdiction of incorporation, formation or organization, as applicable, (b) its authorized, issued and outstanding shares or other equity
interests (if applicable), and (c) the ownership of such equity interests, is set forth on
Section 4.2 of the Company Disclosure Letter. The Subsidiaries of the Company have been duly incorporated, formed or organized, as applicable,
and are validly existing under the Laws of their jurisdiction of incorporation, formation or organization, as applicable, and have the requisite power and authority to own, lease or operate all of their respective properties and assets and to
conduct their respective businesses as they are now being conducted. True, correct and complete copies of the Governing Documents of each Subsidiary of the Company, as amended to the date of this Agreement, have been previously made available
to Acquiror by or on behalf of the Company. Each Subsidiary of the Company is duly licensed or qualified and in good standing as a foreign or extra-provincial corporation (or other entity, if applicable) in each jurisdiction in which its
ownership of property or the character of its activities is such as to require it to be so licensed or qualified or in good standing, as applicable, except where the failure to be so licensed or qualified or in good standing would not be
material to its and the Company’s business, taken as a whole. Except with respect to the Company’s Subsidiaries, the Company does not directly or indirectly own any equity or similar interest in, or any interest convertible into or exchangeable
or exercisable for any equity in, any other corporation, partnership, joint venture or business association or other entity.
Section 4.3
Spanish
Subsidiaries. None of the Spanish Subsidiaries are subject to any mandatory cause for dissolution pursuant to Section 363 of Spanish Companies Act.
Section 4.4
Insolvency. No
order has been made, petition presented or meeting (of equityholders or otherwise) convened for the bankruptcy, winding up (voluntary or mandatory) or granting of pre-insolvency protection under the relevant applicable Laws (including, without
limitation, the Spanish Insolvency Act) or for the appointment of any provisional liquidator or in relation to any other process whereby the assets of the Company or any of its Subsidiaries are distributed amongst its creditors or shareholders
or other contributors, and there are no Actions under any applicable bankruptcy, insolvency, reorganization, corporate or similar applicable Law, that would be reasonably likely to justify any such cases or Actions. No receiver or trustee has
been appointed in respect of the whole or any part of any of the property or assets of the Company or any of its Subsidiaries, nor has any such order been made (including, in any relevant jurisdiction, any other order by which, during the
period it is in force, the affairs and assets of the Company are managed by a person appointed for the purpose by a Governmental Authority). Neither the Company nor any Subsidiary has taken any steps with
TABLE OF CONTENTS
a view to a suspension of payments or a moratorium of any indebtedness or for the
granting of pre-insolvency protection under the Laws of any applicable jurisdiction (including the Spanish Insolvency Act) or has made or is negotiating any voluntary arrangement with any of its creditors or is insolvent or unable to pay its
debts as they become due. The Company has provided Acquiror with up-to-date, true and accurate information relating to the Ardachon Proceedings and such information has been completed in all material respects.
Section 4.5
Due
Authorization.
(a) Other than the Company Stockholder Approvals, the Company has
all requisite company or corporate power, as applicable, and authority to (i) execute and deliver this Agreement and each of the Ancillary Agreements, (ii) subject to the approvals described in Section 4.7 of the Company Disclosure
Letter, consummate the transactions contemplated hereby and thereby and (iii) perform all of its obligations hereunder and thereunder. The execution and delivery of this Agreement and the other documents contemplated hereby to which the Company
is a party and the consummation of the transactions contemplated hereby and thereby have been duly and validly authorized and approved by the Company Board. This Agreement has been, and on or prior to the Closing, the other documents
contemplated hereby to which the Company is a party will be, duly and validly executed and delivered by the Company and this Agreement constitutes, and on or prior to the Closing, the other documents contemplated hereby to which the Company is
a party will constitute, assuming due authorization, execution and delivery by the other parties thereto, a legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, subject to applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and similar Laws affecting creditors’ rights generally and subject, as to enforceability, to general principles of equity (the “Enforceability Exceptions”).
(b) On or prior to the date of this Agreement, the Company Board has
duly adopted resolutions (i) determining that this Agreement and the other documents contemplated hereby to which the Company is a party and the transactions contemplated hereby and thereby are advisable and fair to, and in the best interests
of, the Company and the Company Stockholders, (ii) authorizing and approving the execution, delivery and performance by the Company of this Agreement and the other documents contemplated hereby to which the Company is a party and the
transactions contemplated hereby and thereby and (iii) recommending the adoption and approval of this Agreement and the other documents contemplated hereby to which the Company is a party and the transactions contemplated hereby and thereby by
the Company Stockholders. Other than the Company Stockholder Approval, no other corporate action is required on the part of the Company or any of the Company Stockholders to enter into this Agreement or the documents to which the Company is a
party contemplated hereby or to approve the Merger.
Section 4.6
No Conflict.
Subject to the receipt of the consents, approvals, authorizations and other requirements set forth in
Section 4.7 and except as set forth on
Section 4.6 of the Company Disclosure Letter, the execution and delivery by the
Company of this Agreement and the documents to which the Company is a party contemplated hereby and the consummation of the transactions contemplated hereby and thereby do not and will not (a) violate or conflict with any provision of, or
result in the breach of, or default under the Governing Documents of the Company or the Company Stockholders Agreement as in effect on the date hereof, (b) violate or conflict with any provision of, or result in the breach of, or default under
any Law or Governmental Order applicable to the Company or any of the Company’s Subsidiaries, (c) violate or conflict with any provision of, or result in the breach of, result in the loss of any right or benefit, or cause acceleration, or
trigger vesting or increase the amount of any compensation or benefit payable, or constitute (with or without due notice or lapse of time or both) a default (or give rise to any right of termination, cancellation or acceleration), or require
consent from or notice to the counterparty, under any Contract of the type described in
Section 4.16(a) to which the Company or any of the Company’s Subsidiaries is a party or by which the Company or any of the Company’s Subsidiaries
may be bound, or terminate or result in the termination of any such foregoing Contract, (d) result in the creation of any Lien (other than Permitted Liens) upon any of the properties or assets of the Company or any of the Company’s
Subsidiaries, or (e) result in a violation or revocation of Licenses or any Grants, except, in the case of
clauses (b) through
(e), to the extent that the occurrence of the foregoing would not have, or would not reasonably be
expected to have, individually or in the aggregate, a material adverse effect on (i) the ability of the Company to enter into and perform their obligations under this Agreement or (ii) the business of the Company and its Subsidiaries, taken as
a whole.
TABLE OF CONTENTS
Section 4.7
Governmental
Authorities; Consents. Except as set forth on
Section 4.7 of the Company Disclosure Letter, assuming the truth and completeness of the representations and warranties of Acquiror contained in this Agreement, no consent, waiver,
approval or authorization of, or designation, declaration or filing with, or notification to, any Governmental Authority (each, a “
Governmental Authorization”) is required on the part of the Company or its Subsidiaries with respect to
the Company’s execution and delivery of this Agreement or any Ancillary Agreement or the consummation of the transactions contemplated hereby and thereby, except for (a) applicable requirements pursuant to the HSR Act; (b) any consents,
approvals, authorizations, designations, declarations, waivers or filings, the absence of which would not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the ability of the Company to perform or
comply with on a timely basis any material obligation of the Company under this Agreement or any Ancillary Agreement or to consummate the transactions contemplated hereby and thereby and (c) the filing of the Merger Certificate in accordance
with the DGCL.
Section 4.8
Government
Authorities; TID U.S. Business. The Company and its Subsidiaries do not (a) produce, design, test, manufacture, fabricate or develop any “critical technologies” as that term is defined as of the date hereof in 31 C.F.R. § 800.215; (b)
perform the functions as set forth in column 2 of appendix A to 31 C.F.R. Part 800 with respect to “covered investment critical infrastructure”, as that term is defined as of the date hereof in 31 C.F.R. § 800.212; or (c) maintain or collect
“sensitive personal data”, as described as of the date hereof in 31 C.F.R. § 800.241, and have no demonstrated business objective to do so in the future. For the avoidance of doubt, “as that term is defined as of the date hereof” or “as
described as of the date hereof” each include, for purposes of the representations in the preceding sentence, the version in effect as of the date hereof of any other statutes, regulations, and other legal authorities cited by the authorities
referenced in the preceding sentence.
Section 4.9
Capitalization of
the Company.
(a) Except as set forth on Section 4.9(a) of the Company
Disclosure Letter, as of the date of this Agreement, the authorized capital stock of the Company consists of 10,000,000 shares of Company Common Stock, of which 10,000,000 shares are issued and outstanding as of the date of this Agreement, and
there are no other authorized equity interests of the Company that are issued and outstanding. Except as set forth on Section 4.9(a) of the Company Disclosure Letter, all of the issued and outstanding shares of Company Common Stock (w)
have been duly authorized and validly issued and are fully paid and non-assessable; (x) have been offered, sold and issued in compliance in all material respects with applicable Law, including federal and state securities Laws, and all
requirements set forth in (1) the Governing Documents of the Company and (2) any other applicable Contracts (including the Company Stockholders Agreement) governing the issuance of such securities; (y) are not subject to, nor have they been
issued in violation of, any purchase option, call option, right of first refusal, preemptive right, subscription right or any similar right under any provision of any applicable Law, the Governing Documents of the Company or any Contract to
which the Company is a party or otherwise bound (including the Company Stockholders Agreement); and (z) are free and clear of any Liens other than Liens imposed under the Governing Documents of the Company or Permitted Liens.
(b) As of the date of this Agreement, Company Options to purchase
623,966 shares of Company Common Stock (excluding any Company Options that have been granted pursuant to the formula as described in Section 4.9(b) of the Company Disclosure Letter), of which 68,966 are exercisable as of the date of
this Agreement (including pursuant to an early exercise feature). Section 4.9(b) of the Company Disclosure Letter includes a true and complete list of each Company Option that is outstanding as of the date of this Agreement, including
the Employee, consultant or director of the Company or any of its Subsidiaries who holds such Company Option, the number of shares of Company Common Stock subject thereto, the vesting schedule thereof (including whether the Company Option is
subject to an early exercise feature) and the exercise price thereof. All Company Options are evidenced by award agreements in substantially the forms previously made available to Acquiror, and no Company Options are subject to terms that are
materially different from those set forth in such forms. Each Company Option was validly issued and properly approved by the Company Board.
(c) Except as set forth in Section 4.9(b) of the Company
Disclosure Letter, the Company has not granted any outstanding subscriptions, options, restricted stock units, stock appreciation rights, warrants, rights or other securities (including debt securities) convertible into or exchangeable or
exercisable for
TABLE OF CONTENTS
shares of Company Common Stock, any other equity interests or equity-related awards,
any other commitments, calls, conversion rights, rights of exchange or privilege (whether pre-emptive, contractual or by matter of Law), plans or other agreements of any character providing for the issuance of additional shares, the sale of
treasury shares or other equity interests, or for the repurchase or redemption of shares or other equity interests of the Company or the value of which is determined by reference to shares or other equity interests of the Company, and there are
no voting trusts, proxies or agreements of any kind which may obligate the Company to issue, purchase, register for sale, redeem or otherwise acquire any shares of Company Common Stock.
Section 4.10
Capitalization
of Subsidiaries.
(a) The outstanding shares of capital stock or equity interests of
each of the Company’s Subsidiaries: (i) have been duly authorized and validly issued, and are, to the extent applicable, fully paid and non-assessable; (ii) have been offered, sold and issued in compliance with applicable Law, including federal
and state securities Laws, and all requirements set forth in (1) the Governing Documents of each such Subsidiary, and (2) any other applicable Contracts governing the issuance of such securities; and (iii) are not subject to, nor have they been
issued in violation of, any purchase option, call option, right of first refusal, preemptive right, subscription right or any similar right under any provision of any applicable Law, the Governing Documents of each such Subsidiary or any
Contract to which each such Subsidiary is a party or otherwise bound.
(b) The Company owns of record and beneficially the number of issued
and outstanding shares of capital stock or equity interests of such Subsidiaries as set forth on Section 4.2 of the Company Disclosure Letter, free and clear of any Liens other than Liens under the Governing Documents of the Company’s
Subsidiaries and Permitted Liens.
(c) There are no outstanding subscriptions, options, restricted
stock units, stock appreciation rights, warrants, rights or other securities (including debt securities) exercisable or exchangeable for any capital stock of any Subsidiary of the Company, any other equity interests or equity-related awards,
any other commitments, calls, conversion rights, rights of exchange or privilege (whether pre-emptive, contractual or by matter of Law), plans or other agreements of any character providing for the issuance of additional shares, the sale of
treasury shares or other equity interests, or for the repurchase or redemption of shares or other equity interests of such Subsidiaries or the value of which is determined by reference to shares or other equity interests of such Subsidiaries,
and there are no voting trusts, proxies or agreements of any kind which may obligate any Subsidiary of the Company to issue, purchase, register for sale, redeem or otherwise acquire any of its capital stock.
Section 4.11
Company
Financial Statements.
(a) Attached as Section 4.11(a) of the Company Disclosure
Letter are true and complete copies of the audited consolidated balance sheets as of December 31, 2022 and December 31, 2021, and statements of operations, comprehensive loss, stockholders’ equity and cash flows of the Company and its
Subsidiaries for the years ended December 31, 2022 and December 31, 2021, together with the auditor’s reports thereon (together with the PCAOB Financial Statements, when delivered pursuant to Section 6.4(a), the “Audited Financial
Statements” and, together with (i) the Q1 Unaudited Financial Statements, when delivered pursuant to Section 6.4(b) and (ii) the Q2 Unaudited Financial Statements, if and when delivered pursuant to Section 6.4(c), the “Company
Financial Statements”).
(b) Except as set forth on Section 4.11(b) of the Company
Disclosure Letter, the Audited Financial Statements (i) fairly present in all material respects the consolidated financial position of the Company and its consolidated Subsidiaries, as at the respective dates thereof, and the consolidated
results of their operations and their consolidated cash flows for the respective periods then ended (subject, in the case of the Q1 Unaudited Financial Statements and the Q2 Unaudited Financial Statements, to normal year-end adjustments and the
absence of footnotes), (ii) have been prepared in conformity with GAAP applied on a consistent basis during the periods involved (except as may be indicated in the notes thereto and, in the case of Q1 Unaudited Financial Statements and the Q2
Unaudited Financial Statements, the absence of footnotes or the inclusion of limited footnotes), (iii) have been prepared from, and in accordance in all material respects with, the books and records of the Company and its consolidated
Subsidiaries and (iv) when delivered by the Company for inclusion in the Proxy Statement/Registration Statement for filing with the
TABLE OF CONTENTS
SEC following the date of this Agreement in accordance with Section 6.4,
will comply in all material respects with the applicable accounting requirements and with the rules and regulations of the SEC, the Exchange Act and the Securities Act applicable to a registrant, in effect as of the respective dates thereof.
(c) All financial projections with respect to the Company and its
Subsidiaries included in the Registration Statement were prepared in good faith using assumptions that the Company believes to be reasonable.
(d) The Company and each Subsidiary have established and maintain a
system of internal financial and accounting controls. Such internal financial and accounting controls are designed to provide reasonable assurance that (i) transactions are executed in all material respects in accordance with management’s
authorization and with applicable Laws, (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP, and (iii) adequate procedures are implemented to effect the collection of accounts, notes
and other receivables on a timely basis.
(e) As of the date hereof, the Company and its Subsidiaries do not
have any Indebtedness other than the Indebtedness set forth in the Company Financial Statements and in such amounts (including principal and any accrued but unpaid interest or other obligations with respect to such Indebtedness), as set forth
therein. Except as set forth on Section 4.11(e) of the Company Disclosure Letter, no Indebtedness of the Company or any Subsidiary contains any restriction upon (i) the prepayment of any of such Indebtedness, (ii) the incurrence of
Indebtedness by the Company or any Subsidiary, (iii) the ability of the Company and its Subsidiaries to grant any Lien on their respective properties or assets or (iv) the consummation of the transactions contemplated by this Agreement. Except
as set forth on Section 4.11(e) of the Company Disclosure Letter, no Indebtedness requires the Company or any Subsidiary to make any payment to another Person related to, in connection with, or as a result of the transactions
contemplated by this Agreement (a “Change of Control Payment”) or that gives a third party a right to receive or elect to receive a Change of Control Payment.
(f) The Company has not identified, not been made aware of, and has
not received written notice from an independent auditor of (i) any significant deficiency or material weakness in the system of internal accounting controls utilized by the Company or any of its Subsidiaries, (ii) any fraud, whether or not
material, that involves the Company’s or any of its Subsidiaries’ management or other Employees who have a role in the preparation of financial statements or the internal accounting controls utilized by the Company or any of its Subsidiaries or
(iii) any claim or allegation regarding any of the foregoing.
Section 4.12
Books and
Records. The books, records and accounts of the Company and of each Subsidiary, including the statutory books of the Company and each Subsidiary (including, but not limited to, minutes books, books of agreements with the sole shareholder,
shareholders registry books and/or stock ledgers) since January 1, 2019 or the date on which each Subsidiary was incorporated, whichever is the latest, (a) are in all material respects true, complete and correct; and (b) have been maintained in
accordance with good business practices on a basis consistent with prior years and in accordance with applicable Laws, except, in each case of (a) and (b), as would not, individually or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect.
Section 4.13
Undisclosed
Liabilities. Except as set forth on
Section 4.13 of the Company Disclosure Letter, there is no other liability, debt (including Indebtedness) or obligation of, or claim or judgment against, the Company or any of the Company’s
Subsidiaries (whether direct or indirect, absolute or contingent, accrued or unaccrued, known or unknown, liquidated or unliquidated, or due or to become due), except for liabilities, debts, obligations, claims or judgments (a) reflected or
reserved for on the Company Financial Statements or disclosed in the notes thereto, (b) that have arisen since the date of the most recent balance sheet included in the Company Financial Statements in the ordinary course of business consistent
with past practice of the Company and its Subsidiaries or (c) that will be discharged or paid off prior to or at the Closing.
Section 4.14
Litigation and
Proceedings. Except as set forth on
Section 4.14 of the Company Disclosure Letter, there are no, and for the past three (3) years there have been no: (a) pending or, to the knowledge of the Company, threatened lawsuits or other
Actions against the Company or any of the Company’s Subsidiaries or their respective properties or assets; and (b) pending or threatened Actions by the Company or any of the Company’s Subsidiaries against any third party, (c) settlements or
similar agreements that impose any outstanding material obligation or restriction on the Company or any of the Company’s Subsidiaries and (d) outstanding
TABLE OF CONTENTS
Governmental Order imposed upon the Company or any of the Company’s Subsidiaries; nor
are any properties or assets of the Company or any of the Company’s Subsidiaries’ respective businesses bound or subject to any Governmental Order, except, in each case, as would not be, or would not reasonably be expected to be, material to
the business of the Company and its Subsidiaries, taken as a whole.
Section 4.15
Legal
Compliance.
(a) As of the date hereof, each of the Company and its Subsidiaries
is in material compliance with applicable Law.
(b) The Company and its Subsidiaries maintain a program of policies,
procedures, and internal controls reasonably designed and implemented to (i) prevent the use of the products and services of the Company and its Subsidiaries in a manner that violates applicable Law (including money laundering or fraud), and
(ii) otherwise provide reasonable assurance that violations of applicable Law by any of the Company’s or its Subsidiaries’ directors, officers, or employees will be prevented, detected and deterred.
(c) None of the Company, any of its Subsidiaries or, to the
knowledge of the Company, any of the current or former officers, directors, managers or senior consultants thereof acting in such capacity has, in the past three (3) years, received any written notice of, or been charged with, the violation of
any Laws, except where such violation has not been, individually or in the aggregate, material to the Company and its Subsidiaries, taken as a whole.
Section 4.16
Contracts; No
Defaults.
(a) Section 4.16(a) of the Company Disclosure Letter contains
a listing of all Contracts described in clauses (i) through (xxiii) below to which, as of the date of this Agreement, the Company or any of the Company’s Subsidiaries is a party or by which they are bound, other than a Company Benefit
Plan. True, correct and complete copies of the Contracts listed on Section 4.16(a) of the Company Disclosure Letter have previously been delivered to or made available to Acquiror or its Representatives, together with all amendments
thereto.
(i) Any Contracts relating to voting and other rights and
obligations of an equity holder of the Company and/or of any of its Subsidiaries;
(ii) Any Contracts relating to the sale, issuance, grant, exercise,
award, purchase, repurchase or redemption of any shares in the capital of the Company and/or of any Subsidiary or other securities or any options, warrants or other rights to purchase or otherwise acquire any such shares in the capital of the
Company or any of its Subsidiaries;
(iii) Any Contract involving the formation of a partnership, joint
venture, special purpose vehicle or other similar Person or profit-sharing arrangement;
(iv) Any Contract with any of the Top Customers or the Top Vendors
(other than purchase orders, invoices, statements of work and non-disclosure or similar agreements entered into in the ordinary course of business consistent with past practice that do not contain any material terms relating to the Contract
underlying the applicable Top Customer or Top Vendor relationship);
(v) Each note, debenture, other evidence of Indebtedness, guarantee,
loan, credit or financing agreement or instrument or other Contract for money borrowed by the Company or any of the Company’s Subsidiaries, including any agreement or commitment for future loans, credit or financing, and any security package
granted in connection thereto, in each case, in excess of $250,000;
(vi) Any Contract pursuant to which the Company or any of the
Company’s Subsidiaries has provided funds or made any advance, loan, or assumed, guaranteed or agreed to act as a surety with respect to any Indebtedness of any Person;
(vii) Each Contract for the acquisition of any Person or any
business unit thereof or the disposition of any material assets of the Company or any of its Subsidiaries in the last three (3) years, in each case, involving payments in excess of $250,000, other than Contracts (A) in which the applicable
acquisition or disposition has been consummated and there are material obligations ongoing, or (B) between the Company and its wholly-owned Subsidiaries;
TABLE OF CONTENTS
(viii) Each lease, rental or occupancy agreement, license,
installment and conditional sale agreement, and other Contract that provides for the ownership of, leasing of, title to, use of, or any leasehold or other interest in any real or tangible personal property that involves aggregate payments in
excess of $100,000 in any calendar year;
(ix) Any Contracts with any Key Person;
(x) Contracts (other than Contracts with Key Persons, Company
Benefit Plans, employee confidentiality and invention assignment agreements, equity documents and Governing Documents) between (1) the Company or any of its Subsidiaries, and (2) any Subsidiary or Affiliate of the Company, or any officer,
director or manager (or equivalent) of the Company or any Subsidiary or Affiliate of the Company, any member or stockholder (or equivalent) of the Company or any Subsidiary or Affiliate of the Company, or any employee of the Company or any
Subsidiary or Affiliate of the Company, or any member of the immediate family of the foregoing Persons;
(xi) Contracts with any Employee or consultant of the Company or any
of the Company’s Subsidiaries (including directors, officers and individual independent contractors) that (A) involve aggregate consideration in excess of $100,000 that provide for change in control, retention or similar payments or benefits
contingent upon, accelerated by or triggered by the consummation of the transactions contemplated hereby or (B) otherwise restrict the Company’s or the Company’s Subsidiaries ability to terminate the Contract on thirty (30) days’ notice or less
for any reason without paying or providing severance, termination or other similar payments or benefits (other than as required by applicable Law);
(xii) Contracts containing covenants of the Company or any of the
Company’s Subsidiaries materially (A) prohibiting or limiting the right of the Company or any of the Company’s Subsidiaries to engage in or compete with any Person in any line of business, (B) prohibiting or restricting the Company’s or any of
the Company’s Subsidiaries’ ability to conduct their business with any Person in any geographic area or during any period of time, (C) prohibiting or restricting the Company’s or any of the Company’s Subsidiaries’ ability to purchase or acquire
an interest in any other Person, or (D) which otherwise include non-solicitation clauses or covenants not to sue (but excluding customary confidentiality agreements and agreements that contain customary confidentiality clauses);
(xiii) Any collective bargaining (or similar) agreement or Contract
between the Company or any of the Company’s Subsidiaries, on one hand, and any labor union, works council, or other body representing Employees of the Company or any of the Company’s Subsidiaries, on the other hand;
(xiv) Each Contract: (A) pursuant to which the Company or any of its
Subsidiaries receives from a third Person a license or the right to use any Intellectual Property Rights or IT Systems material to the business of the Company or any of the Company’s Subsidiaries; or (B) pursuant to which the Company or any of
the Company’s Subsidiaries grants to a third Person a license or right to use any Intellectual Property Rights material to the business of the Company or any of the Company’s Subsidiaries, other than, in each case, (1) Contracts granting
nonexclusive licenses or rights to use Company Owned IP in the ordinary course of business; (2) shrink-wrap, click-wrap and off-the-shelf software licenses, and other Contracts granting the Company or any of its Subsidiaries a nonexclusive
license or other right to use software that is commercially available to the public generally, with one-time or annual license, maintenance, subscription and other fees of less than $100,000; and (3) non-disclosure agreements entered into in
the ordinary course of business;
(xv) Any Contract relating to the purchase of engineering or design
services, other than those Contracts under which no further services are due;
(xvi) Each Contract requiring capital expenditures by the Company or
any of the Company’s Subsidiaries after the date of this Agreement in an amount in excess of $250,000 in any calendar year;
(xvii) Any Contract, including without limitation any Grant or
cooperative agreement, with any Governmental Authority, including any economic development corporation, to which any the Company or any of the Company’s Subsidiaries is a party that involve payments by or to the Company or the relevant
Company’s Subsidiary;
TABLE OF CONTENTS
(xviii) All broker, distributor, agency, sales promotion, market
research, marketing consulting and advertising Contracts or arrangements that are material to the business of the Company and the Company’s Subsidiaries, individually or in the aggregate, taken as a whole;
(xix) Any Contract that (A) grants to any third Person any “most
favored nation rights” or (B) grants to any third Person price guarantees for a period greater than one (1) year from the date of this Agreement and requires aggregate future payments to the Company and its Subsidiaries in excess of $250,000 in
any calendar year;
(xx) Contracts granting to any Person (other than the Company or its
Subsidiaries) a right of first refusal, first offer or similar preferential right to purchase or acquire equity interests in the Company or any of the Company’s Subsidiaries;
(xxi) Any Contract involving 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;
(xxii) Any Contract which relates to a material settlement of
Actions or any other disputes (including any agreement pursuant to which any employment-related claim is settled); and
(xxiii) Any outstanding written commitment to enter into any
Contract of the type described in clauses (i) through (xxii) of this Section 4.16(a).
(b) Except for any Contract that will terminate upon the expiration
of the stated term thereof prior to the Closing Date, all of the Contracts listed pursuant to Section 4.16(a) in the Company Disclosure Letter are (i) in full force and effect and (ii) represent the legal, valid and binding obligations
of the Company or the Subsidiary of the Company party thereto and, to the knowledge of the Company, represent the legal, valid and binding obligations of the counterparties thereto. Except, in each case, where the occurrence of such breach or
default or failure to perform would not be material to the business of the Company and its Subsidiaries, taken as a whole, (x) the Company and its Subsidiaries have performed in all respects all respective obligations required to be performed
by them to date under such Contracts listed pursuant to Section 4.16(a) and neither the Company, the Company’s Subsidiaries, nor, to the knowledge of the Company, any other party thereto is in breach of or default under any such
Contract, (y) during the last twelve (12) months, neither the Company nor any of its Subsidiaries has received any written claim or written notice of termination, breach of or default under any such Contract, and (z) to the knowledge of the
Company, no event has occurred which individually or together with other events, would reasonably be expected to result in a breach of or a default under any such Contract by the Company or its Subsidiaries or, to the knowledge of the Company,
any other party thereto (in each case, with or without notice or lapse of time or both).
Section 4.17
Company Benefit
Plans.
(a) Section 4.17(a) of the Company Disclosure Letter sets
forth a complete list, as of the date hereof, of each material Company Benefit Plan (other than any individual Company Option award agreement, individual offer of employment letter or individual consulting agreement, in either case, that is
consistent in all material respects with the applicable template set forth on Section 4.17(a) of the Company Disclosure Letter and that does not provide any accelerated vesting, retention, change in control or non-statutory severance
payments or benefits). For purposes of this Agreement, a “Company Benefit Plan” means an “employee benefit plan” as defined in Section 3(3) of ERISA or any other plan, policy, program or agreement (including any employment, bonus,
incentive or deferred compensation, employee loan, note or pledge agreement, equity or equity-based compensation, severance, retention, supplemental retirement, change in control or similar plan, policy, program or agreement) providing
compensation or other benefits to any director, officer, manager, individual consultant or Employee of the Company or any of the Company’s Subsidiaries, which are maintained, sponsored or contributed to by the Company or any of the Company’s
Subsidiaries, or to which the Company or any of the Company’s Subsidiaries is a party or has or may have any liability, and in each case whether or not (i) subject to the Laws of the United States, (ii) in writing or (iii) funded, but excluding
in each case any statutory plan, program or arrangement that is required under applicable Law and maintained by any Governmental Authority. With respect to each Company Benefit
TABLE OF CONTENTS
Plan, the Company has made available to Acquiror, to the extent applicable, true,
complete and correct copies of (A) such Company Benefit Plan (or, if not written a written summary of its material terms) and all plan documents, trust agreements, insurance Contracts or other funding vehicles and all amendments thereto, (B)
the most recent summary plan description, including any summary of material modifications, (C) the most recent actuarial report or other financial statement relating to such Company Benefit Plan, and (D) the most recent non-routine
correspondence with any Governmental Authority.
(b) Except as set forth on Section 4.17(b) of the Company
Disclosure Letter, (i) each Company Benefit Plan has been operated and administered in material compliance with its terms and all applicable Laws, (ii) all material employer contributions required by Law or by the terms of such Company Benefit
Plan have been timely made (to the extent previously due), (iii) each such Company Benefit Plan required to be registered has been registered and has been maintained in all material respects in good standing with applicable regulatory
authorities and, to the knowledge of the Company, no event has occurred since the date of the most recent approval or application therefor relating to any such Company Benefit Plan that would reasonably be expected to adversely affect any such
approval or good standing, and (iv) each such Company Benefit Plan required to be funded or insured under applicable Law or the terms of such plan is funded or insured (determined using reasonable actuarial assumptions) in compliance with
applicable Laws.
(c) Except as set forth on Section 4.17(c) of the Company
Disclosure Letter, the consummation of the transactions contemplated hereby will not, either alone or in combination with another event (such as termination following the consummation of the transactions contemplated hereby), (i) entitle any
Employee, officer or other service provider of the Company or any of the Company’s Subsidiaries to any severance pay or any other compensation or benefits payable or to be provided by the Company or any of the Company’s Subsidiaries,
(ii) accelerate the time of payment, funding or vesting, or increase the amount of compensation or benefits due any such Employee, officer or other individual service provider by the Company or a Subsidiary of the Company, or (iii) accelerate
the vesting and/or settlement of any Company Options. The consummation of the transactions contemplated hereby will not, either alone or in combination with another event, result in any “excess parachute payment” under Section 280G of the Code.
No Company Benefit Plan provides for a Tax gross-up, make whole or similar payment with respect to the Taxes imposed under Sections 409A or 4999 of the Code.
Section 4.18
Labor Relations;
Employees.
(a) To the extent permitted to be disclosed pursuant to the
applicable Law, the Company has furnished or made available to Acquiror a list of all current Employees, individual advisors, individual consultants and individual independent contractors of the Company and of the Company’s Subsidiaries as of
the date hereof, setting forth for each such individual (as applicable), the following: (i) name or employee identification number; (ii) title or position (including whether full or part time); (iii) primary work location; (iv) date the
commencement of employment or engagement began; (v) current annual base compensation rate; (vi) commission, bonus or other incentive based compensation; and (vii) the identity of the Person that employs or engages each Employee or independent
contractor.
(b) (i) Except as would not be, or would not reasonably be expected
to be, material to the business of the Company and its Subsidiaries, taken as a whole, as of the date hereof, all compensation, including wages, commissions and bonuses, due and payable to all current or former Employees, individual advisors,
individual consultants and/or individual independent contractors of the Company and any Subsidiary of the Company for services performed on or prior to the date hereof have been paid in full (or accrued in full in the Company Financial
Statements); and (ii) each of the Company and its Subsidiaries have complied in all material respects with its obligations with Governmental Authorities (including Tax and Social Security) and has no debt or deferred payment (other than amounts
accrued and not yet due) to Social Security.
(c) Neither the Company nor any Subsidiary of the Company has
granted (or has an obligation to grant) any credit, loan or any other kind of financing to their current or former Employees, consultants, advisors or independent contractors which remains outstanding and unpaid as of the date hereof.
(d) No Employees of the Company or any of its Subsidiaries are
represented by any labor union, labor organization or works council with respect to their employment with the Company or any of its Subsidiaries, and no labor union, works council, group of employees, or any other employee representative body
has requested or, to the knowledge of the Company, has sought to represent any of the Employees of
TABLE OF CONTENTS
the Company or its Subsidiaries. In the past three (3) years, there has been no
labor organization activity involving any Employees of the Company or any of its Subsidiaries. In the past three (3) years, there has been no actual or, to the knowledge of the Company, threatened unfair labor practice charge, material
grievance, material arbitration, strike, slowdown, work stoppage, picketing, hand billing, lockout or other labor dispute against or affecting the Company or any Subsidiary of the Company.
(e) Each of the Company and its Subsidiaries are, and have been for
the past three (3) years in compliance in all material respects with all applicable Laws respecting labor and employment including, but not limited to, all applicable Laws respecting terms and conditions of employment, employment practices,
health and safety, wages and hours, remote work, applicable collective bargaining agreements, family and medical leave, holiday pay and the calculation of holiday pay, working time, worker classification (with respect to employee vs.
independent contractor and worker status), child labor, immigration, employment discrimination, disability rights or benefits, equal opportunity and equal pay, plant closures and layoffs, affirmative action, workers’ compensation, as well as
other sums as required by the appropriate Governmental Authority, labor relations, employee leave issues and unemployment insurance, and where required, maintain adequate and up to date records relating to Employees which are required by
applicable Law and are not liable for any arrears of wages, taxes, penalties or other sums for failure to comply with any of the foregoing.
(f) Except as would not reasonably be expected to result in material
liability to the Company and its Subsidiaries, taken as a whole, in the past three (3) years, the Company and its Subsidiaries have not received (i) written notice of any unfair labor practice charge or complaint pending or threatened before
any Governmental Authority against them, (ii) written notice of any complaints, grievances or arbitrations arising out of any collective bargaining agreement, (iii) written notice of any charge or complaint with respect to or relating to them
pending before any Governmental Authority responsible for the prevention of unlawful employment practices, (iv) written notice of the intent of any Governmental Authority responsible for the enforcement of labor, employment, wages and hours of
work, child labor, immigration, or occupational safety and health Laws to conduct an investigation with respect to or relating to them or notice that such investigation is in progress, or (v) written notice of any complaint, lawsuit or other
proceeding pending or threatened in any forum by or on behalf of any Employee of such entities, any applicant for employment or classes of the foregoing alleging breach of any express or implied Contract of employment, any applicable Law
governing employment or the termination thereof or other discriminatory, wrongful or tortious conduct in connection with the employment relationship.
(g) To the knowledge of the Company, (i) no Employee has been or is
being investigated in connection with any misconduct, nor subject to any disciplinary action in connection with such misconduct that would reasonably be expected to cause any material damage to the reputation or business of the Company or any
Subsidiary and (ii) no Employee engaged in any conduct or cover-up of such conduct, or aided or assisted any other person or entity to engage in any conduct that would reasonably be expected to cause or has caused any material damage to the
reputation or business of the Company or any Subsidiary or any Employee, including, but not limited to, any conduct constituting sexual misconduct, harassment (including sexual harassment), discrimination or retaliation.
(h) Copies of all material form Contracts, and any Contracts that
contain material deviations from such material Contracts, which apply to Employees, consultants or advisors, or independent contractors, have been provided or made available to Acquiror and the Company has not offered, promised or agreed to any
future, material variation in any Contract of any Employee, consultant, advisor or independent contractor.
(i) No notice to terminate the contract of employment or services of
any key Employee (whether by the Company or its Subsidiaries or the Employee), key individual consultant, individual advisor or individual independent contractor is pending or, to the knowledge of the Company, threatened.
(j) To the knowledge of the Company, in the past three (3) years, no
current or former Employee, individual consultant, individual advisor or individual independent contractor of the Company or any of the Company’s Subsidiaries’ is in violation in any material respect of (i) any nondisclosure agreement,
restrictive covenant, common law nondisclosure obligation, fiduciary duty and proprietary information agreement or any other agreement with a third party relating to confidential or proprietary information, or
TABLE OF CONTENTS
intellectual property or (ii) any restrictive covenant or nondisclosure obligation
to a former employer or engager of any such individual relating to (A) the right of any such individual to work for or provide services to the Company or any of the Company’s Subsidiaries or (B) the knowledge or use of trade secrets or
proprietary information.
(k) Neither the Company nor any of the Company’s Subsidiaries is
party to a settlement agreement with a current or former officer, Employee, consultant, or independent contractor of the Company or any of the Company’s Subsidiaries that involves allegations relating to harassment (including sexual
harassment), sexual misconduct or discrimination, by an Employee of the Company or any of the Company’s Subsidiaries. To the knowledge of the Company, in the past three (3) years, no allegations of harassment (including sexual harassment),
sexual misconduct or discrimination or cover up of any of the foregoing have been made against an Employee of the Company or any of the Company’s Subsidiaries.
(l) The Company and its Subsidiaries have not (i) engaged in
material collective redundancies or layoff, furloughs, employment terminations (other than for cause), “employment loss” or “plant closing”, or effected any collective broad-based salary or other compensation or benefits reductions, in each
case, whether temporary or permanent, or comparable event as defined by any applicable Law in respect of the Company or each of the Company’s Subsidiaries, nor have the Company and/or each Subsidiary assumed or incurred in any statutory
liability in connection therewith. The Company, taken as a whole with its Subsidiaries, has sufficient Employees to operate the business of the Company and its Subsidiaries as currently conducted.
(m) Except as would not be, or would not reasonably be expected to
be, material to the business of the Company and its Subsidiaries, taken as a whole, the Company and its Subsidiaries are not a party to any employment Actions, nor are there any pending or threatened employment Actions against the Company and
its Subsidiaries, involving any Employees or other personnel in respect of any accident or injury or in connection with any other matter arising from their contractual relationship with the Company and its Subsidiaries. The Company and its
Subsidiaries have no outstanding labor disputes including go-slows, stoppages or grievances with respect to its Employees.
(a) All material Tax Returns required to be filed by or with respect
to the Company or any of its Subsidiaries have been timely filed (taking into account any applicable extensions), all such Tax Returns (taking into account all amendments thereto) are true, correct and complete in all material respects and all
material Taxes due and payable (whether or not shown on any Tax Return) have been paid, other than Taxes being contested in good faith and for which adequate reserves have been established in accordance with GAAP.
(b) The Company and each of its Subsidiaries have withheld from
amounts owing to any Employee, creditor or other Person all material Taxes required by Law to be withheld, paid over to the proper Governmental Authority in a timely manner all such withheld amounts required to have been so paid over and
complied in all material respects with all applicable withholding and related reporting requirements with respect to such Taxes.
(c) There are no Liens for any Taxes (other than Permitted Liens)
upon the property or assets of the Company or any of its Subsidiaries.
(d) No material claim, assessment, deficiency or proposed adjustment
for any amount of Tax has been asserted or assessed by any Governmental Authority against the Company or any of its Subsidiaries that remains unresolved or unpaid except for claims, assessments, deficiencies or proposed adjustments being
contested in good faith and for which adequate reserves have been established in accordance with GAAP.
(e) There are no Tax audits or other examinations by a Governmental
Authority of the Company or any of its Subsidiaries presently in progress, nor has the Company or any of its Subsidiaries been notified in writing by a Governmental Authority of any request or threat for such an audit or other examination, and
there are no waivers, extensions (other than automatic extensions to file Tax Returns) or requests for any waivers or extensions of any statute of limitations currently in effect with respect to any material Taxes of the Company or any of its
Subsidiaries.
TABLE OF CONTENTS
(f) Neither the Company nor any of its Subsidiaries has made a
request for an advance tax ruling or request for technical advice, a request for a change of any method of accounting or any similar request that is in progress or pending with any Governmental Authority with respect to any Taxes.
(g) Neither the Company nor any of its Subsidiaries is a party to or
bound by any Tax indemnification or Tax sharing or similar agreement (other than any such agreement solely between the Company and its existing Subsidiaries and customary commercial Contracts (or Contracts entered into in the ordinary course of
business) not primarily related to Taxes).
(h) Neither the Company nor any of its Subsidiaries has been a party
to any transaction treated by the parties as a distribution of stock qualifying for Tax-free treatment under Section 355 of the Code in the two (2) years prior to the date of this Agreement.
(i) Neither the Company nor any of its Subsidiaries (i) is liable
for Taxes of any other Person (other than the Company and its Subsidiaries) under Treasury Regulation Section 1.1502-6 or any similar provision of state, local or foreign Tax Law or as a transferee or successor or by Contract (other than
customary commercial Contracts (or Contracts entered into in the ordinary course of business) not primarily related to Taxes) or (ii) has ever been a member of an affiliated, consolidated, combined or unitary group filing for U.S. federal,
state or local income Tax purposes, other than a group the common parent of which was or is the Company or any of its Subsidiaries.
(j) No written claim has been made by any Governmental Authority
where the Company or any of its Subsidiaries does not file Tax Returns that it is or may be subject to taxation in that jurisdiction.
(k) Neither the Company nor any of its Subsidiaries has, or has ever
had, a permanent establishment or other fixed place of business in any country other than the country of its organization, or is, or has ever been, subject to corporate income Tax in a jurisdiction outside the country of its organization.
(l) Neither the Company nor any of its Subsidiaries has participated
in a “listed transaction” within the meaning of Treasury Regulation 1.6011-4(b)(2).
(m) All material transactions or arrangements made between or among
the Company and any of its Subsidiaries have been made on arms’-length terms, and the Company and each of its Subsidiaries have complied with all material transfer pricing requirements as provided by applicable Law.
(n) Neither the Company nor any of its Subsidiaries will be required
to include any material amount in taxable income, exclude any material item of deduction or loss from taxable income, or make any material adjustment under Section 481 of the Code (or any similar provision of state, local or foreign Law) for
any taxable period (or portion thereof) ending after the Closing Date as a result of any (i) installment sale, intercompany transaction described in the Treasury Regulations under Section 1502 of the Code (or any similar provision of state,
local or foreign Law) or open transaction disposition made prior to the Closing outside the ordinary course of business, (ii) prepaid amount received or deferred revenue recognized prior to the Closing outside the ordinary course of business,
(iii) change in method of accounting for a taxable period ending on or prior to the Closing Date, (iv) “closing agreements” described in Section 7121 of the Code (or any similar provision of state, local or foreign Law) executed prior to the
Closing, or (v) by reason of Section 965(a) of the Code or election pursuant to Section 965(h) of the Code (or any similar provision of state, local or foreign Law).
(o) The Company is not, and immediately prior to the Effective Time
will not be, treated as an “investment company” within the meaning of Section 368(a)(2)(F) of the Code.
(p) The Company has not taken any action, nor to the knowledge of
the Company or any of its Subsidiaries are there any facts or circumstances, that would reasonably be expected to prevent the Merger from qualifying for the Intended U.S. Tax Treatment or the Intended Spanish Tax Treatment.
Section 4.20
Brokers’ Fees.
Except as set forth on
Section 4.20 of the Company Disclosure Letter, no broker, finder, investment banker or other Person is entitled to any brokerage fee, finders’ fee or other commission in connection with the transactions
contemplated hereby based upon arrangements made by the Company, any of the Company’s Subsidiaries or any of their respective Affiliates for which Acquiror, the Company or any of the Company’s Subsidiaries has any obligation.
TABLE OF CONTENTS
(a) Section 4.21(a) of the Company Disclosure Letter contains
a list of, as of the date hereof, all material policies or binders of property, fire and casualty, product liability, workers’ compensation, and other forms of insurance held by, or for the benefit of, the Company or any of the Company’s
Subsidiaries, as of the date of this Agreement. True, correct and complete copies of such insurance policies as in effect as of the date hereof have previously been made available to Acquiror. All such policies are in full force and effect, all
premiums due have been paid, and no notice of cancellation, termination or non-renewal or, to the knowledge of the Company, any written notice relating to or involving any material change in the conditions of insurance outside the ordinary
course of business consistent with past practice, has been received by the Company or any of the Company’s Subsidiaries with respect to any such policy.
(b) Except as disclosed on Section 4.21(b) of the Company
Disclosure Letter, no insurer has denied or disputed coverage of any material claim under an insurance policy during the twelve (12) months prior to the date hereof.
Section 4.22
Licenses.
The Company and its Subsidiaries have obtained, and maintain, all material Licenses required to permit the Company and its Subsidiaries to own, lease, operate, use and maintain their assets in the manner in which they are now owned, leased,
operated, used and maintained, and to conduct the business of the Company and its Subsidiaries as currently conducted, in accordance with applicable Laws. Each material License held by the Company or any of the Company’s Subsidiaries is binding
and in full force and effect, and, to the knowledge of the Company, no fact or circumstance exists that would reasonably be expected to prevent each such License, from being timely renewed or reissued upon terms and conditions substantially
similar to its existing terms and conditions upon its expiration. Each of the Company and its Subsidiaries is and has been during the past three (3) years in compliance in all material respects with all such material Licenses. Neither the
Company nor any of its Subsidiaries (i) is or has during the past three (3) years been in default or violation in any material respect of any term, condition or provision of any material License to which it is a party, (ii) is or has been
during the past three (3) years the subject of any pending or threatened Actions by a Governmental Authority seeking the cancellation, revocation, suspension, termination, limitation, modification or impairment of any material License; or
(iii) has received any notice that any Governmental Authority that has issued any material License intends to cancel, revoke, suspend, terminate, limit, condition, modify or not renew any such material Licenses, except to the extent such
material License may be amended, replaced or reissued as a result of and as necessary to reflect the transactions contemplated hereby, provided such amendment, replacement, or reissuance does not materially adversely affect the continuous
conduct of the business of the Company and its Subsidiaries as currently conducted from and after Closing. To the knowledge of the Company, no event has occurred with respect to any Licenses that would reasonably be expected to result in the
revocation, cancellation or termination of any Licenses.
Section 4.23
Equipment and
Other Tangible Property. The Company or one of its Subsidiaries owns and has good title to, and has the legal and beneficial ownership of or a valid leasehold interest in or right to use by license or otherwise, all material machinery,
equipment and other tangible property reflected on the books of the Company and its Subsidiaries as owned by the Company or one of its Subsidiaries, free and clear of all Liens other than Permitted Liens. All material tangible personal property
and leased tangible personal property assets of the Company and its Subsidiaries are structurally sound and in good operating condition (ordinary wear and tear excepted) and are suitable for their present use and have been maintained in
accordance with generally accepted industry practice.
Section 4.24
Real Property.
(a) None of the Company or any of its Subsidiaries owns any Owned
Real Property.
(b) Section 4.24(b) of the Company Disclosure Letter sets
forth a true, correct and complete list as of the date of this Agreement of all Leased Real Property and all Real Property Leases (as hereinafter defined) pertaining to such Leased Real Property. With respect to each parcel of Leased Real
Property:
(i) The Company or one of its Subsidiaries holds a good and valid
leasehold estate in such Leased Real Property, free and clear of all Liens, except for Permitted Liens.
(ii) The Company and its Subsidiaries have delivered to Acquiror
true, correct and complete copies of all leases, subleases, licenses or occupancy agreements, including all amendments, extensions,
TABLE OF CONTENTS
renewals, guaranties, terminations and modifications thereof (collectively, the “Real
Property Leases”), such Real Property Leases are valid, binding and enforceable against the Company or the applicable Subsidiary in accordance with their terms, subject to any Enforceability Exceptions, and are in full force and effect,
and none of such Real Property Leases have been modified in any material respect, except to the extent that such modifications have been disclosed by the copies delivered to Acquiror;
(iii) The Company’s and its Subsidiaries’, as applicable, possession
and quiet enjoyment of the Leased Real Property under such Real Property Leases has not been materially disturbed and, to the knowledge of the Company, no event has occurred which would reasonably be expected to constitute a material default on
the part of the Company or any of the Company’s Subsidiaries under any of the respective Real Property Leases, and there are no material disputes with respect to such Real Property Leases;
(iv) Neither the Company nor any of its Subsidiaries have received
written notice of any current condemnation proceeding or proposed similar Action or agreement for taking in lieu of condemnation with respect to any portion of the Leased Real Property; and
(v) The Real Property Leases constitute all material interests in
real property currently used, occupied or held for use in connection with the business of the Company or any of its Subsidiaries.
Section 4.25
Intellectual
Property.
(a) Section 4.25(a) of the Company Disclosure Letter contains
a true, correct and complete list of all Company Owned IP issued by, registered with or applied for in any Governmental Authority, showing, as applicable, the filing date, expiration date, registration or application number, jurisdiction of
application or registration (the “Company Registered IP”). The Company Owned IP is exclusively owned (legally and beneficially) by the Company or its Subsidiaries, free and clear of any Liens other than Permitted Liens.
(b) The Company Registered IP is subsisting. To the knowledge of the
Company, the Company Registered IP that has been issued or registered is valid, and there are no Actions pending or, to the knowledge of the Company, threatened, challenging the validity, enforceability, registration, ownership or scope of any
Company Owned IP (other than office actions in connection with the prosecution of applications for Company Registered IP). All renewal, maintenance and other fees, and all filings, which are required to be paid or filed in order to maintain the
Company Registered IP have been paid and filed within the relevant deadlines, taking into account any applicable grace periods.
(c) To the knowledge of the Company, the Company and its
Subsidiaries have complied in all material respects with the terms under which the Company or any of its Subsidiaries uses any Open Source Software and have not used any Open Source Software in manner that would require that the Company or any
of its Subsidiaries disclose, distribute or license any material source code which forms part of the Company Owned IP. No software included in Company Owned IP is deposited with a third party under a source code escrow agreement.
(d) During the past three (3) years, neither the Company nor any of
its Subsidiaries has infringed, misappropriated or otherwise violated the Intellectual Property Rights of any third party in any material respect. To the knowledge of the Company, no third party has been, or is currently infringing,
misappropriating or otherwise violating any of the Company Owned IP, and neither the Company nor any of its Subsidiaries has received notice that any third party has infringed, misappropriated, diluted or otherwise violated any of the Company
Owned IP, in each case, in any material respect in the past three (3) years.
(e) During the past three (3) years, neither the Company nor any of
its Subsidiaries has been party to any Action or given or received written notice of any claim (i) alleging that the Company or any of its Subsidiaries has infringed, misappropriated, diluted, or otherwise violated the Intellectual Property
Rights of a third party in any material respect, (ii) contesting the validity, use, ownership, enforceability, patentability or registrability of any of the material Company Owned IP (other than office actions in connection with the prosecution
of applications for Company Registered IP); or (iii) alleging that a third party has infringed, misappropriated, diluted, or otherwise violated the Company Owned IP in any material respect.
(f) The Company and its Subsidiaries have taken and continue to take
commercially reasonable measures to preserve the confidentiality of their trade secrets and other material Confidential Information.
TABLE OF CONTENTS
Neither the Company nor any of its Subsidiaries has disclosed any material trade
secrets or other material Confidential Information to any Person other than to Persons who are subject to a contractual or other legal obligation to preserve and maintain the confidentiality and protect such Confidential Information.
(g) Each Person who has been involved in the creation, invention,
development or modification (including improvement) of any Intellectual Property Rights material to the business of the Company or any of its Subsidiaries, that are owned or purported to be owned by the Company or any of its Subsidiaries, has
assigned to the Company or any of its Subsidiaries (as applicable) all of such Person’s Intellectual Property Rights in such development, contribution, modification, or improvement except to the extent that such Intellectual Property Rights
vest in the Company or its Subsidiaries by operation of Law. Other than as provided for under the terms of a written agreement with the Company or any of its Subsidiaries, no Employee, director, officer, manager, consultant, advisor or
independent contractor is entitled to any compensation from the Company or any of its Subsidiaries in relation to such Employee’s, director’s, officer’s, manager’s, consultant’s, advisor’s, or independent contractor’s contribution to the
creation, invention, development or modification (including improvement) of any material Company Owned IP.
(h) Except as set forth on Section 4.25(h) of the Company
Disclosure Letter, no government funding, nor any facilities of a university, college, other educational institution or research center, was used in the development of the material Company Owned IP that is used in connection with their
respective business.
(i) There have been no physical intrusions or other unauthorized
access to the IT Systems which in the past three (3) years have had (or are having) a material adverse effect on the business of the Company and its Subsidiaries. In the past three (3) years, the IT Systems have not malfunctioned, or failed to
function, in a manner that materially impacted or disrupted the operations of the Company or its Subsidiaries.
(j) No IT System under the control of the Company or any of its
Subsidiaries and, to the knowledge of the Company, no other IT Systems contain any undisclosed or hidden device or feature designed to disrupt, disable, or otherwise impair the functioning of such IT Systems or any “back door,” “time bomb”,
“Trojan horse,” “worm,” “drop dead device,” or other malicious code or routines that permit unauthorized access or the unauthorized disablement or erasure of software or information or data stored or processed on such IT Systems.
(k) The IT Systems are maintained in all material respects in
accordance with customary industry standards and practices. The Company and its Subsidiaries have implemented commercially reasonable data backup, virus protection and cyber security systems, and disaster recovery and business continuity plans,
procedures and facilities. The IT Systems are sufficient in all material respects for the operation of the business of the Company and its Subsidiaries as currently conducted. The Company and its Subsidiaries take commercially reasonable
measures to maintain and support the IT Systems material to their business and, where the Company has determined, in its reasonable business judgment that such contracts are appropriate, have entered into maintenance and support contracts
appropriate to the nature of such IT Systems.
Section 4.26
Privacy and
Cybersecurity.
(a) The Company and each of its Subsidiaries complies, and has for
the past three (3) years complied, in all material respects with all Privacy Laws and the Company’s and its Subsidiaries’ written privacy policies and contractual commitments relating to the processing of Personal Data, including, to the extent
applicable, in relation to maintaining records of processing activities, processing personal data under a valid legal basis, the collection of consents and international transfers of personal data.
(b) The Company and its Subsidiaries take appropriate measures to
protect Personal Data in its possession or control against unauthorized access, use, modification, disclosure or other misuse, including through administrative, technical and physical safeguards. The Company and its Subsidiaries conduct
appropriate cybersecurity reviews and assessments (including penetration tests and/or vulnerability assessments) and have remediated any and all high-risk/critical identified vulnerabilities.
(c) Neither the Company nor any Subsidiary of the Company has in the
past three (3) years (i) experienced any material Personal Data breach or cybersecurity incident, including in which information was stolen or unlawfully accessed or processed, or (ii) received any written notice, request, inspection or
complaint or, to the Knowledge of the Company, been subject to any investigation from any Person
TABLE OF CONTENTS
(including any Governmental Authority) in relation to their Personal Data processing
activities or compliance with Privacy Laws, nor has any such notice or complaint been threatened in writing against the Company or any of its Subsidiaries, with respect to any Personal Data breach or cybersecurity incident. To the Knowledge of
the Company, no circumstances exist which are likely to give rise to (i) or (ii).
Section 4.27
Environmental
Matters.
(a) The Company and its Subsidiaries are and, except for matters
which have been fully resolved, for the past three (3) years have been in material compliance with all applicable Environmental Laws, which compliance includes obtaining, maintaining in good standing, and complying in all material respects with
all material Licenses required under applicable Environmental Laws for the conduct of its and its Subsidiaries’ business and operations as presently conducted (“Environmental Licenses”). No Action is pending or, to the knowledge of the
Company, threatened to revoke, modify, or terminate any such Environmental License. To the knowledge of the Company, no facts, circumstances, or conditions currently exist that could reasonably be expected to adversely affect such continued
material compliance with Environmental Laws and Environmental Licenses.
(b) Neither the Company nor its Subsidiaries have manufactured,
treated, stored, disposed of, arranged for or permitted the disposal of, generated, handled or released any Hazardous Material in a manner that has given or would reasonably be expected to give rise to any material Action, liability or
obligation of the Company or its Subsidiaries under applicable Environmental Laws. There has been no release of Hazardous Materials at, on, or from any property currently or, during the Company’s or its Subsidiaries’ ownership, operation, or
lease of such property, formerly owned, operated or leased by the Company or any of its Subsidiaries, or any property to which the Company or any of its Subsidiaries arranged for the disposal or treatment of Hazardous Materials, that has
resulted or could reasonably be expected to result in the Company or any of its Subsidiaries incurring any material liabilities or obligations under applicable Environmental Laws.
(c) Neither the Company nor its Subsidiaries are subject to any
outstanding material Governmental Order or Contract with any Governmental Authority or other Person relating to any material non-compliance with Environmental Laws by the Company or its Subsidiaries or the release, investigation, sampling,
monitoring, treatment, remediation, removal or cleanup of Hazardous Materials.
(d) Neither the Company nor its Subsidiaries have expressly assumed
by contract any material liabilities or obligations of any Person under any Environmental Laws.
(e) No material Action is pending or, to the knowledge of the
Company, threatened with respect to the Company’s and its Subsidiaries’ compliance with or liability under Environmental Laws, and, to the knowledge of the Company, there are no facts or circumstances which could reasonably be expected to
form the basis of such an Action.
(f) To the knowledge of the Company, there is not located at any
properties owned, operated or leased, by the Company or any of its Subsidiaries, any underground storage tanks.
(g) The Company has made available to Acquiror all material,
non-privileged environmental reports, assessments, audits and inspections and any material communications or notices from or to any Governmental Authority concerning any material non-compliance of the Company or any of its Subsidiaries with, or
material liability of the Company or any of its Subsidiaries under Environmental Law or with respect to the presence of Hazardous Materials at any property currently or formerly owned, operated or leased by the Company or any of its
Subsidiaries, in each case which are in the possession or control of the Company or its Subsidiaries.
Section 4.28
Absence of
Changes. From the date of the most recent balance sheet included in the Company Financial Statements to the date of this Agreement, (a) the Company has conducted its business in the ordinary course of business in all material respects,
(b) the Company has not taken any action that, if taken after the date hereof, would constitute a violation of
Section 6.1 (
Conduct of Business) and (c) there has not been any Company Material
Adverse Effect.
TABLE OF CONTENTS
Section 4.29
Anti-Corruption
Compliance.
(a) For the past three (3) years, neither the Company nor any of its
Subsidiaries, nor any current or former director, officer, or Employee, nor, to the Knowledge of the Company, any agent or other Representative, while acting on behalf of the Company or any of the Company’s Subsidiaries, has corruptly directly
or indirectly (i) used any funds for unlawful contributions, gifts, gratuities, entertainment or unlawful expenses related to political activity, (ii) made any unlawful payment or offered, promised or authorized the provision of anything of
value, to any foreign or domestic Government Officials (including employees of state-owned enterprises), employees or any foreign or domestic political parties, or other Person for the purpose of influencing any act or decision of such official
or of the government to obtain or retain business or direct business to any Person in violation of Anti-Bribery Laws, (iii) made or offered any other payment in violation of Anti-Bribery Laws to any official of any Governmental Authority or
other Person, including but not limited to, bribes, gratuities, kickbacks, lobbying expenditures, political contributions or contingent fee or commission payments, or (iv) violated any other Anti-Bribery Laws.
(b) For the past three (3) years, each of the Company and its
Subsidiaries has instituted and maintains policies and procedures reasonably designed to promote compliance in all material respects with applicable Anti-Bribery Laws.
(c) To the knowledge of the Company, as of the date hereof, there
are no current or pending internal investigations, third party investigations (including by any Governmental Authority), or internal or external audits, litigation, subpoena, complaint, self-disclosure, request for information or any other
Action that address any allegations or information concerning possible violations of the Anti-Bribery Laws. Within the previous three (3) years, neither the Company nor any of its Subsidiaries have received any communication in writing or,
orally from any Governmental Authority or any other Person (including internal whistleblowers) of any actual or alleged violation, breach or noncompliance by the Company or any of its Subsidiaries, or its respective current or former directors,
officers, Employees, agents or other Representatives or other Person acting on behalf of the Company or any of the Company’s Subsidiary of the applicable Anti-Bribery Laws or the Company’s or any of its Subsidiaries’ policies, procedures and
controls to prevent corrupt conduct.
Section 4.30
Sanctions and
International Trade Compliance.
(a) The Company and its Subsidiaries (i) are, and have been for the
past three (3) years, in compliance with all International Trade Laws and Sanctions Laws, and (ii) have obtained all required licenses, consents, notices, waivers, approvals, orders, registrations, declarations or other authorizations from, and
have made all requisite filings with, any applicable Governmental Authority for the import, export, re-export, deemed export, deemed re-export or transfer of its products and technologies as required under the International Trade Laws or
Sanctions Laws (the “Export Approvals”). There are, and have been for the past three (3) years, no pending or threatened claims, complaints, charges, investigations or Actions against the Company, any of the Company’s Subsidiaries, or
any of their respective current or former directors or officers (in each case in their capacity as such) related to any International Trade Laws or Sanctions Laws or any Export Approvals.
(b) Neither the Company nor any of its Subsidiaries, nor any of
their respective directors, officers or agents is or has in the past three (3) years been a Sanctioned Person. Neither the Company nor any of its Subsidiaries has engaged in the past three (3) years in any business or dealings, directly or
knowingly indirectly, with, involving or for the benefit of any Sanctioned Country or Sanctioned Person, in violation of Sanctions Laws. Since January 1, 2022, neither the Company nor any of its Subsidiaries have engaged in any business,
directly or indirectly, in Russia or Belarus.
(c) The Company and its Subsidiaries have in place written policies,
procedures, controls and systems reasonably designed to ensure compliance with International Trade Laws and Sanctions Laws.
(d) During the past three (3) years, neither the Company nor any of
its Subsidiaries has (i) made any voluntary, directed or involuntary disclosure to any Governmental Authority with respect to any alleged or apparent act or omission arising under or relating to any International Trade Laws or Sanctions Laws,
or (ii) received any notice, request, penalty or citation for any actual or potential non-compliance with International Trade Laws or Sanctions Laws.
TABLE OF CONTENTS
Section 4.31
Proxy
Statement/Registration Statement. None of the information supplied or to be supplied by the Company or any of the Company’s Subsidiaries, or by any other Person acting on behalf of the Company or any of the Company’s Subsidiaries, in
writing specifically for inclusion or incorporation by reference in the Proxy Statement/Registration Statement will, as of the date of the Proxy Statement/Registration Statement is first mailed to the Acquiror Shareholders and at the time of
the Acquiror Shareholders’ Meeting, contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading.
Section 4.32
Customers/Vendors.
(a) Section 4.32(a) of the Company Disclosure Letter sets
forth, as of the date of this Agreement, the top ten (10) customers based on the aggregate Euro value the Company or its Subsidiaries actually received from such customer during the period from January 1, 2022 to March 31, 2023 (the “Top
Customers”).
(b) Section 4.32(b) of the Company Disclosure Letter sets
forth, as of the date of this Agreement, the top ten (10) vendors based on the aggregate Euro value the Company or its Subsidiaries actually paid to such vendor during the period from January 1, 2022 to March 31, 2023 (the “Top Vendors”).
Section 4.33
Grants;
Government Contracts. Except as set forth on
Section 4.33 of the Company Disclosure Letter, the Company is not party to: (a) any Grant, (b) any Contract, including an individual task order, delivery order, purchase order, basic
ordering agreement, letter Contract or blanket purchase agreement between the Company or any of its Subsidiaries, on one hand, and any Governmental Authority, on the other hand, or (c) any subcontract or other Contract by which the Company or
one of its Subsidiaries has agreed to provide goods or services through a prime contractor directly to a Governmental Authority that is expressly identified in such subcontract or other Contract as the ultimate consumer of such goods or
services. None of the Company or any of its Subsidiaries have provided any offer, bid, quotation or proposal to sell products made or services provided by the Company or any of its Subsidiaries that, if accepted or awarded, would lead to any
Contract or subcontract of the type described by the foregoing sentence.
Section 4.34
Sufficiency of
Assets. Except as would not be expected to be material to the Company and its Subsidiaries, taken as a whole, the tangible assets owned, licensed or leased by the Company and its Subsidiaries constitute all of the tangible assets
reasonably necessary for the continued conduct of the business of the Company and its Subsidiaries after the Closing in the ordinary course of business.
Section 4.35
Transactions
with Related Persons. Except as set forth on
Section 4.35 of the Company Disclosure Letter, no officer, director, manager or Employee, the Company or any of the Company’s Subsidiaries, nor any immediate family member (as such
term is defined in Rules 12b-2 and 16a-1 of the Exchange Act) of any of the foregoing (whether directly or indirectly through an Affiliate (other than the Company or any of the Company’s Subsidiaries) of such Person) (each of the foregoing, a “
Related
Person”) is presently a party to any Contract, arrangement or commitment with the Company or any of the Company’s Subsidiaries, including any contract or arrangement (a) providing for the furnishing of services by (other than as officers,
directors, managers or Employees of the Company or any of the Company’s Subsidiaries), (b) providing for the rental of real property or personal property from or right, tangible or intangible (including Intellectual Property Rights) or
(c) otherwise requiring payments to (other than for services or expenses as directors, managers, officers or Employees of the Company or any of the Company’s Subsidiaries in the ordinary course of business consistent with past practice) any
Related Person. Except as set forth on
Section 4.35 of the Company Disclosure Letter, neither the Company nor any of the Company’s Subsidiaries has any outstanding Contract, arrangement or commitment with any Related Person, and no
Related Person owns any real property or material tangible personal property, or material Intellectual Property Rights used in the business of the Company or any of the Company’s Subsidiaries.
Section 4.36
No Additional
Representation or Warranties. Except as provided in this
Article IV, none of the Company, any of its Subsidiaries, any of their respective Affiliates or any of their respective directors, managers, officers, Employees,
equityholders, partners, members or other Representatives has made, or is making, any representation or warranty whatsoever to Acquiror or its Affiliates and no such party shall be liable in respect of the accuracy or completeness of any
information provided to Acquiror or its Affiliates.
TABLE OF CONTENTS
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF ACQUIROR
Except as set forth in (a) any Acquiror SEC Filings filed or
furnished on or prior to the date hereof (excluding any disclosures in the Acquiror SEC Filings under the headings “Risk Factors”, “Forward-Looking Statements” or “Qualitative Disclosures About Market Risk” and any other disclosures that are
predictive, cautionary or forward-looking in nature and any exhibits or other documents appended thereto) (it being acknowledged that nothing disclosed in such Acquiror SEC Filings will be deemed to modify or qualify the representations and
warranties set forth in Section 5.8 (Trust Account), Section 5.11 (Capitalization of Acquiror) and Section 5.14 (Taxes)), or (b) in the disclosure letter delivered by Acquiror to the Company (the “Acquiror Disclosure Letter”) on the date of this Agreement (each section of which, subject to Section 11.9, qualifies
the correspondingly numbered and lettered representations in this Article V), Acquiror represents and warrants to the Company as follows:
Section 5.1
Acquiror
Organization. Acquiror has been duly incorporated, organized and formed and is validly existing as a corporation or exempted company in good standing under the Laws of its jurisdiction of incorporation, organization or formation, and has
the requisite company or corporate power and authority to own, lease or operate all of its properties and assets and to conduct its business as it is now being conducted. Copies of the Governing Documents of Acquiror, as amended to the date of
this Agreement and set forth in the Acquiror SEC Filings, are true, correct and complete. Acquiror is duly licensed or qualified and in good standing as a foreign corporation or company in all jurisdictions in which its ownership of property or
the character of its activities is such as to require it to be so licensed or qualified or in good standing, except where failure to be so licensed or qualified or in good standing would not reasonably be expected to have, individually or in
the aggregate, a material adverse effect on the ability of Acquiror to enter into this Agreement or consummate the transactions contemplated hereby.
Section 5.2
Due Authorization.
(a) Acquiror has all requisite company or corporate power and,
subject to obtaining Acquiror Shareholder Approval, authority to (i) execute and deliver this Agreement and each of the Ancillary Agreements, (ii) subject to obtaining the Acquiror Shareholder Approval, consummate the transactions contemplated
hereby and thereby and (iii) perform all obligations to be performed by it hereunder and thereunder. The Acquiror Board has (i) determined that this Agreement and the other documents contemplated hereby to which Acquiror is a party and the
transactions contemplated hereby and thereby are advisable and in the best interests of Acquiror and Acquiror Shareholders; (ii) authorized and approved the execution, delivery and performance by Acquiror of this Agreement and the other
documents to which Acquiror is a party contemplated hereby and the transactions contemplated hereby and thereby; and (iii) recommended the adoption and approval of this Agreement and the other documents contemplated hereby to which Acquiror is
a party and the consummation of the transactions contemplated hereby and thereby by the Acquiror Shareholders. No other company or corporate proceeding on the part of Acquiror is necessary to authorize this Agreement and the other documents to
which Acquiror is a party contemplated hereby (other than the Acquiror Shareholder Approval). This Agreement has been, and at or prior to the Closing, the other documents contemplated hereby will be, duly and validly executed and delivered by
Acquiror, and this Agreement constitutes, and at or prior to the Closing, the other documents contemplated hereby will constitute, assuming due authorization, execution and delivery by the other parties thereto, a legal, valid and binding
obligation of Acquiror, enforceable against Acquiror in accordance with its terms, subject to any Enforceability Exceptions.
(b) Assuming that a quorum (as determined pursuant to Acquiror’s
Governing Documents) is present:
(i) each of those Transaction Proposals identified in clauses
(i), (ii) and (iii) of Section 8.2(b) shall require approval by an affirmative vote of the holders of at least two-thirds of the issued and outstanding shares of Acquiror Common Stock entitled to vote, who attend
and vote thereupon (as determined in accordance with Acquiror’s Governing Documents) at a shareholders’ meeting duly called by the Acquiror Board and held for such purpose and
(ii) each of those Transaction Proposals identified in clauses
(iv), (v), (vi), (vii), (viii), (ix), and (x), of Section 8.2(b), in each case, shall require approval by an affirmative vote of the holders of at
TABLE OF CONTENTS
least a majority of the issued and outstanding shares of Acquiror Common Stock
entitled to vote thereupon (as determined in accordance with Acquiror’s Governing Documents) at a shareholders’ meeting duly called by the Acquiror Board and held for such purpose.
(c) The foregoing votes are the only votes of any of Acquiror’s
share capital necessary in connection with entry into this Agreement by Acquiror and the consummation of the transactions contemplated hereby, including the Closing.
(d) At a meeting duly called and held or by unanimous written
resolution, the Acquiror Board has unanimously approved the transactions contemplated by this Agreement as a Business Combination.
Section 5.3
No Conflict.
Subject to the Acquiror Shareholder Approval, the execution and delivery of this Agreement by Acquiror and the other documents contemplated hereby by Acquiror and the consummation of the transactions contemplated hereby and thereby do not and
will not (a) violate or conflict with any provision of, or result in the breach of or default under the Governing Documents of Acquiror, (b) violate or conflict with any provision of, or result in the breach of, or default under any applicable
Law or Governmental Order applicable to Acquiror, (c) violate or conflict with any provision of, or result in the breach of, result in the loss of any right or benefit, or cause acceleration, or constitute (with or without due notice or lapse
of time or both) a default (or give rise to any right of termination, cancellation or acceleration) under any Contract to which Acquiror is a party or by which Acquiror may be bound, or terminate or result in the termination of any such
Contract or (d) result in the creation of any Lien upon any of the properties or assets of Acquiror, except, in the case of
clauses (b) through
(d), to the extent that the occurrence of the foregoing would not have, or would not
reasonably be expected to have, individually or in the aggregate, a material adverse effect on the ability of Acquiror to enter into and perform their obligations under this Agreement.
Section 5.4
Litigation and
Proceedings. There are no pending or, to the knowledge of Acquiror, threatened Actions against Acquiror, their respective properties or assets, or, to the knowledge of Acquiror, any of their respective directors, managers, officers or
employees (in their capacity as such). There are no investigations or other inquiries pending or, to the knowledge of Acquiror, threatened by any Governmental Authority, against Acquiror, their respective properties or assets, or, to the
knowledge of Acquiror, any of their respective directors, managers, officers or employees (in their capacity as such). There is no outstanding Governmental Order imposed upon Acquiror, nor are any assets of Acquiror’s businesses bound or
subject to any Governmental Order the violation of which would, individually or in the aggregate, reasonably be expected to be material to Acquiror. As of the date hereof, Acquiror is in compliance with all applicable Laws in all material
respects. Since its date of incorporation, Acquiror has not received any written notice of or been charged with the violation of any Laws, except where such violation has not been, individually or in the aggregate, material to Acquiror.
Section 5.5
SEC Filings.
Acquiror has timely filed all statements, prospectuses, registration statements, forms, reports and documents required to be filed by it with the SEC since February 4, 2021, pursuant to the Exchange Act or the Securities Act (collectively, as
they have been amended since the time of their filing through the date hereof, the “
Acquiror SEC Filings”). Each of the Acquiror SEC Filings, as of the respective date of its filing (or if amended or superseded by a filing prior to the
date of this Agreement or the Closing Date, then on the date of such filing), was prepared in all material respects in accordance with the applicable requirements of the Securities Act, the Exchange Act, the Sarbanes-Oxley Act and any rules and
regulations promulgated thereunder applicable to the Acquiror SEC Filings. As of the respective date of its filing (or if amended or superseded by a filing prior to the date of this Agreement or the Closing Date, then on the date of such
filing), the Acquiror SEC Filings did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements made therein, in light of the circumstances under which
they were made, not misleading. As of the date hereof, (a) there are no outstanding or unresolved comments in comment letters received from the SEC with respect to the Acquiror SEC Filings and (b) to the knowledge of Acquiror, none of the
Acquiror SEC Filings filed on or prior to the date hereof is subject to ongoing SEC review or investigation.
Section 5.6
Internal Controls;
Listing; Acquiror Financial Statements.
(a) Except as not required in reliance on exemptions from various
reporting requirements by virtue of Acquiror’s status as an “emerging growth company” within the meaning of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012, Acquiror has established and maintains disclosure
controls and procedures (as defined in Rule 13a-15 under the Exchange Act). Such disclosure controls and
TABLE OF CONTENTS
procedures are designed to ensure that material information relating to Acquiror is
made known to Acquiror’s principal executive officer and its principal financial officer by others within the Acquiror, particularly during the periods in which the periodic reports required under the Exchange Act are being prepared. To the
knowledge of Acquiror, such disclosure controls and procedures are effective in timely alerting Acquiror’s principal executive officer and principal financial officer to material information required to be included in Acquiror’s periodic
reports required under the Exchange Act. Since its inception, Acquiror has maintained a system of internal controls over financial reporting (as defined in Rule 13a-15 under the Exchange Act) sufficient to provide reasonable assurance regarding
the reliability of Acquiror’s financial reporting and the preparation of Acquiror Financial Statements for external purposes in accordance with GAAP.
(b) Each director and executive officer of Acquiror has filed with
the SEC on a timely basis all statements required by Section 16(a) of the Exchange Act and the rules and regulations promulgated thereunder. Acquiror has not taken any action prohibited by Section 402 of the Sarbanes-Oxley Act.
(c) Except as disclosed in the Acquiror SEC Filings, the Acquiror
Financial Statements included in the Acquiror SEC Filings (i) fairly present (subject, in the case of the unaudited interim financial statements included therein, to normal year-end adjustments and the absence of complete footnotes) in all
material respects the financial position of Acquiror, as at the respective dates thereof, and the results of operations and consolidated cash flows for the respective periods then ended, (ii) were prepared in conformity with GAAP applied on a
consistent basis during the periods involved (except as may be indicated therein or in the notes thereto and except with respect to unaudited statements as permitted by Form 10-Q of the SEC), and (iii) were prepared in all material respects in
accordance with the applicable accounting requirements and with the rules and regulations of the SEC, the Exchange Act and the Securities Act in effect as of the respective dates thereof. The books and records of Acquiror have been, and are
being, maintained in all material respects in accordance with GAAP and any other applicable legal and accounting requirements.
(d) There are no outstanding loans or other extensions of credit
made by Acquiror to any executive officer (as defined in Rule 3b-7 under the Exchange Act) or director of Acquiror.
(e) Neither Acquiror (including any employee thereof) nor Acquiror’s
independent auditors has identified or been made aware of (i) any significant deficiency or material weakness in the system of internal accounting controls utilized by Acquiror, (ii) any fraud, whether or not material, that involves Acquiror’s
management or other employees who have a role in the preparation of financial statements or the internal accounting controls utilized by Acquiror or (iii) any claim or allegation regarding any of the foregoing.
Section 5.7
Governmental
Authorities; Consents. Assuming the truth and completeness of the representations and warranties of the Company contained in this Agreement, and subject to receipt of the Acquiror Shareholder Approval, no consent, waiver, approval or
authorization of, or designation, declaration or filing with, or notification to, any Governmental Authority or other Person is required on the part of Acquiror with respect to Acquiror’s execution or delivery of this Agreement or the
consummation of the transactions contemplated hereby, except for (a) applicable requirements of the HSR Act, (b) in connection with the Domestication, the applicable requirements and required approval of the Cayman Registrar, (c) such filings
as are contemplated by this Agreement, (d) any filings required with Nasdaq or the SEC with respect to the transactions contemplated hereby, (e) 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 (f) where the failure to obtain such consents, waiver, approvals, authorizations, or to make such designation, declaration, filing or notification, would not, individually or in
the aggregate, reasonably be expected to adversely affect the ability of Acquiror to perform or comply with any material obligation under this Agreement or any ancillary agreement hereto to which it is a party or to consummate the transactions
contemplated hereby and thereby.
Section 5.8
Trust Account.
As of the date of this Agreement, Acquiror has at least $9,184,020.00 in the Trust Account, pursuant to the Investment Management Trust Agreement, dated as of February 4, 2021, between Acquiror and Continental Stock Transfer & Trust
Company, as trustee (the “
Trustee”) (the “
Trust Agreement”). 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 Acquiror SEC Filings to be inaccurate or that would entitle any Person (other than Acquiror Shareholders holding shares of
TABLE OF CONTENTS
Acquiror Common Stock sold in Acquiror’s initial public offering who shall have
properly elected to redeem their shares of Acquiror Common Stock pursuant to Acquiror’s Governing Documents and the underwriters of Acquiror’s initial public offering with respect to deferred underwriting commissions) to any portion of the
proceeds in the Trust Account. Prior to the Closing, none of the funds held in the Trust Account may be released other than to pay (i) Taxes or (ii) payments with respect to all Acquiror Share Redemptions, in each case in accordance with the
Acquiror’s Governing Documents, the Prospectus and the Trust Agreement (including with respect to expenses relating to the administration of the Trust Account). The Trust Agreement has not been amended or modified and is a valid and binding
obligation of Acquiror and is in full force and effect and is enforceable in accordance with its terms. As of the date hereof, there are no claims or proceedings pending, or to the knowledge of Acquiror, threatened with respect to the Trust
Account. Acquiror has performed all material obligations required to be performed by it to date under, and is not in material default or breach or materially delinquent in performance or any other respect (claimed or actual) in connection with,
the Trust Agreement, and no event has occurred which, with due notice or lapse of time or both, would constitute such a default or breach thereunder. As of the Effective Time, the obligations of Acquiror to dissolve or liquidate pursuant to
Acquiror’s Governing Documents shall terminate, and as of the Effective Time, Acquiror shall have no obligation whatsoever pursuant to Acquiror’s Governing Documents to dissolve and liquidate the assets of Acquiror by reason of the consummation
of the transactions contemplated hereby. To Acquiror’s knowledge, as of the date hereof, following the Effective Time, no Acquiror Shareholder shall be entitled to receive any amount from the Trust Account except to the extent such Acquiror
Shareholder is exercising an Acquiror Share Redemption. As of the date hereof, assuming the accuracy of the representations and warranties of the Company contained herein and the compliance by the Company with its obligations hereunder,
Acquiror has no reason to believe that any of the conditions to the use of funds in the Trust Account will not be satisfied or funds available in the Trust Account will not be available to Acquiror on the Closing Date.
Section 5.9
Absence of Changes.
Since April 18, 2023, there has not been any event or occurrence that has had, or would not reasonably be expected to have, individually or in the aggregate, a material adverse effect on the ability of Acquiror to enter into and perform its
obligations under this Agreement. Since April 18, 2023, Acquiror has, in all material respects, conducted its business and operated its properties in the ordinary course of business consistent with past practice.
Section 5.10
No Undisclosed
Liabilities. Except (a) for any fees and expenses payable by Acquiror as a result of or in connection with the consummation of the transactions contemplated hereby, (b) for any Working Capital Loans or (c) as set forth in
Section 5.10
of the Acquiror Disclosure Letter, there is no liability, debt or obligation or claim or judgment against Acquiror (whether direct or indirect, absolute or contingent, accrued or unaccrued, known or unknown, liquidated or unliquidated, or due
or to become due), except for liabilities, debts, obligations, claims or judgments (i) reflected or reserved for on Acquiror’s financial statements or disclosed in the notes thereto included in Acquiror SEC Filings, (ii) that have arisen since
the date of the most recent balance sheet included in the Acquiror SEC Filings in the ordinary course of business of Acquiror, or (iii) which would not be, or would not reasonably be expected to be, material to Acquiror.
Section 5.11
Capitalization
of Acquiror.
(a) Acquiror is authorized to issue (i) 500,000,000 Acquiror Class A
Shares, 918,402 of which are issued and outstanding as of the date of this Agreement, (ii) 50,000,000 Acquiror Class B Shares, of which 12,075,000 shares are issued and outstanding as of the date of this Agreement and (iii) 5,000,000 preference
shares of par value $0.0001 each, of which no shares are issued and outstanding as of the date of this Agreement (clauses (i), (ii) and (iii) collectively, the “Acquiror Securities”). The foregoing represents all
of the issued and outstanding Acquiror Securities as of the date of this Agreement. All issued and outstanding Acquiror Securities (x) have been duly authorized and validly issued and are fully paid and nonassessable, (y) were issued in
compliance in all material respects with applicable Law and Acquiror’s Governing Documents and (z) were not issued in breach or violation of any preemptive rights, purchase option, call option, right of first refusal, subscription right or any
similar right or issued in breach or violation of any Contract to which Acquiror is a party or otherwise bound.
(b) As of the date of this Agreement, (i) 9,660,000 Acquiror Public
Warrants and (ii) 8,216,330 Acquiror Private Warrants, are issued and outstanding. All outstanding Acquiror Warrants (x) have been duly authorized and validly issued and are fully paid and nonassessable and constitute the valid and binding
obligations of Acquiror, enforceable against Acquiror in accordance with their terms, subject to the
TABLE OF CONTENTS
Enforceability Exceptions, (y) were offered and issued in compliance with applicable
Law and Acquiror’s Governing Documents and (z) were not issued in breach or violation of any preemptive right, purchase option, call option, right of first refusal, subscription right or any similar right or issued in breach or violation of any
or Contract to which Acquiror is a party or otherwise bound.
(c) Except as set forth in this Section 5.11 or Section
5.11(c) of the Acquiror Disclosure Letter or as contemplated by Acquiror’s Governing Document, this Agreement or the other documents contemplated hereby, (i) Acquiror has not granted any outstanding options, share capital appreciation
rights, warrants, rights or other securities convertible into or exchangeable or exercisable for Acquiror Securities, and (ii) there are no Contracts of any kind which may obligate Acquiror to issue, purchase, redeem or otherwise acquire any
Acquiror Securities.
(d) The Acquiror Common Stock to be issued in connection with the
transactions contemplated hereby, including the Surviving Corporation Common Stock to be issued as part of Aggregate Closing Date Merger Consideration, when issued in accordance with the terms hereof, shall be duly authorized and validly
issued, fully paid and non-assessable and issued in compliance with all applicable state and federal securities Laws and not subject to, and not issued in violation of, any Lien, purchase option, call option, right of first refusal, preemptive
right, subscription right or any similar right under any provision of applicable Law, Acquiror’s Governing Documents, or any Contract to which Acquiror is a party or otherwise bound.
(e) Acquiror has no Subsidiaries, and does not own, directly or
indirectly, any equity interests or other interests or investments (whether equity or debt) in any Person, whether incorporated or unincorporated. Acquiror is not party to any Contract that obligates Acquiror to invest money in, loan money to
or make any capital contribution to any other Person.
Section 5.12
Brokers’ Fees.
Except fees described on
Section 5.12 of the Acquiror Disclosure Letter, no broker, finder, investment banker or other Person is entitled to any brokerage fee, finders’ fee or other commission in connection with the transactions
contemplated hereby based upon arrangements made by Acquiror or any of its Affiliates.
Section 5.13
Indebtedness.
Except for Working Capital Loans or as set forth in
Section 5.13 of the Acquiror Disclosure Letter, Acquiror does not have any Indebtedness.
(a) All material Tax Returns required to be filed by or with
respect to Acquiror have been timely filed (taking into account any applicable extensions), all such Tax Returns (taking into account all amendments thereto) are true, correct and complete in all material respects and all material Taxes due and
payable (whether or not shown on any Tax Return) have been paid, other than Taxes being contested in good faith and for which adequate reserves have been established in accordance with GAAP.
(b) Acquiror has withheld from amounts owing to any employee,
creditor or other Person all material Taxes required by Law to be withheld, paid over to the proper Governmental Authority in a timely manner all such withheld amounts required to have been so paid over and complied in all material respects
with all applicable withholding and related reporting requirements with respect to such Taxes.
(c) There are no Liens for any Taxes (other than Permitted Liens)
upon the property or assets of Acquiror.
(d) No material claim, assessment, deficiency or proposed adjustment
for any amount of Tax has been asserted or assessed by any Governmental Authority against Acquiror or that remains unresolved or unpaid except for claims, assessments, deficiencies or proposed adjustments being contested in good faith and for
which adequate reserves have been established in accordance with GAAP.
(e) There are no Tax audits or other examinations by a Governmental
Authority of Acquiror presently in progress, nor has Acquiror been notified in writing by a Governmental Authority of any request or threat for such an audit or other examination, and there are no waivers, extensions (other than automatic
extensions to file Tax Returns) or requests for any waivers or extensions of any statute of limitations currently in effect with respect to any material Taxes of Acquiror.
TABLE OF CONTENTS
(f) Acquiror has not made a request for an advance tax ruling or
request for technical advice, a request for a change of any method of accounting or any similar request that is in progress or pending with any Governmental Authority with respect to any Taxes.
(g) Acquiror is not a party to or bound by any Tax indemnification
or Tax sharing or similar agreement (other than any customary commercial Contracts (or Contracts entered into in the ordinary course of business) not primarily related to Taxes).
(h) Acquiror has not been a party to any transaction treated by the
parties as a distribution of stock qualifying for Tax-free treatment under Section 355 of the Code in the two (2) years prior to the date of this Agreement.
(i) Acquiror has never been a registered tax resident of the Cayman
Islands for Cayman Islands’ tax purposes.
(j) Acquiror (x) is not liable for Taxes of any other Person under
Treasury Regulation Section 1.1502-6 or any similar provision of state, local or foreign Tax Law or as a transferee or successor or by Contract (other than customary commercial Contracts (or Contracts entered into in the ordinary course of
business) not primarily related to Taxes) or (y) has never been a member of an affiliated, consolidated, combined or unitary group filing for U.S. federal, state or local income Tax purposes.
(k) No written claim has been made by any Governmental Authority
where Acquiror does not file Tax Returns that it is or may be subject to taxation in that jurisdiction.
(l) Acquiror does not have, and has never had, a permanent
establishment or other fixed place of business in any country other than the country of its organization and Acquiror is not, and has never been, subject to corporate income Tax in a jurisdiction outside the country of its organization.
(m) Acquiror has not participated in a “listed transaction” within
the meaning of Treasury Regulation 1.6011-4(b)(2).
(n) Acquiror will not be required to include any material amount in
taxable income, exclude any material item of deduction or loss from taxable income, or make any material adjustment under Section 481 of the Code (or any similar provision of state, local or foreign Law) for any taxable period (or portion
thereof) ending after the Closing Date as a result of any (i) installment sale, intercompany transaction described in the Treasury Regulations under Section 1502 of the Code (or any similar provision of state, local or foreign Law) or open
transaction disposition made prior to the Closing outside the ordinary course of business, (ii) prepaid amount received or deferred revenue recognized prior to the Closing outside the ordinary course of business, (iii) change in method of
accounting for a taxable period ending on or prior to the Closing Date or (iv) “closing agreements” described in Section 7121 of the Code (or any similar provision of state, local or foreign Law) executed prior to the Closing.
(o) Except as contemplated by this Agreement, the Ancillary
Agreements, or the transactions contemplated hereby and thereby, Acquiror has not taken any action, and to the knowledge of Acquiror there no facts or circumstances, that would reasonably be expected to prevent the Merger from qualifying for
the Intended U.S. Tax Treatment or the Intended Spanish Tax Treatment.
Section 5.15
Business
Activities.
(a) Since its incorporation, Acquiror has not conducted any business
activities other than activities related to Acquiror’s initial public offering or directed toward the accomplishment of a Business Combination. Except as set forth in Acquiror’s Governing Documents or as otherwise contemplated by this Agreement
or the Ancillary Agreements and the transactions contemplated hereby and thereby, there is no agreement, commitment, or Governmental Order binding upon Acquiror or to which Acquiror is a party which has or would reasonably be expected to have
the effect of prohibiting or impairing any business practice of Acquiror or any acquisition of property by Acquiror or the conduct of business by Acquiror as currently conducted or as contemplated to be conducted as of the Closing, other than
such effects, individually or in the aggregate, which have not been and would not reasonably be expected to be material to Acquiror.
TABLE OF CONTENTS
(b) Except for the transactions contemplated by this Agreement
and the Ancillary Agreements, Acquiror does not own or have a right to acquire, directly or indirectly, any interest or investment (whether equity or debt) in any corporation, partnership, joint venture, business, trust or other entity. Except
for this Agreement and the Ancillary Agreements and the transactions contemplated hereby and thereby, Acquiror has no material interests, rights, obligations or liabilities with respect to, and is not party to, bound by or has its assets or
property subject to, in each case whether directly or indirectly, any Contract or transaction which is, or could reasonably be interpreted as constituting, a Business Combination.
(c) As of the date hereof and except as set forth in Section
5.15(c) of the Acquiror Disclosure Letter or as contemplated by this Agreement, the Ancillary Agreements and the other documents and transactions contemplated hereby and thereby (including with respect to expenses and fees incurred in
connection therewith), Acquiror is not a party to any Contract with any other Person that would require payments by Acquiror after the date hereof in excess of $250,000 in the aggregate with respect to any individual Contract, other than
Working Capital Loans.
Section 5.16
Benefit Plans.
Acquiror does not maintain, sponsor or contribute to, or have any actual or contingent obligation or liability under, any employee benefit plan (as defined in Section 3(3) of ERISA, whether or not subject to ERISA) or any other plan, policy,
program, arrangement or agreement that provides compensation and/or benefits to any current or former employee, officer, director or individual independent contractor thereof (each, an “
Acquiror Benefit Plan”), nor does Acquiror have any
obligation or commitment to create or adopt any such Acquiror Benefit Plan (except for the Equity Incentive Plan expressly contemplated hereby).
Section 5.17
Nasdaq Stock
Market Quotation. The issued and outstanding Acquiror Units are registered pursuant to Section 12(b) of the Exchange Act and are listed for trading on the Nasdaq Capital Market (“
Nasdaq”) under the symbol “RMGCU.” The issued and
outstanding Acquiror Class A Shares are registered pursuant to Section 12(b) of the Exchange Act and are listed for trading on Nasdaq under the symbol “RMGC.” The issued and outstanding Acquiror Public Warrants are registered pursuant to
Section 12(b) of the Exchange Act and are listed for trading on Nasdaq under the symbol “RMGCW.” Acquiror is, and since its inception has been, in compliance with Nasdaq listing and corporate governance rules and there is no Action or
proceeding pending or, to the knowledge of Acquiror, threatened against Acquiror by Nasdaq or the SEC with respect to any intention by such entity to deregister the Acquiror Class A Shares or Acquiror Public Warrants or terminate the listing of
Acquiror Class A Shares or Acquiror Public Warrants on Nasdaq. None of Acquiror or its respective Affiliates has taken any action in an attempt to terminate the registration of the Acquiror Class A Shares or Acquiror Public Warrants under the
Exchange Act except as contemplated by this Agreement.
Section 5.18
Proxy
Statement/Registration Statement. On the date that the Proxy Statement/Registration Statement is first mailed to the Acquiror Shareholders and certain of the Company’s stockholders, as applicable, and at the time of the Acquiror
Shareholders’ Meeting, the Proxy Statement/Registration Statement will not include any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in light of the circumstances under which they
were made, not misleading;
provided,
however, that Acquiror makes no representations or warranties as to the information contained in, or omitted from, the Proxy Statement/Registration Statement in reliance upon, and in
conformity with, information furnished in writing to Acquiror by, or on behalf of, the Company specifically for inclusion in the Proxy Statement/Registration Statement that were not supplied by, or on behalf of, Acquiror for use therein.
Section 5.19
No Outside
Reliance. Notwithstanding anything contained in this
Article V or any other provision hereof, Acquiror and its directors, officers, employees, equityholders, partners, members and other Representatives, acknowledge and agree that
Acquiror has made its own investigation of the Company and that neither the Company nor any of its Affiliates or Representatives is making any representation or warranty whatsoever, express or implied, beyond those expressly given by the
Company in
Article IV, including any implied warranty or representation as to condition, merchantability, suitability or fitness for a particular purpose or trade as to any of the assets of the Company or its Subsidiaries. Without
limiting the generality of the foregoing, it is understood that any cost estimates, financial or other projections or other predictions that may be contained or referred to in the Company Disclosure Letter or elsewhere, as well as any
information, documents or other materials (including any such materials contained in any “data room” (whether or not accessed by Acquiror or its Representatives) or reviewed by Acquiror) or management presentations that have been or shall
hereafter be provided to Acquiror or any of its Affiliates or Representatives are not and will not be deemed to be
TABLE OF CONTENTS
representations or warranties of the Company, and no representation or warranty is
made as to the accuracy or completeness of any of the foregoing except as may be expressly set forth in Article IV of this Agreement. Except as otherwise expressly set forth in this Agreement, Acquiror understands and agrees that any
assets, properties and business of the Company and its Subsidiaries are furnished “as is,” “where is” and subject to and except as otherwise provided in the representations and warranties contained in Article IV, with all faults and
without any other representation or warranty of any nature whatsoever.
Section 5.20
No Additional
Representation or Warranties. Except as provided in this
Article V, neither Acquiror nor any of its Affiliates, nor any of their respective directors, managers, officers, employees, shareholders, stockholders, partners, members or
other Representatives has made, or is making, any representation or warranty whatsoever to the Company or its Affiliates and no such party shall be liable in respect of the accuracy or completeness of any information provided to the Company or
its Affiliates and Representatives. Without limiting the foregoing, the Company acknowledges that the Company and its advisors, have made their own investigation of Acquiror and its Affiliates and, except as provided in this
Article V,
are not relying on any representation or warranty whatsoever as to the condition, merchantability, suitability or fitness for a particular purpose or trade as to any of the assets of Acquiror or any of its Affiliates, the prospects (financial
or otherwise) or the viability or likelihood of success of the business of Acquiror and its Affiliates as conducted after the Closing, as contained in any materials provided by Acquiror, or any of its Affiliates or any of their respective
directors, officers, employees, shareholders, partners, members or other Representatives or otherwise.
ARTICLE VI
COVENANTS OF THE COMPANY
Section 6.1
Conduct of
Business. From the date of this Agreement through the earlier of the Closing or valid termination of this Agreement pursuant to
Article X (the “
Interim Period”), except (a) as set forth in
Section 6.1 of the
Company Disclosure Letter, (b) as contemplated by this Agreement or the Ancillary Agreements, (c) in connection with any Capital Raise Transaction, (d) as consented to by Acquiror in writing (which consent shall not be unreasonably conditioned,
withheld, delayed or denied) or (e) as required by Law, the Company shall, and shall cause its Subsidiaries to, use reasonable best efforts to operate the business of the Company in the ordinary course consistent with past practice. Without
limiting the generality of the foregoing, except (i) as set forth in
Section 6.1 of the Company Disclosure Letter, (ii) as contemplated by this Agreement or the Ancillary Agreements, (iii) in connection with any Capital Raise
Transaction, (iv) as consented to by Acquiror in writing (which consent shall not be unreasonably conditioned, withheld, delayed or denied) or (v) as required by Law, the Company shall not, and the Company shall cause its Subsidiaries not to:
(a) change or amend the Company Stockholders Agreement, other than
in connection with the Capital Raise Transaction;
(b) change or amend the Governing Documents of the Company or any of
the Company’s Subsidiaries, other than in connection with the matters set forth in Section 4.8(a) of the Company Disclosure Letter;
(c) form or cause to be formed any new Subsidiary of the Company;
(d) make or declare any dividend or distribution to the Company
Stockholders or make any other distributions in respect of any of the Company Common Stock or equity interests;
(e) split, combine, reclassify, recapitalize or otherwise amend any
terms of any shares of Company Common Stock or any of the Company’s Subsidiaries’ capital stock or equity interests, except for any such transaction by a wholly-owned Subsidiary of the Company that remains a wholly-owned Subsidiary of the
Company after consummation of such transaction;
(f) purchase, repurchase, redeem or otherwise acquire any issued and
outstanding share capital, outstanding shares of capital stock, membership interests or other equity interests of the Company or its Subsidiaries, except for: (i) the acquisition by the Company or any of its Subsidiaries of any shares of
capital stock, membership interests or other equity interests (other than Company Options) of the Company or its Subsidiaries in connection with the forfeiture or cancellation of such interests, including, for the avoidance of doubt,
redemptions of equity securities from former Employees upon the terms set forth in the
TABLE OF CONTENTS
underlying agreements governing such equity securities; (ii) the Ardachon Share
Acquisition; (iii) transactions between the Company and any wholly-owned Subsidiary of the Company or between wholly-owned Subsidiaries of the Company; (iv) the acquisition by the Company of shares of Company Common Stock in connection with the
surrender of shares of Company Common Stock by holders of Company Options in order to pay the exercise price of such Company Options; and (v) the withholding of shares of Company Common Stock to satisfy Tax obligations with respect to the
Company Options, in each of clauses (iv) and (v), solely to the extent in accordance with their terms as previously disclosed to Acquiror;
(g) enter into, modify in any material respect or terminate (other
than expiration in accordance with its terms) any Contract of a type required to be listed on Section 4.16(a) of the Company Disclosure Letter or any Real Property Lease, in each case, other than entry into such agreements in connection
with the (i) the Ardachon Share Acquisition, (ii) the Capital Raise Transaction, or (iii) in the ordinary course of business consistent with past practice or as required by Law;
(h) sell, assign, transfer, convey, lease or otherwise dispose of
any material portion of tangible assets or properties of the Company or its Subsidiaries, except for (i) dispositions of obsolete or worthless equipment, (ii) transactions among the Company and its wholly-owned Subsidiaries or among its
wholly-owned Subsidiaries and (iii) transactions in the ordinary course of business consistent with past practice;
(i) acquire any ownership interest in any real property;
(j) except as otherwise required by Law, existing Company Benefit
Plans or existing Contracts listed on Section 4.16(a) of the Company Disclosure Letter, (i) grant any material severance, retention, change in control or termination or similar pay to any Employee, (ii) make any change in the key
management structure of the Company or any of the Company’s Subsidiaries, (iii) hire or engage, or make an offer to hire or engage, any Employee with an annual base compensation of $250,000 or more, (iv) terminate the employment or engagement
of any Employee with an annual base compensation of $250,000 or more, other than terminations for cause or due to death or disability, (v) terminate, adopt, enter into or materially amend any Company Benefit Plan, except in the ordinary course
of business consistent with past practice, (vi) materially increase the cash compensation or bonus opportunity of any Employee, except in the ordinary course of business consistent with past practice, (vii) establish any trust or take any other
action to secure the payment of any compensation payable by the Company or any of the Company’s Subsidiaries, (viii) take any action to amend or waive any performance or vesting criteria or to accelerate the time of payment or vesting of any
compensation or benefit payable by the Company or any of the Company’s Subsidiaries or (ix) grant any equity or equity-based compensation to any Employee or other individual service provider of the Company or any of its Subsidiaries;
(k) acquire by merger or consolidation with, or merge or consolidate
with, or purchase substantially all or a material portion of the assets of, any corporation, partnership, association, joint venture or other business organization or division thereof;
(l) (i) issue or sell any debt securities or warrants or other
rights to acquire any debt securities of the Company or any Subsidiary of the Company or otherwise incur or assume any Indebtedness, or (ii) guarantee any Indebtedness of another Person, the sum of (i) and (ii) not to be in excess of
$10,000,000 in the aggregate, in each case, other than in the ordinary course of business consistent with past practice, other than in connection with the Ardachon Share Acquisition;
(m) (i) make or change any material election in respect of material
Taxes, (ii) materially amend any filed material Tax Return, (iii) adopt or request permission of any taxing authority to change any accounting method in respect of material Taxes, (iv) enter into any “closing agreement” as described in Section
7121 of the Code (or any similar provision of state, local, or foreign Law) with any Governmental Authority in respect of material Taxes executed on or prior to the Closing Date or enter into any Tax sharing or similar agreement (other than any
such agreement solely between the Company and its existing Subsidiaries and customary commercial Contracts (or Contracts entered into in the ordinary course of business) not primarily related to Taxes), (v) settle any claim or assessment in
respect of material Taxes or (vi) consent to any
TABLE OF CONTENTS
extension or waiver of the limitation period applicable to any claim or assessment
in respect of material Taxes (other than automatic extensions to file Tax Returns), in each case, if such action would be reasonably expected to have an adverse effect on the Company, Acquiror or any of their Subsidiaries after the Closing
Date;
(n) take any action, or knowingly fail to take any action, where
such action or failure to act would reasonably be expected to prevent the Merger from qualifying for the Intended U.S. Tax Treatment or the Intended Spanish Tax Treatment;
(o) discharge any secured or unsecured obligation or liability
(whether accrued, absolute, contingent or otherwise) in excess of $10,000,000, except as such obligations become due in the ordinary course and subject to the terms of each applicable Contract, other than in connection with the Ardachon Share
Acquisition or in connection with the Capital Raise Transaction;
(p) issue any additional shares of Company Common Stock or
securities exercisable for or convertible into Company Common Stock, other than (i) the issuance of Company Common Stock upon the exercise of Company Options in the ordinary course of business or (ii) in connection with the Capital Raise
Transaction;
(q) adopt a plan of, or otherwise enter into or effect a, complete
or partial liquidation, dissolution, restructuring, recapitalization or other reorganization of the Company or any of its Subsidiaries (other than the Merger);
(r) waive, release, settle, compromise or otherwise resolve any
inquiry, investigation, claim, litigation or other Actions, except where such waivers, releases, settlements or compromises involve only the payment of monetary damages in an amount less than $250,000 in the aggregate;
(s) assign, transfer, pledge, sell, or license to any Person rights
to any Company Owned IP, or dispose of, abandon, permit to lapse or fail to renew such Intellectual Property Rights, except for the expiration of Company Owned IP in accordance with the applicable statutory term, or for the grant of
non-exclusive licenses in the ordinary course of business, consistent with past practice;
(t) modify in any material respect any of the Company’s privacy
policies, or any administrative, technical or physical safeguards related to privacy or cybersecurity, except (i) to remediate any security issue, (ii) to enhance data security or integrity, (iii) to comply with applicable Law, or (iv) as
otherwise directed or required by a Governmental Authority;
(u) disclose or agree to disclose to any Person (other than Acquiror
or any of its Representatives) any material trade secret or any other material confidential or proprietary information of the Company or any of its Subsidiaries other than to Persons who are subject to a contractual, legal, or enforceable
ethical obligation to maintain the confidentiality thereof;
(v) Except as set forth on Section 6.1(u) of the Company
Disclosure Letter, make or commit to make any capital expenditures in an amount greater than $250,000 in the aggregate;
(w) manage the Company’s and its Subsidiaries’ working capital
(including paying amounts payable in a timely manner when due and payable) in a manner other than in the ordinary course of business consistent with past practice;
(x) other than as required by applicable Law, modify, enter into or
extend any collective bargaining agreement or any other labor-related agreements or arrangements with any labor union, labor organization or works council, or recognize or certify any labor union, labor organization, works council or group of
Employees of the Company or its Subsidiaries as the bargaining representative for any Employees of the Company or its Subsidiaries;
(y) terminate without replacement or fail to use reasonable efforts
to maintain any License material to the conduct of the business of the Company and its Subsidiaries, taken as a whole;
(z) waive the restrictive covenant obligations of any Employee of
the Company or any of the Company’s Subsidiaries;
TABLE OF CONTENTS
(aa) (i) limit the right of the Company or any of the Company’s
Subsidiaries to engage in any line of business or in any geographic area, to develop, market or sell products or services, or to compete with any Person or (ii) grant any exclusive rights to any Person, in each case, except where such
limitation or grant does not, and would not be reasonably likely to, individually or in the aggregate, materially and adversely affect, or materially disrupt, the ordinary course operation of the businesses of the Company and its Subsidiaries,
taken as a whole;
(bb) terminate without replacement or amend in a manner materially
detrimental to the Company and its Subsidiaries, taken as a whole, any insurance policy insuring the business of the Company or any of the Company’s Subsidiaries; or
(cc) enter into any agreement to do any action prohibited under
this Section 6.1.
Section 6.2
Inspection.
Subject to confidentiality obligations that may be applicable to information furnished to the Company or any of the Company’s Subsidiaries by third parties that may be in the Company’s or any of its Subsidiaries’ possession from time to time,
and except for any information that is subject to attorney-client privilege (
provided that, to the extent possible, the Parties shall cooperate in good faith to permit disclosure of such information in a manner that preserves such
privilege or compliance with such confidentiality obligation), and to the extent permitted by applicable Law, (a) the Company shall, and shall cause its Subsidiaries to, afford to Acquiror and its accountants, counsel and other Representatives
reasonable access during the Interim Period (including for the purpose of coordinating transition planning for Employees), during normal business hours and with reasonable advance notice, in such manner as to not materially interfere with the
ordinary course of business of the Company and its Subsidiaries, to all of their respective properties, books, Contracts, commitments, Tax Returns, records and appropriate officers and Employees of the Company and its Subsidiaries, and shall
furnish such Representatives with all financial and operating data and other information concerning the affairs of the Company and its Subsidiaries as such Representatives may reasonably request;
provided that such access shall not
include any invasive or intrusive investigations or other testing, sampling or analysis of any properties, facilities or equipment of the Company or its Subsidiaries, including any testing, sampling or analysis of environmental media, without
the prior written consent of the Company, and (b) the Company shall, and shall cause its Subsidiaries to, provide to Acquiror and, if applicable, its accountants, counsel or other Representatives, (x) such information and such other materials
and resources relating to any Action initiated, pending or threatened during the Interim Period, or to the compliance and risk management operations and activities of the Company and its Subsidiaries during the Interim Period, in each case, as
Acquiror or such Representative may reasonably request, (y) prompt written notice of any material status updates in connection with any such Actions or otherwise relating to any compliance and risk management matters or decisions of the Company
or its Subsidiaries, and (z) copies of any communications sent or received by the Company or its Subsidiaries in connection with such Actions, matters and decisions (and, if any such communications occurred orally, the Company shall, and shall
cause its Subsidiaries to, memorialize such communications in writing to Acquiror).
Section 6.3
Confidentiality.
The Parties to this Agreement acknowledge that they have and will continue to receive Confidential Information (as defined below) from or regarding the other parties and their respective Subsidiaries, the release of which would be damaging to
such other Party. Each Party shall hold in strict confidence any Confidential Information in such Party’s possession, and each such Party shall not disclose such Confidential Information to any Person (including any Affiliates of such Person)
other than another Party or a Representative of such Party with a need to know such Confidential Information in connection with the transactions contemplated by this Agreement and the Ancillary Agreements, or otherwise use such Confidential
Information for any purpose other than to evaluate, analyze and keep apprised of the other parties’ and their respective Subsidiaries’ businesses and assets;
provided that a Party may disclose or use for any purpose any Confidential
Information (i) to comply with any Laws (including applicable stock exchange or quotation system requirements) or requests by any Governmental Authority;
provided that a Party must notify the other Party promptly of any disclosure of
Confidential Information that is required by Law or requested by any Governmental Authority, and any such disclosure of Confidential Information shall be limited to the minimum extent required by Law or requested by such Governmental Authority,
(ii) that a Party has also received from a source independent of the other parties hereto on a non-confidential basis and that such Party reasonably believes was obtained by such source without breach of any obligation of confidentiality to the
other parties hereto, (iii) that have been or are hereafter independently developed by a Party or its Affiliates or on their behalf without
TABLE OF CONTENTS
using any of the Confidential Information of the other Party, or (iv) that are or
become generally available to the public (other than as a result of a prohibited disclosure by a Party or its Representatives). The term “Confidential Information” means any information pertaining to a Party’s or any of its
Subsidiaries’ business that is not available to the public, whether written, oral, electronic, visual form or in any other media, including, but not limited to, trade secrets.
Section 6.4
Preparation and
Delivery of Additional Company Financial Statements.
(a) As soon as reasonably practicable following the date hereof, but
in any event no later than May 15, 2023, the Company shall deliver to Acquiror audited consolidated balance sheets as of December 31, 2022 and December 31, 2021, and statements of operations, comprehensive loss, stockholders’ equity and cash
flows of the Company and its Subsidiaries as of and for the years ended December 31, 2022 and December 31, 2021, together with the auditor’s reports thereon, which comply in all material respects with the applicable accounting requirements and
with the rules and regulations of the SEC, the Exchange Act and the Securities Act applicable to a U.S. registrant, including the standards established by the Public Company Accounting Oversight Board (collectively, the “PCAOB Financial
Statements”); provided that upon delivery of such PCAOB Financial Statements, such financial statements shall be deemed “Audited Financial Statements” for the purposes of this Agreement and the representation and warranties
set forth in Section 4.11 shall be deemed to apply to such Audited Financial Statements with the same force and effect as if made as of the date of this Agreement.
(b) As soon as reasonably practicable following the date hereof, but
in any event no later than June 30, 2023, the Company shall deliver to Acquiror an unaudited consolidated balance sheet as of March 31, 2023 and statements of operations, comprehensive loss, stockholders’ equity and cash flows of the Company
and its Subsidiaries as of and for the three- (3) month periods ended March 31, 2023 and March 31, 2022, such quarterly financial statements to be subject to a limited review by the Company’s auditors and which comply in all material respects
with the applicable accounting requirements and with the rules and regulations of the SEC, the Exchange Act and the Securities Act applicable to a U.S. registrant including the standards established by the Public Company Accounting Oversight
Board (the “Q1 Unaudited Financial Statements”); provided that upon delivery of such Q1 Unaudited Financial Statements, the representation and warranties set forth in Section 4.11 shall be deemed to apply to such
Q1 Unaudited Financial Statements with the same force and effect as if made as of the date of this Agreement.
(c) If the Effective Time has not occurred prior to August 14, 2023,
and this Agreement has not been earlier terminated pursuant to Article X, then as soon as reasonably practicable following August 14, 2023, and by no later than September 15, 2023, the Company shall deliver to Acquiror unaudited
consolidated balance sheet as of June 30, 2023, and statements of operations, comprehensive loss, stockholders’ equity and cash flows of the Company and its Subsidiaries as of and for the six-(6) month period ended June 30, 2023 and June 30,
2022, such quarterly financial statements to be subject to a limited review by the Company’s auditors and which comply in all material respects with the applicable accounting requirements and with the rules and regulations of the SEC, the
Exchange Act and the Securities Act applicable to a registrant (the “Q2 Unaudited Financial Statements”); provided that upon delivery of such Q2 Unaudited Financial Statements, the representation and warranties set forth in Section
4.11 shall be deemed to apply to such Q2 Unaudited Financial Statements with the same force and effect as if made as of the date of this Agreement.
(d) The Company shall deliver to Acquiror, as soon as reasonably
practicable following the date hereof, any additional financial or other information reasonably requested by Acquiror to prepare pro forma financial statements required under federal securities Laws to be included in Acquiror’s filings with the
SEC (including, if applicable, the Proxy Statement) that comply with the requirements of Regulation S-X under the rules and regulations of the SEC (as interpreted by the staff of the SEC) and shall cooperate with Acquiror to prepare such pro
forma financial statements.
(e) The Company shall use its reasonable best efforts to cause its
independent auditors to provide any necessary consents to the inclusion of the Company Financial Statements in Acquiror’s filings with the SEC in accordance with the applicable requirements of federal securities Laws.
TABLE OF CONTENTS
Section 6.5
Acquisition
Proposals. From the date hereof until the Closing Date or, if earlier, the termination of this Agreement in accordance with
Article X, the Company and its Subsidiaries shall not, and the Company shall instruct and use its
reasonable best efforts to cause its Representatives, not to (a) initiate any negotiations with any Person with respect to, or provide any non-public information or data concerning the Company or any of the Company’s Subsidiaries to any Person
relating to, an Acquisition Proposal or afford to any Person access to the business, properties, assets or personnel of the Company or any of the Company’s Subsidiaries in connection with an Acquisition Proposal, (b) enter into any acquisition
agreement, merger agreement or similar definitive agreement, or any letter of intent, memorandum of understanding or agreement in principle, or any other agreement relating to an Acquisition Proposal, (c) grant any waiver, amendment or release
under any confidentiality agreement or the anti-takeover laws of any state, or (d) otherwise knowingly facilitate any such inquiries, proposals, discussions or negotiations or any effort or attempt by any Person to make an Acquisition Proposal.
ARTICLE VII
COVENANTS OF ACQUIROR
Section 7.1
Trust Account.
Upon satisfaction or waiver of the conditions set forth in
Article IX and provision of notice thereof to the Trustee (which notice Acquiror shall provide to the Trustee in accordance with the terms of the Trust Agreement), (a) in
accordance with and pursuant to the Trust Agreement, at the Closing, Acquiror (i) shall cause any documents, opinions and notices required to be delivered to the Trustee pursuant to the Trust Agreement to be so delivered and (ii) shall use its
reasonable best efforts to cause the Trustee to, and the Trustee shall thereupon be obligated to (x) pay as and when due all amounts payable to the Acquiror Shareholders pursuant to the Acquiror Share Redemptions, and (y) pay all remaining
amounts, less the fees and costs incurred by the Trustee in accordance with the Trust Agreement, then available in the Trust Account to Acquiror for immediate use, subject to this Agreement and the Trust Agreement, and (b) thereafter, the Trust
Account shall terminate, except as otherwise provided therein.
Section 7.2
Nasdaq Listing.
From the date hereof through the Effective Time, Acquiror shall remain listed as a public company on Nasdaq, and shall prepare and submit to Nasdaq a listing application, if required under Nasdaq listing rules, covering the shares of Surviving
Corporation Common Stock issuable in the Merger, and shall use reasonable efforts to obtain approval for the listing of such shares of Surviving Corporation Common Stock and the Company shall reasonably cooperate with Acquiror with respect to
such listing.
Section 7.3
No Solicitation by
Acquiror. From the date hereof until the Closing Date or, if earlier, the termination of this Agreement in accordance with
Article X, Acquiror shall not, and shall instruct its Representatives not to, (a) make any proposal or
offer that constitutes a Business Combination Proposal, (b) initiate any discussions or negotiations with any Person with respect to a Business Combination Proposal or (c) enter into any acquisition agreement, business combination, merger
agreement or similar definitive agreement, or any letter of intent, memorandum of understanding or agreement in principle, or any other agreement relating to a Business Combination Proposal, in each case, other than to or with the Company and
its respective Representatives. From and after the date hereof, Acquiror shall, and shall instruct its officers and directors to, and Acquiror shall instruct and cause its Representatives to, immediately cease and terminate all discussions and
negotiations with any Persons that may be ongoing with respect to a Business Combination Proposal (other than the Company and its Representatives).
TABLE OF CONTENTS
Section 7.4
Acquiror
Conduct of Business.
(a) During the Interim Period, except (w) as set forth in Section
7.4 of the Acquiror Disclosure Letter, (x) as contemplated by this Agreement (including in connection with any financing arrangement or efforts contemplated by Section 8.6 or in connection with the Domestication) or the Ancillary
Agreements, (y) as consented to by the Company in writing (which consent shall not be unreasonably conditioned, withheld, delayed or denied) or (z) as required by Law, Acquiror shall operate its business in the ordinary course and consistent
with past practice. Without limiting the generality of the foregoing, except (w) as set forth in Section 7.4 of the Acquiror Disclosure Letter, (x) as contemplated by this Agreement (including in connection with any financing
arrangement or efforts contemplated by Section 8.6 or in connection with the Domestication) or the Ancillary Agreements, (y) as consented to by the Company in writing (which consent shall not be unreasonably conditioned, withheld,
delayed or denied) or (z) as required by Law, Acquiror shall not:
(i) change, modify or amend the Trust Agreement or the Governing
Documents of Acquiror, except as contemplated by the Transaction Proposals;
(ii) (x) make or declare any dividend or distribution to the
Acquiror Shareholders or make any other distributions in respect of any of Acquiror’s share capital, (y) split, combine, reclassify, recapitalize or otherwise amend any terms of any shares or series of Acquiror’s share capital or equity
interests, or (z) purchase, repurchase, redeem or otherwise acquire any issued and outstanding share capital, outstanding shares of capital stock, share capital or membership interests, warrants or other equity interests of Acquiror, other than
a redemption of Acquiror Class A Shares made as part of the Acquiror Share Redemptions;
(iii) (A) make or change any material election in respect of
material Taxes, (B) amend any filed material Tax Return, (C) adopt or request permission of any taxing authority to change any accounting method in respect of material Taxes, (D) enter into any “closing agreement” as described in Section 7121
of the Code (or any similar provision of state, local, or foreign Law) with any Governmental Authority in respect of material Taxes or enter into any Tax sharing or similar agreement, (E) settle any claim or assessment in respect of material
Taxes, or (F) consent to any extension or waiver of the limitation period applicable to any claim or assessment in respect of material Taxes;
(iv) take any action, where such action or failure to act would
reasonably be expected to prevent the Merger from qualifying for the Intended U.S. Tax Treatment or the Intended Spanish Tax Treatment. For the avoidance of doubt, following the Domestication (and prior to the Merger), Acquiror shall cease
operations in the Cayman Islands, and shall not hold material assets in, or deposited in, persons located in the Cayman Islands, nor carry out any material actions concerning this Agreement and the transactions contemplated hereunder from the
Cayman Islands;
(v) other than as expressly required by the Sponsor Support
Agreement, enter into, renew or amend in any material respect, any transaction or Contract with an Affiliate of Acquiror (including, for the avoidance of doubt, (x) the Sponsor and (y) any Person in which the Sponsor has a direct or indirect
legal, contractual or beneficial ownership interest of five percent (5%) or greater);
(vi) except as contemplated by the Equity Incentive Plan, (A) enter
into, adopt or amend any Acquiror Benefit Plan, or enter into any employment contract or collective bargaining agreement that would cover employees of Acquiror following Closing or (B) hire any employee or any other individual to provide
services to Acquiror following Closing;
(vii) incur or assume any Indebtedness or guarantee any Indebtedness
of another Person, issue or sell any debt securities or warrants or other rights to acquire any debt securities of the Company or any of the Company’s Subsidiaries or guaranty any debt securities of another Person, or otherwise knowingly and
purposefully incur, guarantee or otherwise become liable for (whether directly, contingently or otherwise) any other material liabilities, debts or obligations, other than (A) fees and expenses, including finder’s fees, for professional
services incurred in support of the transactions contemplated by this Agreement and the Ancillary Agreements or in support of the ordinary course
TABLE OF CONTENTS
operations of Acquiror (which the Parties agree shall include any Indebtedness in
respect of any Working Capital Loan) or (B) any Indebtedness for borrowed money or guarantee incurred in the ordinary course of business consistent with past practice;
(viii) (A) issue any Acquiror Securities or securities exercisable
for or convertible into Acquiror Securities, other than the issuance (1) of the Aggregate Closing Date Merger Consideration, (2) of Surviving Corporation Options, in each case in accordance with Section 3.3, and (3) in connection with
any financing arrangement or efforts contemplated by Section 8.6, (B) grant any options, warrants or other equity-based awards with respect to Acquiror Securities not outstanding on the date hereof, or (C) amend, modify or waive any of
the material terms or rights set forth in any Acquiror Warrant or the Warrant Agreement, including any amendment, modification or reduction of the warrant price set forth therein; or
(ix) enter into any agreement to do any action prohibited under
this Section 7.4.
(b) During the Interim Period, Acquiror shall comply with, and
continue performing under, as applicable, Acquiror’s Governing Documents, the Trust Agreement and all other agreements or Contracts to which Acquiror may be a party.
Section 7.5
Domestication.
(a) Subject to receipt of the Acquiror Shareholder Approval, at
least one (1) Business Day prior to the Effective Time, Acquiror shall cause the Domestication to become effective, including by (a) filing with the Delaware Secretary of State a Certificate of Domestication with respect to the Domestication,
in form and substance reasonably acceptable to Acquiror and the Company, together with the Certificate of Incorporation of Acquiror in substantially the form attached as Exhibit A to this Agreement, in each case, in accordance with the
provisions thereof and applicable Law and (b) completing and making and procuring all those filings required to be made with the Cayman Registrar under the Companies Act in connection with the Domestication. In accordance with applicable Law,
the Domestication shall provide that at the effective time of the Domestication, by virtue of the Domestication, and without any action on the part of any Acquiror Shareholder, (i) each then issued and outstanding Acquiror Class A Share shall
convert automatically, on a one-for-one basis, into a share of Domesticated Acquiror Class A Stock; (ii) each then issued and outstanding Acquiror Class B Share shall convert automatically, on a one-for-one basis, into a share of Domesticated
Acquiror Class B Stock; (iii) each then issued and outstanding Acquiror Warrant shall convert automatically into a Domesticated Acquiror Warrant, pursuant to the Warrant Agreement; and (iv) each then issued and outstanding Acquiror Unit shall
be canceled and will entitle the holder thereof to one share of Domesticated Acquiror Class A Stock and one-fifth of one Domesticated Acquiror Warrant.
(b) At least one (1) Business Day prior to the Effective Time,
Acquiror shall take the actions necessary vis-à-vis the relevant Governmental Authority to become a resident taxpayer for purposes of U.S. federal income tax.
Section 7.6
Indemnification
and Insurance.
(a) From and after the Effective Time, the Surviving Corporation
shall indemnify and hold harmless each present and former director and officer of the (i) Company and each of its Subsidiaries (in each case, solely to the extent acting in their capacity as such and to the extent such activities are related to
the business of the Company being acquired under this Agreement) (the “Company Indemnified Parties”) and (ii) Acquiror (together with the Company Indemnified Parties, the “D&O Indemnified Parties”) against any costs or
expenses (including reasonable attorneys’ fees), judgments, fines, losses, claims, damages or liabilities incurred in connection with any Action, whether civil, criminal, administrative or investigative, arising out of or pertaining to matters
existing or occurring at or prior to the Effective Time, whether asserted or claimed prior to, at or after the Effective Time, to the fullest extent that the Company or its Subsidiaries, or Acquiror, as the case may be, would have been
permitted under applicable Law and its respective certificate of incorporation, certificate of formation, bylaws, limited liability company agreement or other organizational documents in effect on the date of this Agreement to indemnify such
D&O Indemnified Parties (including the advancing of expenses as incurred to the fullest extent permitted under applicable Law). Without limiting the foregoing, the Surviving Corporation shall, and shall cause its Subsidiaries to
(x) maintain for a period of not less than six (6) years from the Effective Time provisions in
TABLE OF CONTENTS
its Governing Documents concerning the indemnification and exoneration (including
provisions relating to expense advancement) of the Surviving Corporation’s and its Subsidiaries’ former and current officers, directors, Employees, and agents that are no less favorable to those Persons than the provisions of the Governing
Documents of the Company or its Subsidiaries, or Acquiror, as applicable, in each case, as of the date of this Agreement, and (y) not amend, repeal or otherwise modify such provisions in any respect that would adversely affect the rights of
those Persons thereunder, in each case, except as required by Law. The Surviving Corporation shall assume, and be liable for, each of the covenants in this Section 7.6.
(b) For a period of six (6) years from the Effective Time, the
Surviving Corporation shall maintain in effect directors’ and officers’ liability insurance covering those Persons who are currently covered by Acquiror’s, the Company’s or its Subsidiaries’ directors’ and officers’ liability insurance policies
(true, correct and complete copies of which have been heretofore made available to Acquiror or its Representatives) on terms not less favorable than the terms of such current insurance coverage, except that in no event shall the Surviving
Corporation be required to pay an annual premium for such insurance in excess of three hundred percent (300%) of the aggregate annual premiums currently payable by Acquiror or the Company, as applicable, with respect to such current policies; provided,
however, that (i) the Surviving Corporation may cause coverage to be extended under the current directors’ and officers’ liability insurance by obtaining a six (6) year “tail” policy containing terms not materially less favorable than
the terms of such current insurance coverage with respect to claims existing or occurring at or prior to the Effective Time and (ii) if any claim is asserted or made within such six (6) year period, any insurance required to be maintained under
this Section 7.6 shall be continued in respect of such claim until the final disposition thereof.
(c) Notwithstanding anything contained in this Agreement to the
contrary, this Section 7.6 shall survive the consummation of the Merger indefinitely and shall be binding, jointly and severally, on the Surviving Corporation and all successors and assigns of the Surviving Corporation. In the event
that the Surviving Corporation or any of its successors or assigns consolidates with or merges into any other Person and shall not be the continuing or surviving corporation or entity of such consolidation or merger or transfers or conveys all
or substantially all of its properties and assets to any Person, then, and in each such case, the Surviving Corporation shall ensure that proper provision shall be made so that the successors and assigns of the Surviving Corporation shall
succeed to the obligations set forth in this Section 7.6.
(d) On the Closing Date, the Surviving Corporation shall enter into
customary indemnification agreements reasonably satisfactory to each of the Company and Acquiror with the post-Closing directors and officers of the Surviving Corporation, which indemnification agreements shall continue to be effective
following the Closing.
Section 7.7
Acquiror Public
Filings. From the date hereof through the Effective Time, Acquiror will keep current and timely file all reports required to be filed or furnished with the SEC and otherwise comply in all material respects with its reporting obligations
under applicable Laws.
Section 7.8
Equity Incentive
Plan. Prior to the Closing Date, Acquiror shall approve and adopt an equity incentive plan (the “
Equity Incentive Plan”) that provides for grants of awards to eligible service providers, with an initial share reserve that is
reasonably satisfactory to Acquiror. Within two (2) Business Days following the expiration of the sixty (60) day period following the date the Surviving Corporation has filed current Form 10 information with the SEC reflecting its status as an
entity that is not a shell company, the Surviving Corporation shall file an effective registration statement on Form S-8 with respect to the Surviving Corporation Common Stock issuable under the Equity Incentive Plan, and Acquiror shall
maintain the effectiveness of such registration statement(s) (and maintain the current status of the prospectus or prospectuses contained therein) for so long as awards granted pursuant to the Equity Incentive Plan remain outstanding.
Section 7.9
Extension. If
the Closing shall not have occurred by June 28, 2023, and unless this Agreement has been validly terminated pursuant to
Article X, Acquiror shall take, in accordance with applicable Law and the Acquiror’s Governing Documents, all
commercially reasonable actions necessary to (a) establish a record date for, give, publish the notice of, convene, schedule and hold a meeting of the Acquiror Shareholders to consider
TABLE OF CONTENTS
the adoption and approval of an Extension, in each case, on a month-to-month basis up
to the earlier of (i) the Closing or (ii) the valid termination of this Agreement pursuant to Article X (the “Extension Proposal”) and (b) obtain approval of the Extension Proposal by the Acquiror Shareholders, in each case of
clauses (a) and (b) prior to August 9, 2023.
Section 7.10
Amendment to the
Warrant Agreement. On the Closing Date, Acquiror shall amend, or shall cause to be amended, the Warrant Agreement to change (a) all references to Public Warrants and Private Placement Warrants (as such terms are defined in the Warrant
Agreement) to Adjusted Public Warrants and Adjusted Private Placement Warrants and (b) all references to Ordinary Shares (as defined in the Warrant Agreement) to Surviving Corporation Common Stock, which shall, following the execution of such
Warrant Agreement Amendment, cause (x) each outstanding Acquiror Public Warrant to represent the right to receive 0.075 shares of Surviving Corporation Common Stock, and (y) each outstanding Acquiror Private Warrant to represent the right to
receive 0.075 shares of Surviving Corporation Common Stock (such transaction, the “
Warrant Exchange”, the amendment to the Warrant Agreement pursuant to this
Section 7.10, the “
Warrant Agreement Amendment”) and any
shares of Surviving Corporation Common Stock issued in connection with the Warrant Exchange, the “
Warrant Exchange Shares”).
ARTICLE VIII
JOINT COVENANTS
Section 8.1
HSR Act; Other
Regulatory Filings.
(a) In connection with the transactions contemplated hereby, each of
the Company and Acquiror shall (and, to the extent required, shall cause its Affiliates to) comply promptly with the notification and reporting requirements of the HSR Act. Each of the Company and Acquiror shall use reasonable best efforts to
comply with any Information or Document Requests.
(b) Each of the Company and Acquiror shall (and shall cause its
Affiliates to) exercise its reasonable best efforts to (i) obtain termination or expiration of any applicable waiting periods under the HSR Act, (ii) prevent the entry, in any Action brought by an Antitrust Authority or any other Person, of any
Governmental Order which would prohibit, make unlawful or delay the consummation of the transactions contemplated hereby and (iii) if any such Governmental Order is issued in any such Action, cause such Governmental Order to be lifted.
(c) Each of Acquiror and the Company shall cooperate in good faith
with Governmental Authorities and undertake promptly any and all action required to complete lawfully the transactions contemplated hereby as soon as practicable (but in any event prior to the Agreement End Date) and any and all action
necessary or advisable to avoid, prevent, eliminate or remove the actual or threatened commencement of any Action in any forum by or on behalf of any Governmental Authority, or the issuance of any Governmental Order by a Governmental Authority,
that would delay, enjoin, prevent, restrain or otherwise prohibit the consummation of the Merger or the other transactions contemplated hereby.
(d) With respect to all filings, and any other requests, inquiries,
or other Action by or from Governmental Authorities, each of the Company and Acquiror shall (and shall cause its Affiliates to) (i) use reasonable best efforts to obtain any necessary or advisable clearance, approval, consent, or Governmental
Authorization under Laws prescribed or enforceable by any Governmental Authority for the transactions contemplated by this Agreement (including the HSR Act and, if advisable, to obtain CFIUS Approval) and to resolve any objections as may be
asserted by any Governmental Authority with respect to the transactions contemplated by this Agreement; and (ii) cooperate fully with each other in the defense of such matters. To the extent not prohibited by Law, the Company shall promptly
furnish to Acquiror, and Acquiror shall promptly furnish to the Company, copies of any notices or written communications received by such Party or any of its Affiliates from any third party or any Governmental Authority with respect to the
transactions contemplated hereby, and each Party shall permit counsel to the other Party an opportunity to review in advance, and each Party shall consider in good faith the views of such counsel in connection with any proposed written
communications by such Party and/or its Affiliates to any Governmental Authority concerning the transactions contemplated hereby; provided that none of the Parties shall extend any waiting period or comparable period under the HSR Act
or enter into any agreement with any Governmental Authority without the written consent of the other Party. Materials required to be provided pursuant to this
TABLE OF CONTENTS
Section 8.1(d) may be restricted to outside counsel and may be redacted
(i) to remove references concerning the valuation of the Company, (ii) as necessary to comply with contractual arrangements, and (iii) to remove references to privileged information. To the extent not prohibited by Law, the Company agrees to
provide Acquiror and its counsel, and Acquiror agrees to provide the Company and its counsel, the opportunity, on reasonable advance notice, to participate in any substantive meetings or discussions, either in person or by telephone, between
such Party and/or any of its Affiliates, agents or advisors, on the one hand, and any Governmental Authority, on the other hand, concerning or in connection with the transactions contemplated hereby.
(e) Acquiror and the Company shall not take any action that would
reasonably be expected to adversely affect or materially delay the approval of any Governmental Authority, or the expiration or termination of any waiting period under any Laws (including the HSR Act), including by agreeing to merge with or
acquire any other Person or acquire a substantial portion of the assets of or equity in any other Person. The Parties hereto further covenant and agree, with respect to a threatened or pending preliminary or permanent injunction or other order,
decree or ruling or statute, rule, regulation or executive order that would adversely affect the ability of any Party to consummate the transactions contemplated hereby, to use reasonable best efforts to prevent or lift the entry, enactment or
promulgation thereof, as the case may be.
Section 8.2
Preparation of
Proxy Statement/Registration Statement; Acquiror Shareholder Approval.
(a) Preparation of Proxy Statement/Registration Statement.
(i) As promptly as practicable after the execution of this
Agreement, (1) Acquiror and the Company shall jointly prepare and Acquiror shall file with the SEC, mutually acceptable materials which shall include the proxy statement to be filed with the SEC as part of the Registration Statement and sent to
the Acquiror Shareholders relating to the Acquiror Shareholders’ Meeting (such proxy statement, together with any amendments or supplements thereto, the “Proxy Statement”), and (2) Acquiror shall prepare (with the Company’s reasonable
cooperation (including using commercially reasonable efforts to cause its Subsidiaries and Representatives to cooperate)) and file with the SEC a registration statement on Form S-4, or other appropriate form (such registration statement,
including any pre-effective or post-effective amendments or supplements thereto, the “Registration Statement”), in which the Proxy Statement will be included as a prospectus (collectively, the “Proxy Statement/Registration
Statement”), in connection with the registration under the Securities Act of (A) the shares of Domesticated Acquiror Class A Stock and Domesticated Acquiror Warrants to be issued in exchange for the issued and outstanding Acquiror Class A
Shares and Acquiror Warrants, respectively, in the Domestication, and (B) the shares of Surviving Corporation Common Stock that constitute the Aggregate Closing Date Merger Consideration. Each of Acquiror and the Company shall use its
reasonable best efforts to cause the Proxy Statement/Registration Statement to comply with the rules and regulations promulgated by the SEC, to have the Registration Statement declared effective under the Securities Act as promptly as
practicable after such filing and to keep the Registration Statement effective as long as is necessary to consummate the transactions contemplated hereby. Acquiror also agrees to use its reasonable best efforts to obtain all necessary state
securities law or “Blue Sky” permits and approvals required to carry out the transactions contemplated hereby, and the Company shall furnish all information concerning the Company, its Subsidiaries and any of their respective members or
stockholders as may be reasonably requested in connection with any such action. Each of Acquiror and the Company agrees to furnish to the other Party all information concerning itself, its Subsidiaries, officers, directors, managers,
stockholders and other equityholders, as applicable, and information regarding such other matters as may be reasonably necessary or advisable or as may be reasonably requested in connection with the Proxy Statement/Registration Statement, any
response to comments of the SEC, a Current Report on Form 8-K pursuant to the Exchange Act in connection with the transactions contemplated by this Agreement, or any other statement, filing, notice or application made by or on behalf of
Acquiror, the Company or its Subsidiaries to any regulatory authority (including Nasdaq) in connection with the Merger and the other transactions contemplated hereby (the “Offer Documents”). Acquiror will cause the Proxy
Statement/Registration Statement to be mailed to the Acquiror Shareholders promptly after the Registration Statement is declared effective under the Securities Act.
TABLE OF CONTENTS
(ii) To the extent not prohibited by Law, Acquiror shall advise
the Company promptly after Acquiror receives notice thereof, of the time when the Proxy Statement/Registration Statement has become effective or any supplement or amendment has been filed, of the issuance of any stop order or the suspension of
the qualification of the Acquiror Common Stock for offering or sale in any jurisdiction, of the initiation or written threat of any proceeding for any such purpose, or of any the receipt of any comments (written or oral) from or request by the
SEC for the amendment or supplement of the Proxy Statement/Registration Statement or for additional information. To the extent not prohibited by Law, the Company and its counsel shall be given a reasonable opportunity to review and comment on
the Proxy Statement/Registration Statement and any Offer Document each time before any such document is filed with the SEC, and Acquiror shall give reasonable and good faith consideration to any comments made by the Company and its counsel. To
the extent not prohibited by Law, Acquiror shall provide the Company and their counsel with (1) any comments or other communications, whether written or oral, that Acquiror or its counsel may receive from time to time from the SEC or its staff
with respect to the Proxy Statement/Registration Statement or Offer Documents promptly after receipt of those comments or other communications and (2) a reasonable opportunity to participate in the response of Acquiror to those comments and to
provide comments on that response (to which reasonable and good faith consideration shall be given), including by participating with the Company or its counsel in any discussions or meetings with the SEC.
(iii) Each of Acquiror and the Company shall use reasonable best
efforts to ensure that none of the information supplied by or on its behalf for inclusion or incorporation by reference in (1) the Registration Statement will, at the time the Registration Statement is filed with the SEC, at each time at which
it is amended and at the time it becomes effective under the Securities Act, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, not
misleading or (2) the Proxy Statement will, at the date it is first mailed to the Acquiror Shareholders and at the time of the Acquiror Shareholders’ Meeting, contain any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading.
(iv) If at any time prior to the Effective Time any information
relating to the Company or its Subsidiaries, Acquiror or any of their respective Affiliates, directors, officers or Employees is discovered by the Company or Acquiror, which is required to be set forth in an amendment or supplement to the Proxy
Statement or the Registration Statement, so that neither of such documents would include any misstatement of a material fact or omit to state any material fact necessary to make the statements therein, with respect to the Proxy Statement, in
light of the circumstances under which they were made, not misleading, the Party which discovers such information shall promptly notify the other parties and an appropriate amendment or supplement describing such information shall be promptly
filed with the SEC and, to the extent required by Law, disseminated to the Acquiror Shareholders.
(v) The Registration Statement, to the extent permitted by
applicable rules and regulations of the SEC, will also register the resale of the shares of Surviving Corporation Common Stock that constitute the Aggregate Closing Date Merger Consideration.
(b) Acquiror Shareholder Approval. Acquiror shall (i) as
promptly as practicable following confirmation by the SEC that the SEC has no further comments to the Proxy Statement (and in any event within five (5) Business Days after such date), (1) cause the Proxy Statement in definitive form to be
disseminated to Acquiror Shareholders in compliance with applicable Law, (2) solely with respect to the Transaction Proposals (as defined below), duly (A) give notice of and (B) convene and hold a general meeting (annual or extraordinary, as
appropriate) of Acquiror Shareholders (the “Acquiror Shareholders’ Meeting”) in accordance with Acquiror’s Governing Documents and Nasdaq Listing Rule 5620(b), for a date no later than thirty (30) Business Days following the
mailing of the Proxy Statement to the Acquiror Shareholders, and (3) solicit proxies from the holders of Acquiror Common Stock to vote in favor of each of the Transaction Proposals, and (ii) provide its shareholders with the opportunity to
elect to effect an Acquiror Share Redemption. Acquiror shall, through the Acquiror Board, recommend to the Acquiror Shareholders the (i) approval of the Domestication, (ii) approval of the change of the Surviving
TABLE OF CONTENTS
Corporation’s name to “H2B2 Electrolysis Technologies, Inc.,” (iii) amendment and
restatement of Acquiror’s Governing Documents, in substantially the form attached as Exhibits A and B to this Agreement (as may be subsequently amended by mutual written agreement of the Company and Acquiror at any time before
the mailing of the Proxy Statement to the Acquiror Shareholders) in connection with the Domestication, including any separate or unbundled proposals as are required to implement the foregoing, (iv) the adoption and approval of this Agreement in
accordance with applicable Law and exchange rules and regulations, (v) approval of the issuance of shares of Domesticated Acquiror Class A Stock, Domesticated Acquiror Class B Stock and Domesticated Acquiror Warrants in connection with the
Domestication, (vi) approval of the issuance of shares of Surviving Corporation Common Stock in connection with the Merger, (vii) the election of directors effective as of the Closing as contemplated by Section 8.7, (viii) approval of
the adoption by Acquiror of the Equity Incentive Plan, (ix) adoption and approval of any other proposals as the SEC (or staff member thereof) may indicate are necessary in its comments to the Proxy Statement or correspondence related thereto,
(x) adoption and approval of any other proposals as reasonably agreed by Acquiror and the Company to be necessary or appropriate in connection with the Merger or the other transactions contemplated hereby, and (xi) adjournment or postponement
of the Acquiror Shareholders’ Meeting, if necessary, to permit further solicitation of proxies because there are not sufficient votes to approve and adopt any of the foregoing or if the Acquiror Board and Company Board mutually determine before
the Acquiror Shareholders’ Meeting that it is not necessary or no longer desirable to proceed with any of the foregoing (such proposals in clauses (i) through (xi), together, the “Transaction Proposals”), and
include such recommendation in the Proxy Statement, with such changes as mutually agreed to by the Parties. The Acquiror Board shall not change, withdraw, withhold, qualify or modify its recommendation to the Acquiror Shareholders that they
vote in favor of the Transaction Proposals (together with any change, withdrawal, withholding, qualification or modification of its recommendation to the Acquiror Shareholders described in the Recitals hereto, a “Modification in
Recommendation”). To the fullest extent permitted by applicable Law, (x) Acquiror’s obligations to establish a record date for, duly call, give notice of, convene and hold the Acquiror Shareholders’ Meeting shall not be affected by any
Modification in Recommendation, (y) Acquiror agrees to establish a record date for, duly call, give notice of, convene and hold the Acquiror Shareholders’ Meeting and submit for approval the Transaction Proposals and (z) Acquiror agrees that if
the Acquiror Shareholder Approval shall not have been obtained at any such Acquiror Shareholders’ Meeting, then Acquiror shall promptly continue to take all such necessary actions, including the actions required by this Section 8.2(b),
and hold additional Acquiror Shareholders’ Meetings in order to obtain the Acquiror Shareholder Approval. Acquiror may only adjourn or postpone the Acquiror Shareholders’ Meeting (i) to solicit additional proxies for the purpose of obtaining
the Acquiror Shareholder Approval, (ii) for the absence of a quorum and (iii) to allow reasonable additional time for the filing or mailing of any supplemental or amended disclosure that Acquiror has determined in good faith after consultation
with outside legal counsel is required under applicable Law and for such supplemental or amended disclosure to be disseminated and reviewed by Acquiror Shareholders prior to the Acquiror Shareholders’ Meeting; provided that the Acquiror
Shareholders’ Meeting (x) may not be adjourned or postponed to a date that is more than thirty (30) days after the date for which the Acquiror Shareholders’ Meeting was originally scheduled (excluding any adjournments or postponements required
by applicable Law) and (y) shall not be held later than three (3) Business Days prior to the Agreement End Date. Acquiror agrees that it shall provide the holders of Acquiror Class A Shares the opportunity to elect redemption of such Acquiror
Class A Shares in connection with the Acquiror Shareholders’ Meeting, as required by Acquiror’s Governing Documents.
(c) Company Stockholder Approvals. Within five (5) Business
Days following the date of this Agreement, the Company Board shall deliver written notice to the Company Stockholders of a special meeting of the Stockholders (the “Company Stockholder Meeting”) called for the purpose of obtaining the
Company Stockholder Approval, with such Company Stockholder Meeting to be held as promptly as reasonably practical, and in any event by no later than June 19, 2023.
Section 8.3
Support of
Transaction. Without limiting any covenant contained in
Article VI,
Article VII or
Article VIII, Acquiror and the Company shall each, and the Company shall cause its Subsidiaries to (a) use reasonable best efforts
to obtain all material consents and approvals of third parties that any of Acquiror, or the Company or their respective Affiliates are required to obtain in order to consummate the Merger and the other transactions contemplated hereby, and (b)
take such other action as may be reasonably necessary or as another
TABLE OF CONTENTS
Party may reasonably request to satisfy the conditions of Article IX or
otherwise to comply with this Agreement and to consummate the transactions contemplated hereby as soon as practicable. Notwithstanding anything to the contrary contained herein, no action taken by the Company under this Section 8.3 will
constitute a breach of Section 6.1.
(a) The Parties (i) hereby agree and acknowledge that, for U.S.
federal and Spanish, and applicable state and local, income Tax purposes, as applicable, it is intended that the Merger qualify for the Intended U.S. Tax Treatment and the Intended Spanish Tax Treatment, (ii) shall not, and shall not permit or
cause any of their Affiliates or Subsidiaries, in the case of the Company, to, knowingly take any action, or fail to take any action, prior to or following the consummation of the Merger, that would reasonably be expected to prevent, impair or
impede the Intended U.S. Tax Treatment or the Intended Spanish Tax Treatment, as applicable, and (iii) shall not take any position inconsistent with (whether in audits, Tax Returns or otherwise), such treatment unless required to do so pursuant
to a “determination” (within the meaning of Section 1313(a) of the Code). Each Party shall reasonably cooperate with each other and shall use reasonable best efforts to promptly notify the other Party in writing if, before the Closing Date,
such Party knows or has reason to believe that the Merger may not qualify for the Intended U.S. Tax Treatment or the Intended Spanish Tax Treatment, as applicable.
(b) The Parties hereby adopt this Agreement as a “plan of
reorganization” within the meaning of Treasury Regulations Sections 1.368-2(g) and 1.368-3(a), for purposes of Sections 354, 361 and 368 of the Code and the Treasury Regulations thereunder.
(c) Prior to the Closing (or as soon as reasonably practicable
thereafter in case of an IRS Website Shutdown), Acquiror shall use reasonable best efforts to (i) file an application with the Internal Revenue Service for a new employer identification number; and (ii) prepare and file an Internal Revenue
Service Form 8802, in each case with respect to the post-Domestication Acquiror entity. The Parties shall reasonably cooperate with each other in good faith with respect to this Section 8.4(c) and in order to evidence its U.S. resident
taxpayer status at the Effective Time.
(d) If, in connection with the preparation and filing of the Proxy
Statement/Registration Statement, the SEC (or its staff) requires that Tax opinions be prepared and submitted in such connection, Acquiror and the Company shall use reasonable best efforts to deliver customary Tax representation letters (not to
be inconsistent with this Agreement), dated and executed as of the date the Proxy Statement/Registration Statement shall have been declared effective by the SEC, or such other date(s) as reasonably determined by the Tax counsel providing such
opinion in connection with the preparation and filing of the Proxy Statement/Registration Statement. If the SEC (or its staff) requires any opinion on the Domestication or other tax consequences to Acquiror Shareholders of the transactions
contemplated by this Agreement, Acquiror shall use reasonable best efforts to cause such opinion (as so required or requested) to be provided by one of its advisors. If the SEC (or its staff) requires any opinion on the Intended U.S. Tax
Treatment of the Merger or other Tax consequences to Company Stockholders of the transactions contemplated by this Agreement, the Company shall use reasonable best efforts to cause such opinion (as so required or requested) to be provided by
one of its advisors.
Section 8.5
Section 16 Matters.
Prior to the Effective Time, each of the Company and Acquiror shall take all such steps as may be required (to the extent permitted under applicable Law) to cause any dispositions of shares of the Company Common Stock or acquisitions of shares
of Acquiror Common Stock (including, in each case, securities deliverable upon exercise, vesting or settlement of any derivative securities) resulting from the transactions contemplated hereby by each individual who may become subject to the
reporting requirements of Section 16(a) of the Exchange Act in connection with the transactions contemplated hereby to be exempt under Rule B-3 promulgated under the Exchange Act.
Section 8.6
Cooperation;
Consultation. Prior to Closing, each of the Company and Acquiror shall, and each of them shall cause its respective Subsidiaries and Affiliates (as applicable) and its and their officers, directors, managers, Employees, consultants,
counsel, accounts, agents and other Representatives to, reasonably cooperate in a timely manner in connection with any financing arrangement the parties mutually agree to seek in connection with the transactions contemplated by this Agreement
(it being understood and agreed that the consummation of any such financing by the Company or Acquiror shall be subject to the parties’ mutual
TABLE OF CONTENTS
agreement), including (if mutually agreed by the parties) (a) by providing such
information and assistance as the other Party may reasonably request (including the Company providing such financial statements and other financial data relating to the Company and its Subsidiaries as would be required if Acquiror were filing a
general form for registration of securities under Form 10 following the consummation of the transactions contemplated hereby and a registration statement on Form S-1 for the resale of the securities issued in connection with such financing
arrangement following the consummation of the transactions contemplated hereby), (b) granting such access to the other Party and its Representatives as may be reasonably necessary for their due diligence, (c) participating in a reasonable
number of meetings, presentations, road shows, drafting sessions, due diligence sessions with respect to such financing efforts (including direct contact between senior management and other Representatives of the Company and its Subsidiaries at
reasonable times and locations) and (d) consulting and cooperating with, and considering in good faith any feedback from, each Party and its legal and financial advisors with respect to such matters. All such cooperation, assistance and access
shall be granted during normal business hours and shall be granted under conditions that shall not unreasonably interfere with the business and operations of the Company, Acquiror, or their respective auditors.
Section 8.7
Post-Closing
Directors and Officers of the Surviving Corporation. Subject to the terms of the Surviving Corporation’s Governing Documents, Acquiror and the Company shall take all such action within their power as may be necessary or appropriate such
that immediately following the Effective Time:
(a) the Board of Directors of the Surviving Corporation (the “Surviving
Corporation Board”) shall consist of nine (9) directors, which shall initially include:
(i) five (5) director nominees, each of whom shall be “independent”
directors for the purposes of Nasdaq, designated by the Company, and all of whom shall be proposed by the Company pursuant to written notice to Acquiror as soon as reasonably practicable following the date of this Agreement;
(ii) four (4) director nominees to be designated by the Company
pursuant to written notice to Acquiror as soon as reasonably practicable following the date of this Agreement;
(b) the Surviving Corporation Board shall have a majority of
“independent” directors for the purposes of Nasdaq, each of whom shall serve in such capacity in accordance with the terms of the Surviving Corporation’s Governing Documents following the Effective Time;
(c) The Chief Executive Officer of the Surviving Corporation will be
Mr. Anselmo Andrade Fernández de Mesa;
(d) the executive officers of the Surviving Corporation will be the
individuals designated by the Company for such roles pursuant to written notice to Acquiror as soon as reasonably practicable following the date of this Agreement; and
(e) Acquiror shall, for a one (1) year period following the Closing,
be entitled from time to time to appoint one (1) person as an observer on the Board of Directors and to remove any such person so appointed and appoint another person in that person’s place.
Section 8.8
Shareholder
Litigation. In the event that any litigation related to this Agreement, any Ancillary Agreement or the transactions contemplated hereby or thereby is brought, or, to the knowledge of a Party, threatened in writing, against a Party or the
Board of Directors of such Party by any of such Party’s stockholders or shareholders prior to the Closing, such Party shall promptly notify the other Party of any such litigation and keep the other Party reasonably informed with respect to the
status thereof. Such Party shall provide the other Party the opportunity to participate in (subject to a customary joint defense agreement), but not control, the defense of any such litigation, shall give due consideration to the other Party’s
advice with respect to such litigation and shall not settle any such litigation without prior written consent of the other Party, such consent not to be unreasonably withheld, conditioned, delayed or denied.
Section 8.9
Lock-Up Agreement.
The Company shall use its reasonable best efforts to cause each of the Company Stockholders to execute and deliver a counterpart to the Lock-Up Agreement at Closing, subject to the exceptions set forth in
Section 2.5(a)(vi) of the
Company Disclosure Letter.
TABLE OF CONTENTS
ARTICLE IX
CONDITIONS TO OBLIGATIONS
Section 9.1
Conditions to
Obligations of Acquiror and the Company. The obligations of Acquiror and the Company to consummate, or cause to be consummated, the Merger is subject to the satisfaction of the following conditions at or prior to Closing, any one or more
of which may be waived in writing by the Parties:
(a) The Acquiror Shareholder Approval shall have been obtained;
(b) The Company Stockholder Approval shall have been obtained;
(c) The Warrant Conversion Approval shall have been obtained;
(d) The waiting period or periods (and any extension thereof) under
the HSR Act applicable to the transactions contemplated by this Agreement and the Ancillary Agreements shall have expired or been terminated;
(e) There shall not be in force any Law enjoining, preventing,
prohibiting or making illegal the consummation of the Merger; provided that the Governmental Authority issuing such Law has jurisdiction over the Parties with respect to the transactions contemplated hereby;
(f) Acquiror shall have at least $5,000,001 of net tangible assets
(as determined in accordance with Rule 3a51-1(g)(1) of the Exchange Act);
(g) The Registration Statement shall have become effective in
accordance with the Securities Act, no stop order suspending the effectiveness of the Registration Statement shall have been issued by the SEC that remains in effect, and no proceedings for that purpose shall have been initiated or threatened
by the SEC and not withdrawn;
(h) The shares of Surviving Corporation Common Stock to be issued in
connection with the Merger shall have been conditionally approved for listing on Nasdaq; and
(i) The Capital Raise Transaction (including, for the avoidance of
doubt, any PIPE Transaction) shall have been consummated with an aggregate Capital Raise Amount equal to at least the Minimum Investment Amount.
Section 9.2
Conditions to
Obligations of Acquiror. The obligations of Acquiror to consummate, or cause to be consummated, the Merger are subject to the satisfaction of the following additional conditions, any one or more of which may be waived in writing by
Acquiror:
(a) (i) The representations and warranties of the Company contained
in Section 4.9 shall be true and correct in all but de minimis respects as of the Closing Date, except with respect to such representations and warranties which speak as to an earlier date,
which representations and warranties shall be true and correct in all but de minimis respects at and as of such date, except for changes after the date of this Agreement that are contemplated or
expressly permitted by this Agreement or the Ancillary Agreements, (ii) the Company Fundamental Representations (other than Section 4.9) shall be true and correct in all material respects, in each case as of the Closing Date, except
with respect to such representations and warranties which speak as to an earlier date, which representations and warranties shall be true and correct in all material respects at and as of such date, except for changes after the date of this
Agreement that are contemplated or expressly permitted by this Agreement or the Ancillary Agreements and (iii) each of the representations and warranties of the Company contained in this Agreement other than the Company Fundamental
Representations (disregarding any qualifications and exceptions contained therein relating to materiality, material adverse effect and Company Material Adverse Effect or any similar qualification or exception) shall be true and correct as of
the Closing Date, except with respect to such representations and warranties which speak as to an earlier date, which representations and warranties shall be true and correct at and as of such date, except for, in each case, inaccuracies or
omissions that would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect;
(b) Each of the covenants of the Company to be performed as of or
prior to the Closing shall have been performed in all material respects;
TABLE OF CONTENTS
(c) There shall not have occurred a Company Material Adverse
Effect after the date of this Agreement that is continuing; and
(d) The documentation referred to in Section 2.5(a) shall
have been delivered to Acquiror.
Section 9.3
Conditions to the
Obligations of the Company. The obligation of the Company to consummate, or cause to be consummated, the Merger is subject to the satisfaction of the following additional conditions, any one or more of which may be waived in writing by
the Company:
(a) (i) The representations and warranties of Acquiror contained in
Section 5.11 shall be true and correct in all but de minimis respects as of the Closing Date, except with respect to such representations and warranties which speak as to an earlier date, which
representations and warranties shall be true and correct in all but de minimis respects at and as of such date, except for changes after the date of this Agreement which are contemplated or expressly
permitted by this Agreement, (ii) the Acquiror Fundamental Representations (other than Section 5.11) shall be true and correct in all material respects, in each case as of the Closing Date, except with respect to such representations
and warranties which speak as to an earlier date, which representations and warranties shall be true and correct in all material respects at and as of such date, except for changes after the date of this Agreement which are contemplated or
expressly permitted by this Agreement or the Ancillary Agreements and (iii) each of the representations and warranties of Acquiror contained in this Agreement (other than the Acquiror Fundamental Representations) (disregarding any
qualifications and exceptions contained therein relating to materiality, material adverse effect or any similar qualification or exception) shall be true and correct in all material respects, in each case as of the Closing Date, except with
respect to such representations and warranties which speak as to an earlier date, which representations and warranties shall be true and correct in all material respects at and as of such date, except for changes after the date of this
Agreement which are contemplated or expressly permitted by this Agreement or the Ancillary Agreements;
(b) Each of the covenants of Acquiror to be performed as of or prior
to the Closing shall have been performed in all material respects;
(c) The Domestication shall have been completed as provided in Section
7.5 and a time-stamped copy of the certificate issued by the Secretary of State of the State of Delaware in relation thereto shall have been delivered to the Company; and
(d) The documentation referred to in Section 2.5(b) shall
have been delivered to the Company or the Exchange Agent, as applicable.
ARTICLE X
TERMINATION/EFFECTIVENESS
Section 10.1
Termination.
This Agreement may be terminated and the transactions contemplated hereby abandoned:
(a) by written consent of the Company and Acquiror;
(b) by the Company or Acquiror:
(i) if any Governmental Authority shall have enacted, issued,
promulgated, enforced or entered any Law which has become final and non-appealable and has the effect of making consummation of the transactions contemplated by this Agreement and the Ancillary Agreements illegal or otherwise enjoining,
preventing or prohibiting consummation of the transactions contemplated by this Agreement and the Ancillary Agreements; provided, however, that the right to terminate this Agreement under this Section 10.1(b)(i) shall
not be available to any Party whose material breach of any provision of this Agreement has been the primary cause of, or resulted in, the enactment, issuance, promulgation, enforcement or entry of such Law;
(ii) if the Closing shall not have occurred on or prior to March 31,
2024 (the “Agreement End Date”), provided that if at that date the only condition remaining unsatisfied (other than conditions that can only be satisfied or waived at Closing) is Section 9.1(i) and the Company
shall have obtained definitive commitments amounting to the Minimum Investment Amount, subject only to closing of such Capital Raise Transaction, then the Agreement End Date shall be extended automatically by an
TABLE OF CONTENTS
additional three months in order to allow the Capital Raise Transaction to close.
The right to terminate this Agreement under this Section 10.1(b)(ii) shall not be available to a Party if a breach or violation by such Party or its Affiliates of any representation, warranty, covenant or obligation under this Agreement
was the primary cause of, or resulted in, the failure of the Closing to occur on or prior to the Agreement End Date (or any extensions thereof); or
(iii) by written notice to the other Party if, such Party disagrees
with the final determination of the Closing Date Purchase Price by the Valuation Firm pursuant to Section 2.4(f).
(c) by the Company:
(i) if there has been a Modification in Recommendation;
(ii) if the Acquiror Shareholder Approval shall not have been
obtained by reason of the failure to obtain the required vote at the Acquiror Shareholders’ Meeting duly convened therefor or at any adjournment or postponement thereof;
(iii) by written notice to Acquiror if prior to completion of the
Capital Raise Transaction, a Capital Raise Investor or group of Capital Raise Investors, whose legal, valid and binding commitments to fund in such Capital Raise Transaction represent in aggregate at least the Minimum Investment Amount, object
to the Merger and the other transactions contemplated hereby by delivering a written notice (an “Investor Objection Notice”) to the Company Board by no later than fifteen (15) days following execution of definitive agreements relating to
the Capital Raise Transaction, after which time no Capital Raise Investor shall be entitled to object to the Merger and the other transactions contemplated hereby; provided that, upon receipt of an Investor Objection Notice, the Company
shall be required to terminate this Agreement on the tenth (10th) Business Day following receipt of the Investor Objection Notice, unless Acquiror and the Company otherwise agree in writing; or
(iv) prior to the Closing, by written notice to Acquiror if there is
any breach of any representation, warranty, covenant or agreement on the part of Acquiror set forth in this Agreement, such that the conditions specified in Section 9.3(a) and Section 9.3(b) would not be satisfied at the
Closing (a “Terminating Acquiror Breach”), except that, if any such Terminating Acquiror Breach is curable by Acquiror through the exercise of its reasonable best efforts, then, for a period of up to thirty (30) days after receipt by
Acquiror of notice from the Company of such breach, but only as long as Acquiror continues to exercise such reasonable best efforts to cure such Terminating Acquiror Breach (the “Acquiror Cure Period”), such termination shall not be
effective, and such termination shall become effective only if the Terminating Acquiror Breach is not cured within the Acquiror Cure Period.
(d) by Acquiror,
(i) if prior to the Closing by written notice to the Company from
Acquiror if there is any breach of any representation, warranty, covenant or agreement on the part of the Company set forth in this Agreement, such that the conditions specified in Section 9.2(a) or Section 9.2(b) would not be
satisfied at the Closing (a “Terminating Company Breach”), except that, if such Terminating Company Breach is curable by the Company through the exercise of its reasonable best efforts, then, for a period of up to thirty (30) days after
receipt by the Company of notice from Acquiror of such breach, but only as long as the Company continues to use its respective reasonable best efforts to cure such Terminating Company Breach (the “Company Cure Period”), such termination
shall not be effective, and such termination shall become effective only if the Terminating Company Breach is not cured within the Company Cure Period;
(ii) if the Company Stockholder Approval shall not have been
obtained; or
(iii) if a Company Stockholder exercises any right or takes any
action or fails to take any action required to satisfy the conditions or any closing deliverables in Section 2.5 that prevents consummation of the Merger and the other transactions contemplated by this Agreement and the Ancillary
Agreements.
Section 10.2
Effect of
Termination.
(a) Subject to Section 10.2(b), in the event of the
termination of this Agreement pursuant to Section 10.1, this Agreement shall forthwith become void and have no effect, without any liability on the
TABLE OF CONTENTS
part of any Party or its respective Affiliates, officers, directors, shareholders or
stockholders, other than liability of the Company or Acquiror, as the case may be, for any willful and material breach of this Agreement occurring prior to such termination, except that the provisions of this Section 10.2 and Article
XI shall survive any termination of this Agreement.
(b) Reimbursement Fee.
(i) In the event that this Agreement is terminated by the Company
pursuant to Section 10.1(b)(iii) or Section 10.1(c)(iii) and following the date of such termination the Company consummates a Capital Raise Transaction resulting in proceeds that are equal to or exceed the Minimum Investment
Amount, then within five (5) Business Days following the consummation of such Capital Raise Transaction, the Company shall pay Acquiror, by wire transfer of same day funds to the account designated by Acquiror, the Reimbursement Fee. This Section
10.2(b)(i) shall survive the termination of this Agreement for any reason.
(ii) In the event that the condition in Section 9.1(i) has
not been satisfied, but within six (6) months following the date of termination of this Agreement pursuant to Section 10.1(a) or Section 10.1(b)(ii), the Company or any of its Subsidiaries consummates a capital raise transaction
(a “Subsequent Capital Raise Transaction”), which when aggregated with any Capital Raise Transaction entered into prior to termination of this Agreement and completed thereafter, results in proceeds that are equal to or exceed, the
Minimum Investment Amount, then the Company shall pay Acquiror the Reimbursement Fee. The Company shall pay the Reimbursement Fee by wire transfer of same-day funds to the account designated by the Acquiror within five (5) Business Days of the
consummation of the Subsequent Capital Raise Transaction. This Section 10.2(b)(ii) shall survive the termination of this Agreement for any reason.
(iii) In the event that this Agreement is terminated by Acquiror
pursuant to Section 10.1(d)(ii) or Section 10.1(d)(iii) and following the date of such termination the Company consummates a Capital Raise Transaction resulting in proceeds that equal to or exceed the Minimum Investment Amount, then
within five (5) Business Days following the consummation of such Capital Raise Transaction the Company shall pay Acquiror, by wire transfer of same day funds to the account designated by Acquiror, the Reimbursement Fee. This Section
10.2(b)(iii) shall survive the termination of this Agreement for any reason.
(c) For the avoidance of doubt, each Party acknowledges that (i) in
no event shall the Company be obligated to pay the Reimbursement Fee on more than one occasion, and (ii) in the event that Closing occurs, or the Agreement is validly terminated pursuant to Article X, Section 11.6 shall apply
with respect to any Acquiror Transaction Expenses and Company Transaction Expenses (other than in connection with a termination where a Reimbursement Fee is paid pursuant to Section 10.2(b)).
(d) The Company acknowledges that the agreements contained in this Section
10.2 are an integral part of the Merger and the other transactions contemplated by this Agreement, and that, without these agreements, Acquiror would not enter into this Agreement. The Company further acknowledges that the Reimbursement
Fee is not a penalty, but rather is liquidated damages in a reasonable amount that will compensate Acquiror in the circumstances in which the Reimbursement Fee is payable for the efforts and resources expended and opportunities foregone while
negotiating this Agreement and in reliance on this Agreement and on the expectation of the consummation of the Merger and the other transactions contemplated hereby. Accordingly, if the Company fails promptly to pay the Reimbursement Fee due
pursuant to this Section 10.2, and, to obtain such payment, Acquiror commences a suit which results in a judgment against the Company for the amount due pursuant to this Section 10.2, the Company shall pay to Acquiror any and
all of its out-of-pocket costs and expenses (including reasonable attorneys’ fees and expenses) in connection with such suit, together with interest on such amount(s) at the prime rate of Citibank, N.A. in effect on the date such payment was
required to be made.
ARTICLE XI
MISCELLANEOUS
Section 11.1
Trust Account
Waiver. The Company acknowledges that Acquiror is a blank check company with the powers and privileges to effect a Business Combination. The Company further acknowledges that, as
TABLE OF CONTENTS
described in the prospectus dated February 4, 2021 (the “Prospectus”)
available at www.sec.gov, substantially all of Acquiror assets consist of the cash proceeds of Acquiror’s initial public offering and private placements of its securities and substantially all of those proceeds have been deposited in a the
trust account for the benefit of Acquiror, certain of its public shareholders and the underwriters of Acquiror’s initial public offering (the “Trust Account”). The Company acknowledges that it has been advised by Acquiror that,
except with respect to interest earned on the funds held in the Trust Account that may be released to Acquiror to pay its franchise Tax, income Tax and similar obligations, the Trust Agreement provides that cash in the Trust Account may be
disbursed only (i) if Acquiror completes the transactions which constitute a Business Combination, then to those Persons and in such amounts as described in the Prospectus; (ii) if Acquiror fails to complete a Business Combination within the
allotted time period and liquidates, subject to the terms of the Trust Agreement, to Acquiror in limited amounts to permit Acquiror to pay the costs and expenses of its liquidation and dissolution, and then to Acquiror’s public shareholders;
and (iii) if Acquiror holds a shareholder vote to amend Acquiror’s Governing Documents to modify the substance or timing of the obligation to allow redemption in connection with a Business Combination or to redeem one hundred percent (100%) of
Acquiror Class A Shares if Acquiror fails to complete a Business Combination within the allotted time period, then for the redemption of any Acquiror Class A Shares properly tendered in connection with such vote. For and in consideration of
Acquiror entering into this Agreement, the receipt and sufficiency of which are hereby acknowledged, the Company hereby irrevocably waives any right, title, interest or claim of any kind they have or may have in the future in or to any monies
in the Trust Account and agree not to seek recourse against the Trust Account or any funds distributed therefrom as a result of, or arising out of, this Agreement and any negotiations, Contracts or agreements with Acquiror; provided
that (x) nothing herein shall serve to limit or prohibit the Company’s right to pursue a claim against Acquiror for legal relief against monies or other assets held outside the Trust Account, for specific performance or other equitable relief
in connection with the consummation of the transactions (including a claim for Acquiror to specifically perform its obligations under this Agreement and cause the disbursement of the balance of the cash remaining in the Trust Account (after
giving effect to the Acquiror Share Redemptions) to the Company in accordance with the terms of this Agreement and the Trust Agreement) so long as such claim would not affect Acquiror’s ability to fulfill its obligation to effectuate the
Acquiror Share Redemptions, or for fraud and (y) nothing herein shall serve to limit or prohibit any claims that the Company may have in the future against Acquiror’s assets or funds that are not held in the Trust Account (including any funds
that have been released from the Trust Account and any assets that have been purchased or acquired with any such funds). This Section 11.1 shall survive the termination of this Agreement for any reason.
Section 11.2
Waiver. Any
Party may, at any time prior to the Closing, by action taken by its Board of Directors or other officers or Persons thereunto duly authorized, (a) extend the time for the performance of the obligations or acts of the other parties hereto, (b)
waive any inaccuracies in the representations and warranties (of another Party) that are contained in this Agreement or (c) waive compliance by the other Party with any of the agreements or conditions contained in this Agreement, but such
extension or waiver shall be valid only if set forth in an instrument in writing signed by the Party granting such extension or waiver.
Section 11.3
Notices. All
notices and other communications between the Parties shall be in writing and shall be deemed to have been duly given (a) when delivered in person, (b) when delivered after posting in the United States mail having been sent registered or
certified mail return receipt requested, postage prepaid, (c) when delivered by FedEx or other nationally recognized overnight delivery service, or (d) when delivered by email (in each case in this
clause (d), solely if receipt is
confirmed, but excluding any automated reply, such as an out-of-office notification), addressed as follows:
|
|
|
(i)
|
|
|
If to Acquiror prior to the Closing, or to the Surviving Corporation after the
Effective Time, to:
|
|
|
|
|
|
|
|
|
|
|
RMG Acquisition Corp. III
|
|
|
|
57 Ocean, Suite 403, 5775 Collins Avenue
|
|
|
|
Miami Beach, Florida
|
|
|
|
Attention:
|
|
|
Philip Kassin
|
|
|
|
Email:
|
|
|
pkassin@rmginvestments.com
|
|
|
|
|
|
|
|
TABLE OF CONTENTS
with copies to (which shall not constitute notice):
|
|
|
|
|
|
|
|
|
|
|
Skadden, Arps, Slate, Meagher & Flom (UK) LLP
|
|
|
|
22 Bishopsgate, EC2N 4BQ London
|
|
|
|
Attention:
|
|
|
Lorenzo Corte; Maria Protopapa
|
|
|
|
Email:
|
|
|
lorenzo.corte@skadden.com
|
|
|
|
|
|
|
maria.protopapa@skadden.com
|
|
|
|
|
|
|
|
|
|
|
(ii)
|
|
|
If to the Company prior to the Closing, or to the Surviving Corporation after
the Effective Time, to:
|
|
|
|
|
|
|
|
|
|
|
H2B2 Electrolysis Technologies, Inc.
|
|
|
|
300 Delaware Ave Ste 210-A
|
|
|
|
Wilmington, DE 19801
|
|
|
|
Attention:
|
|
|
Anselmo Andrade; Mario Barragan
|
|
|
|
Email:
|
|
|
anselmo.andrade@h2b2.es;
|
|
|
|
|
|
|
mario.barragan@h2b2.es
|
|
|
|
|
|
|
|
with copies to (which shall not constitute notice):
|
|
|
|
|
|
|
|
|
|
|
Latham & Watkins LLP
|
|
|
|
811 Main Street, Suite 3700
|
|
|
|
Houston, Texas 77002
|
|
|
|
Attention:
|
|
|
Ryan Maierson; Thomas Verity
|
|
|
|
Email:
|
|
|
ryan.maierson@lw.com
|
|
|
|
|
|
|
thomas.verity@lw.com
|
or to such other address or addresses as the parties may from time to
time designate in writing. Copies delivered solely to outside counsel shall not constitute notice.
Section 11.4
Assignment.
Neither Party shall assign this Agreement or any part hereof without the prior written consent of the other Party and any such transfer without prior written consent shall be void. Subject to the foregoing, this Agreement shall be binding upon
and inure to the benefit of the Parties and their respective permitted successors and assigns.
Section 11.5
Rights of Third
Parties. Nothing expressed or implied in this Agreement is intended or shall be construed to confer upon or give any Person, other than the parties hereto, any right or remedies under or by reason of this Agreement;
provided,
however,
that the D&O Indemnified Parties and the past, present and future directors, managers, officers, employees, incorporators, members, partners, stockholders, shareholders, Affiliates, agents, attorneys, advisors and other Representatives of
the Parties, and any Affiliate of any of the foregoing (and their successors, heirs and Representatives), are intended third-party beneficiaries of, and may enforce,
Section 11.16.
(a) Subject at all times to Section 11.6(b) below, and
except as otherwise set forth in this Agreement (including Section 10.2(b)), each Party shall be responsible for and pay its own expenses incurred in connection with this Agreement and the transactions contemplated hereby, including all
fees of its legal counsel, financial advisers and accountants; provided that if the Closing shall occur, the Surviving Corporation shall pay or cause to be paid, at or as soon as reasonably practicable following Closing, by wire
transfer of immediately available funds, all accrued and unpaid Acquiror Transaction Expenses and Company Transaction Expenses. For the avoidance of doubt, any payments to be made (or to cause to be made) by the Surviving Corporation pursuant
to this Section 11.6 shall be paid upon consummation of the Merger and release of proceeds from the Trust Account.
TABLE OF CONTENTS
(b) Notwithstanding the terms of Section 11.6(a), and
except as otherwise set forth in this Agreement (including Section 10.2(b)), regardless of whether Closing occurs, each of Acquiror and the Company shall bear fifty percent (50%) of any and all fees, costs and expenses paid or payable
by Acquiror or any of its Affiliates, or the Company or any of its Subsidiaries, as the case may be, as a result of or in connection with or arising from (i) filing the Proxy Statement/Registration Statement with the SEC, (ii) submitting to
Nasdaq a listing application pursuant to Section 7.2 (including any filing fees arising therefrom) and (iii) any filings required under Section 8.1 (including any filing fees payable to any Governmental Authority in connection
therewith).
(c) Notwithstanding the terms of Section 11.6(a) and (b),
and except as otherwise set forth in this Agreement (including Section 10.2(b)), the Parties agree that if, following the date of this Agreement, Acquiror files with the SEC a proxy statement pursuant to which it shall seek the approval
of the Acquiror Shareholders to amend the Governing Documents of Acquiror to extend the deadline by which Acquiror must complete a Business Combination in accordance therewith (an “Extension”), any and all reasonable and documented fees,
costs and expenses incurred by Acquiror or any of its Affiliates in connection with obtaining an Extension (including any filing fees payable by Acquiror or any of its Affiliates to any Governmental Authority in connection therewith) (the “Extension
Costs”) shall be allocated between the Parties as follows: the Company shall bear fifty percent (50%) of the Extension Costs up to a maximum amount of $250,000 if the Extension is required for reasons that: (i) are not predominantly
attributable to the Acquiror; or (ii) that are not predominantly attributable to any of the Parties, including delay by the SEC in reviewing and declaring the Registration Statement effective under the Securities Act (other than where such
delay is related to any delay by the Company in delivering the PCAOB Financial Statements pursuant to Section 6.4(a)) or delay in the consummation of the Capital Raise Transaction.
Section 11.7
Governing Law.
This Agreement, and all claims or causes of action based upon, arising out of, or related to this Agreement or the transactions contemplated hereby, shall be governed by, and construed in accordance with, the Laws of the State of Delaware,
without giving effect to principles or rules of conflict of Laws to the extent such principles or rules would require or permit the application of Laws of another jurisdiction.
Section 11.8
Headings;
Counterparts. The headings in this Agreement are for convenience only and shall not be considered a part of or affect the construction or interpretation of any provision of this Agreement. This Agreement may be executed (including by
electronic signature) and delivered in two (2) or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
Section 11.9
Company and
Acquiror Disclosure Letters. The Company Disclosure Letter and the Acquiror Disclosure Letter (including, in each case, any section thereof) referenced herein are a part of this Agreement as if fully set forth herein. All references
herein to the Company Disclosure Letter and/or the Acquiror Disclosure Letter (including, in each case, any section thereof) shall be deemed references to such parts of this Agreement, unless the context shall otherwise require. Any disclosure
made by a Party in the applicable Disclosure Letter, or any section thereof, with reference to any section of this Agreement or section of the applicable Disclosure Letter shall be deemed to be a disclosure with respect to such other applicable
sections of this Agreement or sections of applicable Disclosure Letter if it is reasonably apparent on the face of such disclosure that such disclosure is responsive to such other section of this Agreement or section of the applicable
Disclosure Letter. Certain information set forth in the Disclosure Letters is included solely for informational purposes and may not be required to be disclosed pursuant to this Agreement. The disclosure of any information shall not be deemed
to constitute an acknowledgment that such information is required to be disclosed in connection with the representations and warranties made in this Agreement, nor shall such information be deemed to establish a standard of materiality.
Section 11.10
Entire
Agreement. (a) This Agreement (together with the Company Disclosure Letter and the Acquiror Disclosure Letter), (b) the Sponsor Support Agreement, (c) the Registration Rights Agreement, (d) the Company Support Agreement, and (e) the
Lock-Up Agreements (
clauses (b),
(c),
(d) and
(e), collectively, the “
Ancillary Agreements”) constitute the entire agreement between the Parties relating to the transactions contemplated hereby and
supersede any other agreements, whether written or oral, that may have been made or
TABLE OF CONTENTS
entered into by or between the Parties or any of their respective Subsidiaries
relating to the transactions contemplated hereby. No representations, warranties, covenants, understandings, agreements, oral or otherwise, relating to the transactions contemplated hereby exist between such parties except as expressly set
forth in this Agreement and the Ancillary Agreements.
Section 11.11
Amendments.
This Agreement may be amended or modified in whole or in part, only by a duly authorized agreement in writing executed in the same manner as this Agreement and which makes reference to this Agreement.
(a) All press releases or other public communications relating to
the transactions contemplated hereby, and the method of the release for publication thereof, shall prior to the Closing be subject to the prior mutual approval of Acquiror and the Company, which approval shall not be unreasonably withheld by
any Party; provided that no Party shall be required to obtain consent pursuant to this Section 11.12(a) to the extent any proposed release or statement is substantially equivalent to the information that has previously been made
public without breach of the obligation under this Section 11.12(a).
(b) The restriction in Section 11.12(a) shall not apply to
the extent the public announcement is required by applicable securities Laws, any Governmental Authority or stock exchange rule; provided, however, that in such an event, the Party making the announcement shall use its
commercially reasonable efforts to consult with the other Party in advance as to its form, content and timing.
Section 11.13
Severability.
If any provision of this Agreement is held invalid or unenforceable by any court of competent jurisdiction, the other provisions of this Agreement shall remain in full force and effect. The Parties further agree that if any provision contained
herein is, to any extent, held invalid or unenforceable in any respect under the Laws governing this Agreement, they shall take any actions necessary to render the remaining provisions of this Agreement valid and enforceable to the fullest
extent permitted by Law and, to the extent necessary, shall amend or otherwise modify this Agreement to replace any provision contained herein that is held invalid or unenforceable with a valid and enforceable provision giving effect to the
intent of the parties.
Section 11.14
Jurisdiction;
Waiver of Jury Trial.
(a) Any Action based upon, arising out of or related to this
Agreement or the transactions contemplated hereby must be brought in the Court of Chancery of the State of Delaware (or, to the extent such court does not have subject matter jurisdiction, the Superior Court of the State of Delaware), or, if it
has or can acquire jurisdiction, in the United States District Court for the District of Delaware, and each of the parties irrevocably (i) submits to the exclusive jurisdiction of each such court in any such Action, (ii) waives any objection it
may now or hereafter have to personal jurisdiction, venue or to convenience of forum, (iii) agrees that all claims in respect of the Action shall be heard and determined only in any such court, and (iv) agrees not to bring any Action arising
out of or relating to this Agreement or the transactions contemplated hereby in any other court. Nothing herein contained shall be deemed to affect the right of any Party to serve process in any manner permitted by Law or to commence Actions or
otherwise proceed against any other Party in any other jurisdiction, in each case, to enforce judgments obtained in any Action brought pursuant to this Section 11.14.
(b) EACH PARTY ACKNOWLEDGES AND
AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREBY IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY, UNCONDITIONALLY AND VOLUNTARILY
WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY ACTION, SUIT OR PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY.
Section 11.15
Enforcement.
The Parties agree that irreparable damage could occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the Parties
shall be entitled to an injunction or injunctions to prevent breaches of this Agreement and to specific enforcement of the terms and provisions of this Agreement, in addition to any other remedy to which any Party is entitled at law or in
equity. In the event that any Action shall
TABLE OF CONTENTS
be brought in equity to enforce the provisions of this Agreement, neither Party shall
allege, and each Party waives the defense, that there is an adequate remedy at law, and each Party agrees to waive any requirement for the securing or posting of any bond in connection therewith.
Section 11.16
Non-Recourse.
Except in the case of claims against a Person in respect of such Person’s actual fraud:
(a) Solely with respect to the Company and Acquiror, this Agreement
may only be enforced against, and any claim or cause of action based upon, arising out of, or related to this Agreement or the transactions contemplated hereby may only be brought against, the Company and Acquiror as named parties hereto; and
(b) except to the extent a Party (and then only to the extent of the
specific obligations undertaken by such Party), (i) no past, present or future director, officer, employee, incorporator, member, partner, stockholder, shareholder Affiliate, agent, attorney, advisor or other Representative or Affiliate of the
Company or Acquiror and (ii) no past, present or future director, officer, employee, incorporator, member, partner, stockholder, shareholder, Affiliate, agent, attorney, advisor or other Representative or Affiliate of any of the foregoing shall
have any liability (whether in contract, tort, equity or otherwise) for any one or more of the representations, warranties, covenants, agreements or other obligations or liabilities of any one or more of the Company or Acquiror under this
Agreement for any claim based on, arising out of, or related to this Agreement or the transactions contemplated hereby.
Section 11.17
Non-Survival
of Representations, Warranties and Covenants. Except (a) as otherwise contemplated by
Section 10.2, or (b) in the case of claims against a Person in respect of such Person’s actual fraud, none of the representations, warranties,
covenants, obligations or other agreements in this Agreement or in any certificate, statement or instrument delivered pursuant to this Agreement, including any rights arising out of any breach of such representations, warranties, covenants,
obligations, agreements and other provisions, shall survive the Closing and shall terminate and expire upon the occurrence of the Effective Time (and there shall be no liability after the Closing in respect thereof), except for (i) those
covenants and agreements contained herein that by their terms expressly apply in whole or in part after the Closing and then only with respect to any breaches occurring after the Closing and (ii) this
Article XI.
Section 11.18
Conflicts and
Privilege.
(a) Acquiror and the Company, on behalf of their respective
successors and assigns (including, after the Closing, the Surviving Corporation), hereby agree that, in the event a dispute with respect to this Agreement or the transactions contemplated hereby arises after the Closing between or among (i) the
Sponsor, the stockholders, shareholders, members or holders of other equity interests of Acquiror or the Sponsor and/or any of their respective directors, members, partners, officers, employees or Affiliates (other than the Surviving
Corporation) (collectively, the “RMG Group”), on the one hand, and (ii) the Surviving Corporation and/or any member of the H2B2 Group (as defined below), on the other hand, any legal counsel, including Skadden, Arps, Slate, Meagher &
Flom (UK) LLP and Affiliates (“Skadden”), that represented Acquiror and/or the Sponsor prior to the Closing may represent the Sponsor and/or any other member of the RMG Group, in such dispute even though the interests of such Persons may
be directly adverse to the Surviving Corporation, and even though such counsel may have represented Acquiror in a matter substantially related to such dispute, or may be handling ongoing matters for the Surviving Corporation and/or the Sponsor.
Acquiror and the Company, on behalf of their respective successors and assigns (including, after the Closing, the Surviving Corporation), further agree that, as to all legally privileged communications prior to the Closing (made in connection
with the negotiation, preparation, execution, delivery and performance under, or any dispute or Action arising out of or relating to, this Agreement, any Ancillary Agreements or the transactions contemplated hereby or thereby) between or among
Acquiror, the Sponsor and/or any other member of the RMG Group, on the one hand, and Skadden, on the other hand, the attorney/client privilege and the expectation of client confidence shall survive the Merger and belong to the RMG Group after
the Closing, and shall not pass to or be claimed or controlled by the Surviving Corporation. Notwithstanding the foregoing, any privileged communications or information shared by the Company prior to the Closing with Acquiror or the Sponsor
under a common interest agreement shall remain the privileged communications or information of the Surviving Corporation.
(b) Acquiror and the Company, on behalf of their respective
successors and assigns (including, after the Closing, the Surviving Corporation), hereby agree that, in the event a dispute with respect to this
TABLE OF CONTENTS
Agreement or the transactions contemplated hereby arises after the Closing between
or among (i) the stockholders, shareholders or holders of other equity interests of the Company and/or any of their respective directors, members, partners, officers, employees or Affiliates (other than the Surviving Corporation) (collectively,
the “H2B2 Group”), on the one hand, and (ii) the Surviving Corporation and/or any member of the RMG Group, on the other hand, any legal counsel, including Latham & Watkins LLP (“Latham”) that represented the Company prior to
the Closing may represent any member of the H2B2 Group in such dispute even though the interests of such Persons may be directly adverse to the Surviving Corporation, and even though such counsel may have represented Acquiror and/or the Company
in a matter substantially related to such dispute, or may be handling ongoing matters for the Surviving Corporation, further agree that, as to all legally privileged communications prior to the Closing (made in connection with the negotiation,
preparation, execution, delivery and performance under, or any dispute or Action arising out of or relating to, this Agreement, any Ancillary Agreements or the transactions contemplated hereby or thereby) between or among the Company and/or any
member of the H2B2 Group, on the one hand, and Latham, on the other hand, the attorney/client privilege and the expectation of client confidence shall survive the Merger and belong to the H2B2 Group after the Closing, and shall not pass to or
be claimed or controlled by the Surviving Corporation. Notwithstanding the foregoing, any privileged communications or information shared by Acquiror prior to the Closing with the Company under a common interest agreement shall remain the
privileged communications or information of the Surviving Corporation.
[Remainder of page intentionally left blank]
TABLE OF CONTENTS
IN WITNESS WHEREOF the Parties have hereunto caused this Agreement
to be duly executed as of the date first above written.
|
|
|
RMG ACQUISITION CORP. III
|
|
|
|
|
|
|
|
|
By:
|
|
|
/s/ Philip Kassin
|
|
|
|
|
|
|
Name:
|
|
|
Philip Kassin
|
|
|
|
|
|
|
Title:
|
|
|
President and COO
|
|
|
|
H2B2 ELECTROLYSIS TECHNOLOGIES, INC.
|
|
|
|
|
|
|
|
|
|
|
By:
|
|
|
|
|
|
|
|
|
|
Name:
|
|
|
|
|
|
|
Title:
|
[Signature Page to Agreement and Plan of Merger]
TABLE OF CONTENTS
IN WITNESS WHEREOF the Parties have hereunto caused this Agreement
to be duly executed as of the date first above written.
|
|
|
RMG ACQUISITION CORP. III
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
|
|
|
|
|
|
|
|
|
|
Name:
|
|
|
|
|
|
|
|
Title:
|
|
|
|
|
H2B2 ELECTROLYSIS TECHNOLOGIES, INC.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
|
|
/s/ Anselmo Andrade Fernández de Mesa
|
|
|
|
|
|
|
Name:
|
|
|
Anselmo Andrade Fernández de Mesa
|
|
|
|
|
|
|
Title:
|
|
|
Chief Executive Officer
|
[Signature Page to Agreement and Plan of Merger]
TABLE OF CONTENTS
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
H2B2 ELECTROLYSIS TECHNOLOGIES, INC.
ARTICLE I
NAME
The name of the corporation is H2B2 Electrolysis Technologies, Inc.
(the “Corporation”).
ARTICLE II
REGISTERED OFFICE AND AGENT
The address of the Corporation’s registered office in the State of
Delaware is 8 The Green A, in the City of Dover, Kent County, 19901, and the name of its registered agent at such address is A Registered Agent, Inc.
ARTICLE III
PURPOSE
The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation Law of the State of Delaware (the “DGCL”) as it now exists or may hereafter be amended and supplemented.
ARTICLE IV
CAPITAL STOCK
The Corporation is authorized to issue two classes of stock to be
designated, respectively, “Common Stock” and “Preferred Stock.” The total number of shares of capital stock which the Corporation shall have authority to issue is . The total number of shares of
Common Stock that the Corporation is authorized to issue is , having a par value of $0.0001 per share, and the total number of shares of Preferred Stock that the Corporation is authorized to issue is , having a par value of $0.0001 per
share.
The Corporation has the authority to create and issue rights,
warrants and options entitling the holders thereof to acquire from the Corporation any shares of its capital stock of any class or classes, with such rights, warrants and options to be evidenced by or in instrument(s) approved by the Board of
Directors of the Corporation (the “Board of Directors”). The Board of Directors is empowered to set the exercise price, duration, times for exercise and other terms and conditions of such rights, warrants or options; provided, however,
that the consideration to be received for any shares of capital stock issuable upon exercise thereof may not be less than the par value thereof.
The designations and the powers, privileges and rights, and the
qualifications, limitations or restrictions thereof in respect of each class of capital stock of the Corporation are as follows:
(a) COMMON STOCK.
(i) General. The voting, dividend, liquidation, and other
rights and powers of the Common Stock are subject to and qualified by the rights (preferential or otherwise) and powers of any series of Preferred Stock as may be designated by the Board of Directors and outstanding from time to time.
(ii) Voting.
(1) Except as otherwise provided herein (including any Certificate
of Designation (as defined below)) or otherwise required by law, the holders of the shares of Common Stock shall exclusively possess all voting power with respect to the Corporation.
(2) Except as otherwise provided herein or expressly required by
law, each holder of Common Stock, as such, shall be entitled to vote on each matter submitted to a vote of stockholders and shall be entitled to one (1) vote for each share of Common Stock held of record by such holder as of the record date for
determining stockholders entitled to vote on such matter.
TABLE OF CONTENTS
(3) Except as otherwise provided herein (including any
Certificate of Designation) or otherwise required by law, at any annual or special meeting of the stockholders of the Corporation, holders of the Common Stock shall have the exclusive right to vote for the election of directors and on all other
matters properly submitted to a vote of the stockholders.
(4) Except as otherwise required by law, holders of Common Stock, as
such, shall not be entitled to vote on any amendment to this Certificate (including any Certificate of Designation) that relates solely to the rights (preferential or otherwise), powers (or the qualifications, limitations or restrictions
thereof) or other terms of one or more outstanding series of Preferred Stock if the holders of such affected series are entitled, either separately or together with the holders of one or more other such series, to vote thereon pursuant to this
Amended and Restated Certificate of Incorporation (this “Certificate”) (including any Certificate of Designation) or pursuant to the DGCL.
Subject to the rights of any holders of any outstanding series of
Preferred Stock, the number of authorized shares of Common Stock may be increased or decreased (but not below the number of shares thereof then outstanding) by the affirmative vote of the holders of a majority of the stock of the Corporation
entitled to vote thereon, irrespective of the provisions of Section 242(b)(2) of the DGCL.
(iii) Dividends. Subject to any preferential or other rights
of any holders of any outstanding series of Preferred Stock, the holders of Common Stock, as such, shall be entitled to the payment of dividends on the Common Stock when, as and if declared by the Board of Directors in accordance with
applicable law.
(iv) Liquidation. Subject to any preferential or other rights
of any holders of any shares of any outstanding series of Preferred Stock, in the event of any liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, the funds and assets of the Corporation that may be
legally distributed to the Corporation’s stockholders shall be distributed among the holders of the then outstanding Common Stock pro rata in accordance with the number of shares of Common Stock held
by each such holder.
(b) PREFERRED STOCK
Shares of Preferred Stock may be issued from time to time in one or
more series, each of such series to have such terms as stated or expressed herein and in the resolution or resolutions providing for the creation and issuance of such series adopted by the Board of Directors as hereinafter provided.
Authority is hereby expressly granted to the Board of Directors from
time to time to issue the Preferred Stock in one or more series, and in connection with the creation of any such series, by adopting a resolution or resolutions providing for the issuance of the shares thereof and by filing a certificate of
designation relating thereto in accordance with the DGCL (a “Certificate of Designation”), to determine and fix the number of shares of such series and such voting powers, full or limited, or no voting powers, and such designations and
relative participating, optional, preferential or other special rights, and qualifications, limitations or restrictions thereof, including without limitation thereof, dividend rights, conversion rights, redemption privileges and liquidation
preferences, and to increase or decrease (but not below the number of shares of such series then outstanding) the number of shares of any series as shall be stated and expressed in such resolutions, all to the fullest extent now or hereafter
permitted by the DGCL. Without limiting the generality of the foregoing, the resolution or resolutions providing for the creation and issuance of any series of Preferred Stock may provide that such series shall be superior or rank equally or be
junior to any other series of Preferred Stock to the extent permitted by law and this Certificate (including any Certificate of Designation). Except as otherwise required by law, holders of any series of Preferred Stock shall be entitled only
to such voting rights, if any, as shall expressly be granted thereto by this Certificate (including any Certificate of Designation).
The number of authorized shares of Preferred Stock may be increased
or decreased (but not below the number of shares thereof then outstanding) by the affirmative vote of the holders of a majority of the stock of the Corporation entitled to vote thereon, irrespective of the provisions of Section 242(b)(2) of the
DGCL.
TABLE OF CONTENTS
ARTICLE V
BOARD OF DIRECTORS
For the management of the business and for the conduct of the affairs
of the Corporation it is further provided that:
(a) Subject to the special rights of the holders of one or more
outstanding series of Preferred Stock to elect directors, at each annual meeting of the stockholders of the Corporation beginning with the first annual meeting of the stockholders following the date of this Certificate, the successors of the
directors whose term expires at that meeting shall be elected to hold office for a term expiring at the annual meeting of the stockholders held in the year following the year of their election. Each director shall hold office until his or her
successor is duly elected and qualified or until his or her earlier death, resignation, disqualification or removal. No decrease in the number of directors shall shorten the term of any incumbent director.
(b) Except as otherwise expressly provided by the DGCL or this
Certificate, the business and affairs of the Corporation shall be managed by or under the direction of the Board of Directors. The number of directors which shall constitute the whole Board of Directors shall initially be nine (9) directors and
thereafter shall be fixed exclusively by one or more resolutions adopted from time to time by the Board of Directors. Directors shall be elected by a plurality of the votes cast by the stockholders present in person or represented by proxy at
the meeting and entitled to vote thereon.
(c) Subject to the special rights of the holders of one or more
outstanding series of Preferred Stock to elect directors, the Board of Directors or any individual director may be removed from office at any time, but only for cause and only by the affirmative vote of the holders of at least two-thirds (66
and 2/3%) of the voting power of all of the then outstanding shares of voting stock of the Corporation entitled to vote at an election of directors.
(d) Subject to the special rights of the holders of one or more
outstanding series of Preferred Stock to elect directors, except as otherwise provided by law, any vacancies on the Board of Directors resulting from death, resignation, disqualification, retirement, removal or other causes and any newly
created directorships resulting from any increase in the number of directors shall be filled exclusively by the affirmative vote of a majority of the directors then in office, even though less than a quorum, or by a sole remaining director
(other than any directors elected by the separate vote of one or more outstanding series of Preferred Stock), and shall not be filled by the stockholders. Any director appointed in accordance with the preceding sentence shall hold office until
the expiration of the term to which such director shall have been appointed or until his or her earlier death, resignation, retirement, disqualification, or removal.
(e) Whenever the holders of any one or more series of Preferred
Stock issued by the Corporation shall have the right, voting separately as a series or separately as a class with one or more such other series, to elect directors at an annual or special meeting of stockholders, the election, term of office,
removal and other features of such directorships shall be governed by the terms of this Certificate (including any Certificate of Designation). Notwithstanding anything to the contrary in this Article V, the number of directors that may
be elected by the holders of any such series of Preferred Stock shall be in addition to the number fixed pursuant to paragraph B of this Article V, and the total number of directors constituting the whole Board of Directors shall be
automatically adjusted accordingly. Except as otherwise provided in the Certificate of Designation(s) in respect of one or more series of Preferred Stock, whenever the holders of any series of Preferred Stock having such right to elect
additional directors are divested of such right pursuant to the provisions of such Certificate of Designation(s), the terms of office of all such additional directors elected by the holders of such series of Preferred Stock, or elected to fill
any vacancies resulting from the death, resignation, disqualification or removal of such additional directors, shall forthwith terminate (in which case each such director thereupon shall cease to be qualified as, and shall cease to be, a
director) and the total authorized number of directors of the Corporation shall automatically be reduced accordingly.
(f) In furtherance and not in limitation of the powers conferred by
statute, the Board of Directors is expressly authorized to adopt, amend or repeal the Bylaws of the Corporation (as amended and/or restated from time to time, the “Bylaws”). Any adoption, amendment or repeal of the Bylaws shall require
the approval of a majority of the Board of Directors. In addition to any vote of the holders of any class or series of stock of the Corporation required by applicable law or by this Certificate (including any Certificate
TABLE OF CONTENTS
of Designation in respect of one or more series of Preferred Stock) or the Bylaws of
the Corporation, the adoption, amendment or repeal of the Bylaws of the Corporation by the stockholders of the Corporation shall require the affirmative vote of the holders of at least two-thirds (66 and 2/3%) of the voting power of all of the
then outstanding shares of voting stock of the Corporation entitled to vote generally in an election of directors.
(g) The directors of the Corporation need not be elected by written
ballot unless the Bylaws so provide.
ARTICLE VI
STOCKHOLDERS
(a) Any action required or permitted to be taken by the stockholders
of the Corporation must be effected at an annual or special meeting of the stockholders of the Corporation, and shall not be taken by written consent in lieu of a meeting. Notwithstanding the foregoing, any action required or permitted to be
taken by the holders of any series of Preferred Stock, voting separately as a series or separately as a class with one or more other such series, may be taken without a meeting, without prior notice and without a vote, to the extent expressly
so provided by the applicable Certificate of Designation relating to such series of Preferred Stock, if a consent or consents in writing, setting forth the action so taken, shall be signed by the holders of outstanding shares of the relevant
series of Preferred Stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted and shall be delivered to the
Corporation in accordance with the applicable provisions of the DGCL.
(b) Subject to the special rights of the holders of one or more
series of Preferred Stock, special meetings of the stockholders of the Corporation may be called, for any purpose or purposes, at any time only by or at the direction of the Board of Directors, the Chairperson of the Board of Directors, the
Chief Executive Officer or the President, and shall not be called by any other person or persons.
(c) Advance notice of stockholder nominations for the election of
directors and of other business proposed to be brought by stockholders before any meeting of the stockholders of the Corporation shall be given in the manner provided in the Bylaws.
ARTICLE VII
LIABILITY
No director or officer of the Corporation shall have any personal
liability to the Corporation or its stockholders for monetary damages for any breach of fiduciary duty as a director or officer, except to the extent such exemption from liability or limitation thereof is not permitted under the DGCL as the
same exists or hereafter may be amended. Any amendment, repeal or modification of this Article VIII, or the adoption of any provision of this Certificate inconsistent with this Article VII, shall not adversely affect any right
or protection of a director or officer of the Corporation with respect to any act or omission occurring prior to such amendment, repeal, modification or adoption. If the DGCL is amended after approval by the stockholders of this Article VII
to authorize corporate action further eliminating or limiting the personal liability of directors or officers, then the liability of a director or officer of the Corporation shall be eliminated or limited to the fullest extent permitted by the
DGCL as so amended.
ARTICLE VIII
INDEMNIFICATION
(a) To the fullest extent permitted by the DGCL or any other
applicable law, as it presently exists or may hereafter be amended, the Corporation shall indemnify and hold harmless each person who is or was made a party or is threatened to be made a party to or is otherwise involved in any action, suit or
proceeding, whether civil, criminal, administrative or investigative (a “proceeding”) by reason of the fact that he or she or a person for whom he or she is the legal representative is or was a director or officer of the Corporation or,
while serving as a director or officer of the Corporation, is or was serving at the request
TABLE OF CONTENTS
of the Corporation as a director, officer, employee or agent of another corporation
or of a partnership, joint venture, trust, other enterprise or nonprofit entity, including service with respect to an employee benefit plan (an “indemnitee”), whether the basis of such proceeding is alleged action in an official capacity
as a director, officer, employee or agent, or in any other capacity while serving as a director, officer, employee or agent, against all liability and loss suffered and expenses (including, attorneys’ fees, judgments, fines, ERISA excise taxes
and penalties and amounts paid in settlement) reasonably incurred by such indemnitee in connection with such proceeding; provided that such indemnitee acted in good faith and in a manner such indemnitee reasonably believed to be in or not
opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe such indemnitee’s conduct was unlawful. The Corporation shall to the fullest extent not prohibited by
applicable law pay the expenses (including attorneys’ fees) incurred by an indemnitee in defending or otherwise participating in any proceeding in advance of its final disposition; provided, however, that, to the extent required by applicable
law, such payment of expenses in advance of the final disposition of the proceeding shall be made only upon receipt of an undertaking, by or on behalf of the indemnitee, to repay all amounts so advanced if it shall ultimately be determined that
the indemnitee is not entitled to be indemnified under this Article VIII or otherwise. The rights to indemnification and advancement of expenses conferred by this Article VIII shall be contract rights and such rights shall
continue as to an indemnitee who has ceased to be a director, officer, employee or agent and shall inure to the benefit of his or her heirs, executors and administrators. Notwithstanding the foregoing provisions of this Article VIII,
except for proceedings to enforce rights to indemnification and advancement of expenses, the Corporation shall indemnify and advance expenses to an indemnitee in connection with a proceeding (or part thereof) initiated by such indemnitee only
if such proceeding (or part thereof) was authorized by the Board.
(b) The rights to indemnification and advancement of expenses
conferred on any indemnitee by this Article VIII shall not be exclusive of any other rights that any indemnitee may have or hereafter acquire under law, this Certificate, the Bylaws, an agreement, vote of stockholders or disinterested
directors, or otherwise.
(c) Any repeal or amendment of this Article VIII by the
stockholders of the Corporation or by changes in law, or the adoption of any other provision of this Certificate inconsistent with this Article VIII, shall, unless otherwise required by law, be prospective only (except to the extent
such amendment or change in law permits the Corporation to provide broader indemnification rights on a retroactive basis than permitted prior thereto), and shall not in any way diminish or adversely affect any right or protection existing at
the time of such repeal or amendment or adoption of such inconsistent provision in respect of any proceeding (regardless of when such proceeding is first threatened, commenced or completed) arising out of, or related to, any act or omission
occurring prior to such repeal or amendment or adoption of such inconsistent provision.
(d) This Article VIII shall not limit the right of the
Corporation, to the extent and in the manner authorized or permitted by law, to indemnify and to advance expenses to persons other than indemnitees.
ARTICLE IX
FORUM SELECTION
Unless the Corporation consents in writing to the selection of an
alternative forum, (a) the Court of Chancery of the State of Delaware (the “Chancery Court”) (or, solely in the event that the Chancery Court lacks subject matter jurisdiction, the federal district court for the District of Delaware or
other state courts of the State of Delaware) shall, to the fullest extent permitted by law, be the sole and exclusive forum for (i) any derivative action, suit or proceeding brought on behalf of the Corporation, (ii) any action, suit or
proceeding asserting a claim of breach of a fiduciary duty owed by any current or former director, officer or other employee of the Corporation or any stockholder of the Corporation to the Corporation or to the Corporation’s stockholders,
(iii) any action, suit or proceeding arising pursuant to any provision of the DGCL or the Bylaws or this Certificate (as either may be amended from time to time), (iv) any action, suit or proceeding asserting a claim against the Corporation
governed by the internal affairs doctrine, (v) any action or proceeding to interpret, apply, enforce or determine the validity of this Certificate or the Bylaws (including any right, obligation or remedy thereunder) and (vi) any action or
proceeding as to which the DGCL confers jurisdiction to the Court of Chancery; and (b) subject to the preceding provisions of this Article IX, the federal district courts of the United
TABLE OF CONTENTS
States of America shall be the exclusive forum for the resolution of any complaint
asserting a cause of action arising under the Securities Act of 1933, as amended, including all causes of action asserted against any defendant to such complaint. If any action the subject matter of which is within the scope of clause (a) of
the immediately preceding sentence is filed in a court other than the courts in the State of Delaware (a “Foreign Action”) in the name of any stockholder, such stockholder shall be deemed to have consented to (x) the personal
jurisdiction of the state and federal courts in the State of Delaware in connection with any action brought in any such court to enforce the provisions of clause (a) of the immediately preceding sentence and (y) having service of process made
upon such stockholder in any such action by service upon such stockholder’s counsel in the Foreign Action as agent for such stockholder.
Any person or entity purchasing or otherwise acquiring any interest
in any security of the Corporation shall be deemed to have notice of and consented to this Article IX. This Article IX is intended to benefit and may be enforced by the Corporation, its officers and directors, the underwriters
to any offering giving rise to such complaint, and any other professional or entity whose profession gives authority to a statement made by that person or entity and who has prepared or certified any part of the documents underlying the
offering. Notwithstanding the foregoing, the provisions of this Article IX shall not apply to suits brought to enforce any liability or duty created by the Securities Exchange Act of 1934, as amended, or any other claim for which the
federal courts of the United States have exclusive jurisdiction.
ARTICLE X
AMENDMENTS
(a) Notwithstanding anything contained in this Certificate to the
contrary, in addition to any vote required by applicable law, the following provisions in this Certificate may be amended, altered, repealed or rescinded, in whole or in part, or any provision inconsistent therewith or herewith may be adopted,
only by the affirmative vote of the holders of at least two-thirds (66 and 2/3%) of the total voting power of all the then outstanding shares of stock of the Corporation entitled to vote thereon, voting together as a single class: Part B of Article
IV, Article V, Article VI, Article VII, Article VIII, Article IX, and this Article X.
(b) If any provision or provisions of this Certificate shall be held
to be invalid, illegal or unenforceable as applied to any circumstance for any reason whatsoever: (i) the validity, legality and enforceability of such provisions in any other circumstance and of the remaining provisions of this Certificate
(including, without limitation, each portion of any paragraph of this Certificate containing any such provision held to be invalid, illegal or unenforceable that is not itself held to be invalid, illegal or unenforceable) shall not, to the
fullest extent permitted by applicable law, in any way be affected or impaired thereby and (ii) to the fullest extent permitted by applicable law, the provisions of this Certificate (including, without limitation, each such portion of any
paragraph of this Certificate containing any such provision held to be invalid, illegal or unenforceable) shall be construed so as to permit the Corporation to protect its directors, officers, employees and agents from personal liability in
respect of their good faith service to or for the benefit of the Corporation to the fullest extent permitted by law.
TABLE OF CONTENTS
Amended and Restated
Bylaws of
H2B2 Electrolysis Technologies, Inc.
(a Delaware corporation)
Effective , 2023
TABLE OF CONTENTS
Table of Contents
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TABLE OF CONTENTS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TABLE OF CONTENTS
Bylaws of
H2B2 Electrolysis Technologies, Inc.
CORPORATE OFFICES
Section 1.1
Registered Office.
The address of the registered office of H2B2 Electrolysis
Technologies, Inc. (the “Corporation”) in the State of Delaware, and the name of its registered agent at such address, shall be as set forth in the Corporation’s certificate of incorporation, as the same may be amended and/or restated
from time to time (the “Certificate of Incorporation”).
Section 1.2
Other Offices.
The Corporation may have additional offices at any place or places,
within or outside the State of Delaware, as the Corporation’s board of directors (the “Board”) may from time to time establish or as the business and affairs of the Corporation may require.
MEETINGS OF STOCKHOLDERS
Section 2.1
Place of Meetings.
Meetings of stockholders shall be held at any place, within or
outside the State of Delaware, designated by the Board. The Board may, in its sole discretion, determine that a meeting of stockholders shall not be held at any place, but may instead be held solely by means of remote communication as
authorized by Section 211(a)(2) of the General Corporation Law of the State of Delaware (the “DGCL”). In the absence of any such designation or determination, stockholders’ meetings shall be held at the Corporation’s principal executive
office, whether within or outside of the State of Delaware.
Section 2.2
Annual Meeting.
The Board shall designate the date and time of the annual meeting. At
the annual meeting, the stockholders entitled to vote on such matters shall elect those directors of the Corporation to fill any term of a directorship that expires on the date of such annual meeting and may transact any other business as may
properly be brought before the meeting in accordance with Section 2.4. The Board may postpone, reschedule or cancel any previously scheduled annual meeting of stockholders.
Section 2.3
Special Meeting.
Special meetings of the stockholders may be called only by such
persons and only in such manner as set forth in the Certificate of Incorporation.
No business may be transacted at any special meeting of stockholders
other than the business specified in the notice of such meeting. The Board may postpone, reschedule or cancel any previously scheduled special meeting of stockholders.
Section 2.4
Notice of
Business to be Brought before a Meeting.
(a) At an annual meeting of the stockholders, only such business
shall be conducted as shall have been properly brought before the meeting. To be properly brought before an annual meeting, business must be (i) specified in the Corporation’s notice of meeting (or any supplement thereto) given by or at the
direction of the Board, (ii) if not specified in a notice of meeting, otherwise brought before the meeting by or at the direction of the Board or the Chairperson of the Board or (iii) otherwise properly brought before the meeting by a
stockholder present in person who (A) (1) was a record owner of shares of the Corporation both at the time of giving the notice provided for in this Section 2.4 and at the time of the meeting, (2) is entitled to vote at the meeting and
(3) has complied with this Section 2.4 in all applicable respects or (B) properly made such proposal in accordance with Rule 14a-8 under the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated
thereunder (as so amended and inclusive of such rules and regulations, the “Exchange Act”). The foregoing clause (iii) shall be the exclusive means for a
TABLE OF CONTENTS
stockholder to propose business to be brought before an annual meeting of the
stockholders. The only matters that may be brought before a special meeting are the matters specified in the notice of meeting given by or at the direction of the person calling the meeting pursuant to Section 2.3, and stockholders
shall not be permitted to propose business to be brought before a special meeting of the stockholders. For purposes of this Section 2.4, “present in person” shall mean that the stockholder proposing that the business be brought before
the annual meeting of the Corporation, or a qualified representative of such proposing stockholder, appear at such annual meeting. A “qualified representative” of such proposing stockholder shall be a duly authorized officer, manager or partner
of such stockholder or any other person authorized by a writing executed by such stockholder or an electronic transmission delivered by such stockholder to act for such stockholder as proxy at the meeting of stockholders and such person must
produce such writing or electronic transmission, or a reliable reproduction of the writing or electronic transmission, at the meeting of stockholders. Stockholders seeking to nominate persons for election to the Board must comply with Section 2.5,
and this Section 2.4 shall not be applicable to nominations except as expressly provided in Section 2.5.
(b) For business to be properly brought before an annual meeting by
a stockholder, the stockholder must (i) provide Timely Notice (as defined below) thereof in writing and in proper form to the Secretary of the Corporation and (ii) provide any updates or supplements to such notice at the times and in the forms
required by this Section 2.4. To be timely, a stockholder’s notice must be delivered to, or mailed and received at, the principal executive offices of the Corporation not less than ninety (90) days nor more than one hundred twenty (120)
days prior to the one-year anniversary of the preceding year’s annual meeting; provided, however, that if no annual meeting was held in the preceding year, to be timely, a stockholder’s notice must be
so delivered, or mailed and received, not earlier than the close of business on the one hundred and twentieth (120th) day prior to such annual meeting and not later than the close of business on the later of the ninetieth (90th)
day prior to such annual meeting or, if later, the tenth (10th) day following the day on which public disclosure of the date of such annual meeting was first made by the Corporation; provided,
further, that if the date of the annual meeting is more than thirty (30) days before or more than sixty (60) days after such anniversary date, to be timely, a stockholder’s notice must be so delivered, or mailed and received, not later
than the ninetieth (90th) day prior to such annual meeting or, if later, the tenth (10th) day following the day on which public disclosure of the date of such annual meeting was first made by the Corporation (such notice
within such time periods, “Timely Notice”). In no event shall any adjournment or postponement of an annual meeting or the announcement thereof commence a new time period for the giving of Timely Notice as described above.
(c) To be in proper form for purposes of this Section 2.4, a
stockholder’s notice to the Secretary of the Corporation shall set forth:
(i) As to each Proposing Person (as defined below), (A) the name and
address of such Proposing Person (including, if applicable, the name and address that appear on the Corporation’s books and records); and (B) the class or series and number of shares of the Corporation that are, directly or indirectly, owned of
record or beneficially owned (within the meaning of Rule 13d-3 under the Exchange Act) by such Proposing Person, except that such Proposing Person shall in all events be deemed to beneficially own any shares of any class or series of the
Corporation as to which such Proposing Person has a right to acquire beneficial ownership at any time in the future (the disclosures to be made pursuant to the foregoing clauses (A) and (B) are referred to as “Stockholder Information”);
(ii) As to each Proposing Person, (A) the full notional amount of
any securities that, directly or indirectly, underlie any “derivative security” (as such term is defined in Rule 16a-1(c) under the Exchange Act) that constitutes a “call equivalent position” (as such term is defined in Rule 16a-1(b) under the
Exchange Act) (“Synthetic Equity Position”) and that is, directly or indirectly, held or maintained by such Proposing Person with respect to any shares of any class or series of shares of the Corporation; provided that, for the purposes of the definition of “Synthetic Equity Position,” the term “derivative security” shall also include any security or instrument that would not otherwise constitute a “derivative security” as a
result of any feature that would make any conversion, exercise or similar right or privilege of such security or instrument becoming determinable only at some future date or upon the happening of a future occurrence, in which case the
determination of the amount of securities
TABLE OF CONTENTS
into which such security or instrument would be convertible or exercisable shall be
made assuming that such security or instrument is immediately convertible or exercisable at the time of such determination; and, provided, further, that any Proposing Person satisfying the requirements
of Rule 13d-1(b)(1) under the Exchange Act (other than a Proposing Person that so satisfies Rule 13d-1(b)(1) under the Exchange Act solely by reason of Rule 13d-1(b)(1)(ii)(E)) shall not be deemed to hold or maintain the notional amount of any
securities that underlie a Synthetic Equity Position held by such Proposing Person as a hedge with respect to a bona fide derivatives trade or position of such Proposing Person arising in the ordinary course of such Proposing Person’s business
as a derivatives dealer, (B) any rights to dividends on the shares of any class or series of shares of the Corporation owned beneficially by such Proposing Person that are separated or separable from the underlying shares of the Corporation,
(C) any material pending or threatened legal proceeding in which such Proposing Person is a party or material participant involving the Corporation or any of its officers or directors, or any affiliate of the Corporation, (D) any other material
relationship between such Proposing Person, on the one hand, and the Corporation or any affiliate of the Corporation, on the other hand, (E) any direct or indirect material interest in any material contract or agreement of such Proposing Person
with the Corporation or any affiliate of the Corporation (including, in any such case, any employment agreement, collective bargaining agreement or consulting agreement), (F) a representation that such Proposing Person intends or is part of a
group that intends to deliver a proxy statement or form of proxy to holders of at least the percentage of the Corporation’s outstanding capital stock required to approve or adopt the proposal or otherwise solicit proxies from stockholders in
support of such proposal and (G) any other information relating to such Proposing Person that would be required to be disclosed in a proxy statement or other filing required to be made in connection with solicitations of proxies or consents by
such Proposing Person in support of the business proposed to be brought before the meeting pursuant to Section 14(a) of the Exchange Act (the disclosures to be made pursuant to the foregoing clauses (A) through (G) are referred to as “Disclosable
Interests”); provided, however, that Disclosable Interests shall not include any such disclosures with respect to the ordinary course business activities
of any broker, dealer, commercial bank, trust company or other nominee who is a Proposing Person solely as a result of being the stockholder directed to prepare and submit the notice required by these bylaws on behalf of a beneficial owner; and
(iii) As to each item of business that the stockholder proposes to
bring before the annual meeting, (A) a brief description of the business desired to be brought before the annual meeting, the reasons for conducting such business at the annual meeting and any material interest in such business of each
Proposing Person, (B) the text of the proposal or business (including the text of any resolutions proposed for consideration and in the event that such business includes a proposal to amend the bylaws, the language of the proposed amendment),
and (C) a reasonably detailed description of all agreements, arrangements and understandings (x) between or among any of the Proposing Persons or (y) between or among any Proposing Person and any other person or entity (including their names)
in connection with the proposal of such business by such stockholder; and (D) any other information relating to such item of business that would be required to be disclosed in a proxy statement or other filing required to be made in connection
with solicitations of proxies in support of the business proposed to be brought before the meeting pursuant to Section 14(a) of the Exchange Act; provided, however,
that the disclosures required by this Section 2.4(c)(iii) shall not include any disclosures with respect to any broker, dealer, commercial bank, trust company or other nominee who is a Proposing Person solely as a result of being the
stockholder directed to prepare and submit the notice required by these bylaws on behalf of a beneficial owner.
For purposes of this Section 2.4, the term “Proposing
Person” shall mean (i) the stockholder providing the notice of business proposed to be brought before an annual meeting, (ii) the beneficial owner or beneficial owners, if different, on whose
behalf the notice of the business proposed to be brought before the annual meeting is made, and (iii) any participant (as defined in paragraphs (a)(ii)-(vi) of Instruction 3 to Item 4 of Schedule 14A) with such stockholder in such solicitation.
(d) A Proposing Person shall update and supplement its notice to the
Corporation of its intent to propose business at an annual meeting, if necessary, so that the information provided or required to be provided in such notice pursuant to this Section 2.4 shall be true and correct as of the record date
for stockholders entitled to vote at the meeting and as of the date that is ten (10) business days prior to the
TABLE OF CONTENTS
meeting or any adjournment or postponement thereof, and such update and supplement
shall be delivered to, or mailed and received by, the Secretary of the Corporation at the principal executive offices of the Corporation not later than five (5) business days after the record date for stockholders entitled to vote at the
meeting (in the case of the update and supplement required to be made as of such record date), and not later than eight (8) business days prior to the date for the meeting or, if practicable, any adjournment or postponement thereof (and, if not
practicable, on the first practicable date prior to the date to which the meeting has been adjourned or postponed) (in the case of the update and supplement required to be made as of ten (10) business days prior to the meeting or any
adjournment or postponement thereof). For the avoidance of doubt, the obligation to update and supplement as set forth in this paragraph or any other Section of these bylaws shall not limit the Corporation’s rights with respect to any
deficiencies in any notice provided by a stockholder, extend any applicable deadlines hereunder or enable or be deemed to permit a stockholder who has previously submitted notice hereunder to amend or update any proposal or to submit any new
proposal, including by changing or adding matters, business or resolutions proposed to be brought before a meeting of the stockholders.
(e) Notwithstanding anything in these bylaws to the contrary, no
business shall be conducted at an annual meeting that is not properly brought before the meeting in accordance with this Section 2.4. The presiding officer of the meeting shall, if the facts warrant, determine that the business was not
properly brought before the meeting in accordance with this Section 2.4, and if he or she should so determine, he or she shall so declare to the meeting and any such business not properly brought before the meeting shall not be
transacted.
(f) This Section 2.4 is expressly intended to apply to any
business proposed to be brought before an annual meeting of stockholders other than any proposal made in accordance with Rule 14a-8 under the Exchange Act and included in the Corporation’s proxy statement. In addition to the requirements of
this Section 2.4 with respect to any business proposed to be brought before an annual meeting, each Proposing Person shall comply with all applicable requirements of the Exchange Act with respect to any such business. Nothing in this Section
2.4 shall be deemed to affect the rights of stockholders to request inclusion of proposals in the Corporation’s proxy statement pursuant to Rule 14a-8 under the Exchange Act.
(g) For purposes of these bylaws, “public disclosure” shall
mean disclosure in a press release reported by a national news service or in a document publicly filed by the Corporation with the Securities and Exchange Commission pursuant to Sections 13, 14 or 15(d) of the Exchange Act.
Section 2.5
Notice of
Nominations for Election to the Board.
(a) Nominations of any person for election to the Board at an annual
meeting or at a special meeting (but only if the election of directors is a matter specified in the notice of meeting given by or at the direction of the person calling such special meeting) may be made at such meeting only (i) by or at the
direction of the Board, including by any committee or persons authorized to do so by the Board or these bylaws, or (ii) by a stockholder present in person (A) who was a record owner of shares of the Corporation both at the time of giving the
notice provided for in this Section 2.5 and at the time of the meeting, (B) is entitled to vote at the meeting, and (C) has complied with this Section 2.5 as to such notice and nomination. For purposes of this Section 2.5,
“present in person” shall mean that the stockholder proposing that the business be brought before the meeting of the Corporation, or a qualified representative of such stockholder, appear at such meeting. A “qualified representative”
of such proposing stockholder shall be a duly authorized officer, manager or partner of such stockholder or any other person authorized by a writing executed by such stockholder or an electronic transmission delivered by such stockholder to act
for such stockholder as proxy at the meeting of stockholders and such person must produce such writing or electronic transmission, or a reliable reproduction of the writing or electronic transmission, at the meeting of stockholders. The
foregoing clause (ii) shall be the exclusive means for a stockholder to make any nomination of a person or persons for election to the Board at an annual meeting or special meeting.
(b) (i) Without qualification, for a stockholder to make any
nomination of a person or persons for election to the Board at an annual meeting, the stockholder must (1) provide Timely Notice (as defined in Section 2.4) thereof in writing and in proper form to the Secretary of the Corporation, (2)
provide the
TABLE OF CONTENTS
information, agreements and questionnaires with respect to such stockholder and its
candidate for nomination as required to be set forth by this Section 2.5 and (3) provide any updates or supplements to such notice at the times and in the forms required by this Section 2.5.
(ii) Without qualification, if the election of directors is a matter
specified in the notice of meeting given by or at the direction of the person calling a special meeting, then for a stockholder to make any nomination of a person or persons for election to the Board at a special meeting, the stockholder must
(i) provide Timely Notice thereof in writing and in proper form to the Secretary of the Corporation at the principal executive offices of the Corporation, (ii) provide the information with respect to such stockholder and its candidate for
nomination as required by this Section 2.5 and (iii) provide any updates or supplements to such notice at the times and in the forms required by this Section 2.5. To be timely, a stockholder’s notice for nominations to be made
at a special meeting must be delivered to, or mailed and received at, the principal executive offices of the Corporation not earlier than the one hundred twentieth (120th) day prior to such special meeting and not later than the
ninetieth (90th) day prior to such special meeting or, if later, the tenth (10th) day following the day on which public disclosure (as defined in Section 2.4) of the date of such special meeting was first made.
(iii) In no event shall any adjournment or postponement of an annual
meeting or special meeting or the announcement thereof commence a new time period for the giving of a stockholder’s notice as described above.
(iv) In no event may a Nominating Person provide Timely Notice with
respect to a greater number of director candidates than are subject to election by shareholders at the applicable meeting. If the Corporation shall, subsequent to such notice, increase the number of directors subject to election at the meeting,
such notice as to any additional nominees shall be due on the later of (i) the conclusion of the time period for Timely Notice, (ii) the date set forth in Section 2.5(b)(ii) or (iii) the tenth day following the date of public disclosure
(as defined in Section 2.4) of such increase.
(c) To be in proper form for purposes of this Section 2.5, a
stockholder’s notice to the Secretary of the Corporation shall set forth:
(i) As to each Nominating Person (as defined below), the Stockholder
Information (as defined in Section 2.4(c)(i), except that for purposes of this Section 2.5, the term “Nominating Person” shall be substituted for the term “Proposing Person” in all places it appears in Section
2.4(c)(i));
(ii) As to each Nominating Person, any Disclosable Interests (as
defined in Section 2.4(c)(ii), except that for purposes of this Section 2.5, the term “Nominating Person” shall be substituted for the term “Proposing Person” in all places it appears in Section 2.4(c)(ii)
and the disclosure with respect to the business to be brought before the meeting in Section 2.4(c)(ii) shall be made with respect to the election of directors at the meeting); and
(iii) As to each candidate whom a Nominating Person proposes to
nominate for election as a director, (A) all information with respect to such candidate for nomination that would be required to be set forth in a stockholder’s notice pursuant to this Section 2.5 if such candidate for nomination were a
Nominating Person, (B) all information relating to such candidate for nomination that is required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors in
a contested election pursuant to Section 14(a) under the Exchange Act (including such candidate’s written consent to being named in the proxy statement as a nominee and to serving as a director if elected), (C) a description of any direct or
indirect material interest in any material contract or agreement between or among any Nominating Person, on the one hand, and each candidate for nomination or his or her respective associates or any other participants in such solicitation, on
the other hand, including, without limitation, all information that would be required to be disclosed pursuant to Item 404 under Regulation S-K if such Nominating Person were the “registrant” for purposes of such rule and the candidate for
nomination were a director or executive officer of such registrant and (D) a completed and signed questionnaire, representation and agreement as provided in Section 2.5(f).
TABLE OF CONTENTS
For purposes of this Section 2.5, the term “Nominating
Person” shall mean (i) the stockholder providing the notice of the nomination proposed to be made at the meeting, (ii) the beneficial owner or beneficial owners, if different, on whose behalf the notice of the nomination proposed to be
made at the meeting is made, and (iii) any other participant in such solicitation.
(d) A stockholder providing notice of any nomination proposed to be
made at a meeting shall further update and supplement such notice, if necessary, so that the information provided or required to be provided in such notice pursuant to this Section 2.5 shall be true and correct as of the record date for
stockholders entitled to vote at the meeting and as of the date that is ten (10) business days prior to the meeting or any adjournment or postponement thereof, and such update and supplement shall be delivered to, or mailed and received by, the
Secretary of the Corporation at the principal executive offices of the Corporation not later than five (5) business days after the record date for stockholders entitled to vote at the meeting (in the case of the update and supplement required
to be made as of such record date), and not later than eight (8) business days prior to the date for the meeting or, if practicable, any adjournment or postponement thereof (and, if not practicable, on the first practicable date prior to the
date to which the meeting has been adjourned or postponed) (in the case of the update and supplement required to be made as of ten (10) business days prior to the meeting or any adjournment or postponement thereof). For the avoidance of doubt,
the obligation to update and supplement as set forth in this paragraph or any other Section of these bylaws shall not limit the Corporation’s rights with respect to any deficiencies in any notice provided by a stockholder, extend any applicable
deadlines hereunder or enable or be deemed to permit a stockholder who has previously submitted notice hereunder to amend or update any nomination or to submit any new nomination.
(e) In addition to the requirements of this Section 2.5 with
respect to any nomination proposed to be made at a meeting, each Nominating Person shall comply with all applicable requirements of the Exchange Act with respect to any such nominations.
(f) To be eligible to be a candidate for election as a director of
the Corporation at an annual or special meeting, a candidate must be nominated in the manner prescribed in Section 2.5 and the candidate for nomination, whether nominated by the Board or by a stockholder of record, must have previously
delivered (in accordance with the time period prescribed for delivery in a notice to such candidate given by or on behalf of the Board), to the Secretary of the Corporation at the principal executive offices of the Corporation, (i) a completed
written questionnaire (in a form provided by the Corporation) with respect to the background, qualifications, stock ownership and independence of such proposed nominee and (ii) a written representation and agreement (in form provided by the
Corporation) that such candidate for nomination (A) is not and, if elected as a director during his or her term of office, will not become a party to (1) any agreement, arrangement or understanding with, and has not given and will not give any
commitment or assurance to, any person or entity as to how such proposed nominee, if elected as a director of the Corporation, will act or vote on any issue or question (a “Voting Commitment”) or (2) any Voting Commitment that could
limit or interfere with such proposed nominee’s ability to comply, if elected as a director of the Corporation, with such proposed nominee’s fiduciary duties under applicable law, (B) is not, and will not become a party to, any agreement,
arrangement or understanding with any person or entity other than the Corporation with respect to any direct or indirect compensation or reimbursement for service as a director that has not been disclosed to the Corporation and (C) if elected
as a director of the Corporation, will comply with all applicable corporate governance, conflict of interest, confidentiality, stock ownership and trading and other policies and guidelines of the Corporation applicable to directors and in
effect during such person’s term in office as a director (and, if requested by any candidate for nomination, the Secretary of the Corporation shall provide to such candidate for nomination all such policies and guidelines then in effect).
(g) The Board may also require any proposed candidate for nomination
as a Director to furnish such other information as may reasonably be requested by the Board in writing prior to the meeting of stockholders at which such candidate’s nomination is to be acted upon in order for the Board to determine the
eligibility of such candidate for nomination to be an independent director of the Corporation in accordance with the Corporation’s corporate governance guidelines.
(h) A candidate for nomination as a director shall further update
and supplement the materials delivered pursuant to this Section 2.5, if necessary, so that the information provided or required to be
TABLE OF CONTENTS
provided pursuant to this Section 2.5 shall be true and correct as of the
record date for stockholders entitled to vote at the meeting and as of the date that is ten (10) business days prior to the meeting or any adjournment or postponement thereof, and such update and supplement shall be delivered to, or mailed and
received by, the Secretary of the Corporation at the principal executive offices of the Corporation (or any other office specified by the Corporation in any public announcement) not later than five (5) business days after the record date for
stockholders entitled to vote at the meeting (in the case of the update and supplement required to be made as of such record date), and not later than eight (8) business days prior to the date for the meeting or, if practicable, any adjournment
or postponement thereof (and, if not practicable, on the first practicable date prior to the date to which the meeting has been adjourned or postponed) (in the case of the update and supplement required to be made as of ten (10) business days
prior to the meeting or any adjournment or postponement thereof). For the avoidance of doubt, the obligation to update and supplement as set forth in this paragraph or any other Section of these bylaws shall not limit the Corporation’s rights
with respect to any deficiencies in any notice provided by a stockholder, extend any applicable deadlines hereunder or enable or be deemed to permit a stockholder who has previously submitted notice hereunder to amend or update any proposal or
to submit any new proposal, including by changing or adding nominees, matters, business or resolutions proposed to be brought before a meeting of the stockholders.
(i) No candidate shall be eligible for nomination as a director of
the Corporation unless such candidate for nomination and the Nominating Person seeking to place such candidate’s name in nomination has complied with this Section 2.5. The presiding officer at the meeting shall, if the facts warrant,
determine that a nomination was not properly made in accordance with Section 2.5, and if he or she should so determine, he or she shall so declare such determination to the meeting, the defective nomination shall be disregarded and any
ballots cast for the candidate in question (but in the case of any form of ballot listing other qualified nominees, only the ballots cast for the nominee in question) shall be void and of no force or effect.
(j) Notwithstanding anything in these bylaws to the contrary, no
candidate for nomination shall be eligible to be seated as a director of the Corporation unless nominated and elected in accordance with Section 2.5.
Section 2.6
Notice of
Stockholders’ Meetings.
Unless otherwise provided by law, the Certificate of Incorporation or
these bylaws, the notice of any meeting of stockholders shall be sent or otherwise given in accordance with Section 8.1 not less than ten (10) nor more than sixty (60) days before the date of the meeting to each stockholder entitled to
vote at such meeting. The notice shall specify the place, if any, date and time of the meeting, the means of remote communication, if any, by which stockholders and proxy holders may be deemed to be present in person and vote at such meeting,
and, in the case of a special meeting, the purpose or purposes for which the meeting is called.
Unless otherwise provided by law, the Certificate of Incorporation or
these bylaws, the holders of a majority in voting power of the stock issued and outstanding and entitled to vote, present in person, or by remote communication, if applicable, or represented by proxy, shall constitute a quorum for the
transaction of business at all meetings of the stockholders. A quorum, once established at a meeting, shall not be broken by the withdrawal of enough votes to leave less than a quorum. If, however, a quorum is not present or represented at any
meeting of the stockholders, then either (i) the person presiding over the meeting or (ii) a majority in voting power of the stockholders entitled to vote at the meeting, present in person, or by remote communication, if applicable, or
represented by proxy, shall have power to recess the meeting or adjourn the meeting from time to time in the manner provided in Section 2.8 until a quorum is present or represented. At any recessed or adjourned meeting at which a quorum
is present or represented, any business may be transacted that might have been transacted at the meeting as originally noticed.
Section 2.8
Adjourned
Meeting; Notice.
When a meeting is adjourned to another time or place, unless these
bylaws otherwise require, notice need not be given of the adjourned meeting if the time, place, if any, thereof, and the means of remote
TABLE OF CONTENTS
communications, if any, by which stockholders and proxy holders may be deemed to be
present in person and vote at such adjourned meeting are announced at the meeting at which the adjournment is taken or are provided in any other manner permitted by the DGCL. At any adjourned meeting, the Corporation may transact any business
which might have been transacted at the original meeting. If the adjournment is for more than thirty (30) days, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. If after the
adjournment a new record date for determination of stockholders entitled to vote is fixed for the adjourned meeting, the Board shall fix as the record date for determining stockholders entitled to notice of such adjourned meeting the same or an
earlier date as that fixed for determination of stockholders entitled to vote at the adjourned meeting, and shall give notice of the adjourned meeting to each stockholder of record entitled to vote at such meeting as of the record date so fixed
for notice of such adjourned meeting.
Section 2.9
Conduct of
Business.
The date and time of the opening and the closing of the polls for
each matter upon which the stockholders will vote at a meeting shall be announced at the meeting by the person presiding over the meeting. The Board may adopt by resolution such rules and regulations for the conduct of the meeting of
stockholders as it shall deem appropriate. Except to the extent inconsistent with such rules and regulations as adopted by the Board, the person presiding over any meeting of stockholders shall have the right and authority to convene and (for
any or no reason) to recess and/or adjourn the meeting, to prescribe such rules, regulations and procedures (which need not be in writing) and to do all such acts as, in the judgment of such presiding person, are appropriate for the proper
conduct of the meeting. Such rules, regulations or procedures, whether adopted by the Board or prescribed by the person presiding over the meeting, may include, without limitation, the following: (i) the establishment of an agenda or order of
business for the meeting; (ii) rules and procedures for maintaining order at the meeting and the safety of those present (including, without limitation, rules and procedures for removal of disruptive persons from the meeting); (iii) limitations
on attendance at or participation in the meeting to stockholders entitled to vote at the meeting, their duly authorized and constituted proxies or such other persons as the person presiding over the meeting shall determine; (iv) restrictions on
entry to the meeting after the time fixed for the commencement thereof; and (v) limitations on the time allotted to questions or comments by participants. The presiding person at any meeting of stockholders, in addition to making any other
determinations that may be appropriate to the conduct of the meeting (including, without limitation, determinations with respect to the administration and/or interpretation of any of the rules, regulations or procedures of the meeting, whether
adopted by the Board or prescribed by the person presiding over the meeting), shall, if the facts warrant, determine and declare to the meeting that a matter of business was not properly brought before the meeting and if such presiding person
should so determine, such presiding person shall so declare to the meeting and any such matter or business not properly brought before the meeting shall not be transacted or considered. Unless and to the extent determined by the Board or the
person presiding over the meeting, meetings of stockholders shall not be required to be held in accordance with the rules of parliamentary procedure.
Except as may be otherwise provided in the Certificate of
Incorporation, these bylaws or the DGCL, each stockholder shall be entitled to one (1) vote for each share of capital stock held by such stockholder.
Except as otherwise provided by the Certificate of Incorporation, at
all duly called or convened meetings of stockholders at which a quorum is present, for the election of directors, a plurality of the votes cast shall be sufficient to elect a director. Except as otherwise provided by the Certificate of
Incorporation, these bylaws, the rules or regulations of any stock exchange applicable to the Corporation, or applicable law or pursuant to any regulation applicable to the Corporation or its securities, each other matter presented to the
stockholders at a duly called or convened meeting at which a quorum is present shall be decided by the affirmative vote of the holders of a majority in voting power of the votes cast (excluding abstentions and broker non-votes) on such matter.
Section 2.11
Record Date for
Stockholder Meetings and Other Purposes.
In order that the Corporation may determine the stockholders entitled
to notice of or to vote at any meeting of stockholders or any adjournment thereof, the Board may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board, and which
record date shall, unless otherwise required by law, not be more than sixty (60) days nor less than ten (10) days before the date of such meeting. If the Board so fixes a date, such date shall also be the record date for determining the
stockholders entitled to vote at such meeting unless the Board determines, at the time it fixes such record date,
TABLE OF CONTENTS
that a later date on or before the date of the meeting shall be the date for making
such determination. If no record date is fixed by the Board, the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be the close of business on the next day preceding the day on which
notice is first given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders
shall apply to any adjournment of the meeting; provided, however, that the Board may fix a new record date for determination of stockholders entitled to vote at the adjourned meeting; and in such case
shall also fix as the record date for stockholders entitled to notice of such adjourned meeting the same or an earlier date as that fixed for determination of stockholders entitled to vote in accordance herewith at the adjourned meeting.
In order that the Corporation may determine the stockholders entitled
to receive payment of any dividend or other distribution or allotment or any rights or the stockholders entitled to exercise any rights in respect of any change, conversion or exchange of capital stock, or for the purposes of any other lawful
action, the Board may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted, and which record date shall be not more than sixty (60) days prior to such action. If no record
date is fixed, the record date for determining stockholders for any such purpose shall be at the close of business on the day on which the Board adopts the resolution relating thereto.
Each stockholder entitled to vote at a meeting of stockholders may
authorize another person or persons to act for such stockholder by proxy authorized by an instrument in writing or by a transmission permitted by law filed in accordance with the procedure established for the meeting, but no such proxy shall be
voted or acted upon after three (3) years from its date, unless the proxy provides for a longer period. The revocability of a proxy that states on its face that it is irrevocable shall be governed by the provisions of Section 212 of the DGCL. A
proxy may be in the form of an electronic transmission which sets forth or is submitted with information from which it can be determined that the transmission was authorized by the stockholder.
Section 2.13
List of
Stockholders Entitled to Vote.
The Corporation shall prepare, at least ten (10) days before every
meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting (provided, however, that if the record date for determining the stockholders entitled to vote is less than ten
(10) days before the date of the meeting, the list shall reflect the stockholders entitled to vote as of the tenth (10th) day before the meeting date), arranged in alphabetical order, and showing the address of each stockholder and
the number of shares registered in the name of each stockholder. The Corporation shall not be required to include electronic mail addresses or other electronic contact information on such list. Such list shall be open to the examination of any
stockholder, for any purpose germane to the meeting for a period of at least ten (10) days prior to the meeting: (i) on a reasonably accessible electronic network, provided that the information
required to gain access to such list is provided with the notice of the meeting, or (ii) during ordinary business hours, at the Corporation’s principal executive office. In the event that the Corporation determines to make the list available on
an electronic network, the Corporation may take reasonable steps to ensure that such information is available only to stockholders of the Corporation. If the meeting is to be held at a place, then the list shall be produced and kept at the time
and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present. If the meeting is to be held solely by means of remote communication, then the list shall also be open to the examination of any
stockholder during the whole time of the meeting on a reasonably accessible electronic network, and the information required to access such list shall be provided with the notice of the meeting. Such list shall presumptively determine the
identity of the stockholders entitled to vote at the meeting and the number of shares held by each of them. Except as otherwise provided by law, the stock ledger shall be the only evidence as to who are the stockholders entitled to examine the
list of stockholders required by this Section 2.13 or to vote in person or by proxy at any meeting of stockholders.
TABLE OF CONTENTS
Section 2.14
Inspectors
of Election.
Before any meeting of stockholders, the Corporation shall appoint an
inspector or inspectors of election to act at the meeting or its adjournment and make a written report thereof. The Corporation may designate one or more persons as alternate inspectors to replace any inspector who fails to act. If any person
appointed as inspector or any alternate fails to appear or fails or refuses to act, then the person presiding over the meeting shall appoint a person to fill that vacancy.
Such inspectors shall:
(i) determine the number of shares outstanding and the voting power
of each, the number of shares represented at the meeting and the validity of any proxies and ballots;
(ii) count all votes or ballots;
(iii) count and tabulate all votes;
(iv) determine and retain for a reasonable period a record of the
disposition of any challenges made to any determination by the inspector(s); and
(v) certify its or their determination of the number of shares
represented at the meeting and its or their count of all votes and ballots.
Each inspector, before entering upon the discharge of the duties of
inspector, shall take and sign an oath faithfully to execute the duties of inspection with strict impartiality and according to the best of such inspector’s ability. Any report or certificate made by the inspectors of election is prima facie evidence of the facts stated therein. The inspectors of election may appoint such persons to assist them in performing their duties as they determine.
Section 2.15
Delivery to the
Corporation.
Whenever this Article II requires one (1) or more persons
(including a record or beneficial owner of stock) to deliver a document or information to the Corporation or any officer, employee or agent thereof (including any notice, request, questionnaire, revocation, representation or other document or
agreement), such document or information shall be in writing exclusively (and not in an electronic transmission) and shall be delivered exclusively by hand (including, without limitation, overnight courier service) or by certified or registered
mail, return receipt requested, and the Corporation shall not be required to accept delivery of any document not in such written form or so delivered. For the avoidance of doubt, the Corporation expressly opts out of Section 116 of the DGCL
with respect to the delivery of information and documents to the Corporation required by this Article II.
DIRECTORS
Except as otherwise provided by the Certificate of Incorporation or
the DGCL, the business and affairs of the Corporation shall be managed by or under the direction of the Board.
Section 3.2
Number of
Directors.
Subject to the Certificate of Incorporation, the total number of
directors constituting the Board shall be determined from time to time by resolution of the Board. No reduction of the authorized number of directors shall have the effect of removing any director before that director’s term of office expires.
Section 3.3
Election,
Qualification and Term of Office of Directors.
Except as provided in Section 3.4, and subject to the
Certificate of Incorporation, each director, including a director elected to fill a vacancy or newly created directorship, shall hold office until such director’s successor is duly elected and qualified or until such director’s earlier death,
resignation, disqualification or removal. Directors need not be stockholders or residents of the State of Delaware. The Certificate of Incorporation or these bylaws may prescribe qualifications for directors.
TABLE OF CONTENTS
Section 3.4
Resignation
and Vacancies.
Any director may resign at any time upon notice given in writing or
by electronic transmission to the Corporation. The resignation shall take effect at the time specified therein or upon the happening of an event specified therein, and if no time or event is specified, at the time of its receipt. When one or
more directors so resigns and the resignation is effective at a future date or upon the happening of an event to occur on a future date, a majority of the directors then in office, including those who have so resigned, shall have power to fill
such vacancy or vacancies, the vote thereon to take effect when such resignation or resignations shall become effective, and each director so chosen shall hold office as provided in Section 3.3.
Unless otherwise provided in the Certificate of Incorporation or
these bylaws, vacancies resulting from the death, resignation, disqualification or removal of any director, and newly created directorships resulting from any increase in the authorized number of directors shall be filled only by a majority of
the directors then in office, although less than a quorum, or by a sole remaining director.
Section 3.5
Place of
Meetings; Meetings by Telephone.
The Board may hold meetings, both regular and special, either
within or outside the State of Delaware.
Unless otherwise restricted by the Certificate of Incorporation or
these bylaws, members of the Board, or any committee designated by the Board, may participate in a meeting of the Board, or any committee, by means of conference telephone or other communications equipment by means of which all persons
participating in the meeting can hear each other, and such participation in a meeting pursuant to this bylaw shall constitute presence in person at the meeting.
Section 3.6
Regular
Meetings.
Regular meetings of the Board may be held within or outside the State
of Delaware and at such time and at such place as which has been designated by the Board and publicized among all directors, either orally or in writing, by telephone, including a voice-messaging system or other system designed to record and
communicate messages, facsimile, telegraph or telex, or by electronic mail or other means of electronic transmission. No further notice shall be required for regular meetings of the Board.
Section 3.7
Special Meetings;
Notice.
Special meetings of the Board for any purpose or purposes may be
called at any time by the Chairperson of the Board, the Chief Executive Officer, the President or the Secretary of the Corporation or a majority of the total number of directors constituting the Board.
Notice of the time and place of special meetings shall be:
(i) delivered personally by hand, by courier or by telephone;
(ii) sent by United States first-class mail, postage prepaid;
(iii) sent by facsimile or electronic mail; or
(iv) sent by other means of electronic transmission,
directed to each director at that director’s address, telephone number, facsimile
number or electronic mail address, or other address for electronic transmission, as the case may be, as shown on the Corporation’s records.
If the notice is (i) delivered personally by hand, by courier or by
telephone, (ii) sent by facsimile or electronic mail, or (iii) sent by other means of electronic transmission, it shall be delivered or sent at least twenty-four (24) hours before the time of the holding of the meeting. If the notice is sent by
U.S. mail, it shall be deposited in the U.S. mail at least four (4) days before the time of the holding of the meeting. The notice need not specify the place of the meeting (if the meeting is to be held at the Corporation’s principal executive
office) nor the purpose of the meeting.
At all meetings of the Board, unless otherwise provided by the
Certificate of Incorporation, a majority of the total number of directors shall constitute a quorum for the transaction of business. The vote of a majority of the directors present at any meeting at which a quorum is present shall be the act of
the Board, except as may be
TABLE OF CONTENTS
otherwise specifically provided by statute, the Certificate of Incorporation or these
bylaws. If a quorum is not present at any meeting of the Board, then the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum is present.
Section 3.9
Board Action
without a Meeting.
Unless otherwise restricted by the Certificate of Incorporation or
these bylaws, any action required or permitted to be taken at any meeting of the Board, or of any committee thereof, may be taken without a meeting if all members of the Board or committee, as the case may be, consent thereto in writing or by
electronic transmission. After an action is taken, the consent or consents relating thereto shall be filed with the minutes of the proceedings of the Board, or the committee thereof, in the same paper or electronic form as the minutes are
maintained. Such action by written consent or consent by electronic transmission shall have the same force and effect as a unanimous vote of the Board.
Section 3.10
Fees and
Compensation of Directors.
Unless otherwise restricted by the Certificate of Incorporation or
these bylaws, the Board shall have the authority to fix the compensation, including fees and reimbursement of expenses, of directors for services to the Corporation in any capacity.
COMMITTEES
Section 4.1
Committees of
Directors.
The Board may designate one (1) or more committees, each committee to
consist, of one (1) or more of the directors of the Corporation. The Board may designate one (1) or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the
absence or disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not such member or members constitute a quorum, may unanimously appoint another member of
the Board to act at the meeting in the place of any such absent or disqualified member. Any such committee, to the extent provided in the resolution of the Board or in these bylaws, shall have and may exercise all the powers and authority of
the Board in the management of the business and affairs of the Corporation, and may authorize the seal of the Corporation to be affixed to all papers that may require it; but no such committee shall have the power or authority to (i) approve or
adopt, or recommend to the stockholders, any action or matter expressly required by the DGCL to be submitted to stockholders for approval, or (ii) adopt, amend or repeal any bylaw of the Corporation.
Section 4.2
Committee Minutes.
Each committee shall keep regular minutes of its meetings and report
the same to the Board when required.
Section 4.3
Meetings and
Actions of Committees.
Meetings and actions of committees shall be governed by, and held and
taken in accordance with, the provisions of:
(i) Section 3.5 (place of meetings; meetings by telephone);
(ii) Section 3.6 (regular meetings);
(iii) Section 3.7 (special meetings; notice);
(iv) Section 3.9 (board action without a meeting); and
(v) Section 7.13 (waiver of notice),
with such changes in the context of those bylaws as are necessary to substitute the
committee and its members for the Board and its members; provided, however, that:
1. the time of regular meetings of committees may be determined
either by resolution of the Board or by resolution of the committee;
TABLE OF CONTENTS
(vi) special meetings of committees may also be called by
resolution of the Board or the chairperson of the applicable committee; and
(vii) the Board may adopt rules for the governance of any committee
to override the provisions that would otherwise apply to the committee pursuant to this Section 4.3, provided that such rules do not violate the provisions of the Certificate of Incorporation or applicable law.
Section 4.4
Subcommittees.
Unless otherwise provided in the Certificate of Incorporation, these
bylaws or the resolutions of the Board designating the committee, a committee may create one (1) or more subcommittees, each subcommittee to consist of one (1) or more members of the committee, and delegate to a subcommittee any or all of the
powers and authority of the committee.
OFFICERS
The officers of the Corporation shall include a Chief Executive
Officer, a President and a Secretary. The Corporation may also have, at the discretion of the Board, a Chairperson of the Board, a Vice Chairperson of the Board, a Chief Financial Officer, a Chief Operating Officer, a Treasurer, one (1) or more
Vice Presidents, one (1) or more Assistant Vice Presidents, one (1) or more Assistant Treasurers, one (1) or more Assistant Secretaries, and any such other officers as may be appointed in accordance with the provisions of these bylaws. Any
number of offices may be held by the same person. No officer need be a stockholder or director of the Corporation.
Section 5.2
Appointment of
Officers.
The Board shall appoint the officers of the Corporation, except such
officers as may be appointed in accordance with the provisions of Section 5.3.
Section 5.3
Subordinate
Officers.
The Board may appoint, or empower the Chief Executive Officer or, in
the absence of a Chief Executive Officer, the President, to appoint, such other officers and agents as the business of the Corporation may require. Each of such officers and agents shall hold office for such period, have such authority, and
perform such duties as are provided in these bylaws or as the Board may from time to time determine.
Section 5.4
Removal and
Resignation of Officers.
Subject to the rights, if any, of an officer under any contract of
employment, any officer may be removed, either with or without cause, by the Board or, except in the case of an officer chosen by the Board, by any officer upon whom such power of removal may be conferred by the Board.
Any officer may resign at any time by giving written notice to the
Corporation. Any resignation shall take effect at the date of the receipt of that notice or at any later time specified in that notice. Unless otherwise specified in the notice of resignation, the acceptance of the resignation shall not be
necessary to make it effective. Any resignation is without prejudice to the rights, if any, of the Corporation under any contract to which the officer is a party.
Section 5.5
Vacancies in
Offices.
Any vacancy occurring in any office of the Corporation shall be
filled by the Board or as provided in Section 5.2.
Section 5.6
Representation of
Shares of Other Corporations.
The Chairperson of the Board, the Chief Executive Officer, or the
President of this Corporation, or any other person authorized by the Board, the Chief Executive Officer or the President, is authorized to vote, represent and exercise on behalf of this Corporation all rights incident to any and all shares or
voting securities of any other corporation or other person standing in the name of this Corporation. The authority granted herein may be exercised either by such person directly or by any other person authorized to do so by proxy or power of
attorney duly executed by such person having the authority.
TABLE OF CONTENTS
Section 5.7
Authority and
Duties of Officers.
All officers of the Corporation shall respectively have such
authority and perform such duties in the management of the business of the Corporation as may be provided herein or designated from time to time by the Board and, to the extent not so provided, as generally pertain to their respective offices,
subject to the control of the Board.
Section 5.8
Compensation.
The compensation of the officers of the Corporation for their
services as such shall be fixed from time to time by or at the direction of the Board. An officer of the Corporation shall not be prevented from receiving compensation by reason of the fact that he or she is also a director of the Corporation.
RECORDS
A stock ledger consisting of one or more records in which the names
of all of the Corporation’s stockholders of record, the address and number of shares registered in the name of each such stockholder, and all issuances and transfers of stock of the corporation are recorded in accordance with Section 224 of the
DGCL shall be administered by or on behalf of the Corporation. Any records administered by or on behalf of the Corporation in the regular course of its business, including its stock ledger, books of account, and minute books, may be kept on, or
by means of, or be in the form of, any information storage device, or method, or one or more electronic networks or databases (including one or more distributed electronic networks or databases), provided that
the records so kept can be converted into clearly legible paper form within a reasonable time and, with respect to the stock ledger, that the records so kept (i) can be used to prepare the list of stockholders specified in Sections 219 and 220
of the DGCL, (ii) record the information specified in Sections 156, 159, 217(a) and 218 of the DGCL, and (iii) record transfers of stock as governed by Article 8 of the Uniform Commercial Code as adopted in the State of Delaware.
GENERAL MATTERS
Section 7.1
Execution of
Corporate Contracts and Instruments.
The Board, except as otherwise provided in these bylaws, may
authorize any officer or officers, or agent or agents, to enter into any contract or execute any instrument in the name of and on behalf of the Corporation; such authority may be general or confined to specific instances.
Section 7.2
Stock
Certificates.
The shares of the Corporation shall be represented by certificates or
shall be uncertificated. Certificates for the shares of stock, if any, shall be in such form as is consistent with the Certificate of Incorporation and applicable law. Every holder of stock represented by a certificate shall be entitled to have
a certificate signed by, or in the name of the Corporation by, any two officers authorized to sign stock certificates representing the number of shares registered in certificate form. The Chairperson or Vice Chairperson of the Board, the Chief
Executive Officer, the President, Vice President, the Treasurer, any Assistant Treasurer, the Secretary or any Assistant Secretary of the Corporation shall be specifically authorized to sign stock certificates. Any or all of the signatures on
the certificate may be a facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate has ceased to be such officer, transfer agent or registrar before such
certificate is issued, it may be issued by the Corporation with the same effect as if he or she were such officer, transfer agent or registrar at the date of issue.
The Corporation may issue the whole or any part of its shares as
partly paid and subject to call for the remainder of the consideration to be paid therefor. Upon the face or back of each stock certificate issued to represent any such partly paid shares, or upon the books and records of the Corporation in the
case of uncertificated partly paid shares, the total amount of the consideration to be paid therefor and the amount paid thereon shall be stated. Upon the declaration of any dividend on fully paid shares, the Corporation shall declare a
dividend upon partly paid shares of the same class, but only upon the basis of the percentage of the consideration actually paid thereon.
TABLE OF CONTENTS
Section 7.3
Special
Designation of Certificates.
If the Corporation is authorized to issue more than one class of
stock or more than one series of any class, then the powers, the designations, the preferences and the relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or
restrictions of such preferences and/or rights shall be set forth in full or summarized on the face or on the back of the certificate that the Corporation shall issue to represent such class or series of stock (or, in the case of uncertificated
shares, set forth in a notice provided pursuant to Section 151 of the DGCL); provided, however, that except as otherwise provided in Section 202 of the DGCL, in lieu of the foregoing requirements, there
may be set forth on the face of back of the certificate that the Corporation shall issue to represent such class or series of stock (or, in the case of any uncertificated shares, included in the aforementioned notice) a statement that the
Corporation will furnish without charge to each stockholder who so requests the powers, the designations, the preferences and the relative, participating, optional or other special rights of each class of stock or series thereof and the
qualifications, limitations or restrictions of such preferences and/or rights.
Section 7.4
Lost
Certificates.
Except as provided in this Section 7.4, no new certificates
for shares shall be issued to replace a previously issued certificate unless the latter is surrendered to the Corporation and canceled at the same time. The Corporation may issue a new certificate of stock or uncertificated shares in the place
of any certificate theretofore issued by it, alleged to have been lost, stolen or destroyed, and the Corporation may require the owner of the lost, stolen or destroyed certificate, or such owner’s legal representative, to give the Corporation a
bond sufficient to indemnify it against any claim that may be made against it on account of the alleged loss, theft or destruction of any such certificate or the issuance of such new certificate or uncertificated shares.
Section 7.5
Shares Without
Certificates.
The Corporation may adopt a system of issuance, recordation and
transfer of its shares of stock by electronic or other means not involving the issuance of certificates, provided the use of such system by the Corporation is permitted in accordance with applicable law.
Section 7.6
Construction;
Definitions.
Unless the context requires otherwise, the general provisions, rules
of construction and definitions in the DGCL shall govern the construction of these bylaws. Without limiting the generality of this provision, the singular number includes the plural and the plural number includes the singular.
The Board, subject to any restrictions contained in either (i) the
DGCL or (ii) the Certificate of Incorporation, may declare and pay dividends upon the shares of its capital stock. Dividends may be paid in cash, in property or in shares of the Corporation’s capital stock.
The Board may set apart out of any of the funds of the Corporation
available for dividends a reserve or reserves for any proper purpose and may abolish any such reserve. Such purposes shall include but not be limited to equalizing dividends, repairing or maintaining any property of the Corporation, and meeting
contingencies.
The fiscal year of the Corporation shall be fixed by resolution of
the Board and may be changed by the Board.
The Corporation may adopt a corporate seal, which shall be adopted
and which may be altered by the Board. The Corporation may use the corporate seal by causing it or a facsimile thereof to be impressed or affixed or in any other manner reproduced.
Section 7.10
Transfer of
Stock.
Shares of the stock of the Corporation shall be transferable in the
manner prescribed by law and in these bylaws. Shares of stock of the Corporation shall be transferred on the books of the Corporation only by the
TABLE OF CONTENTS
holder of record thereof or by such holder’s attorney duly authorized in writing,
upon surrender to the Corporation of the certificate or certificates representing such shares endorsed by the appropriate person or persons (or by delivery of duly executed instructions with respect to uncertificated shares), with such evidence
of the authenticity of such endorsement or execution, transfer, authorization and other matters as the Corporation may reasonably require, and accompanied by all necessary stock transfer stamps. No transfer of stock shall be valid as against
the Corporation for any purpose until it shall have been entered in the stock records of the Corporation by an entry showing the names of the persons from and to whom it was transferred.
Section 7.11
Stock Transfer
Agreements.
The Corporation shall have power to enter into and perform any
agreement with any number of stockholders of any one or more classes or series of stock of the Corporation to restrict the transfer of shares of stock of the Corporation of any one or more classes owned by such stockholders in any manner not
prohibited by the DGCL.
Section 7.12
Registered
Stockholders.
The Corporation:
(i) shall be entitled to recognize the exclusive right of a person
registered on its books as the owner of shares to receive dividends and to vote as such owner; and
(ii) shall not be bound to recognize any equitable or other claim to
or interest in such share or shares on the part of another person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of the State of Delaware.
Section 7.13
Waiver of
Notice.
Whenever notice is required to be given under any provision of the
DGCL, the Certificate of Incorporation or these bylaws, a written waiver, signed by the person entitled to notice, or a waiver by electronic transmission by the person entitled to notice, whether before or after the time of the event for which
notice is to be given, shall be deemed equivalent to notice. Attendance of a person at a meeting shall constitute a waiver of notice of such meeting, except when the person attends a meeting for the express purpose of objecting at the beginning
of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the stockholders need be specified in any
written waiver of notice or any waiver by electronic transmission unless so required by the Certificate of Incorporation or these bylaws.
NOTICE
Section 8.1
Delivery of
Notice; Notice by Electronic Transmission.
Without limiting the manner by which notice otherwise may be given
effectively to stockholders, any notice to stockholders given by the Corporation under any provisions of the DGCL, the Certificate of Incorporation, or these bylaws may be given in writing directed to the stockholder’s mailing address (or by
electronic transmission directed to the stockholder’s electronic mail address, as applicable) as it appears on the records of the Corporation and shall be given (1) if mailed, when the notice is deposited in the U.S. mail, postage prepaid,
(2) if delivered by courier service, the earlier of when the notice is received or left at such stockholder’s address or (3) if given by electronic mail, when directed to such stockholder’s electronic mail address unless the stockholder has
notified the Corporation in writing or by electronic transmission of an objection to receiving notice by electronic mail. A notice by electronic mail must include a prominent legend that the communication is an important notice regarding the
Corporation.
Without limiting the manner by which notice otherwise may be given
effectively to stockholders, any notice to stockholders given by the Corporation under any provision of the DGCL, the Certificate of Incorporation or these bylaws shall be effective if given by a form of electronic transmission consented to by
the stockholder to whom the notice is given. Any such consent shall be revocable by the stockholder by written notice or electronic transmission to the Corporation. Notwithstanding the provisions of this paragraph, the Corporation may give a
notice by electronic mail in accordance with the first paragraph of this Section 8.1 without obtaining the consent required by this paragraph.
TABLE OF CONTENTS
Any notice given pursuant to the preceding paragraph shall be
deemed given:
(i) if by facsimile telecommunication, when directed to a number at
which the stockholder has consented to receive notice;
(ii) if by a posting on an electronic network together with separate
notice to the stockholder of such specific posting, upon the later of (A) such posting and (B) the giving of such separate notice; and
(iii) if by any other form of electronic transmission, when
directed to the stockholder.
Notwithstanding the foregoing, a notice may not be given by an
electronic transmission from and after the time that (1) the Corporation is unable to deliver by such electronic transmission two (2) consecutive notices given by the Corporation and (2) such inability becomes known to the Secretary or an
Assistant Secretary of the Corporation or to the transfer agent, or other person responsible for the giving of notice; provided, however, that the inadvertent failure to discover such inability shall
not invalidate any meeting or other action.
An affidavit of the Secretary or an Assistant Secretary of the
Corporation or of the transfer agent or other agent of the Corporation that the notice has been given shall, in the absence of fraud, be prima facie evidence of the facts stated therein.
INDEMNIFICATION
Section 9.1
Indemnification
of Directors and Officers.
The Corporation shall indemnify and hold harmless, to the fullest
extent permitted by the DGCL or any other applicable law, as it presently exists or may hereafter be amended, any person who was or is made or is threatened to be made a party or is otherwise involved in any action, suit or proceeding, whether
civil, criminal, administrative or investigative (a “Proceeding”) by reason of the fact that he or she, or a person for whom he or she is the legal representative, is or was a director or officer of the Corporation or, while serving as a
director or officer of the Corporation, is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation or of a partnership, joint venture, trust, other enterprise or non-profit entity,
including service with respect to employee benefit plans (hereinafter, an “indemnitee”), whether the basis of such proceeding is alleged action in an official capacity as director, officer, employee, or agent, or in any other capacity
while serving as director, officer, employee or agent, against all liability and loss suffered and expenses (including attorneys’ fees, judgments, fines ERISA excise taxes or penalties and amounts paid in settlement) reasonably incurred by such
indemnitee in connection with any such Proceeding; provided that such indemnitee acted in good faith and in a manner such indemnitee reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe such indemnitee’s conduct was unlawful. Notwithstanding the preceding sentence, except as otherwise provided in Section 9.4, the Corporation shall be required to
indemnify a person in connection with a Proceeding initiated by such indemnitee only if the Proceeding was authorized in the specific case by the Board.
Section 9.2
Indemnification
of Others.
The Corporation shall have the power to indemnify and hold harmless,
to the fullest extent permitted by the DGCL or any other applicable law, as it presently exists or may hereafter be amended, any employee or agent of the Corporation who was or is made or is threatened to be made a party or is otherwise
involved in any Proceeding by reason of the fact that he or she, or a person for whom he or she is the legal representative, is or was an employee or agent of the Corporation or is or was serving at the request of the Corporation as a director,
officer, employee or agent of another corporation or of a partnership, joint venture, trust, enterprise or nonprofit entity, including service with respect to employee benefit plans, against all liability and loss suffered and expenses
reasonably incurred by such person in connection with any such Proceeding.
Section 9.3
Prepayment of
Expenses.
In addition to the obligation to indemnify conferred in Section
9.1, the Corporation shall to the fullest extent not prohibited by the DGCL or any other applicable law pay the expenses (including attorneys’ fees) incurred by any indemnitee, and may pay the expenses incurred by any employee or agent of
the Corporation, in defending
TABLE OF CONTENTS
any Proceeding in advance of its final disposition; provided, however, that such payment of expenses in advance of the final disposition of the Proceeding shall be made only upon receipt of an undertaking by or on behalf of the person to repay all amounts advanced if it should
be ultimately determined that the person is not entitled to be indemnified under this Article IX or otherwise.
Section 9.4
Determination;
Claim.
If a claim for indemnification (following the final disposition of
such Proceeding) under this Article IX is not paid in full within sixty (60) days, or a claim for advancement of expenses under this Article IX is not paid in full within thirty (30) days, after a written claim therefor has
been received by the Corporation the indemnitee may thereafter (but not before) file suit to recover the unpaid amount of such claim and, if successful in whole or in part, shall be entitled to be paid the expense of prosecuting such claim to
the fullest extent permitted by law. In any such action the Corporation shall have the burden of proving that the claimant was not entitled to the requested indemnification or payment of expenses under applicable law.
Section 9.5
Non-Exclusivity
of Rights.
The rights conferred on any person by this Article IX shall
not be exclusive of any other rights which such person may have or hereafter acquire under any statute, provision of the Certificate of Incorporation, these bylaws, agreement, vote of stockholders or disinterested directors or otherwise.
The Corporation shall purchase and maintain insurance on behalf of
any person who is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust
enterprise or non-profit entity against any liability asserted against him or her and incurred by him or her in any such capacity, or arising out of his or her status as such, whether or not the Corporation would have the power to indemnify him
or her against such liability under the provisions of the DGCL.
Section 9.7
Other
Indemnification.
The Corporation’s obligation, if any, to indemnify or advance
expenses to any person who was or is serving at its request as a director, officer, employee or agent of another corporation, partnership, joint venture, trust, enterprise or non-profit entity shall be reduced by any amount such person may
collect as indemnification or advancement of expenses from such other corporation, partnership, joint venture, trust, enterprise or nonprofit enterprise.
Section 9.8
Continuation of
Indemnification.
The rights to indemnification and to prepayment of expenses provided
by, or granted pursuant to, this Article IX shall continue notwithstanding that the person has ceased to be a director or officer of the Corporation and shall inure to the benefit of the estate, heirs, executors, administrators, legatees and
distributees of such person.
Section 9.9
Amendment or
Repeal; Interpretation.
The provisions of this Article IX shall constitute a contract between
the Corporation, on the one hand, and, on the other hand, each individual who serves or has served as a director or officer of the Corporation (whether before or after the adoption of these bylaws), in consideration of such person’s performance
of such services, and pursuant to this Article IX the Corporation intends to be legally bound to each such current or former director or officer of the Corporation. With respect to current and former directors and officers of the Corporation,
the rights conferred under this Article IX are present contractual rights and such rights are fully vested, and shall be deemed to have vested fully, immediately upon adoption of theses bylaws. With respect to any directors or officers of the
Corporation who commence service following adoption of these bylaws, the rights conferred under this provision shall be present contractual rights and such rights shall fully vest, and be deemed to have vested fully, immediately upon such
director or officer commencing service as a director or officer of the Corporation. Any repeal or modification of the foregoing provisions of this Article IX shall not adversely affect any right or protection (i) hereunder of any person in
respect of any act or omission occurring prior to the time of such repeal or modification or (ii) under any agreement providing for indemnification or advancement of expenses to an officer or director of the Corporation in effect prior to the
time of such repeal or modification.
Any reference to an officer of the Corporation in this Article IX
shall be deemed to refer exclusively to the Chief Executive Officer, the President and the Secretary of the Corporation, or other officer of the Corporation
TABLE OF CONTENTS
appointed by (x) the Board pursuant to Article V or (y) an officer to whom the Board
has delegated the power to appoint officers pursuant to Article V, and any reference to an officer of any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise shall be deemed to refer exclusively to an
officer appointed by the board of directors (or equivalent governing body) of such other entity pursuant to the certificate of incorporation and bylaws (or equivalent organizational documents) of such other corporation, partnership, joint
venture, trust, employee benefit plan or other enterprise. The fact that any person who is or was an employee of the Corporation or an employee of any other corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise has been given or has used the title of “Vice President” or any other title that could be construed to suggest or imply that such person is or may be an officer of the Corporation or of such other corporation, partnership, joint
venture, trust, employee benefit plan or other enterprise shall not result in such person being constituted as, or being deemed to be, an officer of the Corporation or of such other corporation, partnership, joint venture, trust, employee
benefit plan or other enterprise for purposes of this Article IX.
AMENDMENTS
The Board is expressly empowered to adopt, amend or repeal the bylaws
of the Corporation. The stockholders also shall have power to adopt, amend or repeal the bylaws of the Corporation; provided, however, that such action by stockholders shall require, in addition to any
other vote required by the Certificate of Incorporation or applicable law, the affirmative vote of the holders of at least two-thirds of the voting power of all the then-outstanding shares of voting stock of the Corporation with the power to
vote generally in an election of directors, voting together as a single class.
DEFINITIONS
As used in these bylaws, unless the context otherwise requires, the
following terms shall have the following meanings:
An “electronic transmission” means any form of communication,
not directly involving the physical transmission of paper, including the use of, or participation in, one or more electronic networks or databases (including one or more distributed electronic networks or databases), that creates a record that
may be retained, retrieved and reviewed by a recipient thereof, and that may be directly reproduced in paper form by such a recipient through an automated process.
An “electronic mail” means an electronic transmission directed
to a unique electronic mail address (which electronic mail shall be deemed to include any files attached thereto and any information hyperlinked to a website if such electronic mail includes the contact information of an officer or agent of the
Corporation who is available to assist with accessing such files and information).
An “electronic mail address” means a destination, commonly
expressed as a string of characters, consisting of a unique user name or mailbox (commonly referred to as the “local part” of the address) and a reference to an internet domain (commonly referred to as the “domain part” of the address), whether
or not displayed, to which electronic mail can be sent or delivered.
The term “person” means any individual, general partnership,
limited partnership, limited liability company, corporation, trust, business trust, joint stock company, joint venture, unincorporated association, cooperative or association or any other legal entity or organization of whatever nature, and
shall include any successor (by merger or otherwise) of such entity.
TABLE OF CONTENTS
FORM OF AMENDED AND RESTATED
REGISTRATION RIGHTS AGREEMENT
THIS AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT (this “Agreement”),
dated as of , 20 , is made and entered into by and among , a Delaware corporation (the “Company”) (formerly known as RMG Acquisition Corp. III, a Cayman Islands exempted company prior to its domestication as a Delaware
corporation), RMG Sponsor III LLC, a Delaware limited liability company (the “Sponsor”), and certain former stockholders of H2B2 Electrolysis Technologies, Inc., a Delaware corporation (“Legacy H2B2”),
set forth on Schedule I hereto (such stockholders, the “H2B2 Holders” and, collectively with the Sponsor and any person or entity who hereafter becomes a party to this Agreement pursuant to Section
5.2 or Section 5.10 of this Agreement, the “Holders” and each, a “Holder”).
WHEREAS, the
Company and the Sponsor are party to that certain Registration Rights Agreement, dated as of February 4, 2021 (the “Original RRA”);
WHEREAS, the
Company has entered into that certain Agreement and Plan of Merger, dated as of May 9, 2023, (as it may be amended or supplemented from time to time, the “Merger Agreement”), by and between the Company and Legacy H2B2, pursuant to
which, among other things, on the date hereof, Legacy H2B2 merged with and into the Company, the separate corporate existence of Legacy H2B2 ceased and the Company continued as the Surviving Corporation (as defined in the Merger Agreement),
on the terms and conditions set forth therein;
WHEREAS, prior
to the date hereof and subject to the conditions of the Merger Agreement, the Company migrated to and domesticated as a Delaware corporation in accordance with Section 388 of the Delaware General Corporation Law, as amended, and the Cayman
Islands Companies Act (as amended);
WHEREAS, on the
date hereof, pursuant to the Merger Agreement, the H2B2 Holders received shares of class A common stock, par value $0.0001 per share (the “Common Stock”), of the Company;
WHEREAS,
pursuant to Section 5.5 of the Original RRA, the provisions, covenants and conditions set forth therein may be amended or modified upon the written consent of the Company and the Holders (as defined in the Original RRA) of at least a majority
in interest of the Registrable Securities (as defined in the Original RRA) at the time in question, and the Sponsor is a holder of at least a majority in interest of the Registrable Securities as of the date hereof; and
WHEREAS, the
Company and the Sponsor desire to amend and restate the Original RRA in its entirety and enter into this Agreement, pursuant to which the Company shall grant the Holders certain registration rights with respect to certain securities of the
Company, as set forth in this Agreement.
NOW, THEREFORE,
in consideration of the representations, covenants and agreements contained herein, and certain other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally
bound, hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1 Definitions.
The terms defined in this Article I shall, for all purposes of this Agreement, have the respective meanings set forth below:
“Additional Holder” shall have the meaning given in Section
5.10.
“Additional Holder Common Stock” shall have the meaning given
in Section 5.10.
“Adverse Disclosure” shall mean any public disclosure of
material non-public information, which disclosure, in the good faith judgment of the Chief Executive Officer of the Company, the Chief Financial Officer of the Company or the Board, after consultation with counsel to the Company, (i) would be
required to be made in any Registration Statement or Prospectus in order for the applicable Registration Statement or Prospectus not to contain any untrue statement of a material fact or omit to state a material fact necessary to make the
statements contained therein (in the case of any prospectus and any preliminary prospectus, in the light of the circumstances under which they were made) not misleading, (ii) would not be required to be made at such
TABLE OF CONTENTS
time if the Registration Statement were not being filed, declared effective or used,
as the case may be, and (iii) the Company has a bona fide business purpose for not making such information public.
“Agreement” shall have the meaning given in the Preamble
hereto.
“Board” shall mean the Board of Directors of the Company.
“Closing” shall have the meaning given in the Merger
Agreement.
“Closing Date” shall have the meaning given in the Merger
Agreement.
“Commission” shall mean the United States Securities and
Exchange Commission.
“Common Stock” shall have the meaning given in the Recitals
hereto.
“Company” shall have the meaning given in the Preamble hereto
and includes the Company’s successors by recapitalization, merger, consolidation, spin-off, reorganization or similar transaction.
“Competing Registration Rights” shall have the meaning given
in Section 5.7.
“Demanding Holder” shall have the meaning given in Section
2.1.4.
“Exchange Act” shall mean the Securities Exchange Act of 1934,
as it may be amended from time to time.
“Form S-1 Shelf” shall have the meaning given in Section
2.1.1.
“Form S-3 Shelf” shall have the meaning given in Section
2.1.1.
“H2B2 Holders” shall have the meaning given in the Preamble
hereto.
“H2B2 Majority Holders” shall mean the H2B2 Holders holding in
the aggregate a majority of the Registrable Securities then held by all of the H2B2 Holders.
“Holder Information” shall have the meaning given in Section
4.1.2.
“Holders” shall have the meaning given in the Preamble hereto,
for so long as such person or entity holds any Registrable Securities.
“Joinder” shall have the meaning given in Section 5.10.
“Legacy H2B2” shall have the meaning given in the Preamble
hereto.
“Maximum Number of Securities” shall have the meaning given in
Section 2.1.5.
“Merger Agreement” shall have the meaning given in the
Recitals hereto.
“Minimum Takedown Threshold” shall have the meaning given in Section
2.1.4.
“Misstatement” shall mean an untrue statement of a material
fact or an omission to state a material fact required to be stated in a Registration Statement or Prospectus or necessary to make the statements in a Registration Statement or Prospectus (in the case of a Prospectus, in the light of the
circumstances under which they were made) not misleading.
“Original RRA” shall have the meaning given in the Recitals
hereto.
“Permitted Transferees” shall mean any person or entity to
whom a Holder of Registrable Securities is permitted to transfer such Registrable Securities, subject to and in accordance with any applicable agreement between such Holder and/or their respective Permitted Transferees and the Company and any
transferee thereafter, including pursuant to Section 5.2 of this Agreement and including, for the avoidance of doubt, pursuant to the Lock-Up Agreements (as defined in the Merger Agreement).
“Piggyback Registration” shall have the meaning given in Section
2.2.1.
“Prospectus” shall mean the prospectus included in any
Registration Statement, as supplemented by any and all prospectus supplements and as amended by any and all post-effective amendments and including all material incorporated by reference in such prospectus.
“Registrable Security” shall mean (a) any outstanding shares
of Common Stock or any other equity security (including warrants to purchase shares of Common Stock and shares of Common Stock issued or issuable upon
TABLE OF CONTENTS
the exercise of any other equity security) of the Company held by a Holder
immediately following the Closing (including any securities distributable pursuant to the Merger Agreement); (b) any Additional Holder Common Stock; and (c) any other equity security of the Company issued or issuable with respect to any
securities referenced in clauses (a) and (b) above by way of a stock dividend or stock split or in connection with a recapitalization, merger, consolidation, spin-off, reorganization or similar transaction; provided,
however, that, as to any particular Registrable Security, such securities shall cease to be Registrable Securities upon the earliest to occur of: (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 by the applicable Holder; (B)(i) such securities shall have been otherwise
transferred, (ii) new certificates for such securities not bearing (or book-entry positions not subject to) a legend restricting further transfer shall have been delivered by the Company and (iii) subsequent public distribution of such
securities shall not require registration under the Securities Act; (C) such securities shall have ceased to be outstanding; (D) such securities may be sold without registration pursuant to Rule 144 or any successor rule promulgated under the
Securities Act (but with no limitation as to volume or manner of sale); and (E) such securities have been sold to, or through, a broker, dealer or underwriter in a public distribution or other public securities transaction.
“Registration” shall mean a registration, including any
related Shelf Takedown, effected by preparing and filing a registration statement, Prospectus or similar document in compliance with the requirements of the Securities Act, and the applicable rules and regulations promulgated thereunder, and
such registration statement becoming effective.
“Registration Expenses” shall mean the documented,
out-of-pocket expenses of a Registration, including, without limitation, the following:
(A) all registration and filing fees (including fees with respect to
filings required to be made with the Financial Industry Regulatory Authority, Inc.) and any national securities exchange on which the Common Stock is then listed;
(B) fees and expenses of compliance with securities or blue sky laws
(including reasonable fees and disbursements of outside counsel for the Underwriters in connection with blue sky qualifications of Registrable Securities);
(C) printing, messenger, telephone and delivery expenses incurred
specifically in connection with such Registration;
(D) reasonable fees and disbursements of counsel for the Company
incurred specifically in connection with such Registration;
(E) reasonable fees and disbursements of all independent registered
public accountants of the Company incurred specifically in connection with such Registration; and
(F) in an Underwritten Offering, reasonable fees and expenses of one
(1) legal counsel selected by the majority in interest of the Demanding Holders.
“Registration Statement” shall mean any registration statement
that covers Registrable Securities pursuant to the provisions of this Agreement, including the Prospectus included in such registration statement, amendments (including post-effective amendments) and supplements to such registration statement,
and all exhibits to and all material incorporated by reference in such registration statement.
“Requesting Holders” shall have the meaning given in Section
2.1.5.
“Securities Act” shall mean the Securities Act of 1933, as
amended from time to time.
“Shelf” shall mean the Form S-1 Shelf, the Form S-3 Shelf or
any Subsequent Shelf Registration Statement, as the case may be.
“Shelf Registration” shall mean a registration of securities
pursuant to a registration statement filed with the Commission in accordance with and pursuant to Rule 415 promulgated under the Securities Act (or any successor rule then in effect).
TABLE OF CONTENTS
“Shelf Takedown” shall mean an Underwritten Shelf Takedown
or any proposed transfer or sale using a Registration Statement, including a Piggyback Registration.
“Sponsor” shall have the meaning given in the Preamble hereto.
“Subsequent Shelf Registration Statement” shall have the
meaning given in Section 2.1.2.
“Transfer” shall mean the (a) sale or assignment of, offer to
sell, contract or agreement to sell, hypothecate, pledge, grant of any option to purchase or otherwise dispose of or agreement to dispose of, directly or indirectly, or establishment or increase of a put equivalent position or liquidation with
respect to or decrease of a call equivalent position within the meaning of Section 16 of the Exchange Act with respect to, any security, (b) entry into any swap or other arrangement that transfers to another, in whole or in part, any of the
economic consequences of ownership of any security, whether any such transaction is to be settled by delivery of such securities, in cash or otherwise, or (c) public announcement of any intention to effect any transaction specified in clause
(a) or (b).
“Underwriter” shall mean a securities dealer who purchases any
Registrable Securities as principal in an Underwritten Offering and not as part of such dealer’s market-making activities.
“Underwritten Offering” shall mean a Registration in which
securities of the Company are sold to an Underwriter in a firm commitment underwriting for distribution to the public.
“Underwritten Shelf Takedown” shall have the meaning given in
Section 2.1.4.
“Withdrawal Notice” shall have the meaning given in Section
2.1.6.
ARTICLE II
REGISTRATIONS AND OFFERINGS
2.1 Shelf Registration.
2.1.1 Filing.
Within thirty (30) calendar days following the Closing Date, the Company shall submit to or file with the Commission a Registration Statement for a Shelf Registration on Form S-1 (the “Form S-1 Shelf”) or a Registration Statement for a
Shelf Registration on Form S-3 (the “Form S-3 Shelf”), if the Company is then eligible to use a Form S-3 Shelf, in each case, covering the resale of all the Registrable Securities (determined as of two (2) business days prior
to such submission or filing) on a delayed or continuous basis and shall use its commercially reasonable efforts to have such Shelf declared effective as soon as practicable after the filing thereof, but no later than the earlier of (a) the
one hundred twentieth (120th) calendar day following the filing date thereof if the Commission notifies the Company that it will “review” the Registration Statement and (b) the tenth (10th) business day after the date the Company is notified
(orally or in writing, whichever is earlier) by the Commission that the Registration Statement will not be “reviewed” or will not be subject to further review. Such Shelf shall provide for the resale of the Registrable Securities included
therein pursuant to any method or combination of methods legally available to, and requested by, any Holder named therein. The Company shall maintain a Shelf in accordance with the terms hereof, and shall prepare and file with the Commission
such amendments, including post-effective amendments, and supplements as may be necessary to keep a Shelf continuously effective, available for use to permit the Holders named therein to sell their Registrable Securities included therein and
in compliance with the provisions of the Securities Act until such time as there are no longer any Registrable Securities. In the event the Company files a Form S-1 Shelf, the Company shall use its commercially reasonable efforts to convert
the Form S-1 Shelf (and any Subsequent Shelf Registration Statement) to a Form S-3 Shelf as soon as practicable after the Company is eligible to use Form S-3. The Company’s obligation under this Section 2.1.1, shall, for the avoidance
of doubt, be subject to Section 3.4.
2.1.2 Subsequent Shelf Registration. If any Shelf ceases to be effective under the Securities Act for any reason at any time while Registrable Securities are still outstanding, the Company shall, subject to Section 3.4, use its commercially
reasonable efforts to as promptly as is reasonably practicable cause such Shelf to again become effective under the Securities Act (including using its commercially reasonable efforts to obtain the prompt withdrawal of any order suspending
the effectiveness of such Shelf), and shall use its commercially reasonable efforts to as promptly as is reasonably practicable amend such Shelf in a manner reasonably expected to result in the withdrawal of any order suspending the
effectiveness of such Shelf or
TABLE OF CONTENTS
file an additional registration statement as a Shelf Registration (a “Subsequent
Shelf Registration Statement”) registering the resale of all Registrable Securities (determined as of two (2) business days prior to such filing), and pursuant to any method or combination of methods legally available to, and
requested by, any Holder named therein. If a Subsequent Shelf Registration Statement is filed, the Company shall use its commercially reasonable efforts to (i) cause such Subsequent Shelf Registration Statement to become effective under the
Securities Act as promptly as is reasonably practicable after the filing thereof (it being agreed that the Subsequent Shelf Registration Statement shall be an automatic shelf registration statement (as defined in Rule 405 promulgated under the
Securities Act) if the Company is a well-known seasoned issuer (as defined in Rule 405 promulgated under the Securities Act) at the most recent applicable eligibility determination date) and (ii) keep such Subsequent Shelf Registration
Statement continuously effective, available for use to permit the Holders named therein to sell their Registrable Securities included therein and in compliance with the provisions of the Securities Act until such time as there are no longer any
Registrable Securities. Any such Subsequent Shelf Registration Statement shall be on Form S-3 to the extent that the Company is eligible to use such form. Otherwise, such Subsequent Shelf Registration Statement shall be on another appropriate
form. The Company’s obligation under this Section 2.1.2, shall, for the avoidance of doubt, be subject to Section 3.4.
2.1.3 Additional Registrable Securities. Subject to Section 3.4, in the event that any Holder holds Registrable Securities that are not registered for resale on a delayed or continuous basis, the Company, upon written request of the Sponsor or
the H2B2 Majority Holders, shall promptly use its commercially reasonable efforts to cause the resale of such Registrable Securities to be covered by either, at the Company’s option, any then available Shelf (including by means of a
post-effective amendment) or by filing a Subsequent Shelf Registration Statement and cause the same to become effective as soon as practicable after such filing and such Shelf or Subsequent Shelf Registration Statement shall be subject to the
terms hereof; provided, however, that the Company shall only be required to cause such Registrable Securities to be so covered twice per
calendar year for each of the Sponsor and the H2B2 Majority Holders, respectively.
2.1.4 Requests for Underwritten Shelf Takedowns. Subject to Section 3.4, at any time and from time to time when an effective Shelf is on file with the Commission, the Sponsor or the H2B2 Majority Holders (the Sponsor or the H2B2 Majority Holders being
in such case, a “Demanding Holder”) may request to sell all or any portion of its Registrable Securities in an Underwritten Offering that is registered pursuant to the Shelf (each, an “Underwritten Shelf Takedown”); provided that the Company shall only be obligated to effect an Underwritten Shelf Takedown if such offering shall include Registrable Securities
proposed to be sold by the Demanding Holder, either individually or together with other Demanding Holders, with a total offering price reasonably expected to exceed, in the aggregate, $50 million (the “Minimum Takedown Threshold”). All
requests for Underwritten Shelf Takedowns shall be made by giving written notice to the Company, which shall specify the approximate number of Registrable Securities proposed to be sold in the Underwritten Shelf Takedown. The Company shall
have the right to select the Underwriters for such offering (which shall consist of one or more reputable nationally recognized investment banks), subject to the initial Demanding Holder’s prior approval (which shall not be unreasonably
withheld, conditioned or delayed). The Sponsor, on the one hand, and the H2B2 Majority Holders, on the other hand, may each demand not more than two (2) Underwritten Shelf Takedowns pursuant to this Section 2.1.4 in any twelve (12)
month period. Notwithstanding anything to the contrary in this Agreement, the Company may effect any Underwritten Offering pursuant to any then effective Registration Statement, including a Form S-3, that is then available for such offering.
2.1.5 Reduction of Underwritten Offering. If the managing Underwriter or Underwriters in an Underwritten Shelf Takedown, in good faith, advises the Company, the Demanding Holders and the Holders requesting piggy back rights pursuant to this Agreement
with respect to such Underwritten Shelf Takedown (the “Requesting Holders”) (if any) in writing that the dollar amount or number of Registrable Securities that the Demanding Holders and the Requesting Holders (if any) desire to sell,
taken together with all other shares of Common Stock or other equity securities that the Company desires to sell and all other shares of Common Stock or other equity securities, if any, that have been requested to be sold in such Underwritten
Offering pursuant to separate written contractual piggy-back registration rights held by any other stockholders, exceeds the maximum dollar amount or maximum number of equity securities that can be sold in the Underwritten Offering without
adversely affecting the proposed offering price, the timing, the distribution method, or the probability of success of such offering (such maximum dollar amount or
TABLE OF CONTENTS
maximum number of such securities, as applicable, the “Maximum Number of
Securities”), then the Company shall include in such Underwritten Offering, before including any shares of Common Stock or other equity securities proposed to be sold by Company or by other holders of Common Stock or other equity
securities, the Registrable Securities of the Demanding Holders and the Requesting Holders (if any) (pro rata (as nearly as practicable) based on the respective number of Registrable Securities that each Demanding Holder and Requesting Holder
(if any) has requested be included in such Underwritten Shelf Takedown and the aggregate number of Registrable Securities that the Demanding Holders and Requesting Holders have requested be included in such Underwritten Shelf Takedown) that can
be sold without exceeding the Maximum Number of Securities. To facilitate the allocation of Registrable Securities in accordance with the above provisions, the Company or the Underwriters may round the number of shares allocated to any Holder
to the nearest one hundred (100) Registrable Securities. The Company shall not be required to include any Registrable Securities in such Underwritten Shelf Takedown unless the Holders accept the terms of the underwriting as agreed upon between
the Company and its Underwriters.
2.1.6 Withdrawal. Prior to the filing of the applicable “red herring” prospectus or prospectus supplement used for marketing such Underwritten Shelf Takedown, a majority in interest of the Demanding Holders initiating an Underwritten Shelf Takedown
shall have the right to withdraw from such Underwritten Shelf Takedown for any or no reason whatsoever upon written notification (a “Withdrawal Notice”) to the Company and the Underwriter or Underwriters (if any) of their intention to
withdraw from such Underwritten Shelf Takedown; provided that the Sponsor or the H2B2 Majority Holders may elect to have the Company
continue an Underwritten Shelf Takedown if the Minimum Takedown Threshold would still be satisfied by the Registrable Securities proposed to be sold in the Underwritten Shelf Takedown by the Sponsor, the H2B2 Majority Holders or any of their
respective Permitted Transferees, as applicable. If withdrawn, a demand for an Underwritten Shelf Takedown shall constitute a demand for an Underwritten Shelf Takedown by the withdrawing Demanding Holder for purposes of Section 2.1.4,
unless such Demanding Holder reimburses the Company for all Registration Expenses with respect to such Underwritten Shelf Takedown (or, if there is more than one Demanding Holder, a pro rata portion of such Registration Expenses based on the
respective number of Registrable Securities that each Demanding Holder has requested be included in such Underwritten Shelf Takedown); provided that, if the Sponsor or the H2B2 Majority Holders elect(s) to continue an Underwritten Shelf Takedown pursuant to the proviso in the immediately preceding sentence, such Underwritten Shelf Takedown shall instead count as an
Underwritten Shelf Takedown demanded by the Sponsor or the H2B2 Majority Holders, as applicable, for purposes of Section 2.1.4. Following the receipt of any Withdrawal Notice, the Company shall promptly forward such Withdrawal Notice
to any other Holders that had elected to participate in such Shelf Takedown. Notwithstanding anything to the contrary in this Agreement, the Company shall be responsible for the Registration Expenses incurred in connection with a Shelf
Takedown prior to its withdrawal under this Section 2.1.6, other than if a withdrawing Demanding Holder elects to pay such Registration Expenses pursuant to the second sentence of this Section 2.1.6.
2.2 Piggyback Registration.
2.2.1 Piggyback Rights. If the Company or any Holder proposes to conduct a registered offering of, or if the Company proposes to file a Registration Statement under the Securities Act with respect to the Registration of, equity securities, or securities
or other obligations exercisable or exchangeable for, or convertible into equity securities, for its own account or for the account of stockholders of the Company (or by the Company and by the stockholders of the Company, including, without
limitation, an Underwritten Shelf Takedown pursuant to Section 2.1), other than a Registration Statement (or any registered offering with respect thereto) (i) filed in connection with any employee stock option or other benefit plan,
(ii) pursuant to a Registration Statement on Form S-4 (or similar form that relates to a transaction subject to Rule 145 under the Securities Act or any successor rule thereto), (iii) for an offering of debt that is convertible into equity
securities of the Company, or (iv) for a dividend reinvestment plan, then the Company shall give written notice of such proposed offering to all of the Holders of Registrable Securities as soon as practicable but not less than ten (10)
calendar days before the anticipated filing date of such Registration Statement or, in the case of an Underwritten Offering pursuant to a Shelf Registration, the applicable “red herring” prospectus or prospectus supplement used for marketing
such offering, which notice shall (A) describe the amount and type of securities to be included in such offering, the intended method(s) of distribution, and the name of the proposed managing Underwriter or Underwriters, if any, in
TABLE OF CONTENTS
such offering, and (B) offer to all of the Holders of Registrable Securities the
opportunity to include in such registered offering such number of Registrable Securities as such Holders may request in writing within five (5) calendar days after receipt of such written notice (such registered offering, a “Piggyback Registration”).
Subject to Section 2.2.2, the Company shall, in good faith, cause such Registrable Securities to be included in such Piggyback Registration and, if applicable, shall use its commercially reasonable efforts to cause the managing
Underwriter or Underwriters of such Piggyback Registration to permit the Registrable Securities requested by the Holders pursuant to this Section 2.2.1 to be included therein on the same terms and conditions as any similar securities of
the Company included in such registered offering and to permit the sale or other disposition of such Registrable Securities in accordance with the intended method(s) of distribution thereof. The inclusion of any Holder’s Registrable Securities
in a Piggyback Registration shall be subject to such Holder agreement to enter into an underwriting agreement in customary form with the Underwriter(s) selected for such Underwritten Offering. For purposes of this Section 2.2.1, the
filing by the Company of an automatic shelf registration statement for offerings pursuant to Rule 415(a) that omits information with respect to any specific offering pursuant to Rule 430B shall not trigger any notification or participation
rights hereunder until such time as the Company amends or supplements such Registration Statement to include information with respect to a specific offering of securities (and such amendment or supplement shall trigger the notice and
participation rights provided for in this Section 2.2.1).
2.2.2 Reduction of Piggyback Registration. If the managing Underwriter or Underwriters in an Underwritten Offering that is to be a Piggyback Registration, in good faith, advises the Company and the Holders of Registrable Securities participating in the
Piggyback Registration in writing that the dollar amount or number of shares of Common Stock or other equity securities that the Company desires to sell, taken together with (i) the shares of Common Stock or other equity securities, if any,
as to which Registration or a registered offering has been demanded pursuant to separate written contractual arrangements with persons or entities other than the Holders of Registrable Securities hereunder, (ii) the Registrable Securities as
to which registration has been requested pursuant to Section 2.2 hereof, and (iii) the shares of Common Stock or other equity securities, if any, as to which Registration or a registered offering has been requested pursuant to
separate written contractual piggy-back registration rights of persons or entities other than the Holders of Registrable Securities hereunder, exceeds the Maximum Number of Securities, then:
(a) if the
Registration is undertaken for the Company’s account, the Company shall include in any such Registration (A) first, the shares of Common Stock or other equity securities that the Company desires to sell, which can be sold without exceeding
the Maximum Number of Securities; (B) second, to the extent that the Maximum Number of Securities has not been reached under the foregoing clause (A), the Registrable Securities of Holders exercising their rights to register their Registrable
Securities pursuant to Section 2.2.1, pro rata (as nearly as practicable), based on the respective number of Registrable Securities that each Holder has requested be included in such Underwritten Offering and the aggregate number of
Registrable Securities that the Holders have requested to be included in such Underwritten Offering, which can be sold without exceeding the Maximum Number of Securities; and (C) third, to the extent that the Maximum Number of Securities has
not been reached under the foregoing clauses (A) and (B), the shares of Common Stock or other equity securities, if any, as to which Registration or a registered offering has been requested pursuant to separate written contractual piggy-back
registration rights of persons or entities other than the Holders of Registrable Securities hereunder, which can be sold without exceeding the Maximum Number of Securities;
(b) if the
Registration is pursuant to a demand by persons or entities other than the Holders of Registrable Securities, then the Company shall include in any such Registration (A) first, the shares of Common Stock or other equity securities, if any, of
such requesting persons or entities, other than the Holders of Registrable Securities, which can be sold without exceeding the Maximum Number of Securities; (B) second, to the extent that the Maximum Number of Securities has not been reached
under the foregoing clause (A), the Registrable Securities of Holders exercising their rights to register their Registrable Securities pursuant to Section 2.2.1, pro rata (as nearly as practicable), based on the respective number of
Registrable Securities that each Holder has requested be included in such Underwritten Offering and the aggregate number of Registrable Securities that the Holders have requested to be included in such Underwritten Offering, which can be sold
without exceeding the
TABLE OF CONTENTS
Maximum Number of Securities; (C) third, to the extent that the Maximum Number of
Securities has not been reached under the foregoing clauses (A) and (B), the shares of Common Stock or other equity securities that the Company desires to sell, which can be sold without exceeding the Maximum Number of Securities; and (D)
fourth, to the extent that the Maximum Number of Securities has not been reached under the foregoing clauses (A), (B) and (C), the shares of Common Stock or other equity securities, if any, as to which Registration or a registered offering has
been requested pursuant to separate written contractual piggy-back registration rights of persons or entities other than the Holders of Registrable Securities hereunder, which can be sold without exceeding the Maximum Number of Securities; and
(c) if the
Registration and Underwritten Shelf Takedown is pursuant to a request by Holder(s) of Registrable Securities pursuant to Section 2.1 hereof, then the Company shall include in any such Registration securities in the priority set forth
in Section 2.1.5.
2.2.3 Piggyback Registration Withdrawal. Any Holder of Registrable Securities (other than a Demanding Holder, whose right to withdraw from an Underwritten Shelf Takedown, and related obligations, shall be governed by Section 2.1.6) shall have
the right to withdraw from a Piggyback Registration for any or no reason whatsoever upon written notification to the Company and the Underwriter or Underwriters (if any) of his, her or its intention to withdraw from such Piggyback
Registration prior to the effectiveness of the Registration Statement filed with the Commission with respect to such Piggyback Registration or, in the case of a Piggyback Registration pursuant to a Shelf Registration, the filing of the
applicable “red herring” prospectus or prospectus supplement with respect to such Piggyback Registration used for marketing such transaction. The Company (whether on its own good faith determination or as the result of a request for
withdrawal by persons or entities pursuant to separate written contractual obligations) may withdraw a Registration Statement filed with the Commission in connection with a Piggyback Registration at any time prior to the effectiveness of such
Registration Statement. Notwithstanding anything to the contrary in this Agreement (other than Section 2.1.6), the Company shall be responsible for the Registration Expenses incurred in connection with the Piggyback Registration prior
to its withdrawal under this Section 2.2.3.
2.2.4 Unlimited Piggyback Registration Rights. For purposes of clarity, subject to Section 2.1.6, any Piggyback Registration effected pursuant to Section 2.2 hereof shall not be counted as a demand for an Underwritten Shelf Takedown under Section
2.1.4 hereof.
2.3 Market Stand-off. In connection with any Underwritten Offering of equity securities of the Company, if requested by the managing Underwriters, each Holder that is an executive officer or director of the Company or a Holder of more than five percent
(5%) of the outstanding Common Stock (and for which it is customary for such a Holder to agree to a lock-up) agrees that it shall not Transfer any shares of Common Stock or other equity securities of the Company (other than those included in
such offering pursuant to this Agreement), without the prior written consent of the Company, during the ninety (90)-day period (or such shorter time agreed to by the managing Underwriters) beginning on the date of pricing of such offering,
except as expressly permitted by such lock-up agreement or in the event the managing Underwriters otherwise agree by written consent. Each such Holder agrees to execute a customary lock-up agreement in favor of the Underwriters to such effect
(in each case on substantially the same terms and conditions as all such Holders).
ARTICLE III
COMPANY PROCEDURES
3.1 General Procedures. In connection with any Shelf and/or Shelf Takedown, the Company shall use its commercially reasonable efforts to effect such Registration to permit the sale of such Registrable Securities in accordance with the intended plan of
distribution thereof, and pursuant thereto the Company shall, as expeditiously as possible:
3.1.1 prepare
and file with the Commission as soon as practicable a Registration Statement with respect to such Registrable Securities and use its commercially reasonable efforts to cause such Registration Statement to become effective and remain effective
until all Registrable Securities have ceased to be Registrable Securities;
3.1.2 prepare
and file with the Commission such amendments and post-effective amendments to the Registration Statement, and such supplements to the Prospectus, as may be reasonably requested by any
TABLE OF CONTENTS
Holder that holds at least five percent (5%) of the Registrable Securities
registered on such Registration Statement or any Underwriter of Registrable Securities or as may be required by the rules, regulations or instructions applicable to the registration form used by the Company or by the Securities Act or rules and
regulations thereunder to keep the Registration Statement effective until all Registrable Securities covered by such Registration Statement are sold in accordance with the intended plan of distribution set forth in such Registration Statement
or supplement to the Prospectus;
3.1.3 prior to
filing a Registration Statement or Prospectus, or any amendment or supplement thereto, furnish without charge to the Underwriters, if any, and the Holders of Registrable Securities included in such Registration, and such Holders’ legal
counsel, copies of such Registration Statement as proposed to be filed, each amendment and supplement to such Registration Statement (in each case including all exhibits thereto and documents incorporated by reference therein), the Prospectus
included in such Registration Statement (including each preliminary Prospectus), and such other documents as the Underwriters and the Holders of Registrable Securities included in such Registration or the legal counsel for any such Holders
may request in order to facilitate the disposition of the Registrable Securities owned by such Holders;
3.1.4 prior to
any public offering of Registrable Securities, use its commercially reasonable efforts to (i) register or qualify the Registrable Securities covered by the Registration Statement under such securities or “blue sky” laws of such jurisdictions
in the United States as the Holders of Registrable Securities included in such Registration Statement (in light of their intended plan of distribution) may request (or provide evidence satisfactory to such Holders that the Registrable
Securities are exempt from such registration or qualification) and (ii) take such action necessary to cause such Registrable Securities covered by the Registration Statement to be registered with or approved by such other governmental
authorities as may be necessary by virtue of the business and operations of the Company and do any and all other acts and things that may be necessary or advisable to enable the Holders of Registrable Securities included in such Registration
Statement to consummate the disposition of such Registrable Securities in such jurisdictions; provided, however, that the Company shall
not be required to qualify generally to do business in any jurisdiction where it would not otherwise be required to qualify or take any action to which it would be subject to general service of process or taxation in any such jurisdiction
where it is not then otherwise so subject;
3.1.5 cause
all such Registrable Securities to be listed on each national securities exchange on which similar securities issued by the Company are then listed;
3.1.6 provide
a transfer agent or warrant agent, as applicable, and registrar for all such Registrable Securities no later than the effective date of such Registration Statement;
3.1.7 advise
each seller of such Registrable Securities, promptly after it shall receive notice or obtain knowledge thereof, of the issuance of any stop order by the Commission suspending the effectiveness of such Registration Statement or the initiation
or threatening of any proceeding for such purpose and promptly use its commercially reasonable efforts to prevent the issuance of any stop order or to obtain its withdrawal if such stop order should be issued;
3.1.8 prior to
the filing of any Registration Statement or Prospectus or any amendment or supplement to such Registration Statement or Prospectus (or such shorter period of time as may be (a) necessary in order to comply with the Securities Act, the
Exchange Act, and the rules and regulations promulgated under the Securities Act or Exchange Act, as applicable or (b) advisable in order to reduce the number of days that sales are suspended pursuant to Section 3.4), furnish a copy
thereof to each seller of such Registrable Securities or its counsel (excluding any exhibits thereto and any filing made under the Exchange Act that is to be incorporated by reference therein);
3.1.9 notify
the Holders at any time when a Prospectus relating to such Registration Statement is required to be delivered under the Securities Act, of the happening of any event as a result of which the Prospectus included in such Registration Statement,
as then in effect, includes a Misstatement, and then to correct such Misstatement as set forth in Section 3.4;
3.1.10 in the
event of an Underwritten Offering or sale by a broker, placement agent or sales agent pursuant to such Registration, permit a representative of the Holders, the Underwriters or other financial institutions facilitating such Underwritten
Offering or other sale pursuant to such Registration, if any, and any attorney, consultant or accountant retained by such Holders or Underwriter to participate, at each such
TABLE OF CONTENTS
person’s or entity’s own expense, in the preparation of the Registration Statement,
and cause the Company’s officers, directors and employees to supply all information reasonably requested by any such representative, Underwriter, financial institution, attorney, consultant or accountant in connection with the Registration; provided, however, that such representatives, Underwriters or financial institutions agree to confidentiality arrangements in form and substance reasonably satisfactory to the Company, prior to the release
or disclosure of any such information;
3.1.11 use
commercially reasonable efforts to obtain a “comfort” letter (including a bring-down letter dated as of the date the Registrable Securities are delivered for sale pursuant to such Registration) from the Company’s independent registered public
accountants in the event of an Underwritten Offering or sale by a broker, placement agent or sales agent pursuant to such Registration (subject to such broker, placement agent or sales agent providing such certification or representation
reasonably requested by the Company’s independent registered public accountants and the Company’s counsel) in customary form and covering such matters of the type customarily covered by “comfort” letters as the managing Underwriter may
reasonably request, and reasonably satisfactory to a majority in interest of the participating Holders;
3.1.12 in the
event of an Underwritten Offering or sale by a broker, placement agent or sales agent pursuant to such Registration, on the date the Registrable Securities are delivered for sale pursuant to such Registration, obtain an opinion, dated such
date, of counsel representing the Company for the purposes of such Registration, addressed to the participating Holders, the broker, placement agents or sales agent, if any and the Underwriters, if any, covering such legal matters with
respect to the Registration in respect of which such opinion is being given as the participating Holders, broker, placement agent, sales agent or Underwriter may reasonably request and as are customarily included in such opinions, provided
such participating Holders provide such information to such counsel as is customarily required for purpose of such opinions;
3.1.13 in the
event of any Underwritten Offering or sale by a broker, placement agent or sales agent pursuant to such Registration, enter into and perform its obligations under an underwriting or other purchase or sales agreement, in usual and customary
form, with the managing Underwriter or the broker, placement agent or sales agent of such offering or sale;
3.1.14 make
available to its security holders, as soon as reasonably practicable, an earnings statement covering the period of at least twelve (12) months beginning with the first day of the Company’s first full calendar quarter after the effective date
of the Registration Statement which satisfies the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder (or any successor rule then in effect);
3.1.15 if the
Registration involves the Registration of Registrable Securities involving gross proceeds in excess of $15 million, use its reasonable best efforts to make available senior executives of the Company to participate in customary “road show”
presentations that may be reasonably requested by the Underwriter in such Underwritten Offering; and
3.1.16 otherwise,
in good faith, cooperate reasonably with, and take such customary actions as may reasonably be requested by the participating Holders, consistent with the terms of this Agreement, in connection with such Registration.
Notwithstanding the foregoing, the Company shall not be required to
provide any documents or information to an Underwriter or broker, sales agent or placement agent if such Underwriter or broker, sales agent or placement agent has not then been named with respect to the applicable Underwritten Offering or other
offering involving a registration as an Underwriter or broker, sales agent or placement agent, as applicable.
3.2 Registration Expenses. The Registration Expenses of all Registrations shall be borne by the Company. It is acknowledged by the Holders that the Holders selling Registrable Securities in any offering shall bear all incremental selling expenses relating to
the sale of such Registrable Securities, such as Underwriters’ commissions and discounts, brokerage fees, Underwriter marketing costs and, other than as set forth in the definition of “Registration Expenses,” all fees and expenses of
any legal counsel representing the Holders.
3.3 Requirements for Participation in Registration
Statement in Offerings. The Holders of Registrable Securities shall provide such information as may reasonably be requested by the Company, or the managing Underwriter or placement agent or sales agent, if
any, in connection with the preparation of any Registration Statement or Prospectus, including amendments and supplements thereto, in order to effect the registration of any Registrable Securities under the Securities Act pursuant to ARTICLE
II and in connection with the Company’s
TABLE OF CONTENTS
obligation to comply with federal and applicable state securities laws.
Notwithstanding anything in this Agreement to the contrary, if any Holder does not provide the Company with its requested Holder Information, the Company may exclude such Holder’s Registrable Securities from the applicable Registration
Statement or Prospectus if the Company determines, based on the advice of counsel, that such information is necessary to effect the registration and such Holder continues thereafter to withhold such information. No person or entity may
participate in any Underwritten Offering or other offering for equity securities of the Company pursuant to a Registration initiated by the Company hereunder unless such person or entity (i) agrees to sell such person’s or entity’s securities
on the basis provided in any underwriting, sales, distribution or placement arrangements approved by the Company and (ii) completes and executes all customary questionnaires, powers of attorney, indemnities, lock-up agreements, underwriting or
other agreements and other customary documents as may be reasonably required under the terms of such underwriting, sales, distribution or placement arrangements. The exclusion of a Holder’s Registrable Securities as a result of this Section
3.3 shall not affect the registration of the other Registrable Securities to be included in such Registration.
3.4 Suspension of Sales; Adverse Disclosure;
Restrictions on Registration Rights.
3.4.1 Upon
receipt of written notice from the Company that a Registration Statement or Prospectus contains a Misstatement, each of the Holders shall forthwith discontinue disposition of Registrable Securities until it has received copies of a
supplemented or amended Prospectus correcting the Misstatement (it being understood that the Company hereby covenants to prepare and file such supplement or amendment as soon as practicable after the time of such notice), or until it is
advised in writing by the Company that the use of the Prospectus may be resumed.
3.4.2 Subject
to Section 3.4.4, if the filing, initial effectiveness or continued use of a Registration Statement in respect of any Registration at any time would (a) require the Company to make an Adverse Disclosure, (b) require the inclusion in
such Registration Statement of financial statements that are unavailable to the Company for reasons beyond the Company’s control, or (c) in the good faith judgment of the majority of the Board, be seriously detrimental to the Company and the
majority of the Board concludes as a result that it is essential to defer such filing, initial effectiveness or continued use at such time, the Company may, upon giving prompt written notice of such action to the Holders (which notice shall
not specify the nature of the event giving rise to such delay or suspension), delay the filing or initial effectiveness of, or suspend use of, such Registration Statement for the shortest period of time determined in good faith by the Company
to be necessary for such purpose. In the event the Company exercises its rights under this Section 3.4.2, the Holders agree to suspend, immediately upon their receipt of the notice referred to above, their use of the Prospectus
relating to any Registration in connection with any sale or offer to sell Registrable Securities until such Holder receives written notice from the Company that such sales or offers of Registrable Securities may be resumed, and in each case
maintain the confidentiality of such notice and its contents.
3.4.3 Subject
to Section 3.4.4, (a) during the period starting with the date sixty (60) calendar days prior to the Company’s good faith estimate of the date of the filing of, and ending on a date one hundred and eighty (180) calendar days after the
effective date of, a Company-initiated Registration, and provided that the Company continues to actively employ, in good faith, all reasonable efforts to maintain the effectiveness of the applicable Shelf Registration Statement, or (b) if,
pursuant to Section 2.1.4, Holders have requested an Underwritten Shelf Takedown and the Company and Holders are unable to obtain the commitment of underwriters to firmly underwrite such offering, the Company may, upon giving prompt
written notice of such action to the Holders, delay any other registered offering pursuant to Section 2.1.4.
3.4.4 The
right to delay or suspend any filing, initial effectiveness or continued use of a Registration Statement pursuant to Section 3.4.2 or a registered offering pursuant to Section 3.4.3 shall be exercised by the Company, in the
aggregate, for not more than ninety (90) consecutive calendar days or more than one hundred and twenty (120) total calendar days in each case, during any twelve (12)-month period.
3.5 Reporting Obligations. As long as any Holder shall own Registrable Securities, the Company, at all times while it shall be a reporting company under the Exchange Act, covenants to file timely (or obtain extensions in respect thereof and file within the
applicable grace period) all reports required to be filed by the Company after the date hereof pursuant to Sections 13(a) or 15(d) of the Exchange Act and to promptly furnish the Holders upon written request with true and complete copies of
all such filings; provided that any documents
TABLE OF CONTENTS
publicly filed or furnished with the Commission pursuant to the Electronic Data
Gathering, Analysis and Retrieval System shall be deemed to have been furnished or delivered to the Holders pursuant to this Section 3.5. The Company further covenants that it shall use reasonable efforts to take such further action as
any Holder may reasonably request, all to the extent required from time to time to enable such Holder to sell Registrable Securities held by such Holder without registration under the Securities Act within the limitation of the exemptions
provided by Rule 144 promulgated under the Securities Act (or any successor rule then in effect). Upon the request of any Holder, the Company shall deliver to such Holder a written certification of a duly authorized officer as to whether it has
complied with such requirements.
ARTICLE IV
INDEMNIFICATION AND CONTRIBUTION
4.1 Indemnification.
4.1.1 The
Company agrees to indemnify, to the extent permitted by law, each Holder of Registrable Securities, its officers, directors and agents and each person or entity who controls such Holder (within the meaning of the Securities Act), against all
losses, claims, damages, liabilities and reasonable out-of-pocket expenses (including, without limitation, reasonable outside attorneys’ fees) resulting from any untrue or alleged untrue statement of material fact contained in or incorporated
by reference in any Registration Statement, Prospectus or preliminary Prospectus or any amendment thereof or supplement thereto filed pursuant to this Agreement or any omission or alleged omission of a material fact required to be stated
therein or necessary to make the statements therein, not misleading, except insofar as the same are caused by or contained in any information or affidavit so furnished in writing to the Company by such Holder expressly for use therein. The
Company shall indemnify the Underwriters, their officers and directors and each person or entity who controls such Underwriters (within the meaning of the Securities Act) to the same extent as provided in the foregoing with respect to the
indemnification of the Holder.
4.1.2 In
connection with any Registration Statement filed pursuant to this Agreement in which a Holder of Registrable Securities is participating, such Holder shall furnish (or cause to be furnished) to the Company in writing such information and
affidavits as the Company reasonably requests for use in connection with any such Registration Statement or Prospectus (the “Holder Information”) and, to the extent permitted by law, shall indemnify the Company, its directors, officers
and agents and each person or entity who controls the Company (within the meaning of the Securities Act) against all losses, claims, damages, liabilities and reasonable out-of-pocket expenses (including, without limitation, reasonable outside
attorneys’ fees) resulting from any untrue or alleged untrue statement of material fact contained or incorporated by reference in any Registration Statement, Prospectus or preliminary Prospectus or any amendment thereof or supplement thereto
or any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein, not misleading, but only to the extent that such untrue statement is contained in (or not contained in, in the
case of an omission) any information or affidavit so furnished in writing by or on behalf of such Holder expressly for use therein; provided, however, that the obligation to indemnify shall be several, not joint and several, among such Holders of Registrable Securities, and the liability of each such Holder of Registrable Securities shall be in proportion to
and limited to the net proceeds received by such Holder from the sale of Registrable Securities pursuant to such Registration Statement. The Holders of Registrable Securities shall indemnify the Underwriters, their officers, directors and
each person or entity who controls such Underwriters (within the meaning of the Securities Act) to the same extent as provided in the foregoing with respect to indemnification of the Company.
4.1.3 Any
person or entity entitled to indemnification herein shall (i) give prompt written notice to the indemnifying party of any claim with respect to which it seeks indemnification (provided that the failure to give prompt notice shall not impair
any person’s or entity’s right to indemnification hereunder to the extent such failure has not materially prejudiced the indemnifying party) and (ii) unless in such indemnified party’s reasonable judgment a conflict of interest between such
indemnified and indemnifying parties may exist with respect to such claim, permit such indemnifying party to assume the defense of such claim with counsel reasonably satisfactory to the indemnified party. If such defense is assumed, the
indemnifying party shall not be subject to any liability for any settlement made by the indemnified party without its consent (but such consent shall not be unreasonably withheld). An indemnifying party who is not entitled to, or
TABLE OF CONTENTS
elects not to, assume the defense of a claim shall not be obligated to pay the fees
and expenses of more than one counsel for all parties indemnified by such indemnifying party with respect to such claim, unless in the reasonable judgment of any indemnified party a conflict of interest may exist between such indemnified party
and any other of such indemnified parties with respect to such claim. No indemnifying party shall, without the consent of the indemnified party, consent to the entry of any judgment or enter into any settlement which cannot be settled in all
respects by the payment of money (and such money is so paid by the indemnifying party pursuant to the terms of such settlement) or which settlement includes a statement or admission of fault and culpability on the part of such indemnified party
or which settlement does not include as an unconditional term thereof the giving by the claimant or plaintiff to such indemnified party of a release from all liability in respect to such claim or litigation.
4.1.4 The
indemnification provided for under this Agreement shall remain in full force and effect regardless of any investigation made by or on behalf of the indemnified party or any officer, director or controlling person or entity of such indemnified
party and shall survive the transfer of securities.
4.1.5 If the
indemnification provided under Section 4.1 from the indemnifying party is unavailable or insufficient to hold harmless an indemnified party in respect of any losses, claims, damages, liabilities and out-of-pocket expenses referred to
herein, then the indemnifying party, in lieu of indemnifying the indemnified party, shall contribute to the amount paid or payable by the indemnified party as a result of such losses, claims, damages, liabilities and out-of-pocket expenses in
such proportion as is appropriate to reflect the relative fault of the indemnifying party and the indemnified party, as well as any other relevant equitable considerations. The relative fault of the indemnifying party and indemnified party
shall be determined by reference to, among other things, whether any action in question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact, was made by (or not made
by, in the case of an omission), or relates to information supplied by (or not supplied by in the case of an omission), such indemnifying party or indemnified party, and the indemnifying party’s and indemnified party’s relative intent,
knowledge, access to information and opportunity to correct or prevent such action; provided, however, that the liability of any Holder
under this Section 4.1.5 shall be limited to the amount of the net proceeds received by such Holder in such offering giving rise to such liability. The amount paid or payable by a party as a result of the losses or other liabilities
referred to above shall be deemed to include, subject to the limitations set forth in Sections 4.1.1, 4.1.2 and 4.1.3 above, any legal or other fees, charges or out-of-pocket expenses reasonably incurred by such party
in connection with any investigation or proceeding. The parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 4.1.5 were determined by pro rata allocation or by any other method of
allocation, which does not take account of the equitable considerations referred to in this Section 4.1.5. No person or entity guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be
entitled to contribution pursuant to this Section 4.1.5 from any person or entity who was not guilty of such fraudulent misrepresentation.
ARTICLE V
MISCELLANEOUS
5.1 Notices.
Any notice or communication under this Agreement must be in writing and given by (i) deposit in the United States mail, addressed to the party to be notified, postage prepaid and registered or certified with return receipt requested,
(ii) delivery in person or by courier service providing evidence of delivery, or (iii) transmission by hand delivery, electronic mail or facsimile. Each notice or communication that is mailed, delivered, or transmitted in the manner described
above shall be deemed sufficiently given, served, sent, and received, in the case of mailed notices, on the third business day following the date on which it is mailed and, in the case of notices delivered by courier service, hand delivery,
electronic mail or facsimile, at such time as it is delivered to the addressee (with the delivery receipt or the affidavit of messenger) or at such time as delivery is refused by the addressee upon presentation. Any notice or communication
under this Agreement must be addressed, if to the Company, to: H2B2 Electrolysis Technologies, Inc., 300 Delaware Ave Ste 210-A, Wilmington, DE 19801, Attention: Anselmo Andrade and Mario Barragan, Email: anselmo.andrade@h2b2.es and
mario.barragan@h2b2.es, and, if to any Holder, at such Holder’s address, electronic mail address or facsimile number as set forth in the Company’s books and records. Any party may change its address for notice at any time and from time to
time by written notice to the other parties hereto, and such change of address shall become effective thirty (30) calendar days after delivery of such notice as provided in this Section 5.1.
TABLE OF CONTENTS
5.2 Assignment; No Third-Party Beneficiaries.
5.2.1 This
Agreement and the rights, duties and obligations of the Company hereunder may not be assigned or delegated by the Company in whole or in part.
5.2.2 Subject
to Section 5.2.4 and Section 5.2.5, this Agreement and the rights, duties and obligations of a Holder hereunder may be assigned in whole or in part to such Holder’s Permitted Transferees; provided that, with respect to the H2B2 Holders and the Sponsor, the rights hereunder that are personal to such Holders may not be assigned or delegated in whole or in
part, except that (x) each of the H2B2 Holders shall be permitted to transfer its rights hereunder as the H2B2 Holders to (i) one (1) or more affiliates or any direct or indirect partners, members or equity holders of such H2B2 Holder (it
being understood that no such transfer shall reduce any rights of such H2B2 Holder or such transferees), (ii) any third-party pledgee in a bona fide transaction as collateral to secure obligations pursuant to lending or other arrangements
between such H2B2 Holder (or its affiliates), on the one hand, and such third party (or its affiliates), on the other hand, or any similar arrangement relating to a financing arrangement for the benefit of such H2B2 Holder and/or its
affiliates, and (iii) pursuant to a bona fide loan or pledge or as a grant or maintenance of a bona fide lien, security interests, pledge or other similar encumbrance of any such securities owned by such H2B2 Holder and/or its affiliates to a
nationally or internationally recognized financial institution in connection with a loan to, or similar financing arrangement with, such H2B2 Holder and/or its affiliates, and (y) the Sponsor shall be permitted to transfer its rights
hereunder as the Sponsor to (i) one (1) or more affiliates or any direct or indirect partners, members or equity holders of the Sponsor (it being understood that no such transfer shall reduce any rights of the Sponsor or such transferees),
(ii) any third-party pledgee in a bona fide transaction as collateral to secure obligations pursuant to lending or other arrangements between the Sponsor (or its affiliates), on the one hand, and such third party (or its affiliates), on the
other hand, or any similar arrangement relating to a financing arrangement for the benefit of the Sponsor and/or its affiliates, and (iii) pursuant to a bona fide loan or pledge or as a grant or maintenance of a bona fide lien, security
interests, pledge or other similar encumbrance of any such securities owned by the Sponsor and/or its affiliates to a nationally or internationally recognized financial institution in connection with a loan to, or similar financing
arrangement with, the Sponsor and/or its affiliates.
5.2.3 This
Agreement and the provisions hereof shall be binding upon and shall inure to the benefit of each of the parties and its successors and the permitted assigns of the Holders, which shall include Permitted Transferees.
5.2.4 This
Agreement shall not confer any rights or benefits on any persons or entities that are not parties hereto, other than as expressly set forth in this Agreement and Section 5.2.
5.2.5 No
assignment by any party hereto of such party’s rights, duties and obligations hereunder shall be binding upon or obligate the Company unless it is permitted under Section 5.2.2 and until the Company shall have received (i) written
notice of such assignment as provided in Section 5.1 hereof and (ii) the written agreement of the assignee, in a form reasonably satisfactory to the Company, to be bound by the terms and provisions of this Agreement (which may be
accomplished by an addendum or certificate of joinder to this Agreement). Any transfer or assignment made other than as provided in this Section 5.2 shall be null and void, ab initio.
5.3 Counterparts.
This Agreement may be executed in two (2) or more counterparts (any of which may be delivered by electronic transmission), each of which shall constitute an original, and all of which taken together shall constitute one and the same
instrument.
5.4 Governing Law; Venue. This Agreement, and all claims or causes of action based upon, arising out of, or related to this Agreement or the transactions contemplated hereby, shall be governed by, and construed in accordance with, the Laws of the State of
Delaware, without giving effect to principles or rules of conflict of Laws to the extent such principles or rules would require or permit the application of Laws of another jurisdiction.
5.5 TRIAL BY JURY. EACH PARTY HERETO ACKNOWLEDGES
AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY, UNCONDITIONALLY AND
VOLUNTARILY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN
TABLE OF CONTENTS
RESPECT OF ANY ACTION, SUIT OR PROCEEDING DIRECTLY OR INDIRECTLY
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (I) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE,
THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (II) EACH SUCH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (III) EACH SUCH PARTY MAKES THIS WAIVER VOLUNTARILY, AND
(IV) EACH SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 5.5.
5.6 Amendments and Modifications. Upon the written consent of (a) the Company and (b) the Holders of a majority of the total Registrable Securities, compliance with any of the provisions, covenants and conditions set forth in this Agreement may
be waived, or any of such provisions, covenants or conditions may be amended or modified; provided, however, that notwithstanding the
foregoing, any amendment hereto or waiver hereof shall also require the written consent of the Sponsor so long as the Sponsor and its affiliates hold, in the aggregate, at least five percent (5%) of the outstanding shares of Common Stock; provided, further, that notwithstanding the
foregoing, any amendment hereto or waiver hereof shall also require the written consent of each of the H2B2 Majority Holders so long as such Holder and its affiliates hold, in the aggregate, at least five percent (5%) of the outstanding
shares of Common Stock; and provided, further, that any amendment hereto or waiver hereof that adversely affects one Holder, solely in
its capacity as a holder of the shares of capital stock of the Company, in a manner that is materially different from the other Holders (in such capacity) shall require the consent of the Holder so affected. No course of dealing between any
Holder or the Company and any other party hereto or any failure or delay on the part of a Holder or the Company in exercising any rights or remedies under this Agreement shall operate as a waiver of any rights or remedies of any Holder or the
Company. No single or partial exercise of any rights or remedies under this Agreement by a party shall operate as a waiver or preclude the exercise of any other rights or remedies hereunder or thereunder by such party.
5.7 Other Registration Rights. Other than as provided in the Warrant Agreement, dated as of February 4, 2021, between the Company and Continental Stock Transfer & Trust Company, the Company represents and warrants that no person or
entity, other than a Holder of Registrable Securities, has any right to require the Company to register any securities of the Company for sale or to include such securities of the Company in any Registration Statement filed by the Company for
the sale of securities for its own account or for the account of any other person or entity. For so long as the Sponsor and its affiliates hold, in the aggregate, at least five percent (5%) of the outstanding shares of Common Stock, the
Company hereby agrees and covenants that it will not grant rights to register any Common Stock (or securities convertible into or exchangeable for Common Stock) pursuant to the Securities Act that are more favorable, pari passu or senior to
those granted to the Holders hereunder (such rights “Competing Registration Rights”) without the prior written consent of the Sponsor. Further, the Company represents and warrants that this Agreement supersedes any other registration
rights agreement or agreement with similar terms and conditions and in the event of a conflict between any such agreement or agreements and this Agreement, the terms of this Agreement shall prevail.
5.8 Term. This
Agreement shall terminate on the earlier of (a) the seventh (7th) anniversary of the date of this Agreement and (b) with respect to any Holder, on the date that such Holder no longer holds any Registrable Securities. The provisions
of Section 3.5 and Article IV shall survive any termination.
5.9 Holder Information. Each Holder agrees, if requested in writing, to represent to the Company the total number of Registrable Securities held by such Holder in order for the Company to make determinations hereunder.
5.10 Additional Holders; Joinder. In addition to persons or entities who may become Holders pursuant to Section 5.2 hereof, subject to the prior written consent of the Sponsor and the H2B2 Majority Holders (in each case, so long as such
Holder and its affiliates hold, in the aggregate, at least five percent (5%) of the outstanding shares of Common Stock), the Company may make any person or entity who has or acquires Common Stock or rights to acquire Common Stock after the
date hereof a party to this Agreement (each such person or entity, an “Additional Holder”) by obtaining an executed joinder to this Agreement from such Additional Holder in the form of Exhibit A attached hereto (a “Joinder”).
Such Joinder shall specify the rights and obligations of the applicable Additional Holder under this Agreement. Upon the execution and delivery and
TABLE OF CONTENTS
subject to the terms of a Joinder by such Additional Holder, the Common Stock then
owned, or underlying any rights then owned, by such Additional Holder (the “Additional Holder Common Stock”) shall be Registrable Securities to the extent provided herein and therein and such Additional Holder shall be a Holder under
this Agreement with respect to such Additional Holder Common Stock.
5.11 Severability. If any provision of this Agreement is held invalid or unenforceable by any court of competent jurisdiction, the other provisions of this Agreement will remain in full force and effect. The parties hereto further agree that if any
provision contained herein is, to any extent, held invalid or unenforceable in any respect under the Laws governing this Agreement, they shall take any actions necessary to render the remaining provisions of this Agreement valid and
enforceable to the fullest extent permitted by Law and, to the extent necessary, shall amend or otherwise modify this Agreement to replace any provision contained herein that is held invalid or unenforceable with a valid and enforceable
provision giving effect to the intent of the parties hereto.
5.12 Entire Agreement; Restatement. This Agreement, the Merger Agreement and the other Ancillary Agreements (as defined in the Merger Agreement) constitute the entire agreement between the parties hereto relating to the transactions contemplated
hereby and supersede any other agreements, whether written or oral, that may have been made or entered into by or between the parties hereto or any of their respective Subsidiaries (as defined in the Merger Agreement) relating to the
transactions contemplated hereby. No representations, warranties, covenants, understandings, agreements, oral or otherwise, relating to the transactions contemplated hereby exist between such parties except as expressly set forth in this
Agreement, the Merger Agreement and the other Ancillary Agreements. Upon the Closing, the Original RRA shall no longer be of any force or effect.
[remainder of page intentionally left blank]
TABLE OF CONTENTS
IN WITNESS WHEREOF, the undersigned have caused this Agreement to
be executed as of the date first written above.
|
|
|
COMPANY:
|
|
|
|
, a Delaware corporation
|
|
|
|
By:
|
|
|
|
|
|
|
Name:
|
|
|
|
|
|
|
Title:
|
|
|
|
[Signature Page to Amended and Restated Registration Rights Agreement]
TABLE OF CONTENTS
IN WITNESS WHEREOF, the undersigned have caused this Agreement to
be executed as of the date first written above.
|
|
|
HOLDERS:
|
|
|
|
|
|
|
|
|
|
|
RMG SPONSOR III LLC, a
Delaware limited liability company
|
|
|
|
|
|
|
|
|
|
|
By:
|
|
|
|
|
|
|
Name:
|
|
|
|
|
|
|
Title:
|
|
|
|
[Signature Page to Amended and Restated Registration Rights Agreement]
TABLE OF CONTENTS
IN WITNESS WHEREOF, the undersigned have caused this Agreement to
be executed as of the date first written above.
[Signature Page to Amended and Restated Registration Rights Agreement]
TABLE OF CONTENTS
Exhibit A
REGISTRATION RIGHTS AGREEMENT JOINDER
The undersigned is executing and delivering this joinder (this “Joinder”)
pursuant to the Amended and Restated Registration Rights Agreement, dated as of (as the same may hereafter be amended, the “Registration Rights Agreement”), by and among , a Delaware corporation (the “Company”),
and the other persons or entities named as parties therein. Capitalized terms used but not otherwise defined herein shall have the meanings provided in the Registration Rights Agreement.
By executing and delivering this Joinder to the Company, and upon
acceptance hereof by the Company upon the execution of a counterpart hereof, the undersigned hereby agrees to become a party to, to be bound by, and to comply with the Registration Rights Agreement as a Holder of Registrable Securities in the
same manner as if the undersigned were an original signatory to the Registration Rights Agreement, and the undersigned’s shares of Common Stock shall be included as Registrable Securities under the Registration Rights Agreement to the extent
provided therein; provided, however, that the undersigned and its permitted assigns (if any) shall not have any rights as Holders, and the undersigned’s (and its transferees’) shares of Common Stock
shall not be included as Registrable Securities, for purposes of the Excluded Sections.
For purposes of this Joinder, “Excluded Sections” shall mean
[ ].
Accordingly, the undersigned has executed and delivered this Joinder
as of the day of , 20 .
|
|
|
|
|
|
|
Signature of Stockholder
|
|
|
|
|
|
|
|
Print Name of Stockholder
|
|
|
|
|
|
|
|
Its:
|
|
|
|
|
|
|
|
|
|
|
Address:
|
|
|
|
|
|
|
|
|
|
|
Agreed and Accepted as of
, 20
|
|
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
|
|
|
|
|
|
Name:
|
|
|
|
|
|
|
Its:
|
|
|
|
|
|
|
TABLE OF CONTENTS
Schedule I
|
H2B2 Holders
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TABLE OF CONTENTS
FORM OF LOCK-UP AGREEMENT
THIS LOCK-UP AGREEMENT (this “Agreement”),
dated as of is made and entered into by and among , a Delaware corporation (the “Company”) (formerly known as RMG Acquisition Corp. III, a Cayman Islands exempted company limited by shares prior to its domestication as
a Delaware corporation), and the Persons (as defined in the Merger Agreement (as defined below)) set forth on Schedule I hereto (such Persons, together with any other Person who hereafter becomes a party to this
Agreement pursuant to Section 2 or Section 8 of this Agreement, the “Securityholders” and each, a “Securityholder”).
WHEREAS,
the Company and H2B2 Electrolysis Technologies, Inc., a Delaware corporation (“H2B2”), entered into that certain Agreement and Plan of Merger (as amended or modified from time to time, the “Merger Agreement”;
capitalized terms used but not defined herein shall have the respective meanings ascribed to such terms in the Merger Agreement), dated as of , 2023, pursuant to which, among other things, on the date hereof,
H2B2 merged with and into the Company, with the Company continuing on as the Surviving Corporation, on the terms and conditions set forth therein (the “Merger”);
WHEREAS, upon
the Closing, each of the Securityholders will own equity interests in the Company; and
WHEREAS, in
connection with the Merger, the parties hereto wish to set forth herein certain understandings between such parties with respect to restrictions on transfer of equity interests in the Company.
NOW, THEREFORE,
the parties agree as follows:
1. Subject to the exceptions set forth herein, each Securityholder
agrees not to, without the prior written consent of the board of directors of the Company, (i) sell, offer to sell, contract or agree to sell, hypothecate, pledge, grant any option, right or warrant to purchase or otherwise transfer, dispose of
or agree to transfer or dispose of, directly or indirectly, or establish or increase a put equivalent position or liquidate or decrease a call equivalent position within the meaning of Section 16 of the Exchange Act, and the rules and
regulations of the SEC promulgated thereunder, [any shares of Surviving Corporation Common Stock held by it immediately after the Effective Time]1[80% of the shares of Surviving Corporation Common Stock held by it immediately after
the Effective Time]2, any shares of Surviving Corporation Common Stock issuable upon the exercise or settlement, as applicable, of Surviving Corporation Options held by it immediately after the Effective Time or any other securities
convertible into or exercisable or exchangeable for Surviving Corporation Common Stock held by it immediately after the Effective Time (collectively, the “Lock-Up Shares”), (ii) enter into any swap or other arrangement that transfers to
another, in whole or in part, any of the economic consequences of ownership of any of the Lock-Up Shares, whether any such transaction is to be settled by delivery of such securities, in cash or otherwise or (iii) publicly announce any
intention to effect or take any action in furtherance of any transaction specified in clause (i) or (ii) (the actions specified in clauses (i)-(iii), collectively, “Transfer”) until the date that is 180 days after the Closing Date (the “Lock-Up
Period”), subject to the early release provisions set forth in Section 4 below.
2. The restrictions set forth in Section 1 shall not apply
to:
(i)
|
in the case of an entity, Transfers (A) to another entity that is an affiliate (as defined in Rule 405 promulgated under the
Securities Act) of the undersigned, or to any investment fund or other entity controlling, controlled by, managing or managed by or under common control with the undersigned or affiliates of the undersigned or who shares a common
investment advisor with the undersigned or (B) as part of a distribution to members, partners, shareholders or equity holders of the undersigned;
|
(ii)
|
in the case of an individual, Transfers by gift to members of the individual’s immediate family (as defined below) or to a
trust, the beneficiary of which is a member of one of the individual’s immediate family, an affiliate of such person or to a charitable organization;
|
TABLE OF CONTENTS
(iii)
|
in the case of an individual, Transfers by virtue of laws of descent and distribution upon death of the individual;
|
(iv)
|
in the case of an individual, Transfers by operation of law or pursuant to a court order, such as a qualified domestic relations
order, divorce decree or separation agreement;
|
(v)
|
in the case of an individual, Transfers to a partnership, limited liability company or other entity of which the undersigned
and/or the immediate family (as defined below) of the undersigned are the legal and beneficial owner of all of the outstanding equity securities or similar interests;
|
(vi)
|
in the case of an entity that is a trust, Transfers to a trustor or beneficiary of the trust or to the estate of a beneficiary
of such trust;
|
(vii)
|
in the case of an entity, Transfers by virtue of the laws of the state of the entity’s organization and the entity’s
organizational documents upon dissolution of the entity;
|
(viii)
|
Transfers relating to Surviving Corporation Common Stock or other securities convertible into or exercisable or exchangeable for
Surviving Corporation Common Stock acquired in open market transactions after the Closing; provided that no such transaction is required to be, or is, publicly announced (whether on Form 4, Form
5 or otherwise, other than a required filing on Schedule 13F, 13G or 13G/A) during the Lock-Up Period;
|
(ix)
|
the exercise of stock options or the vesting of stock awards of Surviving Corporation Common Stock and any related transfer of
shares of Surviving Corporation Common Stock in connection therewith (x) deemed to occur upon the “cashless” or “net” exercise of such options or (y) for the purpose of paying the exercise price of such options or for paying taxes due
as a result of the exercise of such options, the vesting of such options or stock awards, or as a result of the vesting of such shares of Surviving Corporation Common Stock, it being understood that all shares of Surviving Corporation
Common Stock received upon such exercise, vesting or transfer will remain subject to the restrictions of this Agreement during the Lock-Up Period;
|
(x)
|
Transfers to the Company pursuant to any contractual arrangement in effect at the Effective Time that provides for the
repurchase by the Company or forfeiture of Surviving Corporation Common Stock or other securities convertible into or exercisable or exchangeable for Surviving Corporation Common Stock in connection with the termination of the
Securityholder’s service to the Company;
|
(xi)
|
the entry, by a Securityholder, at any time after the Effective Time, of any trading plan providing for the sale of shares of
Surviving Corporation Common Stock by a Securityholder, which trading plan meets the requirements of Rule 10b5-1(c) under the Exchange Act; provided, however,
that such plan does not provide for, or permit, the sale of any shares of Surviving Corporation Common Stock during the Lock-Up Period and no public announcement or filing is voluntarily made or required regarding such plan during the
Lock-Up Period;
|
(xii)
|
Transfers in the event of completion of a liquidation, merger, stock exchange, reorganization or other similar transaction that
results in all of the Company’s securityholders having the right to exchange their shares of Surviving Corporation Common Stock for cash, securities or other property;
|
(xiii)
|
Transfers to satisfy any U.S. federal, state, or local income tax obligations of a Securityholder (or its direct or indirect
owners) arising from a change in the Code, or the U.S. Treasury Regulations promulgated thereunder (the “Regulations”) after the date on which the Merger Agreement was executed by the parties thereto, and such change prevents the
Merger from qualifying as a “reorganization” pursuant to Section 368 of the Code (and the Merger does not qualify for similar tax-free treatment pursuant to any successor or other provision of the Code or Regulations taking into account
such changes), in each case solely and to the extent necessary to cover any tax liability as a direct result of the transaction;
|
(xiv)
|
Transfers to satisfy any Spanish tax obligations of a Securityholder (or its direct or indirect owners) arising from a change in
the Spanish tax laws and regulations after the date on which the Merger Agreement was executed by the parties thereto, and such change prevents the
|
TABLE OF CONTENTS
Merger from qualifying for the regime set forth under Title VII, Chapter VII of the
Spanish Law 27/209014, Corporate Income Tax Law (and the Merger does not qualify for similar tax-free treatment pursuant to any successor or other provision of such Law or regulations thereunder taking into account such changes), in each case
solely and to the extent necessary to cover any tax liability as a direct result of the transaction; and
(xv)
|
pledges of Surviving Corporation Common Stock or other securities convertible into or exercisable or exchangeable for Surviving
Corporation Common Stock in a bona fide transaction as collateral to secure obligations pursuant to lending or other financing arrangements between a Securityholder (or its affiliates), on the one hand, and a third party, on the other
hand, for the benefit of such Securityholder and/or its affiliates.
|
provided, however, that (A) in the case of clauses (i) through (vii), such permitted transferees must enter into a written agreement, in substantially the form of this Agreement (it being understood that any references to “immediate family” in the
agreement executed by such permitted transferee shall expressly refer only to the immediate family of the applicable Securityholder and not to the immediate family of the permitted transferee), agreeing to be bound by all Transfer
restrictions set forth herein. For purposes of this paragraph, “immediate family” shall mean a spouse, domestic partner, child (including by adoption), father, mother, brother or sister of the applicable undersigned Securityholder, and lineal
descendant (including by adoption) of the applicable undersigned Securityholder or of any of the foregoing Persons, and “affiliate” shall have the meaning set forth in Rule 405 under the Securities Act.
3. In the event that the Company releases or waives, in full or in
part, any Person from a lock-up agreement entered into in connection with the Closing, then the same number of Surviving Corporation Common Stock constituting the Lock-Up Shares held by any undersigned Securityholder as held by such released
party shall be immediately and fully released on the same terms as such released party from the applicable prohibition(s) set forth herein. The foregoing provisions of this paragraph will not apply if (i) the release or waiver is granted to a
holder of Surviving Corporation Common Stock in connection with a follow-on public offering of Surviving Corporation Common Stock pursuant to a registration statement filed with the SEC, whether or not such offering or sale is wholly or
partially a secondary offering of the Surviving Corporation Common Stock, and the undersigned Securityholder, only to the extent the undersigned Securityholder has a contractual right to demand or require the registration of the undersigned’s
Surviving Corporation Common Stock or “piggyback” on a registration statement filed by the Company for the offer and sale of its Surviving Corporation Common Stock, has been given an opportunity to participate on a basis consistent with such
contractual rights in such follow-on offering, (ii) (a) the release or waiver is effected solely to permit a Transfer not for consideration and (b) the transferee has agreed in writing to be bound by the same terms described in this Agreement
to the extent and for the duration that such terms remain in effect at the time of the Transfer, (iii) the aggregate number of Surviving Corporation Common Stock constituting the Lock-Up Shares affected by such releases or waivers (whether in
one or multiple releases or waivers) with respect to any particular beneficial or record holder of such Surviving Corporation Common Stock constituting the Lock-Up Shares is less than or equal to 1% of the total number of outstanding shares of
Surviving Corporation Common Stock then outstanding (on a fully-diluted basis, calculated as of the date of such release or waiver), or (iv) the Company determines in its sole discretion that a release or waiver should be granted to a record or
beneficial holder of Surviving Corporation Common Stock constituting the Lock-Up Shares due to circumstances of emergency or hardship. In the event that the Company changes, amends, modifies or waives (other than to correct a typographical
error) any particular provision of any other lock-up agreement entered into in connection with the Closing, then each undersigned Securityholder shall be offered the option (but not the requirement) to make a corresponding change, amendment,
modification or waiver to this Agreement, with such option to be exercised in a written notice to the Company which makes reference to this Agreement.
4. This Agreement shall terminate upon the earlier of (i) the
expiration of the Lock-Up Period, (ii) the closing of a liquidation, merger, stock exchange, reorganization or other similar transaction after the Closing Date that results in all of the public stockholders of the Company having the right to
exchange their shares of Surviving Corporation Common Stock for cash securities or other property, or (iii) the liquidation of the Company.
5. In furtherance of the foregoing, the Company, and any duly
appointed transfer agent for the registration or transfer of the securities described therein, are hereby authorized to decline to make any transfer of securities if such transfer would constitute a violation or breach of this Agreement.
TABLE OF CONTENTS
6. This Agreement replaces Section 7(a) of that certain Letter
Agreement, dated February 4, 2021, among the Company, RMG Sponsor III LLC, a Delaware limited liability company, and certain other Persons party thereto, which Section 7(a) shall be terminated and, to the extent previously applicable to a
Securityholder, of no further effect with respect to such Securityholder upon the Closing, and constitutes the entire agreement and understanding of the parties hereto in respect of the subject matter hereof and supersedes all prior
understandings, agreements or representations by or among the parties hereto, written or oral, to the extent they relate in any way to the subject matter hereof or the transactions contemplated hereby.
7. This Agreement may be amended or modified in whole or in part,
only by a duly authorized agreement in writing, executed by the Company and the Securityholders holding a majority of the shares of Surviving Corporation Common Stock then held by the Securityholders in the aggregate as to which this Agreement
has not been terminated, executed in the same manner as this Agreement and which makes reference to this Agreement. This Agreement may not be modified or amended except as provided in the immediately preceding sentence and any purported
amendment by any party or parties hereto effected in a manner which does not comply with this Section 7 shall be null and void, ab initio.
8. Except as set forth herein, no party hereto may assign either this
Agreement or any of its rights, interests or obligations hereunder without the prior written consent of (i) with respect to any Securityholder, the Company, and (ii) with respect to the Company, the Securityholders holding a majority of the
shares of Surviving Corporation Common Stock then held by the Securityholders in the aggregate as to which this Agreement has not been terminated. Any purported assignment in violation of this paragraph shall be void and ineffectual and shall
not operate to transfer or assign any interest or title to the purported assignee. This Agreement shall be binding on each Securityholder and each of its respective successors, heirs and assigns and permitted transferees.
9. This Agreement, and all claims or causes of action based upon,
arising out of, or related to this Agreement or the transactions contemplated hereby, shall be governed by, and construed in accordance with, the Laws of the State of Delaware, without giving effect to principles or rules of conflict of Laws to
the extent such principles or rules would require or permit the application of Laws of another jurisdiction. Any proceeding or Action based upon, arising out of or related to this Agreement or the transactions contemplated hereby must be
brought in the Court of Chancery of the State of Delaware (or, to the extent such court does not have subject matter jurisdiction, the Superior Court of the State of Delaware), or, if it has or can acquire jurisdiction, in the United States
District Court for the District of Delaware, and each of the parties hereto irrevocably (i) submits to the exclusive jurisdiction of each such court in any such proceeding or Action, (ii) waives any objection it may now or hereafter have to
personal jurisdiction, venue or to convenience of forum, (iii) agrees that all claims in respect of the proceeding or Action shall be heard and determined only in any such court, and (iv) agrees not to bring any proceeding or Action arising out
of or relating to this Agreement or the transactions contemplated hereby in any other court. Nothing herein contained shall be deemed to affect the right of any party hereto to serve process in any manner permitted by Law or to commence Legal
Proceedings or otherwise proceed against any other party hereto in any other jurisdiction, in each case, to enforce judgments obtained in any Action, suit or proceeding brought pursuant to this Section 9. EACH PARTY HERETO ACKNOWLEDGES AND
AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY, UNCONDITIONALLY AND VOLUNTARILY
WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY ACTION, SUIT OR PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY CERTIFIES
AND ACKNOWLEDGES THAT (I) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (II) EACH SUCH PARTY
UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (III) EACH SUCH PARTY MAKES THIS WAIVER VOLUNTARILY, AND (IV) EACH SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION 9.
10. This Agreement may be executed in two (2) or more counterparts
(any of which may be delivered by electronic transmission), each of which shall constitute an original, and all of which taken together shall constitute one and the same instrument.
TABLE OF CONTENTS
11. If any provision of this Agreement is held invalid or
unenforceable by any court of competent jurisdiction, the other provisions of this Agreement will remain in full force and effect. The parties hereto further agree that if any provision contained herein is, to any extent, held invalid or
unenforceable in any respect under the Laws governing this Agreement, they shall take any actions necessary to render the remaining provisions of this Agreement valid and enforceable to the fullest extent permitted by Law and, to the extent
necessary, shall amend or otherwise modify this Agreement to replace any provision contained herein that is held invalid or unenforceable with a valid and enforceable provision giving effect to the intent of the parties hereto. The parties
hereto agree that irreparable damage could occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the parties hereto
shall be entitled to an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement in addition to any other remedy to which any party hereto is entitled at law or in
equity. In the event that any Action shall be brought in equity to enforce the provisions of this Agreement, no party hereto shall allege, and each party hereto hereby waives the defense, that there is an adequate remedy at law, and each party
hereto agrees to waive any requirement for the securing or posting of any bond in connection therewith.
12. This Agreement, the Merger Agreement and the other Ancillary
Agreements constitute the entire agreement between the parties hereto relating to the transactions contemplated hereby and supersede any other agreements, whether written or oral, that may have been made or entered into by or between the
parties hereto or any of their respective Subsidiaries relating to the transactions contemplated hereby. No representations, warranties, covenants, understandings, agreements, oral or otherwise, relating to the transactions contemplated hereby
exist between such parties except as expressly set forth in this Agreement, the Merger Agreement and the other Ancillary Agreements.
13. The liability of any Securityholder hereunder is several (and not
joint). Notwithstanding any other provision of this Agreement, in no event will any Securityholder be liable for any other Securityholder’s breach of such other Securityholder’s obligations under this Agreement.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY BLANK]
TABLE OF CONTENTS
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed as of the date first above written.
|
|
|
COMPANY:
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
|
|
|
|
|
|
Name:
|
|
|
|
Title:
|
[Signature Page to Lock-Up Agreement]
TABLE OF CONTENTS
|
|
|
SECURITYHOLDERS:
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
|
|
|
|
|
|
Name:
|
|
|
|
Title:
|
[Signature Page to Lock-Up Agreement]
TABLE OF CONTENTS
SCHEDULE I
SECURITYHOLDERS
TABLE OF CONTENTS
SPONSOR SUPPORT AGREEMENT
This Sponsor Support Agreement (this “Sponsor Agreement”) is
dated as of May 9, 2023, by and among RMG Sponsor III LLC, a Delaware limited liability company (the “Sponsor”), RMG Acquisition Corp. III, a Cayman Islands exempted company limited by shares (which shall de-register as an exempted
company incorporated in the Cayman Islands by way of continuation to the State of Delaware and domesticate as a Delaware corporation prior to the Closing (as defined in the Merger Agreement (as defined below))) (“Acquiror”), and H2B2
Electrolysis Technologies, Inc., a Delaware corporation (the “Company”). Capitalized terms used but not defined herein shall have the respective meanings ascribed to such terms in the Merger Agreement.
RECITALS
WHEREAS, as of the date hereof, the Sponsor is the holder of record
of 12,075,000 Acquiror Class B Shares and 8,216,330 Acquiror Private Warrants in the aggregate (such Acquiror Class B Shares and Acquiror Private Warrants together with any shares of Acquiror Common Stock or Acquiror Warrants of which ownership
of record or the power to vote (including, without limitation, by proxy or power of attorney) is hereafter acquired by Sponsor during the period from the date hereof through the Expiration Time are referred to herein as the “Subject Shares”);
WHEREAS, contemporaneously with the execution and delivery of this
Sponsor Agreement, Acquiror and the Company have entered into an Agreement and Plan of Merger (as amended or modified from time to time in accordance with its terms, the “Merger Agreement”), dated as of the date hereof, pursuant to
which, at the Closing, the Company will merge with and into Acquiror, the separate corporate existence of the Company will cease and Acquiror will be the Surviving Corporation (the “Merger”), on the terms and conditions set forth
therein; and
WHEREAS, as an inducement to the Company’s willingness to enter into
the Merger Agreement and to consummate the transactions contemplated therein, the parties hereto desire to agree to certain matters as set forth herein.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements contained herein and intending to be legally bound hereby, the parties hereto hereby agree as follows:
ARTICLE I
SPONSOR SUPPORT AGREEMENT; COVENANTS
Section 1.1 Binding Effect of Merger Agreement. The Sponsor
hereby acknowledges that it has read the Merger Agreement and this Sponsor Agreement and has had the opportunity to consult with its tax and legal advisors. The Sponsor hereby agrees to be bound by and comply with Sections 6.3 (Confidentiality), 7.3 (No Solicitation by Acquiror), and 11.12 (Publicity) of the Merger Agreement (and any relevant
definitions contained in any such Sections of the Merger Agreement) as if the Sponsor was an original signatory to the Merger Agreement with respect to such provisions to the same extent as such provisions apply to Acquiror.
Section 1.2 No Transfer. During the period commencing on the
date hereof and ending on the Expiration Time (as defined below), the Sponsor shall not (a) sell, offer to sell, contract or agree to sell, hypothecate, pledge, grant any option to purchase or otherwise dispose of or agree to dispose of,
directly or indirectly, file (or participate in the filing of) a registration statement with the SEC or establish or increase a put equivalent position or liquidate or decrease a call equivalent position within the meaning of Section 16 of the
Exchange Act, with respect to any shares of Acquiror Common Stock or Acquiror Warrants owned by the Sponsor, (b) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of
ownership of any shares of Acquiror Common Stock or Acquiror Warrants owned by the Sponsor or (c) publicly announce any intention to effect any transaction specified in clause (a) or (b); provided, however, that
nothing herein shall prohibit a transfer to an Affiliate of Sponsor (a “Permitted Transfer”); provided, further, that any Permitted Transfer shall be permitted only if, as a precondition to such transfer, the transferee
also agrees in a
TABLE OF CONTENTS
writing, reasonably satisfactory in form and substance to the Company, to assume all
of the obligations of the Sponsor under, and be bound by all of the terms of, this Sponsor Agreement; provided, further, that any transfer permitted under this Section 1.2 shall not relieve the Sponsor of its obligations
under this Sponsor Agreement. Any transfer in violation of this Section 1.2 with respect to the Subject Shares shall be null and void. Nothing in this Sponsor Agreement shall prohibit direct or indirect transfers of equity or other
interests in the Sponsor.
Section 1.3 New Shares. In the event that, during the period
commencing on the date hereof and ending at the Expiration Time, (a) any shares of Acquiror Common Stock, Acquiror Warrants or other equity securities of Acquiror are issued to the Sponsor after the date of this Sponsor Agreement pursuant to
any stock dividend, stock split, recapitalization, reclassification, combination or exchange of shares of Acquiror Common Stock or Acquiror Warrants of, on or affecting the shares of Acquiror Common Stock or Acquiror Warrants owned by the
Sponsor or otherwise, (b) the Sponsor purchases or otherwise acquires beneficial ownership of any shares of Acquiror Common Stock, Acquiror Warrants or other equity securities of Acquiror after the date of this Sponsor Agreement, or (c) the
Sponsor acquires the right to vote or share in the voting of any shares of Acquiror Common Stock or other equity securities of Acquiror after the date of this Sponsor Agreement (such shares of Acquiror Common Stock, Acquiror Warrants or other
equity securities of Acquiror, collectively the “New Securities”), then such New Securities acquired or purchased by the Sponsor shall be subject to the terms of this Sponsor Agreement to the same extent as if they constituted
the shares of Acquiror Common Stock or Acquiror Warrants owned by the Sponsor as of the date hereof.
Section 1.4 Closing Date Deliverables. On the Closing Date,
the Sponsor shall deliver to Acquiror and the Company:
(a) a duly executed copy of the Registration Rights Agreement, by
and among Acquiror, the Sponsor, and certain of the Company Stockholders in substantially the form attached as Exhibit C to the Merger Agreement; and
(b) a duly executed copy of the Lock-Up Agreement, by and among
Acquiror, the Sponsor, and certain of the Company Stockholders in substantially the form attached as Exhibit D to the Merger Agreement.
Section 1.5 Sponsor Agreements.
(a) At any meeting of the shareholders of Acquiror, however called,
or at any adjournment or postponement thereof, or in any other circumstance in which the vote, consent or other approval of the shareholders of Acquiror is sought, the Sponsor shall (i) if a meeting is held, appear at each such meeting (in
person or by proxy) or otherwise cause all of its shares of Acquiror Common Stock to be counted as present thereat for purposes of calculating a quorum and (ii) vote (or cause to be voted), or execute and deliver a written consent (or cause a
written consent to be executed and delivered) covering, all of its shares of Acquiror Common Stock:
(i) in favor of each Transaction Proposal;
(ii) in favor of each Extension;
(iii) against any Business Combination Proposal or any proposal
relating to a Business Combination Proposal (in each case, other than the Transaction Proposals);
(iv) against any merger agreement or merger (other than the Merger
Agreement and the transactions contemplated thereby, including the Merger), consolidation, combination, sale of substantial assets, reorganization, recapitalization, dissolution, liquidation or winding up of or by Acquiror;
(v) against any change in the business, management or the Acquiror
Board (other than in connection with the Transaction Proposals); and
(vi) against any proposal, action or agreement that would (A)
impede, frustrate, prevent or nullify any provision of this Sponsor Agreement, the Merger Agreement or the Merger, (B) result in a breach in any respect of any covenant, representation, warranty or any other obligation or agreement of Acquiror
under the Merger Agreement, (C) result in any of the conditions set forth in Article IX of the Merger Agreement not being fulfilled, or (D) change in any manner the dividend policy or
TABLE OF CONTENTS
capitalization of, including the voting rights of any class of capital stock of,
Acquiror (other than in connection with the Transaction Proposals, including, for the avoidance of doubt, any Transaction Proposal in connection with the Domestication or the amendment to the Warrant Agreement pursuant to Section 7.10 of the
Merger Agreement).
The Sponsor hereby agrees that it shall not commit or agree to take
any action inconsistent with the foregoing.
(b) The Sponsor shall comply with, and fully perform all of its
obligations, covenants and agreements set forth in, that certain Letter Agreement, dated as of February 4, 2021, by and among the Sponsor, Acquiror, and certain other parties thereto (the “Letter Agreement”), including the obligations of
the Sponsor pursuant to Section 1 therein to not redeem any shares of Acquiror Common Stock owned by the Sponsor in connection with the transactions contemplated by the Merger Agreement.
(c) During the period commencing on the date hereof and ending on
the earlier of the consummation of the Closing and the termination of the Merger Agreement pursuant to Article X thereof, the Sponsor shall not modify, amend, or terminate any Contract between or among the Sponsor or any Affiliate of the
Sponsor (other than Acquiror), on the one hand, and Acquiror, on the other hand, including, for the avoidance of doubt, the Letter Agreement other than, in each case, as contemplated or permitted by the Merger Agreement, or as set forth in
Section 7.4 of the Acquiror Disclosure Letter.
Section 1.6 No Challenges. The Sponsor agrees not to commence,
join in, facilitate, assist or encourage, and agrees to take all actions necessary to opt out of any class in any class action with respect to, any claim, derivative or otherwise, against Acquiror, the Company or any of their respective
successors or directors (a) challenging the validity of, or seeking to enjoin the operation of, any provision of this Sponsor Agreement or (b) alleging a breach of any fiduciary duty of any Person in connection with the evaluation, negotiation
or entry into the Merger Agreement.
Section 1.7 Further Assurances. The Sponsor shall take, or
cause to be taken, all actions and do, or cause to be done, all things reasonably necessary under applicable Laws to consummate the Merger and the other transactions contemplated by the Merger Agreement on the terms and subject to the
conditions set forth therein and herein.
Section 1.8 No Inconsistent Agreement. The Sponsor hereby
represents and covenants that it has not entered into, and shall not enter into, any agreement that would restrict, limit or interfere with the performance of the Sponsor’s obligations hereunder.
Section 1.9 Other Covenants. The Sponsor hereby authorizes the
Company and Acquiror to publish and disclose in any announcement or disclosure, in each case, required by the SEC or Nasdaq (including all documents and schedules filed with the SEC in connection with the foregoing, including the Proxy
Statement/Registration Statement), the Sponsor’s identity and ownership of the Subject Shares and the nature of the Sponsor’s commitments and agreements under this Sponsor Agreement, the Merger Agreement and any other agreements to the extent
such disclosure is required by applicable securities Laws, the SEC or Nasdaq.
Section 1.10 Waiver of Anti-Dilution Provision. Subject to the
consummation of the Merger, the Sponsor waives (for itself and for its successors, heirs and assigns), to the fullest extent permitted by Law and the second amended and restated memorandum and articles of association of Acquiror (the “Articles”),
all anti-dilution rights that would otherwise result in Acquiror Class B Shares held by the Sponsor converting into shares of Domesticated Acquiror Class A Stock on a greater than one-for-one basis in connection with the Domestication or the
Merger (including, for the avoidance of doubt, pursuant to Article 17.3 of the Articles). The waiver specified in this Section 1.10 shall be applicable only in connection with the Merger and the transactions contemplated by this Sponsor
Agreement and any securities issued in connection with the Merger and the transactions contemplated by this Sponsor Agreement. If the Merger Agreement shall be terminated for any reason, the foregoing waiver shall be void and of no further
force and effect.
TABLE OF CONTENTS
ARTICLE II
REPRESENTATIONS AND WARRANTIES
Section 2.1 Representations and Warranties of the Sponsor. The
Sponsor represents and warrants as of the date hereof to Acquiror and the Company as follows:
(a) Organization; Due Authorization. The Sponsor is duly
organized, validly existing and in good standing under the Laws of the State of Delaware, and the execution, delivery and performance of this Sponsor Agreement and the consummation of the transactions contemplated hereby are within the
Sponsor’s limited liability company powers and have been duly authorized by all necessary corporate, limited liability company or organizational actions on the part of the Sponsor. This Sponsor Agreement has been duly executed and delivered by
the Sponsor and, assuming due authorization, execution and delivery by the other parties to this Sponsor Agreement, this Sponsor Agreement constitutes a legally valid and binding obligation of the Sponsor, enforceable against the Sponsor in
accordance with the terms hereof, subject to any Enforceability Exceptions.
(b) Ownership. The Sponsor is the record owner (as defined in
the Securities Act) of, and has good title to, all of the Subject Shares, and there exist no Liens or any other limitation or restriction (including any restriction on the right to vote, sell or otherwise dispose of such Subject Shares (other
than transfer restrictions under the Securities Act)) affecting any such Subject Shares, other than Liens pursuant to (i) this Sponsor Agreement, (ii) Acquiror’s Governing Documents, (iii) the Merger Agreement, (iv) the Letter Agreement or
(v) any applicable securities Laws. The Subject Shares are the only equity securities in Acquiror owned of record by the Sponsor on the date of this Sponsor Agreement, and none of the Subject Shares are subject to any proxy, voting trust or
other agreement or arrangement with respect to the voting of such Subject Shares, except as provided hereunder and under the Letter Agreement. Other than the Acquiror Private Warrants, the Sponsor does not hold or own any rights to acquire
(directly or indirectly) any equity securities of Acquiror or any equity securities convertible into, or which can be exchanged for, equity securities of Acquiror.
(c) No Conflicts. The execution and delivery of this Sponsor
Agreement by the Sponsor does not, and the performance by the Sponsor of its obligations hereunder will not, (i) conflict with or result in a violation of the Governing Documents of the Sponsor or (ii) require any consent or approval that has
not been given or other action that has not been taken by any Person (including under any Contract binding upon the Sponsor or the Subject Shares), in each case, to the extent such consent, approval or other action would prevent, enjoin or
materially delay the performance by the Sponsor of its obligations under this Sponsor Agreement.
(d) Litigation. There are no Actions pending against the
Sponsor, or to the knowledge of the Sponsor threatened against the Sponsor, before (or, in the case of threatened Actions, that would be before) any arbitrator or any Governmental Authority, which in any manner challenges or seeks to prevent,
enjoin or materially delay the performance by the Sponsor of its obligations under this Sponsor Agreement.
(e) Brokerage Fees. Except as described on Section 5.12 of
the Acquiror Disclosure Letter, no broker, finder, investment banker or other Person is entitled to any brokerage fee, finders’ fee or other commission in connection with the transactions contemplated by the Merger Agreement based upon
arrangements made by the Sponsor, for which Acquiror or any of its Affiliates may become liable.
(f) Affiliate Arrangements. Except as set forth on Schedule
I attached hereto, neither the Sponsor nor, to the knowledge of the Sponsor, any Person in which the Sponsor has a direct or indirect legal, contractual or beneficial ownership of five percent (5%) or greater is party to, or has any
rights with respect to or arising from, any Contract with Acquiror.
(g) Acknowledgment. The Sponsor understands and acknowledges
that each of Acquiror and the Company is entering into the Merger Agreement in reliance upon the Sponsor’s execution and delivery of this Sponsor Agreement.
TABLE OF CONTENTS
(h) No Other Representations or Warranties. Except for the
representations and warranties made by the Sponsor in this ARTICLE II, the Sponsor does not make any express or implied representation or warranty to Acquiror or the Company in connection with this Sponsor Agreement or the transactions
contemplated by this Sponsor Agreement, and the Sponsor expressly disclaims any such other representations or warranties.
ARTICLE III
MISCELLANEOUS
Section 3.1 Termination. This Sponsor Agreement and all of its
provisions shall terminate and be of no further force or effect upon the earliest to occur of (a) the Effective Time, (b) such date and time as the Merger Agreement shall be terminated in accordance with Section 10.1 thereof (the earliest of
(a) and (b), the “Expiration Time”), (c) the liquidation of Acquiror pursuant to applicable Law and the Governing Documents of Acquiror and (d) upon the written agreement of the Sponsor, Acquiror, and the Company. Upon such termination
of this Sponsor Agreement, all obligations of the parties hereto will terminate, without any liability or other obligation on the part of any party hereto to any Person in respect hereof or the transactions contemplated hereby, and no party
hereto shall have any claim against another (and no Person shall have any rights against such party), whether under contract, tort or otherwise, with respect to the subject matter hereof; provided, however, that the termination
of this Sponsor Agreement shall not relieve any party hereto from liability arising in respect of any breach of this Sponsor Agreement prior to such termination. This ARTICLE III shall survive the termination of this Sponsor Agreement.
Section 3.2 Governing Law. This Sponsor Agreement, and all
claims or causes of action based upon, arising out of, or related to this Sponsor Agreement or the transactions contemplated hereby, shall be governed by, and construed in accordance with, the Laws of the State of Delaware, without giving
effect to principles or rules of conflict of Laws to the extent such principles or rules would require or permit the application of Laws of another jurisdiction.
Section 3.3 CONSENT TO JURISDICTION AND SERVICE OF PROCESS; WAIVER
OF JURY TRIAL.
(a) CONSENT TO JURISDICTION AND SERVICE OF
PROCESS. ANY ACTION BASED UPON, ARISING OUT OF OR RELATED TO THIS SPONSOR AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY MUST BE BROUGHT IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE (OR, TO THE EXTENT SUCH COURT DOES NOT HAVE
SUBJECT MATTER JURISDICTION, THE SUPERIOR COURT OF THE STATE OF DELAWARE), OR, IF IT HAS OR CAN ACQUIRE JURISDICTION, IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF DELAWARE, AND EACH OF THE PARTIES IRREVOCABLY (I) SUBMITS TO THE
EXCLUSIVE JURISDICTION OF EACH SUCH COURT IN ANY SUCH ACTION, (II) WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE TO PERSONAL JURISDICTION, VENUE OR TO CONVENIENCE OF FORUM, (III) AGREES THAT ALL CLAIMS IN RESPECT OF THE ACTION SHALL BE
HEARD AND DETERMINED ONLY IN ANY SUCH COURT, AND (IV) AGREES NOT TO BRING ANY ACTION ARISING OUT OF OR RELATING TO THIS SPONSOR AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY IN ANY OTHER COURT. NOTHING HEREIN CONTAINED SHALL BE DEEMED TO
AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN ANY MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST ANY OTHER PARTY HERETO IN ANY OTHER JURISDICTION, IN EACH CASE, TO ENFORCE JUDGMENTS OBTAINED IN
ANY ACTION, SUIT OR PROCEEDING BROUGHT PURSUANT TO THIS SECTION 3.3.
(b) WAIVER OF TRIAL BY JURY. EACH PARTY
HERETO ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS SPONSOR AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY,
UNCONDITIONALLY AND VOLUNTARILY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY ACTION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS SPONSOR AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS SPONSOR
AGREEMENT. EACH PARTY HERETO CERTIFIES AND ACKNOWLEDGES THAT (I) NO REPRESENTATIVE, AGENT OR ATTORNEY
TABLE OF CONTENTS
OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT
SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (II) EACH SUCH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (III) EACH SUCH PARTY MAKES THIS WAIVER VOLUNTARILY, AND (IV)
EACH SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS SPONSOR AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 3.3.
Section 3.4 Assignment. No party hereto shall assign this
Sponsor Agreement or any part hereof without the prior written consent of the other parties hereto and any such transfer without prior written consent shall be void. Subject to the foregoing, this Sponsor Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective permitted successors and assigns.
Section 3.5 Specific Performance. The parties hereto agree
that irreparable damage could occur in the event that any of the provisions of this Sponsor Agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the parties hereto shall
be entitled to an injunction or injunctions to prevent breaches of this Sponsor Agreement and to enforce specifically the terms and provisions of this Sponsor Agreement in addition to any other remedy to which any party hereto is entitled at
law or in equity. In the event that any Action shall be brought in equity to enforce the provisions of this Sponsor Agreement, no party hereto shall allege, and each party hereto hereby waives the defense, that there is an adequate remedy at
law, and each party hereto agrees to waive any requirement for the securing or posting of any bond in connection therewith.
Section 3.6 Amendment; Waiver. This Sponsor Agreement may not
be amended, changed, supplemented, waived or otherwise modified or terminated, except upon the execution and delivery of a written agreement executed by Acquiror, the Company and the Sponsor.
Section 3.7 Severability. If any provision of this Sponsor
Agreement is held invalid or unenforceable by any court of competent jurisdiction, the other provisions of this Sponsor Agreement will remain in full force and effect. The parties hereto further agree that if any provision contained herein is,
to any extent, held invalid or unenforceable in any respect under the Laws governing this Sponsor Agreement, they shall take any actions necessary to render the remaining provisions of this Sponsor Agreement valid and enforceable to the fullest
extent permitted by Law and, to the extent necessary, shall amend or otherwise modify this Sponsor Agreement to replace any provision contained herein that is held invalid or unenforceable with a valid and enforceable provision giving effect to
the intent of the parties hereto.
Section 3.8 Notices. All notices and other communications
among the parties hereto shall be in writing and shall be deemed to have been duly given (a) when delivered in person, (b) when delivered after posting in the United States mail having been sent registered or certified mail return receipt
requested, postage prepaid, (c) when delivered by FedEx or other nationally recognized overnight delivery service, or (d) when delivered by email (in each case in this clause (d), solely if receipt is confirmed, but excluding any automated
reply, such as an out-of-office notification), addressed as follows:
|
|
|
If to Acquiror:
|
|
|
|
|
|
|
|
|
|
|
RMG Acquisition Corp. III
|
|
|
|
57 Ocean, Suite 403, 5775 Collins Avenue
|
|
|
|
Miami Beach, Florida
|
|
|
|
Attention:
|
|
|
Philip Kassin
|
|
|
|
Email:
|
|
|
pkassin@rmginvestments.com
|
|
|
|
|
|
|
|
|
|
|
with copies to (which shall not constitute notice):
|
|
|
|
|
|
|
|
|
|
|
Skadden, Arps, Slate, Meagher & Flom (UK) LLP
|
|
|
|
22 Bishopsgate, EC2N 4BQ London
|
|
|
|
Attention:
|
|
|
Lorenzo Corte; Maria Protopapa
|
|
|
|
Email:
|
|
|
lorenzo.corte@skadden.com
|
|
|
|
|
|
|
maria.protopapa@skadden.com
|
|
|
|
|
|
|
|
TABLE OF CONTENTS
|
|
|
If to the Company:
|
|
|
|
|
|
|
|
|
|
|
H2B2 Electrolysis Technologies, Inc.
|
|
|
|
300 Delaware Ave Ste 210-A,
|
|
|
|
Wilmington, Delaware 19801
|
|
|
|
Attention:
|
|
|
Anselmo Andrade and Mario Barragan
|
|
|
|
Email:
|
|
|
anselmo.andrade@h2b2.es and mario.barragan@h2b2.es
|
|
|
|
|
|
|
|
|
|
|
with copies to (which shall not constitute notice):
|
|
|
|
|
|
|
|
|
|
|
Latham & Watkins LLP
|
|
|
|
811 Main Street, Suite 3700
|
|
|
|
Houston, Texas 77002
|
|
|
|
Attention:
|
|
|
Ryan Maierson; Thomas Verity
|
|
|
|
Email:
|
|
|
ryan.maierson@lw.com
|
|
|
|
|
|
|
thomas.verity@lw.com
|
|
|
|
|
|
|
|
|
|
|
If to the Sponsor:
|
|
|
|
|
|
|
|
|
|
|
RMG Sponsor III LLC
|
|
|
|
57 Ocean, Suite 403, 5775 Collins Avenue
|
|
|
|
Miami Beach, Florida
|
|
|
|
Attention:
|
|
|
Philip Kassin
|
|
|
|
Email:
|
|
|
pkassin@rmginvestments.com
|
|
|
|
|
|
|
|
|
|
|
with a copy to (which will not constitute notice):
|
|
|
|
|
|
|
|
|
|
|
Skadden, Arps, Slate, Meagher & Flom (UK) LLP
|
|
|
|
22 Bishopsgate, EC2N 4BQ London
|
|
|
|
Attention:
|
|
|
Lorenzo Corte; Maria Protopapa
|
|
|
|
Email:
|
|
|
lorenzo.corte@skadden.com
|
|
|
|
|
|
|
maria.protopapa@skadden.com
|
Section 3.9 Headings; Counterparts. The headings in this
Sponsor Agreement are for convenience only and shall not be considered a part of or affect the construction or interpretation of any provision of this Sponsor Agreement. This Sponsor Agreement may be executed in two (2) or more counterparts
(any of which may be delivered by electronic transmission), each of which shall constitute an original, and all of which taken together shall constitute one and the same instrument.
Section 3.10 Entire Agreement. This Sponsor Agreement, the
Merger Agreement and the other Ancillary Agreements 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 to the extent they relate in any way to the subject matter hereof.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY BLANK]
TABLE OF CONTENTS
IN WITNESS WHEREOF, the Sponsor, Acquiror, and the Company have
each caused this Sponsor Support Agreement to be duly executed as of the date first written above.
|
|
|
SPONSOR:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RMG Sponsor III LLC
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
|
|
/s/ Philip Kassin
|
|
|
|
|
|
|
Name:
|
|
|
Philip Kassin
|
|
|
|
|
|
|
Title:
|
|
|
President and COO
|
[Signature Page to Sponsor Support Agreement]
TABLE OF CONTENTS
|
|
|
ACQUIROR:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RMG Acquisition Corp. III
|
|
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
|
|
/s/ Philip Kassim
|
|
|
|
|
|
|
Name:
|
|
|
Philip Kassin
|
|
|
|
|
|
|
Title:
|
|
|
President and COO
|
[Signature Page to Sponsor Support Agreement]
TABLE OF CONTENTS
|
|
|
COMPANY:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
H2B2 Electrolysis Technologies, Inc.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
|
|
/s/ Anselmo Andrade Fernández de Mesa
|
|
|
|
|
|
|
Name:
|
|
|
Anselmo Andrade Fernández de Mesa
|
|
|
|
|
|
|
Title:
|
|
|
Chief Executive Officer
|
[Signature Page to Sponsor Support Agreement]
TABLE OF CONTENTS
Schedule I
Affiliate Agreements
1.
|
Securities Subscription Agreement, dated as of December 30, 2020, by and between Acquiror and Sponsor.
|
3.
|
Sponsor Warrants Purchase Agreement, dated as of February 4, 2021, by and between Acquiror and Sponsor.
|
4.
|
Registration Rights Agreement, dated as of February 4, 2021, by and between Acquiror and Sponsor.
|
[Schedule I to Sponsor Support Agreement]
TABLE OF CONTENTS
COMPANY STOCKHOLDER SUPPORT AGREEMENT
This Company Stockholder Support Agreement (this “Support
Agreement”) is dated as of May 9, 2023, by and among RMG Acquisition Corp. III, a Cayman Islands exempted company limited by shares (which shall de-register as an exempted company incorporated in the Cayman Islands by way of continuation
to the State of Delaware and domesticate as a Delaware corporation prior to the Closing (as defined in the Merger Agreement (as defined below)) (“Acquiror”), H2B2 Electrolysis Technologies, Inc., a Delaware corporation (the “Company”),
and the Persons set forth on Schedule I hereto (each, a “Company Stockholder” and, collectively, the “Company Stockholders”). Capitalized terms used but not defined herein shall have the respective meanings ascribed to
such terms in the Merger Agreement.
RECITALS
WHEREAS, as of the date hereof, the Company Stockholders are the
holders of record of such number of shares of Company Common Stock as are indicated opposite each of their names on Schedule I attached hereto (all such shares of Company Common Stock, together with any shares of Company Common Stock of
which ownership of record or the power to vote (including, without limitation, by proxy or power of attorney) is hereafter acquired by any such Company Stockholder during the period from the date hereof through the Expiration Time are referred
to herein as the “Subject Shares”);
WHEREAS, contemporaneously with the execution and delivery of this
Support Agreement, Acquiror and the Company have entered into an Agreement and Plan of Merger (as amended or modified from time to time in accordance with its terms, the “Merger Agreement”), dated as of the date hereof, pursuant to
which, at the Closing, the Company will merge with and into Acquiror, the separate corporate existence of the Company will cease and Acquiror will be the Surviving Corporation (the “Merger”), on the terms and conditions set forth
therein; and
WHEREAS, as an inducement to Acquiror’s willingness to enter into the
Merger Agreement and to consummate the transactions contemplated therein, the parties hereto desire to agree to certain matters as set forth herein.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements contained herein and intending to be legally bound hereby, the parties hereto hereby agree as follows:
ARTICLE I
COMPANY STOCKHOLDER AGREEMENT; COVENANTS
Section 1.1 Binding Effect of Merger Agreement. Each Company
Stockholder hereby acknowledges that it has read the Merger Agreement and this Support Agreement and has had the opportunity to consult with its tax and legal advisors. Each Company Stockholder hereby agrees to be bound by and comply with
Sections 6.3 (Confidentiality), 6.5 (Acquisition Proposals), and 11.12 (Publicity) of the Merger Agreement (and any
relevant definitions contained in any such Sections of the Merger Agreement) as if such Company Stockholder was an original signatory to the Merger Agreement with respect to such provisions to the same extent as such provisions apply to the
Company.
Section 1.2 No Transfer. During the period commencing on the
date hereof and ending on the Expiration Time (as defined below), each Company Stockholder shall not (a) sell, offer to sell, contract or agree to sell, hypothecate, pledge, grant any option to purchase or otherwise dispose of or agree to
dispose of, directly or indirectly, file (or participate in the filing of) a registration statement with the SEC or establish or increase a put equivalent position or liquidate or decrease a call equivalent position within the meaning of
Section 16 of the Exchange Act, with respect to any shares of Company Common Stock owned by each such Company Stockholder, (b) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic
consequences of ownership of any shares of Company Common Stock owned by each such Company Stockholder or (c) publicly announce any intention to effect any transaction specified in clause (a) or (b); provided, however,
that nothing herein shall prohibit a transfer to an Affiliate of such Company Stockholder
TABLE OF CONTENTS
(a “Permitted Transfer”); provided, further, that any
Permitted Transfer shall be permitted only if, as a precondition to such transfer, the transferee also agrees in a writing, reasonably satisfactory in form and substance to Acquiror, to assume all of the obligations of such Company Stockholder
under, and be bound by all of the terms of, this Support Agreement; provided, further, that any transfer permitted under this Section 1.2 shall not relieve such Company Stockholder of its obligations under this Support
Agreement. Any transfer in violation of this Section 1.2 with respect to the Subject Shares shall be null and void. Nothing in this Support Agreement shall prohibit direct or indirect transfers of equity or other interests in the
Company Stockholder.
Section 1.3 New Shares. In the event that, during the period
commencing on the date hereof and ending at the Expiration Time, (a) any shares of Company Common Stock or other equity securities of the Company are issued to any Company Stockholder after the date of this Support Agreement pursuant to any
stock dividend, stock split, recapitalization, reclassification, combination or exchange of shares of Company Common Stock of, on or affecting the shares of Company Common Stock owned by such Company Stockholder or otherwise, (b) any Company
Stockholder purchases or otherwise acquires beneficial ownership of any shares of Company Common Stock or other equity securities of the Company after the date of this Support Agreement, or (c) any Company Stockholder acquires the right to vote
or share in the voting of any shares of Company Common Stock or other equity securities of the Company after the date of this Support Agreement (such shares of Company Common Stock or other equity securities of the Company, collectively the “New
Securities”), then such New Securities acquired or purchased by such Company Stockholder shall be subject to the terms of this Support Agreement to the same extent as if they constituted the shares of Company Common Stock owned by such
Company Stockholder as of the date hereof.
Section 1.4 Closing Date Deliverables. On the Closing Date,
the Company Stockholders shall deliver to Acquiror (a) a duly executed copy of the Registration Rights Agreement, by and among Acquiror, the Sponsor, and such Company Stockholders in substantially the form attached as Exhibit C to the
Merger Agreement and (b) a duly executed copy of the Lock-Up Agreement, by and among Acquiror, the Sponsor, and each such Company Stockholder in substantially the form attached as Exhibit D to the Merger Agreement.
Section 1.5 Company Stockholder Agreements.
(a) At any meeting of the stockholders of the Company, however
called, or at any adjournment or postponement thereof, or in any other circumstance in which the vote, consent or other approval of the stockholders of the Company is sought, each Company Stockholder shall (i) if a meeting is held, appear at
each such meeting (in person or by proxy) or otherwise cause all of its shares of Company Common Stock to be counted as present thereat for purposes of calculating a quorum and (ii) vote (or cause to be voted), or execute and deliver a written
consent (or cause a written consent to be executed and delivered) covering, all of its shares of Company Common Stock:
(i) in favor of approving and adopting the Merger Agreement, the
Ancillary Agreements and the transactions contemplated thereby (including the Merger);
(ii) against any Acquisition Proposal or any proposal relating to an
Acquisition Proposal;
(iii) against any merger agreement or merger (other than the Merger
Agreement and the transactions contemplated thereby, including the Merger), consolidation, combination, sale of substantial assets, reorganization, recapitalization, dissolution, liquidation or winding up of or by the Company or any of its
Subsidiaries;
(iv) against any change in the business, management or the Company
Board; and
(v) against any proposal, action or agreement that would (A) impede,
frustrate, prevent or nullify any provision of this Support Agreement, the Merger Agreement or the Merger, (B) result in a breach in any respect of any covenant, representation, warranty or any other obligation or agreement of the Company under
the Merger Agreement, (C) result in any of the conditions set forth in Article IX of the Merger Agreement not being fulfilled, (D) change in any manner the dividend policy or capitalization of, including the voting rights of any class of
capital stock of, the Company.
Each Company Stockholder hereby agrees that it shall not commit or
agree to take any action inconsistent with the foregoing; provided, however, that (1) notwithstanding anything in this Support Agreement to the contrary, no Company Stockholder shall be deemed to have waived any of its rights,
benefits and privileges (the
TABLE OF CONTENTS
“SHA Rights”) under the Company Stockholders Agreement in connection with such
Company Stockholder’s entry into this Support Agreement and (2) the exercise of any SHA Rights by a Company Stockholder, or a designee on the Company Board of such Company Stockholder, shall not be deemed to be a breach of this Support
Agreement; provided, further, that the foregoing proviso shall not relieve any Company Stockholder of its obligation to vote in favor of approving and adopting the Merger Agreement pursuant to Section 1.5(a)(i) of this
Support Agreement at a duly called special meeting of the Company Stockholders called pursuant to Section 8.2(c) of the Merger Agreement.
Section 1.6 No Challenges. Each Company Stockholder agrees not
to commence, join in, facilitate, assist or encourage, and agrees to take all actions necessary to opt out of any class in any class action with respect to, any claim, derivative or otherwise, against Acquiror, the Company or any of their
respective successors or directors (a) challenging the validity of, or seeking to enjoin the operation of, any provision of this Support Agreement or (b) alleging a breach of any fiduciary duty of any Person in connection with the evaluation,
negotiation or entry into the Merger Agreement.
Section 1.7 Further Assurances. Each Company Stockholder shall
take, or cause to be taken, all actions and do, or cause to be done, all things reasonably necessary under applicable Laws to consummate the Merger and the other transactions contemplated by the Merger Agreement on the terms and subject to the
conditions set forth therein and herein.
Section 1.8 No Inconsistent Agreement. Each Company
Stockholder hereby represents and covenants that it has not entered into, and shall not enter into, any agreement that would restrict, limit or interfere with the performance of such Company Stockholder’s obligations hereunder.
Section 1.9 Other Covenants. Each Company Stockholder hereby
authorizes the Company and Acquiror to publish and disclose in any announcement or disclosure, in each case, required by the SEC or Nasdaq (including all documents and schedules filed with the SEC in connection with the foregoing, including the
Proxy Statement/Registration Statement), such Company Stockholder’s identity and ownership of the Subject Shares and the nature of such Company Stockholder’s commitments and agreements under this Support Agreement, the Merger Agreement and any
other agreements to the extent such disclosure is required by applicable securities Laws, the SEC or Nasdaq.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
Section 2.1 Representations and Warranties of the Company
Stockholders. Each Company Stockholder represents and warrants as of the date hereof to Acquiror and the Company (solely with respect to itself, himself or herself and not with respect to any other Company Stockholder) as follows:
(a) Organization; Due Authorization. If such Company
Stockholder is not an individual, it is duly organized, validly existing and in good standing under the Laws of the jurisdiction in which it is incorporated, formed, organized or constituted, and the execution, delivery and performance of this
Support Agreement and the consummation of the transactions contemplated hereby are within such Company Stockholder’s corporate, limited liability company or organizational powers and have been duly authorized by all necessary corporate, limited
liability company or organizational actions on the part of such Company Stockholder. If such Company Stockholder is an individual, such Company Stockholder has full legal capacity, right and authority to execute and deliver this Support
Agreement and to perform his or her obligations hereunder. This Support Agreement has been duly executed and delivered by such Company Stockholder 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 such Company Stockholder, enforceable against such Company Stockholder in accordance with the terms hereof, subject to any Enforceability Exceptions. If
this Agreement is being executed in a representative or fiduciary capacity, the Person signing this Support Agreement has full power and authority to enter into this Support Agreement on behalf of the applicable Company Stockholder.
(b) Ownership. Such Company Stockholder is the record owner
of, and has good title to, all of the Subject Shares, and there exist no Liens or any other limitation or restriction (including any restriction on the right to vote, sell or otherwise dispose of such Subject Shares (other than transfer
restrictions under the Securities Act)) affecting any such Subject Shares, other than Liens pursuant to (i) this Support Agreement, (ii) the Company’s Governing Documents, (iii) the Company Stockholders Agreement (iv) the Merger
TABLE OF CONTENTS
Agreement, or (v) any applicable securities Laws. The Subject Shares are the only
equity securities in the Company owned of record by such Company Stockholder on the date of this Support Agreement, and none of the Subject Shares are subject to any proxy, voting trust or other agreement or arrangement with respect to the
voting of such Subject Shares, except as provided hereunder. Such Company Stockholder does not hold or own any rights to acquire (directly or indirectly) any equity securities of the Company or any equity securities convertible into, or which
can be exchanged for, equity securities of the Company.
(c) No Conflicts. The execution and delivery of this Support
Agreement by such Company Stockholder does not, and the performance by such Company Stockholder of its obligations hereunder will not, (i) conflict with or result in a violation of the Governing Documents of the Company or the Company
Stockholders Agreement or (ii) require any consent or approval that has not been given or other action that has not been taken by any Person (including under any Contract binding upon such Company Stockholder or the Subject Shares), in each
case, to the extent such consent, approval or other action would prevent, enjoin or materially delay the performance by such Company Stockholder of its obligations under this Support Agreement.
(d) Litigation. There are no Actions pending against such
Company Stockholder, or to the knowledge of such Company Stockholder threatened against such Company Stockholder, before (or, in the case of threatened Actions, that would be before) any arbitrator or any Governmental Authority, which in any
manner challenges or seeks to prevent, enjoin or materially delay the performance by such Company Stockholder of its obligations under this Support Agreement.
(e) Brokerage Fees. Except as described on Section 4.20 of
the Company Disclosure Letter, no broker, finder, investment banker or other Person is entitled to any brokerage fee, finders’ fee or other commission in connection with the transactions contemplated by the Merger Agreement based upon
arrangements made by such Company Stockholder, for which the Company or any of its Subsidiaries or Affiliates may become liable.
(f) Affiliate Agreements. Except as set forth on Section 4.35
of the Company Disclosure Letter, none of the Company Stockholders is a party to any Contract, arrangement or commitment with the Company or any of the Company’s Subsidiaries.
(g) Acknowledgment. Such Company Stockholder understands and
acknowledges that each of Acquiror and the Company is entering into the Merger Agreement in reliance upon such Company Stockholder’s execution and delivery of this Support Agreement.
(h) No Other Representations or Warranties. Except for the
representations and warranties made by such Company Stockholder in this ARTICLE II, neither such Company Stockholder nor any other Person makes any express or implied representation or warranty to Acquiror or the Company in connection
with this Support Agreement or the transactions contemplated by this Support Agreement, and such Company Stockholder expressly disclaims any such other representations or warranties.
ARTICLE III
MISCELLANEOUS
Section 3.1 Termination. This Support Agreement and all of its
provisions shall terminate and be of no further force or effect upon the earliest to occur of (a) the Effective Time, (b) such date and time as the Merger Agreement shall be terminated in accordance with Section 10.1 thereof (the earliest of
(a) and (b), the “Expiration Time”), (c) the liquidation of Acquiror pursuant to applicable Law and the Governing Documents of Acquiror and (d) as to each Company Stockholder, upon the written agreement of such Company Stockholder,
Acquiror, and the Company. Upon such termination of this Support Agreement, all obligations of the parties hereto will terminate, without any liability or other obligation on the part of any party hereto to any Person in respect hereof or the
transactions contemplated hereby, and no party hereto shall have any claim against another (and no Person shall have any rights against such party), whether under contract, tort or otherwise, with respect to the subject matter hereof; provided,
however, that the termination of this Support Agreement shall not relieve any party hereto from liability arising in respect of any breach of this Support Agreement prior to such termination. This ARTICLE III shall survive the
termination of this Support Agreement.
Section 3.2 Governing Law. This Support Agreement, and all
claims or causes of action based upon, arising out of, or related to this Support Agreement or the transactions contemplated hereby, shall be governed
TABLE OF CONTENTS
by, and construed in accordance with, the Laws of the State of Delaware, without
giving effect to principles or rules of conflict of Laws to the extent such principles or rules would require or permit the application of Laws of another jurisdiction.
Section 3.3 CONSENT TO JURISDICTION AND SERVICE OF PROCESS;
WAIVER OF JURY TRIAL.
(a) CONSENT TO JURISDICTION AND SERVICE OF
PROCESS. ANY ACTION BASED UPON, ARISING OUT OF OR RELATED TO THIS SUPPORT AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY MUST BE BROUGHT IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE (OR, TO THE EXTENT SUCH COURT DOES NOT HAVE
SUBJECT MATTER JURISDICTION, THE SUPERIOR COURT OF THE STATE OF DELAWARE), OR, IF IT HAS OR CAN ACQUIRE JURISDICTION, IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF DELAWARE, AND EACH OF THE PARTIES IRREVOCABLY (I) SUBMITS TO THE
EXCLUSIVE JURISDICTION OF EACH SUCH COURT IN ANY SUCH ACTION, (II) WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE TO PERSONAL JURISDICTION, VENUE OR TO CONVENIENCE OF FORUM, (III) AGREES THAT ALL CLAIMS IN RESPECT OF THE ACTION SHALL BE
HEARD AND DETERMINED ONLY IN ANY SUCH COURT, AND (IV) AGREES NOT TO BRING ANY ACTION ARISING OUT OF OR RELATING TO THIS SUPPORT AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY IN ANY OTHER COURT. NOTHING HEREIN CONTAINED SHALL BE DEEMED TO
AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN ANY MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST ANY OTHER PARTY HERETO IN ANY OTHER JURISDICTION, IN EACH CASE, TO ENFORCE JUDGMENTS OBTAINED IN
ANY ACTION, SUIT OR PROCEEDING BROUGHT PURSUANT TO THIS SECTION 3.3.
(b) WAIVER OF TRIAL BY JURY. EACH PARTY
HERETO ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS SUPPORT AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY,
UNCONDITIONALLY AND VOLUNTARILY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY ACTION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS SUPPORT AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS SUPPORT
AGREEMENT. EACH PARTY HERETO CERTIFIES AND ACKNOWLEDGES THAT (I) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
FOREGOING WAIVER, (II) EACH SUCH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (III) EACH SUCH PARTY MAKES THIS WAIVER VOLUNTARILY, AND (IV) EACH SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS SUPPORT AGREEMENT BY, AMONG
OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 3.3.
Section 3.4 Assignment. No party hereto shall assign this
Support Agreement or any part hereof without the prior written consent of the other parties hereto and any such transfer without prior written consent shall be void. Subject to the foregoing, this Support Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective permitted successors and assigns.
Section 3.5 Specific Performance. The parties hereto agree
that irreparable damage could occur in the event that any of the provisions of this Support Agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the parties hereto shall
be entitled to an injunction or injunctions to prevent breaches of this Support Agreement and to enforce specifically the terms and provisions of this Support Agreement in addition to any other remedy to which any party hereto is entitled at
law or in equity. In the event that any Action shall be brought in equity to enforce the provisions of this Support Agreement, no party hereto shall allege, and each party hereto hereby waives the defense, that there is an adequate remedy at
law, and each party hereto agrees to waive any requirement for the securing or posting of any bond in connection therewith.
TABLE OF CONTENTS
Section 3.6 Amendment; Waiver. This Support Agreement may
not be amended, changed, supplemented, waived or otherwise modified or terminated, except upon the execution and delivery of a written agreement executed by Acquiror, the Company and each Company Stockholder.
Section 3.7 Severability. If any provision of this Support
Agreement is held invalid or unenforceable by any court of competent jurisdiction, the other provisions of this Support Agreement will remain in full force and effect. The parties hereto further agree that if any provision contained herein is,
to any extent, held invalid or unenforceable in any respect under the Laws governing this Support Agreement, they shall take any actions necessary to render the remaining provisions of this Support Agreement valid and enforceable to the fullest
extent permitted by Law and, to the extent necessary, shall amend or otherwise modify this Support Agreement to replace any provision contained herein that is held invalid or unenforceable with a valid and enforceable provision giving effect to
the intent of the parties hereto.
Section 3.8 Notices. All notices and other communications
among the parties hereto shall be in writing and shall be deemed to have been duly given (a) when delivered in person, (b) when delivered after posting in the United States mail having been sent registered or certified mail return receipt
requested, postage prepaid, (c) when delivered by FedEx or other nationally recognized overnight delivery service, or (d) when delivered by email (in each case in this clause (d), solely if receipt is confirmed, but excluding any automated
reply, such as an out-of-office notification), addressed as follows:
|
|
|
If to Acquiror:
|
|
|
|
|
|
|
|
|
|
|
RMG Acquisition Corp. III
|
|
|
|
57 Ocean, Suite 403, 5775 Collins Avenue
|
|
|
|
Miami Beach, Florida
|
|
|
|
Attention: Philip Kassin
|
|
|
|
Email: pkassin@rmginvestments.com
|
|
|
|
|
|
|
|
|
|
|
with copies to (which shall not constitute notice):
|
|
|
|
|
|
|
|
|
|
|
Skadden, Arps, Slate, Meagher & Flom (UK) LLP
|
|
|
|
22 Bishopsgate, EC2N 4BQ London
|
|
|
|
Attention: Lorenzo Corte; Maria Protopapa
|
|
|
|
Email: lorenzo.corte@skadden.com
|
|
|
|
|
|
|
maria.protopapa@skadden.com
|
|
|
|
|
|
|
|
|
|
|
If to the Company:
|
|
|
|
|
|
|
|
|
|
|
H2B2 Electrolysis Technologies, Inc.
|
|
|
|
300 Delaware Ave Ste 210-A
|
|
|
|
Wilmington, DE 19801
|
|
|
|
Attention: Anselo Andrade; Mario Barragan
|
|
|
|
Email: anselmo.andrade@h2b2.es; mario.barragan@h2b2.es
|
|
|
|
|
|
|
|
|
|
|
with copies to (which shall not constitute notice):
|
|
|
|
|
|
|
|
|
|
|
Latham & Watkins LLP
|
|
|
|
811 Main Street, Suite 3700
|
|
|
|
Houston, Texas 77002
|
|
|
|
Attention: Ryan Maierson; Thomas Verity
|
|
|
|
Email: ryan.maierson@lw.com
|
|
|
|
|
|
|
thomas.verity@lw.com
|
|
|
|
|
|
|
|
|
|
|
If to a Company Stockholder
|
|
|
|
|
|
|
|
|
|
|
To such Company Stockholder’s address set forth in Schedule I
|
TABLE OF CONTENTS
Section 3.9 Headings; Counterparts. The headings in this
Support Agreement are for convenience only and shall not be considered a part of or affect the construction or interpretation of any provision of this Support Agreement. This Support Agreement may be executed in two (2) or more counterparts
(any of which may be delivered by electronic transmission), each of which shall constitute an original, and all of which taken together shall constitute one and the same instrument.
Section 3.10 Entire Agreement. This Support Agreement, the
Merger Agreement and the other Ancillary Agreements 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 to the extent they relate in any way to the subject matter hereof.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY BLANK]
TABLE OF CONTENTS
IN WITNESS WHEREOF, the Company Stockholders, Acquiror, and the
Company have each caused this Support Agreement to be duly executed as of the date first written above.
|
|
|
COMPANY STOCKHOLDERS:
|
|
|
|
|
|
|
|
|
|
|
By:
|
|
|
/s/ África Castro Rosende
|
|
|
|
Name:
|
|
|
África Castro Rosende
|
[Signature Page to Company Support Agreement]
TABLE OF CONTENTS
IN WITNESS WHEREOF, the Company Stockholders, Acquiror, and the
Company have each caused this Support Agreement to be duly executed as of the date first written above.
|
|
|
COMPANY STOCKHOLDERS:
|
|
|
|
|
|
|
|
|
|
|
By:
|
|
|
/s/ Alejandra Benjumea de Porres
|
|
|
|
Name:
|
|
|
Alejandra Benjumea de Porres
|
[Signature Page to Company Support Agreement]
TABLE OF CONTENTS
IN WITNESS WHEREOF, the Company Stockholders, Acquiror, and the
Company have each caused this Support Agreement to be duly executed as of the date first written above.
|
|
|
COMPANY STOCKHOLDERS:
|
|
|
|
|
|
|
|
|
|
|
By:
|
|
|
/s/ Anselmo Andrade Fernández de Mesa
|
|
|
|
Name:
|
|
|
Anselmo Andrade Fernández de Mesa
|
[Signature Page to Company Support Agreement]
TABLE OF CONTENTS
IN WITNESS WHEREOF, the Company Stockholders, Acquiror, and the
Company have each caused this Support Agreement to be duly executed as of the date first written above.
|
|
|
COMPANY STOCKHOLDERS:
|
|
|
|
|
|
|
|
|
|
|
By:
|
|
|
/s/ Anselmo Andrade Rodríguez
|
|
|
|
Name:
|
|
|
Anselmo Andrade Rodríguez
|
[Signature Page to Company Support Agreement]
TABLE OF CONTENTS
IN WITNESS WHEREOF, the Company Stockholders, Acquiror, and the
Company have each caused this Support Agreement to be duly executed as of the date first written above.
|
|
|
COMPANY STOCKHOLDERS:
|
|
|
|
|
|
|
|
|
|
|
By:
|
|
|
/s/ Blanca Benjumea de Porres
|
|
|
|
Name:
|
|
|
Blanca Benjumea de Porres
|
[Signature Page to Company Support Agreement]
TABLE OF CONTENTS
IN WITNESS WHEREOF, the Company Stockholders, Acquiror, and the
Company have each caused this Support Agreement to be duly executed as of the date first written above.
|
|
|
COMPANY STOCKHOLDERS:
|
|
|
|
|
|
|
|
|
|
|
By:
|
|
|
/s/ Blanca de Porres Guardiola
|
|
|
|
Name:
|
|
|
Blanca de Porres Guardiola
|
[Signature Page to Company Support Agreement]
TABLE OF CONTENTS
IN WITNESS WHEREOF, the Company Stockholders, Acquiror, and the
Company have each caused this Support Agreement to be duly executed as of the date first written above.
|
|
|
COMPANY STOCKHOLDERS:
|
|
|
|
|
|
|
|
|
|
|
By:
|
|
|
/s/ Carla Benjumea de Porres
|
|
|
|
Name:
|
|
|
Carla Benjumea de Porres
|
[Signature Page to Company Support Agreement]
TABLE OF CONTENTS
IN WITNESS WHEREOF, the Company Stockholders, Acquiror, and the
Company have each caused this Support Agreement to be duly executed as of the date first written above.
|
|
|
COMPANY STOCKHOLDERS:
|
|
|
|
|
|
|
|
|
|
|
By:
|
|
|
/s/ Carlos Sundheim Losada
|
|
|
|
Name:
|
|
|
Carlos Sundheim Losada
|
[Signature Page to Company Support Agreement]
TABLE OF CONTENTS
IN WITNESS WHEREOF, the Company Stockholders, Acquiror, and the
Company have each caused this Support Agreement to be duly executed as of the date first written above.
|
|
|
COMPANY STOCKHOLDERS:
|
|
|
|
|
|
|
|
|
|
|
By:
|
|
|
/s/ Covadonga García Gómez
|
|
|
|
Name:
|
|
|
Covadonga García Gómez
|
[Signature Page to Company Support Agreement]
TABLE OF CONTENTS
IN WITNESS WHEREOF, the Company Stockholders, Acquiror, and the
Company have each caused this Support Agreement to be duly executed as of the date first written above.
|
|
|
COMPANY STOCKHOLDERS:
|
|
|
|
|
|
|
|
|
|
|
By:
|
|
|
/s/ Delia Muñoz Alé
|
|
|
|
Name:
|
|
|
Delia Muñoz Alé
|
[Signature Page to Company Support Agreement]
TABLE OF CONTENTS
IN WITNESS WHEREOF, the Company Stockholders, Acquiror, and the
Company have each caused this Support Agreement to be duly executed as of the date first written above.
|
|
|
COMPANY STOCKHOLDERS:
|
|
|
|
|
|
|
|
|
|
|
By:
|
|
|
/s/ José Javier Brey Sánchez
|
|
|
|
Name:
|
|
|
José Javier Brey Sánchez as CEO of
Empelia Capital S.L.
|
[Signature Page to Company Support Agreement]
TABLE OF CONTENTS
IN WITNESS WHEREOF, the Company Stockholders, Acquiror, and the
Company have each caused this Support Agreement to be duly executed as of the date first written above.
|
|
|
COMPANY STOCKHOLDERS:
|
|
|
|
|
|
|
|
|
|
|
By:
|
|
|
/s/ Enrique Barrientos García
|
|
|
|
Name:
|
|
|
Enrique Barrientos García
|
[Signature Page to Company Support Agreement]
TABLE OF CONTENTS
IN WITNESS WHEREOF, the Company Stockholders, Acquiror, and the
Company have each caused this Support Agreement to be duly executed as of the date first written above.
|
|
|
COMPANY STOCKHOLDERS:
|
|
|
|
|
|
|
|
|
|
|
By:
|
|
|
/s/ Felipe Benjumea de Porres
|
|
|
|
Name:
|
|
|
Felipe Benjumea de Porres
|
[Signature Page to Company Support Agreement]
TABLE OF CONTENTS
IN WITNESS WHEREOF, the Company Stockholders, Acquiror, and the
Company have each caused this Support Agreement to be duly executed as of the date first written above.
|
|
|
COMPANY STOCKHOLDERS:
|
|
|
|
|
|
|
|
|
|
|
By:
|
|
|
/s/ José Javier Brey Sánchez
|
|
|
|
Name:
|
|
|
José Javier Brey Sánchez as President of Fundación para la Promoción de los
Microemprendimientos
|
[Signature Page to Company Support Agreement]
TABLE OF CONTENTS
IN WITNESS WHEREOF, the Company Stockholders, Acquiror, and the
Company have each caused this Support Agreement to be duly executed as of the date first written above.
|
|
|
COMPANY STOCKHOLDERS:
|
|
|
|
|
|
|
|
|
|
|
By:
|
|
|
/s/ José Antonio Vázquez Arjona
|
|
|
|
Name:
|
|
|
José Antonio Vázquez Arjona
|
[Signature Page to Company Support Agreement]
TABLE OF CONTENTS
IN WITNESS WHEREOF, the Company Stockholders, Acquiror, and the
Company have each caused this Support Agreement to be duly executed as of the date first written above.
|
|
|
COMPANY STOCKHOLDERS:
|
|
|
|
|
|
|
|
|
|
|
By:
|
|
|
/s/ Juan Suarez Ávila
|
|
|
|
Name:
|
|
|
Juan Suarez Ávila
|
[Signature Page to Company Support Agreement]
TABLE OF CONTENTS
IN WITNESS WHEREOF, the Company Stockholders, Acquiror, and the
Company have each caused this Support Agreement to be duly executed as of the date first written above.
|
|
|
COMPANY STOCKHOLDERS:
|
|
|
|
|
|
|
|
|
|
|
By:
|
|
|
/s/ Luján Aresti Llorente
|
|
|
|
Name:
|
|
|
Luján Aresti Llorente
|
[Signature Page to Company Support Agreement]
TABLE OF CONTENTS
IN WITNESS WHEREOF, the Company Stockholders, Acquiror, and the
Company have each caused this Support Agreement to be duly executed as of the date first written above.
|
|
|
COMPANY STOCKHOLDERS:
|
|
|
|
|
|
|
|
|
|
|
By:
|
|
|
/s/ María Concepción Guardiola Domínguez
|
|
|
|
Name:
|
|
|
María Concepción Guardiola Domínguez
|
[Signature Page to Company Support Agreement]
TABLE OF CONTENTS
IN WITNESS WHEREOF, the Company Stockholders, Acquiror, and the
Company have each caused this Support Agreement to be duly executed as of the date first written above.
|
|
|
COMPANY STOCKHOLDERS:
|
|
|
|
|
|
|
|
|
|
|
By:
|
|
|
/s/ Guillermo Delclaux Lezama-Leguizamón
|
|
|
|
Name:
|
|
|
Guillermo Delclaux Lezama-Leguizamón
As legal representative of Onatrium H2 S.L.
|
[Signature Page to Company Support Agreement]
TABLE OF CONTENTS
IN WITNESS WHEREOF, the Company Stockholders, Acquiror, and the
Company have each caused this Support Agreement to be duly executed as of the date first written above.
|
|
|
COMPANY STOCKHOLDERS:
|
|
|
|
|
|
|
|
|
|
|
By:
|
|
|
/s/ Roberto Wilson Fernández del Castillo
|
|
|
|
Name:
|
|
|
Roberto Wilson Fernández del Castillo
|
[Signature Page to Company Support Agreement]
TABLE OF CONTENTS
|
|
|
ACQUIROR:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RMG Acquisition Corp. III
|
|
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
|
|
/s/ Philip Kassin
|
|
|
|
|
|
|
Name:
|
|
|
Philip Kassin
|
|
|
|
|
|
|
Title:
|
|
|
President and COO
|
[Signature Page to Company Support Agreement]
TABLE OF CONTENTS
|
|
|
COMPANY:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
H2B2 Electrolysis Technologies, Inc.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
|
|
/s/ Anselmo Andrade Fernández de Mesa
|
|
|
|
|
|
|
Name:
|
|
|
Anselmo Andrade Fernández de Mesa
|
|
|
|
|
|
|
Title:
|
|
|
Chief Executive Officer
|
[Signature Page to Company Support Agreement]
TABLE OF CONTENTS
Schedule I
|
África Castro Rosende
|
|
|
227,228
|
|
|
Alejandra Benjumea de Porres
|
|
|
956
|
|
|
Anselmo Andrade Fernández de Mesa
|
|
|
39,050
|
|
|
Anselmo Andrade Rodríguez
|
|
|
54,821
|
|
|
Blanca Benjumea de Porres
|
|
|
52,000
|
|
|
Blanca de Porres Guardiola
|
|
|
799,598
|
|
|
Carla Benjumea de Porres
|
|
|
4,188
|
|
|
Carlos Sundheim Losada
|
|
|
82,918
|
|
|
Covadonga García Gómez
|
|
|
202,508
|
|
|
Delia Muñoz Alé
|
|
|
25,510
|
|
|
Empelia Capital, SL
|
|
|
768,078
|
|
|
Enrique Barrientos García
|
|
|
4,136
|
|
|
Felipe Benjumea de Porres
|
|
|
38,688
|
|
|
Fundación para la Promoción de los Microemprendimientos
|
|
|
57,679
|
|
|
José Antonio Vázquez Arjona
|
|
|
4,060
|
|
|
Juan Suarez Ávila
|
|
|
55,619
|
|
|
Luján Aresti Llorente
|
|
|
657,337
|
|
|
María Concepción Guardiola Domínguez
|
|
|
554,743
|
|
|
Onatrium H2, S.L.
|
|
|
2,223,276
|
|
|
Roberto Wilson Fernández del Castillo
|
|
|
1,219
|
|
[Schedule I to Company Support Agreement]
TABLE OF CONTENTS
FORM OF AMENDED AND RESTATED
REGISTRATION RIGHTS AGREEMENT
THIS AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT (this “Agreement”),
dated as of , 20 , is made and entered into by and among , a Delaware corporation (the “Company”) (formerly known as RMG Acquisition Corp. III, a Cayman Islands exempted company prior to its domestication as a Delaware
corporation), RMG Sponsor III LLC, a Delaware limited liability company (the “Sponsor”), and certain former stockholders of H2B2 Electrolysis Technologies, Inc., a Delaware corporation (“Legacy H2B2”), set forth on Schedule I
hereto (such stockholders, the “H2B2 Holders” and, collectively with the Sponsor and any person or entity who hereafter becomes a party to this Agreement pursuant to Section 5.2 or Section 5.10 of this Agreement, the “Holders”
and each, a “Holder”).
WHEREAS, the
Company and the Sponsor are party to that certain Registration Rights Agreement, dated as of February 4, 2021 (the “Original RRA”);
WHEREAS, the
Company has entered into that certain Agreement and Plan of Merger, dated as of May 9, 2023, (as it may be amended or supplemented from time to time, the “Merger Agreement”), by and between the Company and Legacy H2B2, pursuant to
which, among other things, on the date hereof, Legacy H2B2 merged with and into the Company, the separate corporate existence of Legacy H2B2 ceased and the Company continued as the Surviving Corporation (as defined in the Merger Agreement),
on the terms and conditions set forth therein;
WHEREAS, prior
to the date hereof and subject to the conditions of the Merger Agreement, the Company migrated to and domesticated as a Delaware corporation in accordance with Section 388 of the Delaware General Corporation Law, as amended, and the Cayman
Islands Companies Act (as amended);
WHEREAS, on the
date hereof, pursuant to the Merger Agreement, the H2B2 Holders received shares of class A common stock, par value $0.0001 per share (the “Common Stock”), of the Company;
WHEREAS,
pursuant to Section 5.5 of the Original RRA, the provisions, covenants and conditions set forth therein may be amended or modified upon the written consent of the Company and the Holders (as defined in the Original RRA) of at least a majority
in interest of the Registrable Securities (as defined in the Original RRA) at the time in question, and the Sponsor is a holder of at least a majority in interest of the Registrable Securities as of the date hereof; and
WHEREAS, the
Company and the Sponsor desire to amend and restate the Original RRA in its entirety and enter into this Agreement, pursuant to which the Company shall grant the Holders certain registration rights with respect to certain securities of the
Company, as set forth in this Agreement.
NOW, THEREFORE,
in consideration of the representations, covenants and agreements contained herein, and certain other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally
bound, hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1 Definitions.
The terms defined in this Article I shall, for all purposes of this Agreement, have the respective meanings set forth below:
“Additional Holder” shall have the meaning given in Section
5.10.
“Additional Holder Common Stock” shall have the meaning given
in Section 5.10.
“Adverse Disclosure” shall mean any public disclosure of
material non-public information, which disclosure, in the good faith judgment of the Chief Executive Officer of the Company, the Chief Financial Officer of the Company or the Board, after consultation with counsel to the Company, (i) would be
required to be made in any Registration Statement or Prospectus in order for the applicable Registration Statement or Prospectus not to contain any untrue statement of a material fact or omit to state a material fact necessary to make the
statements contained therein (in the case of any prospectus and any preliminary prospectus, in the light of the circumstances under which they were made) not misleading, (ii) would not be required to be
TABLE OF CONTENTS
made at such time if the Registration Statement were not being filed, declared
effective or used, as the case may be, and (iii) the Company has a bona fide business purpose for not making such information public.
“Agreement” shall have the meaning given in the Preamble
hereto.
“Board” shall mean the Board of Directors of the Company.
“Closing” shall have the meaning given in the Merger
Agreement.
“Closing Date” shall have the meaning given in the Merger
Agreement.
“Commission” shall mean the United States Securities and
Exchange Commission.
“Common Stock” shall have the meaning given in the Recitals
hereto.
“Company” shall have the meaning given in the Preamble hereto
and includes the Company’s successors by recapitalization, merger, consolidation, spin-off, reorganization or similar transaction.
“Competing Registration Rights” shall have the meaning
given in Section 5.7.
“Demanding Holder” shall have the meaning given in Section
2.1.4.
“Exchange Act” shall mean the Securities Exchange Act of
1934, as it may be amended from time to time.
“Form S-1 Shelf” shall have the meaning given in Section
2.1.1.
“Form S-3 Shelf” shall have the meaning given in Section
2.1.1.
“H2B2 Holders” shall have the meaning given in the Preamble
hereto.
“H2B2 Majority Holders” shall mean the H2B2 Holders holding
in the aggregate a majority of the Registrable Securities then held by all of the H2B2 Holders.
“Holder Information” shall have the meaning given in Section
4.1.2.
“Holders” shall have the meaning given in the Preamble
hereto, for so long as such person or entity holds any Registrable Securities.
“Joinder” shall have the meaning given in Section 5.10.
“Legacy H2B2” shall have the meaning given in the Preamble
hereto.
“Maximum Number of Securities” shall have the meaning given
in Section 2.1.5.
“Merger Agreement” shall have the meaning given in the
Recitals hereto.
“Minimum Takedown Threshold” shall have the meaning given in
Section 2.1.4.
“Misstatement” shall mean an untrue statement of a material
fact or an omission to state a material fact required to be stated in a Registration Statement or Prospectus or necessary to make the statements in a Registration Statement or Prospectus (in the case of a Prospectus, in the light of the
circumstances under which they were made) not misleading.
“Original RRA” shall have the meaning given in the Recitals
hereto.
“Permitted Transferees” shall mean any person or entity to
whom a Holder of Registrable Securities is permitted to transfer such Registrable Securities, subject to and in accordance with any applicable agreement between such Holder and/or their respective Permitted Transferees and the Company and any
transferee thereafter, including pursuant to Section 5.2 of this Agreement and including, for the avoidance of doubt, pursuant to the Lock-Up Agreements (as defined in the Merger Agreement).
“Piggyback Registration” shall have the meaning given in Section
2.2.1.
“Prospectus” shall mean the prospectus included in any
Registration Statement, as supplemented by any and all prospectus supplements and as amended by any and all post-effective amendments and including all material incorporated by reference in such prospectus.
“Registrable Security” shall mean (a) any outstanding shares
of Common Stock or any other equity security (including warrants to purchase shares of Common Stock and shares of Common Stock issued or issuable upon
TABLE OF CONTENTS
the exercise of any other equity security) of the Company held by a Holder
immediately following the Closing (including any securities distributable pursuant to the Merger Agreement); (b) any Additional Holder Common Stock; and (c) any other equity security of the Company issued or issuable with respect to any
securities referenced in clauses (a) and (b) above by way of a stock dividend or stock split or in connection with a recapitalization, merger, consolidation, spin-off, reorganization or similar transaction; provided,
however, that, as to any particular Registrable Security, such securities shall cease to be Registrable Securities upon the earliest to occur of: (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 by the applicable Holder; (B)(i) such securities shall have been otherwise
transferred, (ii) new certificates for such securities not bearing (or book-entry positions not subject to) a legend restricting further transfer shall have been delivered by the Company and (iii) subsequent public distribution of such
securities shall not require registration under the Securities Act; (C) such securities shall have ceased to be outstanding; (D) such securities may be sold without registration pursuant to Rule 144 or any successor rule promulgated under the
Securities Act (but with no limitation as to volume or manner of sale); and (E) such securities have been sold to, or through, a broker, dealer or underwriter in a public distribution or other public securities transaction.
“Registration” shall mean a registration, including any
related Shelf Takedown, effected by preparing and filing a registration statement, Prospectus or similar document in compliance with the requirements of the Securities Act, and the applicable rules and regulations promulgated thereunder, and
such registration statement becoming effective.
“Registration Expenses” shall mean the documented,
out-of-pocket expenses of a Registration, including, without limitation, the following:
(A) all registration and filing fees (including fees with respect to
filings required to be made with the Financial Industry Regulatory Authority, Inc.) and any national securities exchange on which the Common Stock is then listed;
(B) fees and expenses of compliance with securities or blue sky laws
(including reasonable fees and disbursements of outside counsel for the Underwriters in connection with blue sky qualifications of Registrable Securities);
(C) printing, messenger, telephone and delivery expenses incurred
specifically in connection with such Registration;
(D) reasonable fees and disbursements of counsel for the Company
incurred specifically in connection with such Registration;
(E) reasonable fees and disbursements of all independent registered
public accountants of the Company incurred specifically in connection with such Registration; and
(F) in an Underwritten Offering, reasonable fees and expenses of one
(1) legal counsel selected by the majority in interest of the Demanding Holders.
“Registration Statement” shall mean any registration
statement that covers Registrable Securities pursuant to the provisions of this Agreement, including the Prospectus included in such registration statement, amendments (including post-effective amendments) and supplements to such registration
statement, and all exhibits to and all material incorporated by reference in such registration statement.
“Requesting Holders” shall have the meaning given in Section
2.1.5.
“Securities Act” shall mean the Securities Act of 1933, as
amended from time to time.
“Shelf” shall mean the Form S-1 Shelf, the Form S-3 Shelf or
any Subsequent Shelf Registration Statement, as the case may be.
“Shelf Registration” shall mean a registration of securities
pursuant to a registration statement filed with the Commission in accordance with and pursuant to Rule 415 promulgated under the Securities Act (or any successor rule then in effect).
TABLE OF CONTENTS
“Shelf Takedown” shall mean an Underwritten Shelf Takedown
or any proposed transfer or sale using a Registration Statement, including a Piggyback Registration.
“Sponsor” shall have the meaning given in the Preamble
hereto.
“Subsequent Shelf Registration Statement” shall have the
meaning given in Section 2.1.2.
“Transfer” shall mean the (a) sale or assignment of, offer to
sell, contract or agreement to sell, hypothecate, pledge, grant of any option to purchase or otherwise dispose of or agreement to dispose of, directly or indirectly, or establishment or increase of a put equivalent position or liquidation with
respect to or decrease of a call equivalent position within the meaning of Section 16 of the Exchange Act with respect to, any security, (b) entry into any swap or other arrangement that transfers to another, in whole or in part, any of the
economic consequences of ownership of any security, whether any such transaction is to be settled by delivery of such securities, in cash or otherwise, or (c) public announcement of any intention to effect any transaction specified in clause
(a) or (b).
“Underwriter” shall mean a securities dealer who purchases
any Registrable Securities as principal in an Underwritten Offering and not as part of such dealer’s market-making activities.
“Underwritten Offering” shall mean a Registration in which
securities of the Company are sold to an Underwriter in a firm commitment underwriting for distribution to the public.
“Underwritten Shelf Takedown” shall have the meaning given in
Section 2.1.4.
“Withdrawal Notice” shall have the meaning given in Section
2.1.6.
ARTICLE II
REGISTRATIONS AND OFFERINGS
2.1 Shelf Registration.
2.1.1 Filing.
Within thirty (30) calendar days following the Closing Date, the Company shall submit to or file with the Commission a Registration Statement for a Shelf Registration on Form S-1 (the “Form S-1 Shelf”) or a Registration
Statement for a Shelf Registration on Form S-3 (the “Form S-3 Shelf”), if the Company is then eligible to use a Form S-3 Shelf, in each case, covering the resale of all the Registrable Securities (determined as of two (2) business days
prior to such submission or filing) on a delayed or continuous basis and shall use its commercially reasonable efforts to have such Shelf declared effective as soon as practicable after the filing thereof, but no later than the earlier of (a)
the one hundred twentieth (120th) calendar day following the filing date thereof if the Commission notifies the Company that it will “review” the Registration Statement and (b) the tenth (10th) business day after the date the Company is
notified (orally or in writing, whichever is earlier) by the Commission that the Registration Statement will not be “reviewed” or will not be subject to further review. Such Shelf shall provide for the resale of the Registrable Securities
included therein pursuant to any method or combination of methods legally available to, and requested by, any Holder named therein. The Company shall maintain a Shelf in accordance with the terms hereof, and shall prepare and file with the
Commission such amendments, including post-effective amendments, and supplements as may be necessary to keep a Shelf continuously effective, available for use to permit the Holders named therein to sell their Registrable Securities included
therein and in compliance with the provisions of the Securities Act until such time as there are no longer any Registrable Securities. In the event the Company files a Form S-1 Shelf, the Company shall use its commercially reasonable efforts
to convert the Form S-1 Shelf (and any Subsequent Shelf Registration Statement) to a Form S-3 Shelf as soon as practicable after the Company is eligible to use Form S-3. The Company’s obligation under this Section 2.1.1, shall, for
the avoidance of doubt, be subject to Section 3.4.
2.1.2 Subsequent Shelf Registration. If any Shelf ceases to be effective under the Securities Act for any reason at any time while Registrable Securities are still outstanding, the Company shall, subject to Section 3.4, use its commercially
reasonable efforts to as promptly as is reasonably practicable cause such Shelf to again become effective under the Securities Act (including using its commercially reasonable efforts to obtain the prompt withdrawal of any order suspending
the effectiveness of such Shelf), and shall use its commercially reasonable efforts to as promptly as is reasonably practicable amend such Shelf in a manner reasonably expected to result in the withdrawal of any order suspending the
effectiveness of such Shelf or file an additional
TABLE OF CONTENTS
registration statement as a Shelf Registration (a “Subsequent Shelf Registration
Statement”) registering the resale of all Registrable Securities (determined as of two (2) business days prior to such filing), and pursuant to any method or combination of methods legally available to, and requested by, any Holder named
therein. If a Subsequent Shelf Registration Statement is filed, the Company shall use its commercially reasonable efforts to (i) cause such Subsequent Shelf Registration Statement to become effective under the Securities Act as promptly as is
reasonably practicable after the filing thereof (it being agreed that the Subsequent Shelf Registration Statement shall be an automatic shelf registration statement (as defined in Rule 405 promulgated under the Securities Act) if the Company is
a well-known seasoned issuer (as defined in Rule 405 promulgated under the Securities Act) at the most recent applicable eligibility determination date) and (ii) keep such Subsequent Shelf Registration Statement continuously effective,
available for use to permit the Holders named therein to sell their Registrable Securities included therein and in compliance with the provisions of the Securities Act until such time as there are no longer any Registrable Securities. Any such
Subsequent Shelf Registration Statement shall be on Form S-3 to the extent that the Company is eligible to use such form. Otherwise, such Subsequent Shelf Registration Statement shall be on another appropriate form. The Company’s obligation
under this Section 2.1.2, shall, for the avoidance of doubt, be subject to Section 3.4.
2.1.3 Additional Registrable Securities. Subject to Section 3.4, in the event that any Holder holds Registrable Securities that are not registered for resale on a delayed or continuous basis, the Company, upon written request of the Sponsor or
the H2B2 Majority Holders, shall promptly use its commercially reasonable efforts to cause the resale of such Registrable Securities to be covered by either, at the Company’s option, any then available Shelf (including by means of a
post-effective amendment) or by filing a Subsequent Shelf Registration Statement and cause the same to become effective as soon as practicable after such filing and such Shelf or Subsequent Shelf Registration Statement shall be subject to the
terms hereof; provided, however, that the Company shall only be required to cause such Registrable Securities to be so covered twice per
calendar year for each of the Sponsor and the H2B2 Majority Holders, respectively.
2.1.4 Requests for Underwritten Shelf Takedowns. Subject to Section 3.4, at any time and from time to time when an effective Shelf is on file with the Commission, the Sponsor or the H2B2 Majority Holders (the Sponsor or the H2B2 Majority Holders being
in such case, a “Demanding Holder”) may request to sell all or any portion of its Registrable Securities in an Underwritten Offering that is registered pursuant to the Shelf (each, an “Underwritten Shelf Takedown”); provided that the Company shall only be obligated to effect an Underwritten Shelf Takedown if such offering shall include Registrable Securities
proposed to be sold by the Demanding Holder, either individually or together with other Demanding Holders, with a total offering price reasonably expected to exceed, in the aggregate, $50 million (the “Minimum Takedown Threshold”). All
requests for Underwritten Shelf Takedowns shall be made by giving written notice to the Company, which shall specify the approximate number of Registrable Securities proposed to be sold in the Underwritten Shelf Takedown. The Company shall
have the right to select the Underwriters for such offering (which shall consist of one or more reputable nationally recognized investment banks), subject to the initial Demanding Holder’s prior approval (which shall not be unreasonably
withheld, conditioned or delayed). The Sponsor, on the one hand, and the H2B2 Majority Holders, on the other hand, may each demand not more than two (2) Underwritten Shelf Takedowns pursuant to this Section 2.1.4 in any twelve (12)
month period. Notwithstanding anything to the contrary in this Agreement, the Company may effect any Underwritten Offering pursuant to any then effective Registration Statement, including a Form S-3, that is then available for such offering.
2.1.5 Reduction of Underwritten Offering. If the managing Underwriter or Underwriters in an Underwritten Shelf Takedown, in good faith, advises the Company, the Demanding Holders and the Holders requesting piggy back rights pursuant to this Agreement
with respect to such Underwritten Shelf Takedown (the “Requesting Holders”) (if any) in writing that the dollar amount or number of Registrable Securities that the Demanding Holders and the Requesting Holders (if any) desire to sell,
taken together with all other shares of Common Stock or other equity securities that the Company desires to sell and all other shares of Common Stock or other equity securities, if any, that have been requested to be sold in such Underwritten
Offering pursuant to separate written contractual piggy-back registration rights held by any other stockholders, exceeds the maximum dollar amount or maximum number of equity securities that can be sold in the Underwritten Offering without
adversely affecting the proposed offering price, the timing, the distribution method, or the probability of success of such offering (such maximum dollar amount or maximum number of such securities, as applicable, the “Maximum Number of
Securities”), then the Company shall include in such Underwritten Offering, before including any shares of Common Stock or other equity securities proposed to be sold by Company or by other
TABLE OF CONTENTS
holders of Common Stock or other equity securities, the Registrable Securities of the
Demanding Holders and the Requesting Holders (if any) (pro rata (as nearly as practicable) based on the respective number of Registrable Securities that each Demanding Holder and Requesting Holder (if any) has requested be included in such
Underwritten Shelf Takedown and the aggregate number of Registrable Securities that the Demanding Holders and Requesting Holders have requested be included in such Underwritten Shelf Takedown) that can be sold without exceeding the Maximum
Number of Securities. To facilitate the allocation of Registrable Securities in accordance with the above provisions, the Company or the Underwriters may round the number of shares allocated to any Holder to the nearest one hundred (100)
Registrable Securities. The Company shall not be required to include any Registrable Securities in such Underwritten Shelf Takedown unless the Holders accept the terms of the underwriting as agreed upon between the Company and its Underwriters.
2.1.6 Withdrawal.
Prior to the filing of the applicable “red herring” prospectus or prospectus supplement used for marketing such Underwritten Shelf Takedown, a majority in interest of the Demanding Holders initiating an Underwritten Shelf Takedown shall have
the right to withdraw from such Underwritten Shelf Takedown for any or no reason whatsoever upon written notification (a “Withdrawal Notice”) to the Company and the Underwriter or Underwriters (if any) of their intention to withdraw
from such Underwritten Shelf Takedown; provided that the Sponsor or the H2B2 Majority Holders may elect to have the Company continue an
Underwritten Shelf Takedown if the Minimum Takedown Threshold would still be satisfied by the Registrable Securities proposed to be sold in the Underwritten Shelf Takedown by the Sponsor, the H2B2 Majority Holders or any of their respective
Permitted Transferees, as applicable. If withdrawn, a demand for an Underwritten Shelf Takedown shall constitute a demand for an Underwritten Shelf Takedown by the withdrawing Demanding Holder for purposes of Section 2.1.4, unless
such Demanding Holder reimburses the Company for all Registration Expenses with respect to such Underwritten Shelf Takedown (or, if there is more than one Demanding Holder, a pro rata portion of such Registration Expenses based on the
respective number of Registrable Securities that each Demanding Holder has requested be included in such Underwritten Shelf Takedown); provided that, if the Sponsor or the H2B2 Majority Holders elect(s) to continue an Underwritten Shelf Takedown pursuant to the proviso in the immediately preceding sentence, such Underwritten Shelf Takedown shall instead count as an
Underwritten Shelf Takedown demanded by the Sponsor or the H2B2 Majority Holders, as applicable, for purposes of Section 2.1.4. Following the receipt of any Withdrawal Notice, the Company shall promptly forward such Withdrawal Notice
to any other Holders that had elected to participate in such Shelf Takedown. Notwithstanding anything to the contrary in this Agreement, the Company shall be responsible for the Registration Expenses incurred in connection with a Shelf
Takedown prior to its withdrawal under this Section 2.1.6, other than if a withdrawing Demanding Holder elects to pay such Registration Expenses pursuant to the second sentence of this Section 2.1.6.
2.2 Piggyback Registration.
2.2.1 Piggyback Rights. If the Company or any Holder proposes to conduct a registered offering of, or if the Company proposes to file a Registration Statement under the Securities Act with respect to the Registration of, equity securities, or securities
or other obligations exercisable or exchangeable for, or convertible into equity securities, for its own account or for the account of stockholders of the Company (or by the Company and by the stockholders of the Company, including, without
limitation, an Underwritten Shelf Takedown pursuant to Section 2.1), other than a Registration Statement (or any registered offering with respect thereto) (i) filed in connection with any employee stock option or other benefit plan,
(ii) pursuant to a Registration Statement on Form S-4 (or similar form that relates to a transaction subject to Rule 145 under the Securities Act or any successor rule thereto), (iii) for an offering of debt that is convertible into equity
securities of the Company, or (iv) for a dividend reinvestment plan, then the Company shall give written notice of such proposed offering to all of the Holders of Registrable Securities as soon as practicable but not less than ten (10)
calendar days before the anticipated filing date of such Registration Statement or, in the case of an Underwritten Offering pursuant to a Shelf Registration, the applicable “red herring” prospectus or prospectus supplement used for marketing
such offering, which notice shall (A) describe the amount and type of securities to be included in such offering, the intended method(s) of distribution, and the name of the proposed managing Underwriter or Underwriters, if any, in such
offering, and (B) offer to all of the Holders of Registrable Securities the opportunity to include in such registered offering such number of Registrable Securities as such Holders may request in writing within five (5) calendar days after
receipt of such written notice (such registered offering, a “Piggyback Registration”). Subject to Section 2.2.2, the Company shall, in good faith, cause such Registrable Securities to be included in such Piggyback Registration
and, if applicable, shall use its commercially reasonable efforts to cause the
TABLE OF CONTENTS
managing Underwriter or Underwriters of such Piggyback Registration to permit the
Registrable Securities requested by the Holders pursuant to this Section 2.2.1 to be included therein on the same terms and conditions as any similar securities of the Company included in such registered offering and to permit the sale
or other disposition of such Registrable Securities in accordance with the intended method(s) of distribution thereof. The inclusion of any Holder’s Registrable Securities in a Piggyback Registration shall be subject to such Holder agreement to
enter into an underwriting agreement in customary form with the Underwriter(s) selected for such Underwritten Offering. For purposes of this Section 2.2.1, the filing by the Company of an automatic shelf registration statement for
offerings pursuant to Rule 415(a) that omits information with respect to any specific offering pursuant to Rule 430B shall not trigger any notification or participation rights hereunder until such time as the Company amends or supplements such
Registration Statement to include information with respect to a specific offering of securities (and such amendment or supplement shall trigger the notice and participation rights provided for in this Section 2.2.1).
2.2.2 Reduction of Piggyback Registration. If the managing Underwriter or Underwriters in an Underwritten Offering that is to be a Piggyback Registration, in good faith, advises the Company and the Holders of Registrable Securities participating in the
Piggyback Registration in writing that the dollar amount or number of shares of Common Stock or other equity securities that the Company desires to sell, taken together with (i) the shares of Common Stock or other equity securities, if any,
as to which Registration or a registered offering has been demanded pursuant to separate written contractual arrangements with persons or entities other than the Holders of Registrable Securities hereunder, (ii) the Registrable Securities as
to which registration has been requested pursuant to Section 2.2 hereof, and (iii) the shares of Common Stock or other equity securities, if any, as to which Registration or a registered offering has been requested pursuant to
separate written contractual piggy-back registration rights of persons or entities other than the Holders of Registrable Securities hereunder, exceeds the Maximum Number of Securities, then:
(a) if the
Registration is undertaken for the Company’s account, the Company shall include in any such Registration (A) first, the shares of Common Stock or other equity securities that the Company desires to sell, which can be sold without exceeding
the Maximum Number of Securities; (B) second, to the extent that the Maximum Number of Securities has not been reached under the foregoing clause (A), the Registrable Securities of Holders exercising their rights to register their Registrable
Securities pursuant to Section 2.2.1, pro rata (as nearly as practicable), based on the respective number of Registrable Securities that each Holder has requested be included in such Underwritten Offering and the aggregate number of
Registrable Securities that the Holders have requested to be included in such Underwritten Offering, which can be sold without exceeding the Maximum Number of Securities; and (C) third, to the extent that the Maximum Number of Securities has
not been reached under the foregoing clauses (A) and (B), the shares of Common Stock or other equity securities, if any, as to which Registration or a registered offering has been requested pursuant to separate written contractual piggy-back
registration rights of persons or entities other than the Holders of Registrable Securities hereunder, which can be sold without exceeding the Maximum Number of Securities;
(b) if the
Registration is pursuant to a demand by persons or entities other than the Holders of Registrable Securities, then the Company shall include in any such Registration (A) first, the shares of Common Stock or other equity securities, if any, of
such requesting persons or entities, other than the Holders of Registrable Securities, which can be sold without exceeding the Maximum Number of Securities; (B) second, to the extent that the Maximum Number of Securities has not been reached
under the foregoing clause (A), the Registrable Securities of Holders exercising their rights to register their Registrable Securities pursuant to Section 2.2.1, pro rata (as nearly as practicable), based on the respective number of
Registrable Securities that each Holder has requested be included in such Underwritten Offering and the aggregate number of Registrable Securities that the Holders have requested to be included in such Underwritten Offering, which can be sold
without exceeding the Maximum Number of Securities; (C) third, to the extent that the Maximum Number of Securities has not been reached under the foregoing clauses (A) and (B), the shares of Common Stock or other equity securities that the
Company desires to sell, which can be sold without exceeding the Maximum Number of Securities; and (D) fourth, to the extent that the Maximum Number of Securities has not been reached under the foregoing clauses (A), (B) and (C), the shares
of Common Stock or other equity securities, if any, as to which Registration or a registered offering has been requested pursuant to separate written contractual piggy-back registration rights of persons or entities other than the Holders of
Registrable Securities hereunder, which can be sold without exceeding the Maximum Number of Securities; and
TABLE OF CONTENTS
(c) if the
Registration and Underwritten Shelf Takedown is pursuant to a request by Holder(s) of Registrable Securities pursuant to Section 2.1 hereof, then the Company shall include in any such Registration securities in the priority set forth
in Section 2.1.5.
2.2.3 Piggyback Registration Withdrawal. Any Holder of Registrable Securities (other than a Demanding Holder, whose right to withdraw from an Underwritten Shelf Takedown, and related obligations, shall be governed by Section 2.1.6) shall have
the right to withdraw from a Piggyback Registration for any or no reason whatsoever upon written notification to the Company and the Underwriter or Underwriters (if any) of his, her or its intention to withdraw from such Piggyback
Registration prior to the effectiveness of the Registration Statement filed with the Commission with respect to such Piggyback Registration or, in the case of a Piggyback Registration pursuant to a Shelf Registration, the filing of the
applicable “red herring” prospectus or prospectus supplement with respect to such Piggyback Registration used for marketing such transaction. The Company (whether on its own good faith determination or as the result of a request for
withdrawal by persons or entities pursuant to separate written contractual obligations) may withdraw a Registration Statement filed with the Commission in connection with a Piggyback Registration at any time prior to the effectiveness of such
Registration Statement. Notwithstanding anything to the contrary in this Agreement (other than Section 2.1.6), the Company shall be responsible for the Registration Expenses incurred in connection with the Piggyback Registration prior
to its withdrawal under this Section 2.2.3.
2.2.4 Unlimited Piggyback Registration Rights. For purposes of clarity, subject to Section 2.1.6, any Piggyback Registration effected pursuant to Section 2.2 hereof shall not be counted as a demand for an Underwritten Shelf Takedown under Section
2.1.4 hereof.
2.3 Market Stand-off. In connection with any Underwritten Offering of equity securities of the Company, if requested by the managing Underwriters, each Holder that is an executive officer or director of the Company or a Holder of more than five percent
(5%) of the outstanding Common Stock (and for which it is customary for such a Holder to agree to a lock-up) agrees that it shall not Transfer any shares of Common Stock or other equity securities of the Company (other than those included in
such offering pursuant to this Agreement), without the prior written consent of the Company, during the ninety (90)-day period (or such shorter time agreed to by the managing Underwriters) beginning on the date of pricing of such offering,
except as expressly permitted by such lock-up agreement or in the event the managing Underwriters otherwise agree by written consent. Each such Holder agrees to execute a customary lock-up agreement in favor of the Underwriters to such effect
(in each case on substantially the same terms and conditions as all such Holders).
TABLE OF CONTENTS
ARTICLE III
COMPANY PROCEDURES
3.1 General Procedures. In connection with any Shelf and/or Shelf Takedown, the Company shall use its commercially reasonable efforts to effect such Registration to permit the sale of such Registrable Securities in accordance with the intended plan of
distribution thereof, and pursuant thereto the Company shall, as expeditiously as possible:
3.1.1 prepare
and file with the Commission as soon as practicable a Registration Statement with respect to such Registrable Securities and use its commercially reasonable efforts to cause such Registration Statement to become effective and remain effective
until all Registrable Securities have ceased to be Registrable Securities;
3.1.2 prepare
and file with the Commission such amendments and post-effective amendments to the Registration Statement, and such supplements to the Prospectus, as may be reasonably requested by any Holder that holds at least five percent (5%) of the
Registrable Securities registered on such Registration Statement or any Underwriter of Registrable Securities or as may be required by the rules, regulations or instructions applicable to the registration form used by the Company or by the
Securities Act or rules and regulations thereunder to keep the Registration Statement effective until all Registrable Securities covered by such Registration Statement are sold in accordance with the intended plan of distribution set forth in
such Registration Statement or supplement to the Prospectus;
3.1.3 prior to
filing a Registration Statement or Prospectus, or any amendment or supplement thereto, furnish without charge to the Underwriters, if any, and the Holders of Registrable Securities included in such Registration, and such Holders’ legal
counsel, copies of such Registration Statement as proposed to be filed, each amendment and supplement to such Registration Statement (in each case including all exhibits thereto and documents incorporated by reference therein), the Prospectus
included in such Registration Statement (including each preliminary Prospectus), and such other documents as the Underwriters and the Holders of Registrable Securities included in such Registration or the legal counsel for any such Holders
may request in order to facilitate the disposition of the Registrable Securities owned by such Holders;
3.1.4 prior to
any public offering of Registrable Securities, use its commercially reasonable efforts to (i) register or qualify the Registrable Securities covered by the Registration Statement under such securities or “blue sky” laws of such jurisdictions
in the United States as the Holders of Registrable Securities included in such Registration Statement (in light of their intended plan of distribution) may request (or provide evidence satisfactory to such Holders that the Registrable
Securities are exempt from such registration or qualification) and (ii) take such action necessary to cause such Registrable Securities covered by the Registration Statement to be registered with or approved by such other governmental
authorities as may be necessary by virtue of the business and operations of the Company and do any and all other acts and things that may be necessary or advisable to enable the Holders of Registrable Securities included in such Registration
Statement to consummate the disposition of such Registrable Securities in such jurisdictions; provided, however, that the Company shall
not be required to qualify generally to do business in any jurisdiction where it would not otherwise be required to qualify or take any action to which it would be subject to general service of process or taxation in any such jurisdiction
where it is not then otherwise so subject;
3.1.5 cause all
such Registrable Securities to be listed on each national securities exchange on which similar securities issued by the Company are then listed;
3.1.6 provide a
transfer agent or warrant agent, as applicable, and registrar for all such Registrable Securities no later than the effective date of such Registration Statement;
3.1.7 advise
each seller of such Registrable Securities, promptly after it shall receive notice or obtain knowledge thereof, of the issuance of any stop order by the Commission suspending the effectiveness of such Registration Statement or the initiation
or threatening of any proceeding for such purpose and promptly use its commercially reasonable efforts to prevent the issuance of any stop order or to obtain its withdrawal if such stop order should be issued;
3.1.8 prior to
the filing of any Registration Statement or Prospectus or any amendment or supplement to such Registration Statement or Prospectus (or such shorter period of time as may be (a) necessary in order to comply with the Securities Act, the
Exchange Act, and the rules and regulations promulgated under the Securities
TABLE OF CONTENTS
Act or Exchange Act, as applicable or (b) advisable in order to reduce the number of
days that sales are suspended pursuant to Section 3.4), furnish a copy thereof to each seller of such Registrable Securities or its counsel (excluding any exhibits thereto and any filing made under the Exchange Act that is to be
incorporated by reference therein);
3.1.9 notify
the Holders at any time when a Prospectus relating to such Registration Statement is required to be delivered under the Securities Act, of the happening of any event as a result of which the Prospectus included in such Registration Statement,
as then in effect, includes a Misstatement, and then to correct such Misstatement as set forth in Section 3.4;
3.1.10 in the
event of an Underwritten Offering or sale by a broker, placement agent or sales agent pursuant to such Registration, permit a representative of the Holders, the Underwriters or other financial institutions facilitating such Underwritten
Offering or other sale pursuant to such Registration, if any, and any attorney, consultant or accountant retained by such Holders or Underwriter to participate, at each such person’s or entity’s own expense, in the preparation of the
Registration Statement, and cause the Company’s officers, directors and employees to supply all information reasonably requested by any such representative, Underwriter, financial institution, attorney, consultant or accountant in connection
with the Registration; provided, however, that such representatives, Underwriters or financial institutions agree to confidentiality
arrangements in form and substance reasonably satisfactory to the Company, prior to the release or disclosure of any such information;
3.1.11 use
commercially reasonable efforts to obtain a “comfort” letter (including a bring-down letter dated as of the date the Registrable Securities are delivered for sale pursuant to such Registration) from the Company’s independent registered public
accountants in the event of an Underwritten Offering or sale by a broker, placement agent or sales agent pursuant to such Registration (subject to such broker, placement agent or sales agent providing such certification or representation
reasonably requested by the Company’s independent registered public accountants and the Company’s counsel) in customary form and covering such matters of the type customarily covered by “comfort” letters as the managing Underwriter may
reasonably request, and reasonably satisfactory to a majority in interest of the participating Holders;
3.1.12 in the
event of an Underwritten Offering or sale by a broker, placement agent or sales agent pursuant to such Registration, on the date the Registrable Securities are delivered for sale pursuant to such Registration, obtain an opinion, dated such
date, of counsel representing the Company for the purposes of such Registration, addressed to the participating Holders, the broker, placement agents or sales agent, if any and the Underwriters, if any, covering such legal matters with
respect to the Registration in respect of which such opinion is being given as the participating Holders, broker, placement agent, sales agent or Underwriter may reasonably request and as are customarily included in such opinions, provided
such participating Holders provide such information to such counsel as is customarily required for purpose of such opinions;
3.1.13 in the
event of any Underwritten Offering or sale by a broker, placement agent or sales agent pursuant to such Registration, enter into and perform its obligations under an underwriting or other purchase or sales agreement, in usual and customary
form, with the managing Underwriter or the broker, placement agent or sales agent of such offering or sale;
3.1.14 make
available to its security holders, as soon as reasonably practicable, an earnings statement covering the period of at least twelve (12) months beginning with the first day of the Company’s first full calendar quarter after the effective date
of the Registration Statement which satisfies the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder (or any successor rule then in effect);
3.1.15 if the
Registration involves the Registration of Registrable Securities involving gross proceeds in excess of $15 million, use its reasonable best efforts to make available senior executives of the Company to participate in customary “road show”
presentations that may be reasonably requested by the Underwriter in such Underwritten Offering; and
3.1.16 otherwise,
in good faith, cooperate reasonably with, and take such customary actions as may reasonably be requested by the participating Holders, consistent with the terms of this Agreement, in connection with such Registration.
TABLE OF CONTENTS
Notwithstanding the foregoing, the Company shall not be required
to provide any documents or information to an Underwriter or broker, sales agent or placement agent if such Underwriter or broker, sales agent or placement agent has not then been named with respect to the applicable Underwritten Offering or
other offering involving a registration as an Underwriter or broker, sales agent or placement agent, as applicable.
3.2 Registration Expenses. The Registration Expenses of all Registrations shall be borne by the Company. It is acknowledged by the Holders that the Holders selling Registrable Securities in any offering shall bear all incremental selling expenses relating to
the sale of such Registrable Securities, such as Underwriters’ commissions and discounts, brokerage fees, Underwriter marketing costs and, other than as set forth in the definition of “Registration Expenses,” all fees and expenses of
any legal counsel representing the Holders.
3.3 Requirements for Participation in Registration
Statement in Offerings. The Holders of Registrable Securities shall provide such information as may reasonably be requested by the Company, or the managing Underwriter or placement agent or sales agent, if
any, in connection with the preparation of any Registration Statement or Prospectus, including amendments and supplements thereto, in order to effect the registration of any Registrable Securities under the Securities Act pursuant to ARTICLE
II and in connection with the Company’s obligation to comply with federal and applicable state securities laws. Notwithstanding anything in this Agreement to the contrary, if any Holder does not provide the Company with its requested
Holder Information, the Company may exclude such Holder’s Registrable Securities from the applicable Registration Statement or Prospectus if the Company determines, based on the advice of counsel, that such information is necessary to effect
the registration and such Holder continues thereafter to withhold such information. No person or entity may participate in any Underwritten Offering or other offering for equity securities of the Company pursuant to a Registration initiated
by the Company hereunder unless such person or entity (i) agrees to sell such person’s or entity’s securities on the basis provided in any underwriting, sales, distribution or placement arrangements approved by the Company and (ii) completes
and executes all customary questionnaires, powers of attorney, indemnities, lock-up agreements, underwriting or other agreements and other customary documents as may be reasonably required under the terms of such underwriting, sales,
distribution or placement arrangements. The exclusion of a Holder’s Registrable Securities as a result of this Section 3.3 shall not affect the registration of the other Registrable Securities to be included in such Registration.
3.4 Suspension of Sales; Adverse Disclosure;
Restrictions on Registration Rights.
3.4.1 Upon
receipt of written notice from the Company that a Registration Statement or Prospectus contains a Misstatement, each of the Holders shall forthwith discontinue disposition of Registrable Securities until it has received copies of a
supplemented or amended Prospectus correcting the Misstatement (it being understood that the Company hereby covenants to prepare and file such supplement or amendment as soon as practicable after the time of such notice), or until it is
advised in writing by the Company that the use of the Prospectus may be resumed.
3.4.2 Subject
to Section 3.4.4, if the filing, initial effectiveness or continued use of a Registration Statement in respect of any Registration at any time would (a) require the Company to make an Adverse Disclosure, (b) require the inclusion in
such Registration Statement of financial statements that are unavailable to the Company for reasons beyond the Company’s control, or (c) in the good faith judgment of the majority of the Board, be seriously detrimental to the Company and the
majority of the Board concludes as a result that it is essential to defer such filing, initial effectiveness or continued use at such time, the Company may, upon giving prompt written notice of such action to the Holders (which notice shall
not specify the nature of the event giving rise to such delay or suspension), delay the filing or initial effectiveness of, or suspend use of, such Registration Statement for the shortest period of time determined in good faith by the Company
to be necessary for such purpose. In the event the Company exercises its rights under this Section 3.4.2, the Holders agree to suspend, immediately upon their receipt of the notice referred to above, their use of the Prospectus
relating to any Registration in connection with any sale or offer to sell Registrable Securities until such Holder receives written notice from the Company that such sales or offers of Registrable Securities may be resumed, and in each case
maintain the confidentiality of such notice and its contents.
3.4.3 Subject
to Section 3.4.4, (a) during the period starting with the date sixty (60) calendar days prior to the Company’s good faith estimate of the date of the filing of, and ending on a date one hundred and eighty (180) calendar days after the
effective date of, a Company-initiated Registration, and provided that the Company continues to actively employ, in good faith, all reasonable efforts to maintain the effectiveness of the
TABLE OF CONTENTS
applicable Shelf Registration Statement, or (b) if, pursuant to Section 2.1.4,
Holders have requested an Underwritten Shelf Takedown and the Company and Holders are unable to obtain the commitment of underwriters to firmly underwrite such offering, the Company may, upon giving prompt written notice of such action to the
Holders, delay any other registered offering pursuant to Section 2.1.4.
3.4.4 The right
to delay or suspend any filing, initial effectiveness or continued use of a Registration Statement pursuant to Section 3.4.2 or a registered offering pursuant to Section 3.4.3 shall be exercised by the Company, in the
aggregate, for not more than ninety (90) consecutive calendar days or more than one hundred and twenty (120) total calendar days in each case, during any twelve (12)-month period.
3.5 Reporting Obligations. As long as any Holder shall own Registrable Securities, the Company, at all times while it shall be a reporting company under the Exchange Act, covenants to file timely (or obtain extensions in respect thereof and file within the
applicable grace period) all reports required to be filed by the Company after the date hereof pursuant to Sections 13(a) or 15(d) of the Exchange Act and to promptly furnish the Holders upon written request with true and complete copies of
all such filings; provided that any documents publicly filed or furnished with the Commission pursuant to the Electronic Data Gathering,
Analysis and Retrieval System shall be deemed to have been furnished or delivered to the Holders pursuant to this Section 3.5. The Company further covenants that it shall use reasonable efforts to take such further action as any
Holder may reasonably request, all to the extent required from time to time to enable such Holder to sell Registrable Securities held by such Holder without registration under the Securities Act within the limitation of the exemptions
provided by Rule 144 promulgated under the Securities Act (or any successor rule then in effect). Upon the request of any Holder, the Company shall deliver to such Holder a written certification of a duly authorized officer as to whether it
has complied with such requirements.
ARTICLE IV
INDEMNIFICATION AND CONTRIBUTION
4.1 Indemnification.
4.1.1 The
Company agrees to indemnify, to the extent permitted by law, each Holder of Registrable Securities, its officers, directors and agents and each person or entity who controls such Holder (within the meaning of the Securities Act), against all
losses, claims, damages, liabilities and reasonable out-of-pocket expenses (including, without limitation, reasonable outside attorneys’ fees) resulting from any untrue or alleged untrue statement of material fact contained in or incorporated
by reference in any Registration Statement, Prospectus or preliminary Prospectus or any amendment thereof or supplement thereto filed pursuant to this Agreement or any omission or alleged omission of a material fact required to be stated
therein or necessary to make the statements therein, not misleading, except insofar as the same are caused by or contained in any information or affidavit so furnished in writing to the Company by such Holder expressly for use therein. The
Company shall indemnify the Underwriters, their officers and directors and each person or entity who controls such Underwriters (within the meaning of the Securities Act) to the same extent as provided in the foregoing with respect to the
indemnification of the Holder.
4.1.2 In
connection with any Registration Statement filed pursuant to this Agreement in which a Holder of Registrable Securities is participating, such Holder shall furnish (or cause to be furnished) to the Company in writing such information and
affidavits as the Company reasonably requests for use in connection with any such Registration Statement or Prospectus (the “Holder Information”) and, to the extent permitted by law, shall indemnify the Company, its directors, officers
and agents and each person or entity who controls the Company (within the meaning of the Securities Act) against all losses, claims, damages, liabilities and reasonable out-of-pocket expenses (including, without limitation, reasonable outside
attorneys’ fees) resulting from any untrue or alleged untrue statement of material fact contained or incorporated by reference in any Registration Statement, Prospectus or preliminary Prospectus or any amendment thereof or supplement thereto
or any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein, not misleading, but only to the extent that such untrue statement is contained in (or not contained in, in the
case of an omission) any information or affidavit so furnished in writing by or on behalf of such Holder expressly for use therein; provided, however, that the obligation to indemnify shall be several, not joint and several, among such Holders of Registrable Securities, and the liability of each such Holder of Registrable Securities shall be in proportion to
and limited to the net proceeds received by such Holder from the sale of Registrable Securities pursuant to such Registration Statement. The Holders of Registrable Securities shall
TABLE OF CONTENTS
indemnify the Underwriters, their officers, directors and each person or entity who
controls such Underwriters (within the meaning of the Securities Act) to the same extent as provided in the foregoing with respect to indemnification of the Company.
4.1.3 Any
person or entity entitled to indemnification herein shall (i) give prompt written notice to the indemnifying party of any claim with respect to which it seeks indemnification (provided that the failure to give prompt notice shall not impair
any person’s or entity’s right to indemnification hereunder to the extent such failure has not materially prejudiced the indemnifying party) and (ii) unless in such indemnified party’s reasonable judgment a conflict of interest between such
indemnified and indemnifying parties may exist with respect to such claim, permit such indemnifying party to assume the defense of such claim with counsel reasonably satisfactory to the indemnified party. If such defense is assumed, the
indemnifying party shall not be subject to any liability for any settlement made by the indemnified party without its consent (but such consent shall not be unreasonably withheld). An indemnifying party who is not entitled to, or elects not
to, assume the defense of a claim shall not be obligated to pay the fees and expenses of more than one counsel for all parties indemnified by such indemnifying party with respect to such claim, unless in the reasonable judgment of any
indemnified party a conflict of interest may exist between such indemnified party and any other of such indemnified parties with respect to such claim. No indemnifying party shall, without the consent of the indemnified party, consent to the
entry of any judgment or enter into any settlement which cannot be settled in all respects by the payment of money (and such money is so paid by the indemnifying party pursuant to the terms of such settlement) or which settlement includes a
statement or admission of fault and culpability on the part of such indemnified party or which settlement does not include as an unconditional term thereof the giving by the claimant or plaintiff to such indemnified party of a release from
all liability in respect to such claim or litigation.
4.1.4 The
indemnification provided for under this Agreement shall remain in full force and effect regardless of any investigation made by or on behalf of the indemnified party or any officer, director or controlling person or entity of such indemnified
party and shall survive the transfer of securities.
4.1.5 If the
indemnification provided under Section 4.1 from the indemnifying party is unavailable or insufficient to hold harmless an indemnified party in respect of any losses, claims, damages, liabilities and out-of-pocket expenses referred to
herein, then the indemnifying party, in lieu of indemnifying the indemnified party, shall contribute to the amount paid or payable by the indemnified party as a result of such losses, claims, damages, liabilities and out-of-pocket expenses in
such proportion as is appropriate to reflect the relative fault of the indemnifying party and the indemnified party, as well as any other relevant equitable considerations. The relative fault of the indemnifying party and indemnified party
shall be determined by reference to, among other things, whether any action in question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact, was made by (or not made
by, in the case of an omission), or relates to information supplied by (or not supplied by in the case of an omission), such indemnifying party or indemnified party, and the indemnifying party’s and indemnified party’s relative intent,
knowledge, access to information and opportunity to correct or prevent such action; provided, however, that the liability of any Holder
under this Section 4.1.5 shall be limited to the amount of the net proceeds received by such Holder in such offering giving rise to such liability. The amount paid or payable by a party as a result of the losses or other liabilities
referred to above shall be deemed to include, subject to the limitations set forth in Sections 4.1.1, 4.1.2 and 4.1.3 above, any legal or other fees, charges or out-of-pocket expenses reasonably incurred by such party
in connection with any investigation or proceeding. The parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 4.1.5 were determined by pro rata allocation or by any other method of
allocation, which does not take account of the equitable considerations referred to in this Section 4.1.5. No person or entity guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be
entitled to contribution pursuant to this Section 4.1.5 from any person or entity who was not guilty of such fraudulent misrepresentation.
ARTICLE V
MISCELLANEOUS
5.1 Notices.
Any notice or communication under this Agreement must be in writing and given by (i) deposit in the United States mail, addressed to the party to be notified, postage prepaid and registered or certified with return receipt requested,
(ii) delivery in person or by courier service providing evidence of delivery, or (iii) transmission by hand delivery, electronic mail or facsimile. Each notice or communication that is mailed, delivered, or transmitted in the manner described
above shall be deemed sufficiently given, served, sent,
TABLE OF CONTENTS
and received, in the case of mailed notices, on the third business day following the
date on which it is mailed and, in the case of notices delivered by courier service, hand delivery, electronic mail or facsimile, at such time as it is delivered to the addressee (with the delivery receipt or the affidavit of messenger) or at
such time as delivery is refused by the addressee upon presentation. Any notice or communication under this Agreement must be addressed, if to the Company, to: H2B2 Electrolysis Technologies, Inc., 300 Delaware Ave Ste 210-A, Wilmington, DE
19801, Attention: Anselmo Andrade and Mario Barragan, Email: anselmo.andrade@h2b2.es and mario.barragan@h2b2.es, and, if to any Holder, at such Holder’s address, electronic mail address or facsimile number as set forth in the Company’s books
and records. Any party may change its address for notice at any time and from time to time by written notice to the other parties hereto, and such change of address shall become effective thirty (30) calendar days after delivery of such notice
as provided in this Section 5.1.
5.2 Assignment; No Third-Party Beneficiaries.
5.2.1 This
Agreement and the rights, duties and obligations of the Company hereunder may not be assigned or delegated by the Company in whole or in part.
5.2.2 Subject
to Section 5.2.4 and Section 5.2.5, this Agreement and the rights, duties and obligations of a Holder hereunder may be assigned in whole or in part to such Holder’s Permitted Transferees; provided that, with respect to the H2B2 Holders and the Sponsor, the rights hereunder that are personal to such Holders may not be assigned or delegated in whole or in
part, except that (x) each of the H2B2 Holders shall be permitted to transfer its rights hereunder as the H2B2 Holders to (i) one (1) or more affiliates or any direct or indirect partners, members or equity holders of such H2B2 Holder (it
being understood that no such transfer shall reduce any rights of such H2B2 Holder or such transferees), (ii) any third-party pledgee in a bona fide transaction as collateral to secure obligations pursuant to lending or other arrangements
between such H2B2 Holder (or its affiliates), on the one hand, and such third party (or its affiliates), on the other hand, or any similar arrangement relating to a financing arrangement for the benefit of such H2B2 Holder and/or its
affiliates, and (iii) pursuant to a bona fide loan or pledge or as a grant or maintenance of a bona fide lien, security interests, pledge or other similar encumbrance of any such securities owned by such H2B2 Holder and/or its affiliates to a
nationally or internationally recognized financial institution in connection with a loan to, or similar financing arrangement with, such H2B2 Holder and/or its affiliates, and (y) the Sponsor shall be permitted to transfer its rights
hereunder as the Sponsor to (i) one (1) or more affiliates or any direct or indirect partners, members or equity holders of the Sponsor (it being understood that no such transfer shall reduce any rights of the Sponsor or such transferees),
(ii) any third-party pledgee in a bona fide transaction as collateral to secure obligations pursuant to lending or other arrangements between the Sponsor (or its affiliates), on the one hand, and such third party (or its affiliates), on the
other hand, or any similar arrangement relating to a financing arrangement for the benefit of the Sponsor and/or its affiliates, and (iii) pursuant to a bona fide loan or pledge or as a grant or maintenance of a bona fide lien, security
interests, pledge or other similar encumbrance of any such securities owned by the Sponsor and/or its affiliates to a nationally or internationally recognized financial institution in connection with a loan to, or similar financing
arrangement with, the Sponsor and/or its affiliates.
5.2.3 This
Agreement and the provisions hereof shall be binding upon and shall inure to the benefit of each of the parties and its successors and the permitted assigns of the Holders, which shall include Permitted Transferees.
5.2.4 This
Agreement shall not confer any rights or benefits on any persons or entities that are not parties hereto, other than as expressly set forth in this Agreement and Section 5.2.
5.2.5 No
assignment by any party hereto of such party’s rights, duties and obligations hereunder shall be binding upon or obligate the Company unless it is permitted under Section 5.2.2 and until the Company shall have received (i) written
notice of such assignment as provided in Section 5.1 hereof and (ii) the written agreement of the assignee, in a form reasonably satisfactory to the Company, to be bound by the terms and provisions of this Agreement (which may be
accomplished by an addendum or certificate of joinder to this Agreement). Any transfer or assignment made other than as provided in this Section 5.2 shall be null and void, ab initio.
5.3 Counterparts.
This Agreement may be executed in two (2) or more counterparts (any of which may be delivered by electronic transmission), each of which shall constitute an original, and all of which taken together shall constitute one and the same
instrument.
TABLE OF CONTENTS
5.4 Governing Law; Venue. This Agreement, and all claims or causes of action based upon, arising out of, or related to this Agreement or the transactions contemplated hereby, shall be governed by, and construed in accordance with, the
Laws of the State of Delaware, without giving effect to principles or rules of conflict of Laws to the extent such principles or rules would require or permit the application of Laws of another jurisdiction.
5.5 TRIAL BY JURY. EACH PARTY HERETO ACKNOWLEDGES
AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY, UNCONDITIONALLY AND
VOLUNTARILY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY ACTION, SUIT OR PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY
CERTIFIES AND ACKNOWLEDGES THAT (I) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (II) EACH
SUCH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (III) EACH SUCH PARTY MAKES THIS WAIVER VOLUNTARILY, AND (IV) EACH SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS
AND CERTIFICATIONS IN THIS SECTION 5.5.
5.6 Amendments and Modifications. Upon the written consent of (a) the Company and (b) the Holders of a majority of the total Registrable Securities, compliance with any of the provisions, covenants and conditions set forth in this Agreement may
be waived, or any of such provisions, covenants or conditions may be amended or modified; provided, however, that notwithstanding the
foregoing, any amendment hereto or waiver hereof shall also require the written consent of the Sponsor so long as the Sponsor and its affiliates hold, in the aggregate, at least five percent (5%) of the outstanding shares of Common Stock; provided, further, that notwithstanding the
foregoing, any amendment hereto or waiver hereof shall also require the written consent of each of the H2B2 Majority Holders so long as such Holder and its affiliates hold, in the aggregate, at least five percent (5%) of the outstanding
shares of Common Stock; and provided, further, that any amendment hereto or waiver hereof that adversely affects one Holder, solely in
its capacity as a holder of the shares of capital stock of the Company, in a manner that is materially different from the other Holders (in such capacity) shall require the consent of the Holder so affected. No course of dealing between any
Holder or the Company and any other party hereto or any failure or delay on the part of a Holder or the Company in exercising any rights or remedies under this Agreement shall operate as a waiver of any rights or remedies of any Holder or the
Company. No single or partial exercise of any rights or remedies under this Agreement by a party shall operate as a waiver or preclude the exercise of any other rights or remedies hereunder or thereunder by such party.
5.7 Other Registration Rights. Other than as provided in the Warrant Agreement, dated as of February 4, 2021, between the Company and Continental Stock Transfer & Trust Company, the Company represents and warrants that no person or
entity, other than a Holder of Registrable Securities, has any right to require the Company to register any securities of the Company for sale or to include such securities of the Company in any Registration Statement filed by the Company for
the sale of securities for its own account or for the account of any other person or entity. For so long as the Sponsor and its affiliates hold, in the aggregate, at least five percent (5%) of the outstanding shares of Common Stock, the
Company hereby agrees and covenants that it will not grant rights to register any Common Stock (or securities convertible into or exchangeable for Common Stock) pursuant to the Securities Act that are more favorable, pari passu or senior to
those granted to the Holders hereunder (such rights “Competing Registration Rights”) without the prior written consent of the Sponsor. Further, the Company represents and warrants that this Agreement supersedes any other registration
rights agreement or agreement with similar terms and conditions and in the event of a conflict between any such agreement or agreements and this Agreement, the terms of this Agreement shall prevail.
5.8 Term. This
Agreement shall terminate on the earlier of (a) the seventh (7th) anniversary of the date of this Agreement and (b) with respect to any Holder, on the date that such Holder no longer holds any Registrable Securities. The provisions
of Section 3.5 and Article IV shall survive any termination.
5.9 Holder Information. Each Holder agrees, if requested in writing, to represent to the Company the total number of Registrable Securities held by such Holder in order for the Company to make determinations hereunder.
TABLE OF CONTENTS
5.10 Additional Holders; Joinder. In addition to persons or entities who may become Holders pursuant to Section 5.2 hereof, subject to the prior written consent of the Sponsor and the H2B2 Majority Holders (in each case, so long as such
Holder and its affiliates hold, in the aggregate, at least five percent (5%) of the outstanding shares of Common Stock), the Company may make any person or entity who has or acquires Common Stock or rights to acquire Common Stock after the
date hereof a party to this Agreement (each such person or entity, an “Additional Holder”) by obtaining an executed joinder to this Agreement from such Additional Holder in the form of Exhibit A attached hereto (a “Joinder”).
Such Joinder shall specify the rights and obligations of the applicable Additional Holder under this Agreement. Upon the execution and delivery and subject to the terms of a Joinder by such Additional Holder, the Common Stock then owned, or
underlying any rights then owned, by such Additional Holder (the “Additional Holder Common Stock”) shall be Registrable Securities to the extent provided herein and therein and such Additional Holder shall be a Holder under this
Agreement with respect to such Additional Holder Common Stock.
5.11 Severability. If any provision of this Agreement is held invalid or unenforceable by any court of competent jurisdiction, the other provisions of this Agreement will remain in full force and effect. The parties hereto further agree that if any
provision contained herein is, to any extent, held invalid or unenforceable in any respect under the Laws governing this Agreement, they shall take any actions necessary to render the remaining provisions of this Agreement valid and
enforceable to the fullest extent permitted by Law and, to the extent necessary, shall amend or otherwise modify this Agreement to replace any provision contained herein that is held invalid or unenforceable with a valid and enforceable
provision giving effect to the intent of the parties hereto.
5.12 Entire Agreement; Restatement. This Agreement, the Merger Agreement and the other Ancillary Agreements (as defined in the Merger Agreement) constitute the entire agreement between the parties hereto relating to the transactions contemplated
hereby and supersede any other agreements, whether written or oral, that may have been made or entered into by or between the parties hereto or any of their respective Subsidiaries (as defined in the Merger Agreement) relating to the
transactions contemplated hereby. No representations, warranties, covenants, understandings, agreements, oral or otherwise, relating to the transactions contemplated hereby exist between such parties except as expressly set forth in this
Agreement, the Merger Agreement and the other Ancillary Agreements. Upon the Closing, the Original RRA shall no longer be of any force or effect.
[remainder of page intentionally left blank]
TABLE OF CONTENTS
IN WITNESS WHEREOF, the undersigned have caused this Agreement to
be executed as of the date first written above.
|
|
|
COMPANY:
|
|
|
|
|
|
|
|
|
|
|
, a Delaware corporation
|
|
|
|
|
|
|
|
|
|
|
By:
|
|
|
|
|
|
|
Name:
|
|
|
|
|
|
|
Title:
|
|
|
|
[Signature Page to Amended and Restated Registration Rights Agreement]
TABLE OF CONTENTS
IN WITNESS WHEREOF, the undersigned have caused this Agreement to
be executed as of the date first written above.
|
|
|
HOLDERS:
|
|
|
|
|
|
|
|
|
|
|
RMG SPONSOR III LLC, a
Delaware limited liability company
|
|
|
|
|
|
|
|
|
|
|
By:
|
|
|
|
|
|
|
Name:
|
|
|
|
|
|
|
Title:
|
|
|
|
[Signature Page to Amended and Restated Registration Rights Agreement]
TABLE OF CONTENTS
IN WITNESS WHEREOF, the undersigned have caused this Agreement to
be executed as of the date first written above.
[Signature Page to Amended and Restated Registration Rights Agreement]
TABLE OF CONTENTS
Exhibit A
REGISTRATION RIGHTS AGREEMENT JOINDER
The undersigned is executing and delivering this joinder (this “Joinder”)
pursuant to the Amended and Restated Registration Rights Agreement, dated as of (as the same may hereafter be amended, the “Registration Rights Agreement”), by and among , a Delaware corporation (the “Company”), and the
other persons or entities named as parties therein. Capitalized terms used but not otherwise defined herein shall have the meanings provided in the Registration Rights Agreement.
By executing and delivering this Joinder to the Company, and upon
acceptance hereof by the Company upon the execution of a counterpart hereof, the undersigned hereby agrees to become a party to, to be bound by, and to comply with the Registration Rights Agreement as a Holder of Registrable Securities in the
same manner as if the undersigned were an original signatory to the Registration Rights Agreement, and the undersigned’s shares of Common Stock shall be included as Registrable Securities under the Registration Rights Agreement to the extent
provided therein; provided, however, that the undersigned and its permitted assigns (if any) shall not have any rights as Holders, and the undersigned’s (and its transferees’) shares of Common Stock
shall not be included as Registrable Securities, for purposes of the Excluded Sections.
For purposes of this Joinder, “Excluded Sections” shall mean
[ ].
Accordingly, the undersigned has executed and delivered this Joinder
as of the day of , 20 .
|
|
|
|
|
|
|
Signature of Stockholder
|
|
|
|
|
|
|
|
Print Name of Stockholder
|
|
|
|
|
|
|
|
Its:
|
|
|
|
|
|
|
Address:
|
|
|
|
|
|
|
|
|
|
|
Agreed and Accepted as of
|
|
|
|
, 20
|
|
|
|
|
|
|
|
|
|
|
By:
|
|
|
|
|
|
|
Name:
|
|
|
|
|
|
|
Its:
|
|
|
|
|
|
|
[Signature Page to Amended and Restated Registration Rights Agreement]
TABLE OF CONTENTS
Schedule I
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
[Signature Page to Amended and Restated Registration Rights Agreement]
TABLE OF CONTENTS
FORM OF LOCK-UP AGREEMENT
THIS LOCK-UP AGREEMENT (this “Agreement”), dated as of is
made and entered into by and among , a Delaware corporation (the “Company”) (formerly known as RMG Acquisition Corp. III, a Cayman Islands exempted company limited by shares prior to its domestication as a Delaware corporation), and
the Persons (as defined in the Merger Agreement (as defined below)) set forth on Schedule I hereto (such Persons, together with any other Person who hereafter becomes a party to this Agreement pursuant to Section 2 or Section
8 of this Agreement, the “Securityholders” and each, a “Securityholder”).
WHEREAS, the
Company and H2B2 Electrolysis Technologies, Inc., a Delaware corporation (“H2B2”), entered into that certain Agreement and Plan of Merger (as amended or modified from time to time, the “Merger Agreement”; capitalized
terms used but not defined herein shall have the respective meanings ascribed to such terms in the Merger Agreement), dated as of , 2023, pursuant to which, among other things, on the date hereof, H2B2 merged with and into the Company,
with the Company continuing on as the Surviving Corporation, on the terms and conditions set forth therein (the “Merger”);
WHEREAS, upon
the Closing, each of the Securityholders will own equity interests in the Company; and
WHEREAS, in
connection with the Merger, the parties hereto wish to set forth herein certain understandings between such parties with respect to restrictions on transfer of equity interests in the Company.
NOW, THEREFORE,
the parties agree as follows:
1. Subject to the exceptions set forth herein, each Securityholder
agrees not to, without the prior written consent of the board of directors of the Company, (i) sell, offer to sell, contract or agree to sell, hypothecate, pledge, grant any option, right or warrant to purchase or otherwise transfer, dispose of
or agree to transfer or dispose of, directly or indirectly, or establish or increase a put equivalent position or liquidate or decrease a call equivalent position within the meaning of Section 16 of the Exchange Act, and the rules and
regulations of the SEC promulgated thereunder, [any shares of Surviving Corporation Common Stock held by it immediately after the Effective Time]1[80% of the shares of Surviving Corporation Common Stock held by it immediately after
the Effective Time]2, any shares of Surviving Corporation Common Stock issuable upon the exercise or settlement, as applicable, of Surviving Corporation Options held by it immediately after the Effective Time or any other securities
convertible into or exercisable or exchangeable for Surviving Corporation Common Stock held by it immediately after the Effective Time (collectively, the “Lock-Up Shares”), (ii) enter into any swap or other arrangement that transfers to
another, in whole or in part, any of the economic consequences of ownership of any of the Lock-Up Shares, whether any such transaction is to be settled by delivery of such securities, in cash or otherwise or (iii) publicly announce any
intention to effect or take any action in furtherance of any transaction specified in clause (i) or (ii) (the actions specified in clauses (i)-(iii), collectively, “Transfer”) until the date that is 180 days after the Closing Date (the “Lock-Up
Period”), subject to the early release provisions set forth in Section 4 below.
2.
|
The restrictions set forth in Section 1 shall not apply to:
|
(i)
|
in the case of an entity, Transfers (A) to another entity that is an affiliate (as defined in Rule 405 promulgated under the
Securities Act) of the undersigned, or to any investment fund or other entity controlling, controlled by, managing or managed by or under common control with the undersigned or affiliates of the undersigned or who shares a common
investment advisor with the undersigned or (B) as part of a distribution to members, partners, shareholders or equity holders of the undersigned;
|
(ii)
|
in the case of an individual, Transfers by gift to members of the individual’s immediate family (as defined below) or to a
trust, the beneficiary of which is a member of one of the individual’s immediate family, an affiliate of such person or to a charitable organization;
|
TABLE OF CONTENTS
(iii)
|
in the case of an individual, Transfers by virtue of laws of descent and distribution upon death of the individual;
|
(iv)
|
in the case of an individual, Transfers by operation of law or pursuant to a court order, such as a qualified domestic relations
order, divorce decree or separation agreement;
|
(v)
|
in the case of an individual, Transfers to a partnership, limited liability company or other entity of which the undersigned
and/or the immediate family (as defined below) of the undersigned are the legal and beneficial owner of all of the outstanding equity securities or similar interests;
|
(vi)
|
in the case of an entity that is a trust, Transfers to a trustor or beneficiary of the trust or to the estate of a beneficiary
of such trust;
|
(vii)
|
in the case of an entity, Transfers by virtue of the laws of the state of the entity’s organization and the entity’s
organizational documents upon dissolution of the entity;
|
(viii)
|
Transfers relating to Surviving Corporation Common Stock or other securities convertible into or exercisable or exchangeable for
Surviving Corporation Common Stock acquired in open market transactions after the Closing; provided that no such transaction is required to be, or is, publicly announced (whether on Form 4, Form
5 or otherwise, other than a required filing on Schedule 13F, 13G or 13G/A) during the Lock-Up Period;
|
(ix)
|
the exercise of stock options or the vesting of stock awards of Surviving Corporation Common Stock and any related transfer of
shares of Surviving Corporation Common Stock in connection therewith (x) deemed to occur upon the “cashless” or “net” exercise of such options or (y) for the purpose of paying the exercise price of such options or for paying taxes due
as a result of the exercise of such options, the vesting of such options or stock awards, or as a result of the vesting of such shares of Surviving Corporation Common Stock, it being understood that all shares of Surviving Corporation
Common Stock received upon such exercise, vesting or transfer will remain subject to the restrictions of this Agreement during the Lock-Up Period;
|
(x)
|
Transfers to the Company pursuant to any contractual arrangement in effect at the Effective Time that provides for the
repurchase by the Company or forfeiture of Surviving Corporation Common Stock or other securities convertible into or exercisable or exchangeable for Surviving Corporation Common Stock in connection with the termination of the
Securityholder’s service to the Company;
|
(xi)
|
the entry, by a Securityholder, at any time after the Effective Time, of any trading plan providing for the sale of shares of
Surviving Corporation Common Stock by a Securityholder, which trading plan meets the requirements of Rule 10b5-1(c) under the Exchange Act; provided, however,
that such plan does not provide for, or permit, the sale of any shares of Surviving Corporation Common Stock during the Lock-Up Period and no public announcement or filing is voluntarily made or required regarding such plan during the
Lock-Up Period;
|
(xii)
|
Transfers in the event of completion of a liquidation, merger, stock exchange, reorganization or other similar transaction that
results in all of the Company’s securityholders having the right to exchange their shares of Surviving Corporation Common Stock for cash, securities or other property;
|
(xiii)
|
Transfers to satisfy any U.S. federal, state, or local income tax obligations of a Securityholder (or its direct or indirect
owners) arising from a change in the Code, or the U.S. Treasury Regulations promulgated thereunder (the “Regulations”) after the date on which the Merger Agreement was executed by the parties thereto, and such change prevents the
Merger from qualifying as a “reorganization” pursuant to Section 368 of the Code (and the Merger does not qualify for similar tax-free treatment pursuant to any successor or other provision of the Code or Regulations taking into account
such changes), in each case solely and to the extent necessary to cover any tax liability as a direct result of the transaction;
|
TABLE OF CONTENTS
(xiv)
|
Transfers to satisfy any Spanish tax obligations of a Securityholder (or its direct or indirect owners) arising from a change in
the Spanish tax laws and regulations after the date on which the Merger Agreement was executed by the parties thereto, and such change prevents the Merger from qualifying for the regime set forth under Title VII, Chapter VII of the
Spanish Law 27/209014, Corporate Income Tax Law (and the Merger does not qualify for similar tax-free treatment pursuant to any successor or other provision of such Law or regulations thereunder taking into account such changes), in
each case solely and to the extent necessary to cover any tax liability as a direct result of the transaction; and
|
(xv)
|
pledges of Surviving Corporation Common Stock or other securities convertible into or exercisable or exchangeable for Surviving
Corporation Common Stock in a bona fide transaction as collateral to secure obligations pursuant to lending or other financing arrangements between a Securityholder (or its affiliates), on the one hand, and a third party, on the other
hand, for the benefit of such Securityholder and/or its affiliates.
|
provided, however, that (A) in the case of clauses (i) through (vii), such permitted transferees must enter into a written agreement, in substantially the form of this Agreement (it being understood that any references to “immediate family” in the
agreement executed by such permitted transferee shall expressly refer only to the immediate family of the applicable Securityholder and not to the immediate family of the permitted transferee), agreeing to be bound by all Transfer
restrictions set forth herein. For purposes of this paragraph, “immediate family” shall mean a spouse, domestic partner, child (including by adoption), father, mother, brother or sister of the applicable undersigned Securityholder, and lineal
descendant (including by adoption) of the applicable undersigned Securityholder or of any of the foregoing Persons, and “affiliate” shall have the meaning set forth in Rule 405 under the Securities Act.
3. In the event that the Company releases or waives, in full or in
part, any Person from a lock-up agreement entered into in connection with the Closing, then the same number of Surviving Corporation Common Stock constituting the Lock-Up Shares held by any undersigned Securityholder as held by such released
party shall be immediately and fully released on the same terms as such released party from the applicable prohibition(s) set forth herein. The foregoing provisions of this paragraph will not apply if (i) the release or waiver is granted to a
holder of Surviving Corporation Common Stock in connection with a follow-on public offering of Surviving Corporation Common Stock pursuant to a registration statement filed with the SEC, whether or not such offering or sale is wholly or
partially a secondary offering of the Surviving Corporation Common Stock, and the undersigned Securityholder, only to the extent the undersigned Securityholder has a contractual right to demand or require the registration of the undersigned’s
Surviving Corporation Common Stock or “piggyback” on a registration statement filed by the Company for the offer and sale of its Surviving Corporation Common Stock, has been given an opportunity to participate on a basis consistent with such
contractual rights in such follow-on offering, (ii) (a) the release or waiver is effected solely to permit a Transfer not for consideration and (b) the transferee has agreed in writing to be bound by the same terms described in this Agreement
to the extent and for the duration that such terms remain in effect at the time of the Transfer, (iii) the aggregate number of Surviving Corporation Common Stock constituting the Lock-Up Shares affected by such releases or waivers (whether in
one or multiple releases or waivers) with respect to any particular beneficial or record holder of such Surviving Corporation Common Stock constituting the Lock-Up Shares is less than or equal to 1% of the total number of outstanding shares of
Surviving Corporation Common Stock then outstanding (on a fully-diluted basis, calculated as of the date of such release or waiver), or (iv) the Company determines in its sole discretion that a release or waiver should be granted to a record or
beneficial holder of Surviving Corporation Common Stock constituting the Lock-Up Shares due to circumstances of emergency or hardship. In the event that the Company changes, amends, modifies or waives (other than to correct a typographical
error) any particular provision of any other lock-up agreement entered into in connection with the Closing, then each undersigned Securityholder shall be offered the option (but not the requirement) to make a corresponding change, amendment,
modification or waiver to this Agreement, with such option to be exercised in a written notice to the Company which makes reference to this Agreement.
TABLE OF CONTENTS
4. This Agreement shall terminate upon the earlier of (i) the
expiration of the Lock-Up Period, (ii) the closing of a liquidation, merger, stock exchange, reorganization or other similar transaction after the Closing Date that results in all of the public stockholders of the Company having the right to
exchange their shares of Surviving Corporation Common Stock for cash securities or other property, or (iii) the liquidation of the Company.
5. In furtherance of the foregoing, the Company, and any duly
appointed transfer agent for the registration or transfer of the securities described therein, are hereby authorized to decline to make any transfer of securities if such transfer would constitute a violation or breach of this Agreement.
6. This Agreement replaces Section 7(a) of that certain Letter
Agreement, dated February 4, 2021, among the Company, RMG Sponsor III LLC, a Delaware limited liability company, and certain other Persons party thereto, which Section 7(a) shall be terminated and, to the extent previously applicable to a
Securityholder, of no further effect with respect to such Securityholder upon the Closing, and constitutes the entire agreement and understanding of the parties hereto in respect of the subject matter hereof and supersedes all prior
understandings, agreements or representations by or among the parties hereto, written or oral, to the extent they relate in any way to the subject matter hereof or the transactions contemplated hereby.
7. This Agreement may be amended or modified in whole or in part,
only by a duly authorized agreement in writing, executed by the Company and the Securityholders holding a majority of the shares of Surviving Corporation Common Stock then held by the Securityholders in the aggregate as to which this Agreement
has not been terminated, executed in the same manner as this Agreement and which makes reference to this Agreement. This Agreement may not be modified or amended except as provided in the immediately preceding sentence and any purported
amendment by any party or parties hereto effected in a manner which does not comply with this Section 7 shall be null and void, ab initio.
8. Except as set forth herein, no party hereto may assign either
this Agreement or any of its rights, interests or obligations hereunder without the prior written consent of (i) with respect to any Securityholder, the Company, and (ii) with respect to the Company, the Securityholders holding a majority of
the shares of Surviving Corporation Common Stock then held by the Securityholders in the aggregate as to which this Agreement has not been terminated. Any purported assignment in violation of this paragraph shall be void and ineffectual and
shall not operate to transfer or assign any interest or title to the purported assignee. This Agreement shall be binding on each Securityholder and each of its respective successors, heirs and assigns and permitted transferees.
9. This Agreement, and all claims or causes of action based upon,
arising out of, or related to this Agreement or the transactions contemplated hereby, shall be governed by, and construed in accordance with, the Laws of the State of Delaware, without giving effect to principles or rules of conflict of Laws to
the extent such principles or rules would require or permit the application of Laws of another jurisdiction. Any proceeding or Action based upon, arising out of or related to this Agreement or the transactions contemplated hereby must be
brought in the Court of Chancery of the State of Delaware (or, to the extent such court does not have subject matter jurisdiction, the Superior Court of the State of Delaware), or, if it has or can acquire jurisdiction, in the United States
District Court for the District of Delaware, and each of the parties hereto irrevocably (i) submits to the exclusive jurisdiction of each such court in any such proceeding or Action, (ii) waives any objection it may now or hereafter have to
personal jurisdiction, venue or to convenience of forum, (iii) agrees that all claims in respect of the proceeding or Action shall be heard and determined only in any such court, and (iv) agrees not to bring any proceeding or Action arising out
of or relating to this Agreement or the transactions contemplated hereby in any other court. Nothing herein contained shall be deemed to affect the right of any party hereto to serve process in any manner permitted by Law or to commence Legal
Proceedings or otherwise proceed against any other party hereto in any other jurisdiction, in each case, to enforce judgments obtained in any Action, suit or proceeding brought pursuant to this Section 9. EACH PARTY HERETO ACKNOWLEDGES AND
AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY, UNCONDITIONALLY AND VOLUNTARILY
WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY ACTION, SUIT OR PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS
TABLE OF CONTENTS
AGREEMENT. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (I) NO REPRESENTATIVE, AGENT
OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (II) EACH SUCH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF
THIS WAIVER, (III) EACH SUCH PARTY MAKES THIS WAIVER VOLUNTARILY, AND (IV) EACH SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 9.
10. This Agreement may be executed in two (2) or more counterparts
(any of which may be delivered by electronic transmission), each of which shall constitute an original, and all of which taken together shall constitute one and the same instrument.
11. If any provision of this Agreement is held invalid or
unenforceable by any court of competent jurisdiction, the other provisions of this Agreement will remain in full force and effect. The parties hereto further agree that if any provision contained herein is, to any extent, held invalid or
unenforceable in any respect under the Laws governing this Agreement, they shall take any actions necessary to render the remaining provisions of this Agreement valid and enforceable to the fullest extent permitted by Law and, to the extent
necessary, shall amend or otherwise modify this Agreement to replace any provision contained herein that is held invalid or unenforceable with a valid and enforceable provision giving effect to the intent of the parties hereto. The parties
hereto agree that irreparable damage could occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the parties hereto
shall be entitled to an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement in addition to any other remedy to which any party hereto is entitled at law or in
equity. In the event that any Action shall be brought in equity to enforce the provisions of this Agreement, no party hereto shall allege, and each party hereto hereby waives the defense, that there is an adequate remedy at law, and each party
hereto agrees to waive any requirement for the securing or posting of any bond in connection therewith.
12. This Agreement, the Merger Agreement and the other Ancillary
Agreements constitute the entire agreement between the parties hereto relating to the transactions contemplated hereby and supersede any other agreements, whether written or oral, that may have been made or entered into by or between the
parties hereto or any of their respective Subsidiaries relating to the transactions contemplated hereby. No representations, warranties, covenants, understandings, agreements, oral or otherwise, relating to the transactions contemplated hereby
exist between such parties except as expressly set forth in this Agreement, the Merger Agreement and the other Ancillary Agreements.
13. The liability of any Securityholder hereunder is several (and
not joint). Notwithstanding any other provision of this Agreement, in no event will any Securityholder be liable for any other Securityholder’s breach of such other Securityholder’s obligations under this Agreement.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY BLANK]
TABLE OF CONTENTS
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed as of the date first above written.
|
|
|
COMPANY:
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
|
|
|
|
|
|
Name:
|
|
|
|
Title:
|
[Signature Page to Lock-Up Agreement]
TABLE OF CONTENTS
|
|
|
SECURITYHOLDERS:
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
|
|
|
|
|
|
Name:
|
|
|
|
Title:
|
[Signature Page to Lock-Up Agreement]
TABLE OF CONTENTS
SCHEDULE I
SECURITYHOLDERS
[Schedule I to Lock-Up Agreement]
TABLE OF CONTENTS
THE COMPANIES ACT (AS REVISED)
OF THE CAYMAN ISLANDS
COMPANY LIMITED BY SHARES
THIRD AMENDED AND RESTATED
MEMORANDUM AND ARTICLES OF ASSOCIATION
OF
RMG ACQUISITION CORP. III
(ADOPTED BY SPECIAL RESOLUTION
DATED AUGUST 4, 2023 AND EFFECTIVE ON AUGUST 4, 2023)
TABLE OF CONTENTS
THE COMPANIES ACT (AS REVISED)
OF THE CAYMAN ISLANDS
COMPANY LIMITED BY SHARES
THIRD AMENDED AND RESTATED
MEMORANDUM OF ASSOCIATION
OF
RMG ACQUISITION CORP. III
(ADOPTED BY SPECIAL RESOLUTION
DATED AUGUST 4, 2023 AND EFFECTIVE ON AUGUST 4, 2023)
(1)
|
The name of the Company is RMG Acquisition Corp. III.
|
(2)
|
The Registered Office of the Company shall be at the offices of Maples Corporate Services Limited, PO Box 309, Ugland House,
Grand Cayman, KY1-1104, Cayman Islands, or at such other place within the Cayman Islands as the Directors may decide.
|
(3)
|
The objects for which the Company is established are unrestricted and the Company shall have full power and authority to carry
out any object not prohibited by the laws of the Cayman Islands.
|
(4)
|
The liability of each Member is limited to the amount unpaid on such Member’s shares.
|
(5)
|
The share capital of the Company is US$ 55,500 divided into 500,000,000 Class A ordinary shares of a par value of US$0.0001
each, 50,000,000 Class B ordinary shares of a par value of US$0.0001 each and 5,000,000 preference shares of a par value of US$0.0001 each.
|
(6)
|
The Company has power to register by way of continuation as a body corporate limited by shares under the laws of any
jurisdiction outside the Cayman Islands and to be deregistered in the Cayman Islands.
|
(7)
|
Capitalised terms that are not defined in this Third Amended and Restated Memorandum of Association bear the respective meanings
given to them in the Third Amended and Restated Articles of Association of the Company.
|
TABLE OF CONTENTS
THE COMPANIES ACT (AS REVISED)
OF THE CAYMAN ISLANDS
COMPANY LIMITED BY SHARES
THIRD AMENDED AND RESTATED
ARTICLES OF ASSOCIATION
OF
RMG ACQUISITION CORP. III
(ADOPTED BY SPECIAL RESOLUTION
DATED AUGUST 4, 2023 AND EFFECTIVE ON AUGUST 4, 2023)
1.1
|
In the Articles Table A in the First Schedule to the Statute does not apply and, unless there is something in the subject or
context inconsistent therewith:
|
“Affiliate”
|
|
|
in respect of a person, means any other person that, directly or indirectly,
through one or more intermediaries, controls, is controlled by, or is under common control with, such person, and (a) in the case of a natural person, shall include, without limitation, such person’s spouse, parents, children, siblings,
mother in law and father in law and brothers and sisters in law, whether by blood, marriage or adoption or anyone residing in such person’s home, a trust for the benefit of any of the foregoing, a company, partnership or any natural
person or entity wholly or jointly owned by any of the foregoing and (b) in the case of an entity, shall include a partnership, a corporation or any natural person or entity which directly, or indirectly through one or more
intermediaries, controls, is controlled by, or is under common control with, such entity.
|
|
|
|
|
“Applicable Law”
|
|
|
means, with respect to any person, all provisions of laws, statutes,
ordinances, rules, regulations, permits, certificates, judgments, decisions, decrees or orders of any governmental authority applicable to such person.
|
|
|
|
|
“Articles”
|
|
|
means these third amended and restated articles of association of the Company.
|
|
|
|
|
“Audit Committee”
|
|
|
means the audit committee of the board of directors of the Company established
pursuant to the Articles, or any successor committee.
|
|
|
|
|
“Auditor”
|
|
|
means the person for the time being performing the duties of auditor of the
Company (if any).
|
|
|
|
|
“Business Combination”
|
|
|
means a merger, amalgamation, share exchange, asset acquisition, share
purchase, reorganisation or similar business combination involving the Company, with one or more businesses or entities (the “target business”), which Business Combination: (a) as long as the securities of the Company are listed on the
Nasdaq Capital Market., must occur with one or more target businesses that together have an aggregate fair market value of at least 80 per cent of the assets held in the Trust Account (excluding the
|
TABLE OF CONTENTS
|
|
|
deferred underwriting commissions and taxes payable on the income earned on the
Trust Account at the time of the signing of the definitive agreement to enter into such Business Combination); and (b) must not be solely effectuated with another blank cheque company or a similar company with nominal operations.
|
|
|
|
|
“business day”
|
|
|
means any day other than a Saturday, a Sunday or a legal holiday or a day on
which banking institutions or trust companies are authorised or obligated by law to close in New York City.
|
|
|
|
|
“Clearing House”
|
|
|
means a clearing house recognised by the laws of the jurisdiction in which the
Shares (or depositary receipts therefor) are listed or quoted on a stock exchange or interdealer quotation system in such jurisdiction.
|
|
|
|
|
“Class A Share”
|
|
|
means a Class A ordinary share of a par value of US$0.0001 in the share capital
of the Company.
|
|
|
|
|
“Class B Share”
|
|
|
means a Class B ordinary share of a par value of US$0.0001 in the share capital
of the Company.
|
|
|
|
|
“Company”
|
|
|
means the above named company.
|
|
|
|
|
“Company’s Website”
|
|
|
means the website of the Company and/or its web address or domain name (if
any).
|
|
|
|
|
“Compensation Committee”
|
|
|
means the compensation committee of the board of directors of the Company
established pursuant to the Articles, or any successor committee.
|
|
|
|
|
“Designated Stock Exchange”
|
|
|
means any United States national securities exchange on which the securities of
the Company are listed for trading, including the Nasdaq Capital Market.
|
|
|
|
|
“Directors”
|
|
|
means the directors for the time being of the Company.
|
|
|
|
|
“Dividend”
|
|
|
means any dividend (whether interim or final) resolved to be paid on Shares
pursuant to the Articles.
|
|
|
|
|
“Electronic Communication”
|
|
|
means a communication sent by electronic means, including electronic posting to
the Company’s Website, transmission to any number, address or internet website (including the website of the Securities and Exchange Commission) or other electronic delivery methods as otherwise decided and approved by the Directors.
|
|
|
|
|
“Electronic Record”
|
|
|
has the same meaning as in the Electronic Transactions Act.
|
|
|
|
|
“Electronic Transactions Act”
|
|
|
means the Electronic Transactions Act (As Revised) of the Cayman Islands.
|
|
|
|
|
“Equity linked Securities”
|
|
|
means any debt or equity securities that are convertible, exercisable or
exchangeable for Class A Shares issued in a financing transaction in connection with a Business Combination,
|
TABLE OF CONTENTS
|
|
|
including but not limited to a private placement of equity or debt.
|
|
|
|
|
“Exchange Act”
|
|
|
means the United States Securities Exchange Act of 1934, as amended, or any
similar U.S. federal statute and the rules and regulations of the Securities and Exchange Commission thereunder, all as the same shall be in effect at the time.
|
|
|
|
|
“Founders”
|
|
|
means all Members immediately prior to the consummation of the IPO.
|
|
|
|
|
“Independent Director”
|
|
|
has the same meaning as in the rules and regulations of the Designated Stock
Exchange or in Rule 10A-3 under the Exchange Act, as the case may be.
|
|
|
|
|
“IPO”
|
|
|
means the Company’s initial public offering of securities.
|
|
|
|
|
“Member”
|
|
|
has the same meaning as in the Statute.
|
|
|
|
|
“Memorandum”
|
|
|
means the third amended and restated memorandum of association of the Company,
as amended or substituted from time to time.
|
|
|
|
|
“Nominating and Corporate Governance Committee”
|
|
|
means the nominating and corporate governance committee of the board of
directors of the Company established pursuant to the Articles, or any successor committee.
|
|
|
|
|
“Officer”
|
|
|
means a person appointed to hold an office in the Company.
|
|
|
|
|
“Ordinary Resolution”
|
|
|
means a resolution passed by a simple majority of the Members as, being
entitled to do so, vote in person or, where proxies are allowed, by proxy at a general meeting, and includes a unanimous written resolution. In computing the majority when a poll is demanded regard shall be had to the number of votes to
which each Member is entitled by the Articles.
|
|
|
|
|
“Ordinary Share”
|
|
|
means an ordinary share of a par value of US$0.0001 in the share capital of the
Company.
|
|
|
|
|
“Over-Allotment Option”
|
|
|
means the option of the Underwriters to purchase up to an additional 15 per
cent of the firm units (as described in the Articles) issued in the IPO at a price equal to US$10 per unit, less underwriting discounts and commissions.
|
|
|
|
|
“Preference Share”
|
|
|
means a preference share of a par value of US$0.0001 in the share capital of
the Company.
|
|
|
|
|
“Public Share”
|
|
|
means a Class A Share issued as part of the units (as described in the
Articles) issued in the IPO.
|
|
|
|
|
“Redemption Notice”
|
|
|
means a notice in a form approved by the Company by which a holder of Public
Shares is entitled to require the Company to redeem its Public Shares, subject to any conditions contained therein.
|
|
|
|
|
TABLE OF CONTENTS
“Register of Members”
|
|
|
means the register of Members maintained in accordance with the Statute and
includes (except where otherwise stated) any branch or duplicate register of Members.
|
|
|
|
|
“Registered Office”
|
|
|
means the registered office for the time being of the Company.
|
|
|
|
|
“Representative”
|
|
|
means a representative of the Underwriters.
|
|
|
|
|
“Seal”
|
|
|
means the common seal of the Company and includes every duplicate seal.
|
|
|
|
|
“Securities and Exchange Commission”
|
|
|
means the United States Securities and Exchange Commission.
|
|
|
|
|
“Share”
|
|
|
means a Class A Share, a Class B Share or a Preference Share and includes a
fraction of a share in the Company.
|
|
|
|
|
“Special Resolution”
|
|
|
has the same meaning as in the Statute, and includes a unanimous written
resolution.
|
|
|
|
|
“Sponsor”
|
|
|
means RMG Sponsor III, LLC, a Delaware limited liability company, and its
successors or assigns.
|
|
|
|
|
“Statute”
|
|
|
means the Companies Act (As Revised) of the Cayman Islands.
|
|
|
|
|
“Treasury Share”
|
|
|
means a Share held in the name of the Company as a treasury share in accordance
with the Statute.
|
|
|
|
|
“Trust Account”
|
|
|
means the trust account established by the Company upon the consummation of its
IPO and into which a certain amount of the net proceeds of the IPO, together with a certain amount of the proceeds of a private placement of warrants simultaneously with the closing date of the IPO, will be deposited.
|
|
|
|
|
“Underwriter”
|
|
|
means an underwriter of the IPO from time to time and any successor
underwriter.
|
(a)
|
words importing the singular number include the plural number and vice versa;
|
(b)
|
words importing the masculine gender include the feminine gender;
|
(c)
|
words importing persons include corporations as well as any other legal or natural person;
|
(d)
|
“written” and “in writing” include all modes of representing or reproducing words in visible form, including in the form of an
Electronic Record;
|
(e)
|
“shall” shall be construed as imperative and “may” shall be construed as permissive;
|
(f)
|
references to provisions of any law or regulation shall be construed as references to those provisions as amended, modified,
re-enacted or replaced;
|
(g)
|
any phrase introduced by the terms “including”, “include”, “in particular” or any similar expression shall be construed as
illustrative and shall not limit the sense of the words preceding those terms;
|
(h)
|
the term “and/or” is used herein to mean both “and” as well as “or.” The use of “and/or” in
|
TABLE OF CONTENTS
certain contexts in no respects qualifies or modifies the use of the terms “and” or
“or” in others. The term “or” shall not be interpreted to be exclusive and the term “and” shall not be interpreted to require the conjunctive (in each case, unless the context otherwise requires);
(i)
|
headings are inserted for reference only and shall be ignored in construing the Articles;
|
(j)
|
any requirements as to delivery under the Articles include delivery in the form of an Electronic Record;
|
(k)
|
any requirements as to execution or signature under the Articles including the execution of the Articles themselves can be
satisfied in the form of an electronic signature as defined in the Electronic Transactions Act;
|
(l)
|
sections 8 and 19(3) of the Electronic Transactions Act shall not apply;
|
(m)
|
the term “clear days” in relation to the period of a notice means that period excluding the day when the notice is received or
deemed to be received and the day for which it is given or on which it is to take effect; and
|
(n)
|
the term “holder” in relation to a Share means a person whose name is entered in the Register of Members as the holder of such
Share.
|
2.
|
COMMENCEMENT OF BUSINESS
|
2.1
|
The business of the Company may be commenced as soon after incorporation of the Company as the Directors shall see fit.
|
2.2
|
The Directors may pay, out of the capital or any other monies of the Company, all expenses incurred in or about the formation
and establishment of the Company, including the expenses of registration.
|
3.
|
ISSUE OF SHARES AND OTHER SECURITIES
|
3.1
|
Subject to the provisions, if any, in the Memorandum (and to any direction that may be given by the Company in general meeting)
and, where applicable, the rules and regulations of the Designated Stock Exchange, the Securities and Exchange Commission and/or any other competent regulatory authority or otherwise under Applicable Law, and without prejudice to any
rights attached to any existing Shares, the Directors may allot, issue, grant options over or otherwise dispose of Shares (including fractions of a Share) with or without preferred, deferred or other rights or restrictions, whether in
regard to Dividends or other distributions, voting, return of capital or otherwise and to such persons, at such times and on such other terms as they think proper, and may also (subject to the Statute and the Articles) vary such rights,
save that the Directors shall not allot, issue, grant options over or otherwise dispose of Shares (including fractions of a Share) to the extent that it may affect the ability of the Company to carry out a Class B Share Conversion set
out in the Articles.
|
3.2
|
The Company may issue rights, options, warrants or convertible securities or securities of similar nature conferring the right
upon the holders thereof to subscribe for, purchase or receive any class of Shares or other securities in the Company on such terms as the Directors may from time to time determine.
|
3.3
|
The Company may issue units of securities in the Company, which may be comprised of whole or fractional Shares, rights, options,
warrants or convertible securities or securities of similar nature conferring the right upon the holders thereof to subscribe for, purchase or receive any class of Shares or other securities in the Company, upon such terms as the
Directors may from time to time determine.
|
3.4
|
The Company shall not issue Shares to bearer.
|
4.1
|
The Company shall maintain or cause to be maintained the Register of Members in accordance with the Statute.
|
4.2
|
The Directors may determine that the Company shall maintain one or more branch registers of
|
TABLE OF CONTENTS
Members in accordance with the Statute. The Directors may also determine which
register of Members shall constitute the principal register and which shall constitute the branch register or registers, and to vary such determination from time to time.
5.
|
CLOSING REGISTER OF MEMBERS OR FIXING RECORD DATE
|
5.1
|
For the purpose of determining Members entitled to notice of, or to vote at any meeting of Members or any adjournment thereof,
or Members entitled to receive payment of any Dividend or other distribution, or in order to make a determination of Members for any other purpose, the Directors may, after notice has been given by advertisement in an appointed
newspaper or any other newspaper or by any other means in accordance with the rules and regulations of the Designated Stock Exchange, the Securities and Exchange Commission and/or any other competent regulatory authority or otherwise
under Applicable Law, provide that the Register of Members shall be closed for transfers for a stated period which shall not in any case exceed forty days.
|
5.2
|
In lieu of, or apart from, closing the Register of Members, the Directors may fix in advance or arrears a date as the record
date for any such determination of Members entitled to notice of, or to vote at any meeting of the Members or any adjournment thereof, or for the purpose of determining the Members entitled to receive payment of any Dividend or other
distribution, or in order to make a determination of Members for any other purpose.
|
5.3
|
If the Register of Members is not so closed and no record date is fixed for the determination of Members entitled to notice of,
or to vote at, a meeting of Members or Members entitled to receive payment of a Dividend or other distribution, the date on which notice of the meeting is sent or the date on which the resolution of the Directors resolving to pay such
Dividend or other distribution is passed, as the case may be, shall be the record date for such determination of Members. When a determination of Members entitled to vote at any meeting of Members has been made as provided in this
Article, such determination shall apply to any adjournment thereof.
|
6.
|
CERTIFICATES FOR SHARES
|
6.1
|
A Member shall only be entitled to a share certificate if the Directors resolve that share certificates shall be issued. Share
certificates representing Shares, if any, shall be in such form as the Directors may determine. Share certificates shall be signed by one or more Directors or other person authorised by the Directors. The Directors may authorise
certificates to be issued with the authorised signature(s) affixed by mechanical process. All certificates for Shares shall be consecutively numbered or otherwise identified and shall specify the Shares to which they relate. All
certificates surrendered to the Company for transfer shall be cancelled and, subject to the Articles, no new certificate shall be issued until the former certificate representing a like number of relevant Shares shall have been
surrendered and cancelled.
|
6.2
|
The Company shall not be bound to issue more than one certificate for Shares held jointly by more than one person and delivery
of a certificate to one joint holder shall be a sufficient delivery to all of them.
|
6.3
|
If a share certificate is defaced, worn out, lost or destroyed, it may be renewed on such terms (if any) as to evidence and
indemnity and on the payment of such expenses reasonably incurred by the Company in investigating evidence, as the Directors may prescribe, and (in the case of defacement or wearing out) upon delivery of the old certificate.
|
6.4
|
Every share certificate sent in accordance with the Articles will be sent at the risk of the Member or other person entitled to
the certificate. The Company will not be responsible for any share certificate lost or delayed in the course of delivery.
|
6.5
|
Share certificates shall be issued within the relevant time limit as prescribed by the Statute, if applicable, or as the rules
and regulations of the Designated Stock Exchange, the Securities and Exchange Commission and/or any other competent regulatory authority or otherwise under Applicable Law may from time to time determine, whichever is shorter, after the
allotment or, except in the case of a Share transfer which the Company is for the time being entitled to refuse to register and does not register, after lodgement of a Share transfer with the Company.
|
TABLE OF CONTENTS
7.1
|
Subject to the terms of the Articles, any Member may transfer all or any of his Shares by an instrument of transfer provided
that such transfer complies with the rules and regulations of the Designated Stock Exchange, the Securities and Exchange Commission and/or any other competent regulatory authority or otherwise under Applicable Law. If the Shares in
question were issued in conjunction with rights, options, warrants or units issued pursuant to the Articles on terms that one cannot be transferred without the other, the Directors shall refuse to register the transfer of any such Share
without evidence satisfactory to them of the like transfer of such option, warrant or unit.
|
7.2
|
The instrument of transfer of any Share shall be in writing in the usual or common form or in a form prescribed by the rules and
regulations of the Designated Stock Exchange, the Securities and Exchange Commission and/or any other competent regulatory authority or otherwise under Applicable Law or in any other form approved by the Directors and shall be executed
by or on behalf of the transferor (and if the Directors so require, signed by or on behalf of the transferee) and may be under hand or, if the transferor or transferee is a Clearing House or its nominee(s), by hand or by machine
imprinted signature or by such other manner of execution as the Directors may approve from time to time. The transferor shall be deemed to remain the holder of a Share until the name of the transferee is entered in the Register of
Members.
|
8.
|
REDEMPTION, REPURCHASE AND SURRENDER OF SHARES
|
8.1
|
Subject to the provisions of the Statute, and, where applicable, the rules and regulations of the Designated Stock Exchange, the
Securities and Exchange Commission and/or any other competent regulatory authority or otherwise under Applicable Law, the Company may issue Shares that are to be redeemed or are liable to be redeemed at the option of the Member or the
Company. The redemption of such Shares, except Public Shares, shall be effected in such manner and upon such other terms as the Company may, by Special Resolution, determine before the issue of such Shares. With respect to redeeming or
repurchasing the Shares:
|
(a)
|
Members who hold Public Shares are entitled to request the redemption of such Shares in the circumstances described in the
Business Combination Article hereof;
|
(b)
|
Class B Shares held by the Sponsor shall be surrendered by the Sponsor for no consideration to the extent that the
Over-Allotment Option is not exercised in full so that the number of Class B Shares in issue will equal 20 per cent of the Company’s issued Shares after the IPO (exclusive of any securities purchased in a private placement
simultaneously with the IPO); and
|
(c)
|
Public Shares shall be repurchased by way of tender offer in the circumstances set out in the Business Combination
Article hereof.
|
8.2
|
Subject to the provisions of the Statute, and, where applicable, the rules and regulations of the Designated Stock Exchange, the
Securities and Exchange Commission and/or any other competent regulatory authority or otherwise under Applicable Law, the Company may purchase its own Shares (including any redeemable Shares) in such manner and on such other terms as
the Directors may agree with the relevant Member. For the avoidance of doubt, redemptions, repurchases and surrenders of Shares in the circumstances described in the Article above shall not require further approval of the Members.
|
8.3
|
The Company may make a payment in respect of the redemption or purchase of its own Shares in any manner permitted by the
Statute, including out of capital.
|
8.4
|
The Directors may accept the surrender for no consideration of any fully paid Share.
|
9.1
|
The Directors may, prior to the purchase, redemption or surrender of any Share, determine that such Share shall be held as a
Treasury Share.
|
9.2
|
The Directors may determine to cancel a Treasury Share or transfer a Treasury Share on such terms as they think proper
(including, without limitation, for nil consideration).
|
TABLE OF CONTENTS
10.
|
VARIATION OF RIGHTS OF SHARES
|
10.1
|
Subject to Article 3.1, if at any time the share capital of the Company is divided into different classes of Shares, all or any
of the rights attached to any class (unless otherwise provided by the terms of issue of the Shares of that class) may, whether or not the Company is being wound up, be varied without the consent of the holders of the issued Shares of
that class where such variation is considered by the Directors not to have a material adverse effect upon such rights; otherwise, any such variation shall be made only with the consent in writing of the holders of not less than two
thirds of the issued Shares of that class (other than with respect to a waiver of the provisions of the Class B Share Conversion Article hereof, which as stated therein shall only require the consent in writing of the holders of a
majority of the issued Shares of that class), or with the approval of a resolution passed by a majority of not less than two thirds of the votes cast at a separate meeting of the holders of the Shares of that class. For the avoidance of
doubt, the Directors reserve the right, notwithstanding that any such variation may not have a material adverse effect, to obtain consent from the holders of Shares of the relevant class. To any such meeting all the provisions of the
Articles relating to general meetings shall apply mutatis mutandis, except that the necessary quorum shall be one person holding or representing by proxy at least one third of the issued Shares
of the class and that any holder of Shares of the class present in person or by proxy may demand a poll.
|
10.2
|
For the purposes of a separate class meeting, the Directors may treat two or more or all the classes of Shares as forming one
class of Shares if the Directors consider that such class of Shares would be affected in the same way by the proposals under consideration, but in any other case shall treat them as separate classes of Shares.
|
10.3
|
The rights conferred upon the holders of the Shares of any class issued with preferred or other rights shall not, unless
otherwise expressly provided by the terms of issue of the Shares of that class, be deemed to be varied by the creation or issue of further Shares ranking pari passu therewith or Shares issued with preferred or other rights.
|
11.
|
COMMISSION ON SALE OF SHARES
|
The Company may, in so far as the Statute permits, pay a commission to any person in
consideration of his subscribing or agreeing to subscribe (whether absolutely or conditionally) or procuring or agreeing to procure subscriptions (whether absolutely or conditionally) for any Shares. Such commissions may be satisfied by the
payment of cash and/or the issue of fully or partly paid-up Shares. The Company may also on any issue of Shares pay such brokerage as may be lawful.
12.
|
NON RECOGNITION OF TRUSTS
|
The Company shall not be bound by or compelled to recognise in any way (even when
notified) any equitable, contingent, future or partial interest in any Share, or (except only as is otherwise provided by the Articles or the Statute) any other rights in respect of any Share other than an absolute right to the entirety thereof
in the holder.
13.1
|
The Company shall have a first and paramount lien on all Shares (whether fully paid-up or not) registered in the name of a
Member (whether solely or jointly with others) for all debts, liabilities or engagements to or with the Company (whether presently payable or not) by such Member or his estate, either alone or jointly with any other person, whether a
Member or not, but the Directors may at any time declare any Share to be wholly or in part exempt from the provisions of this Article. The registration of a transfer of any such Share shall operate as a waiver of the Company’s lien
thereon. The Company’s lien on a Share shall also extend to any amount payable in respect of that Share.
|
13.2
|
The Company may sell, in such manner as the Directors think fit, any Shares on which the Company has a lien, if a sum in respect
of which the lien exists is presently payable, and is not paid within fourteen clear days after notice has been received or deemed to have been received by the holder of the Shares, or to the person entitled to it in consequence of the
death or bankruptcy of the holder, demanding payment and stating that if the notice is not complied with the Shares may be sold.
|
TABLE OF CONTENTS
13.3
|
To give effect to any such sale the Directors may authorise any person to execute an instrument of transfer of the Shares sold
to, or in accordance with the directions of, the purchaser. The purchaser or his nominee shall be registered as the holder of the Shares comprised in any such transfer, and he shall not be bound to see to the application of the purchase
money, nor shall his title to the Shares be affected by any irregularity or invalidity in the sale or the exercise of the Company’s power of sale under the Articles.
|
13.4
|
The net proceeds of such sale after payment of costs, shall be applied in payment of such part of the amount in respect of which
the lien exists as is presently payable and any balance shall (subject to a like lien for sums not presently payable as existed upon the Shares before the sale) be paid to the person entitled to the Shares at the date of the sale.
|
14.1
|
Subject to the terms of the allotment and issue of any Shares, the Directors may make calls upon the Members in respect of any
monies unpaid on their Shares (whether in respect of par value or premium), and each Member shall (subject to receiving at least fourteen clear days’ notice specifying the time or times of payment) pay to the Company at the time or
times so specified the amount called on the Shares. A call may be revoked or postponed, in whole or in part, as the Directors may determine. A call may be required to be paid by instalments. A person upon whom a call is made shall
remain liable for calls made upon him notwithstanding the subsequent transfer of the Shares in respect of which the call was made.
|
14.2
|
A call shall be deemed to have been made at the time when the resolution of the Directors authorising such call was passed.
|
14.3
|
The joint holders of a Share shall be jointly and severally liable to pay all calls in respect thereof.
|
14.4
|
If a call remains unpaid after it has become due and payable, the person from whom it is due shall pay interest on the amount
unpaid from the day it became due and payable until it is paid at such rate as the Directors may determine (and in addition all expenses that have been incurred by the Company by reason of such non-payment), but the Directors may waive
payment of the interest or expenses wholly or in part.
|
14.5
|
An amount payable in respect of a Share on issue or allotment or at any fixed date, whether on account of the par value of the
Share or premium or otherwise, shall be deemed to be a call and if it is not paid all the provisions of the Articles shall apply as if that amount had become due and payable by virtue of a call.
|
14.6
|
The Directors may issue Shares with different terms as to the amount and times of payment of calls, or the interest to be paid.
|
14.7
|
The Directors may, if they think fit, receive an amount from any Member willing to advance all or any part of the monies
uncalled and unpaid upon any Shares held by him, and may (until the amount would otherwise become payable) pay interest at such rate as may be agreed upon between the Directors and the Member paying such amount in advance.
|
14.8
|
No such amount paid in advance of calls shall entitle the Member paying such amount to any portion of a Dividend or other
distribution payable in respect of any period prior to the date upon which such amount would, but for such payment, become payable.
|
15.1
|
If a call or instalment of a call remains unpaid after it has become due and payable the Directors may give to the person from
whom it is due not less than fourteen clear days’ notice requiring payment of the amount unpaid together with any interest which may have accrued and any expenses incurred by the Company by reason of such non-payment. The notice shall
specify where payment is to be made and shall state that if the notice is not complied with the Shares in respect of which the call was made will be liable to be forfeited.
|
15.2
|
If the notice is not complied with, any Share in respect of which it was given may, before the payment
|
TABLE OF CONTENTS
required by the notice has been made, be forfeited by a resolution of the
Directors. Such forfeiture shall include all Dividends, other distributions or other monies payable in respect of the forfeited Share and not paid before the forfeiture.
15.3
|
A forfeited Share may be sold, re-allotted or otherwise disposed of on such terms and in such manner as the Directors think fit
and at any time before a sale, re-allotment or disposition the forfeiture may be cancelled on such terms as the Directors think fit. Where for the purposes of its disposal a forfeited Share is to be transferred to any person the
Directors may authorise some person to execute an instrument of transfer of the Share in favour of that person.
|
15.4
|
A person any of whose Shares have been forfeited shall cease to be a Member in respect of them and shall surrender to the
Company for cancellation the certificate for the Shares forfeited and shall remain liable to pay to the Company all monies which at the date of forfeiture were payable by him to the Company in respect of those Shares together with
interest at such rate as the Directors may determine, but his liability shall cease if and when the Company shall have received payment in full of all monies due and payable by him in respect of those Shares.
|
15.5
|
A certificate in writing under the hand of one Director or Officer that a Share has been forfeited on a specified date shall be
conclusive evidence of the facts stated in it as against all persons claiming to be entitled to the Share. The certificate shall (subject to the execution of an instrument of transfer) constitute a good title to the Share and the person
to whom the Share is sold or otherwise disposed of shall not be bound to see to the application of the purchase money, if any, nor shall his title to the Share be affected by any irregularity or invalidity in the proceedings in
reference to the forfeiture, sale or disposal of the Share.
|
15.6
|
The provisions of the Articles as to forfeiture shall apply in the case of non payment of any sum which, by the terms of issue
of a Share, becomes payable at a fixed time, whether on account of the par value of the Share or by way of premium as if it had been payable by virtue of a call duly made and notified.
|
16.
|
TRANSMISSION OF SHARES
|
16.1
|
If a Member dies, the survivor or survivors (where he was a joint holder), or his legal personal representatives (where he was a
sole holder), shall be the only persons recognised by the Company as having any title to his Shares. The estate of a deceased Member is not thereby released from any liability in respect of any Share, for which he was a joint or sole
holder.
|
16.2
|
Any person becoming entitled to a Share in consequence of the death or bankruptcy or liquidation or dissolution of a Member (or
in any other way than by transfer) may, upon such evidence being produced as may be required by the Directors, elect, by a notice in writing sent by him to the Company, either to become the holder of such Share or to have some person
nominated by him registered as the holder of such Share. If he elects to have another person registered as the holder of such Share he shall sign an instrument of transfer of that Share to that person. The Directors shall, in either
case, have the same right to decline or suspend registration as they would have had in the case of a transfer of the Share by the relevant Member before his death or bankruptcy or liquidation or dissolution, as the case may be.
|
16.3
|
A person becoming entitled to a Share by reason of the death or bankruptcy or liquidation or dissolution of a Member (or in any
other case than by transfer) shall be entitled to the same Dividends, other distributions and other advantages to which he would be entitled if he were the holder of such Share. However, he shall not, before becoming a Member in respect
of a Share, be entitled in respect of it to exercise any right conferred by membership in relation to general meetings of the Company and the Directors may at any time give notice requiring any such person to elect either to be
registered himself or to have some person nominated by him be registered as the holder of the Share (but the Directors shall, in either case, have the same right to decline or suspend registration as they would have had in the case of a
transfer of the Share by the relevant Member before his death or bankruptcy or liquidation or dissolution or any other case than by transfer, as the case may be). If the notice is not
|
TABLE OF CONTENTS
complied with within ninety days of being received or deemed to be received (as
determined pursuant to the Articles), the Directors may thereafter withhold payment of all Dividends, other distributions, bonuses or other monies payable in respect of the Share until the requirements of the notice have been complied with.
17.
|
CLASS B ORDINARY SHARE CONVERSION
|
17.1
|
The rights attaching to the Class A Shares and Class B Shares shall rank pari passu in
all respects, and the Class A Shares and Class B Shares shall vote together as a single class on all matters (subject to the Variation of Rights of Shares Article and the Appointment and Removal of Directors Article hereof) with the
exception that the holder of a Class B Share shall have the Conversion Rights referred to in this Article.
|
17.2
|
Class B Shares shall automatically convert into Class A Shares on a one-for-one basis (the “Initial
Conversion Ratio”): (a) at any time and from time to time at the option of the holders thereof; and (b) automatically on the day of the closing of a Business Combination.
|
17.3
|
Notwithstanding the Initial Conversion Ratio, in the case that additional Class A Shares or any other Equity linked Securities,
are issued, or deemed issued, by the Company in excess of the amounts offered in the IPO and related to the closing of a Business Combination, all Class B Shares in issue shall automatically convert into Class A Shares at the time of
the consummation of a Business Combination at a ratio for which the Class B Shares shall convert into Class A Shares will be adjusted (unless the holders of a majority of the Class B Shares in issue agree to waive such anti-dilution
adjustment with respect to any such issuance or deemed issuance) so that the number of Class A Shares issuable upon conversion of all Class B Shares will equal, on an as-converted basis, in the aggregate, 20 per cent of the sum of all
Class A Shares and Class B Shares in issue upon completion of the IPO plus all Class A Shares and Equity linked Securities issued or deemed issued in connection with a Business Combination, excluding any Shares or Equity linked
Securities issued, or to be issued, to any seller in a Business Combination and any private placement warrants issued to the Sponsor or its Affiliates upon conversion of working capital loans made to the Company.
|
17.4
|
Notwithstanding anything to the contrary contained herein, the foregoing adjustment to the Initial Conversion Ratio may be
waived as to any particular issuance or deemed issuance of additional Class A Shares or Equity linked Securities by the written consent or agreement of holders of a majority of the Class B Shares then in issue consenting or agreeing
separately as a separate class in the manner provided in the Variation of Rights of Shares Article hereof.
|
17.5
|
The foregoing conversion ratio shall also be adjusted to account for any subdivision (by share split, subdivision, exchange,
capitalisation, rights issue, reclassification, recapitalisation or otherwise) or combination (by reverse share split, share consolidation, exchange, reclassification, recapitalisation or otherwise) or similar reclassification or
recapitalisation of the Class A Shares in issue into a greater or lesser number of shares occurring after the original filing of the Articles without a proportionate and corresponding subdivision, combination or similar reclassification
or recapitalisation of the Class B Shares in issue.
|
17.6
|
Each Class B Share shall convert into its pro rata number of Class A Shares pursuant to this Article. The pro rata share for
each holder of Class B Shares will be determined as follows: each Class B Share shall convert into such number of Class A Shares as is equal to the product of 1 multiplied by a fraction, the numerator of which shall be the total number
of Class A Shares into which all of the Class B Shares in issue shall be converted pursuant to this Article and the denominator of which shall be the total number of Class B Shares in issue at the time of conversion.
|
17.7
|
References in this Article to “converted”, “conversion”
or “exchange” shall mean the compulsory redemption without notice of Class B Shares of any Member and, on behalf of such Members, automatic application of such redemption proceeds in paying for
such new Class A Shares into which the Class B Shares have been converted or exchanged at a price per Class B Share necessary to give effect to a conversion or exchange calculated on the basis that the Class A Shares to be issued as
part of the conversion or exchange will be issued at par. The Class A Shares to be issued on an exchange or conversion shall be registered in the name of such Member or in such name as the Member may direct.
|
TABLE OF CONTENTS
17.8
|
Notwithstanding anything to the contrary in this Article, in no event may any Class B Share convert into Class A Shares at a
ratio that is less than one-for-one.
|
18.
|
AMENDMENTS OF MEMORANDUM AND ARTICLES OF ASSOCIATION AND ALTERATION OF CAPITAL
|
18.1
|
The Company may by Ordinary Resolution:
|
(a)
|
increase its share capital by such sum as the Ordinary Resolution shall prescribe and with such rights, priorities and
privileges annexed thereto, as the Company in general meeting may determine;
|
(b)
|
consolidate and divide all or any of its share capital into Shares of larger amount than its existing Shares;
|
(c)
|
convert all or any of its paid-up Shares into stock, and reconvert that stock into paid-up Shares of any denomination;
|
(d)
|
by subdivision of its existing Shares or any of them divide the whole or any part of its share capital into Shares of smaller
amount than is fixed by the Memorandum or into Shares without par value; and
|
(e)
|
cancel any Shares that at the date of the passing of the Ordinary Resolution have not been taken or agreed to be taken by any
person and diminish the amount of its share capital by the amount of the Shares so cancelled.
|
18.2
|
All new Shares created in accordance with the provisions of the preceding Article shall be subject to the same provisions of the
Articles with reference to the payment of calls, liens, transfer, transmission, forfeiture and otherwise as the Shares in the original share capital.
|
18.3
|
Subject to the provisions of the Statute and the provisions of the Articles as regards the matters to be dealt with by Ordinary
Resolution, the Company may by Special Resolution:
|
(b)
|
alter or add to the Articles;
|
(c)
|
alter or add to the Memorandum with respect to any objects, powers or other matters specified therein; and
|
(d)
|
reduce its share capital or any capital redemption reserve fund.
|
19.
|
OFFICES AND PLACES OF BUSINESS
|
Subject to the provisions of the Statute, the Company may by resolution of the
Directors change the location of its Registered Office. The Company may, in addition to its Registered Office, maintain such other offices or places of business as the Directors determine.
20.1
|
All general meetings other than annual general meetings shall be called extraordinary general meetings.
|
20.2
|
The Company may, but shall not (unless required by the Statute) be obliged to, in each year hold a general meeting as its annual
general meeting, and shall specify the meeting as such in the notices calling it. Any annual general meeting shall be held at such time and place as the Directors shall appoint. At these meetings the report of the Directors (if any)
shall be presented.
|
20.3
|
The Directors, the chief executive officer or the chairman of the board of Directors may call general meetings, and, for the
avoidance of doubt, Members shall not have the ability to call general meetings.
|
20.4
|
Members seeking to bring business before the annual general meeting or to nominate candidates for appointment as Directors at
the annual general meeting must deliver notice to the principal executive offices of the Company not less than 120 calendar days before the date of the Company’s proxy statement released to Members in connection with the previous year’s
annual general meeting or, if the
|
TABLE OF CONTENTS
Company did not hold an annual general meeting the previous year, or if the date of
the current year’s annual general meeting has been changed by more than 30 days from the date of the previous year’s annual general meeting, then the deadline shall be set by the board of Directors with such deadline being a reasonable time
before the Company begins to print and send its related proxy materials.
21.
|
NOTICE OF GENERAL MEETINGS
|
21.1
|
At least five clear days’ notice shall be given of any general meeting. Every notice shall specify the place, the day and the
hour of the meeting and the general nature of the business to be conducted at the general meeting and shall be given in the manner hereinafter mentioned or in such other manner if any as may be prescribed by the Company, provided that a
general meeting of the Company shall, whether or not the notice specified in this Article has been given and whether or not the provisions of the Articles regarding general meetings have been complied with, be deemed to have been duly
convened if it is so agreed:
|
(a)
|
in the case of an annual general meeting, by all of the Members entitled to attend and vote thereat; and
|
(b)
|
in the case of an extraordinary general meeting, by a majority in number of the Members having a right to attend and vote at the
meeting, together holding not less than ninety-five per cent in par value of the Shares giving that right.
|
21.2
|
The accidental omission to give notice of a general meeting to, or the non receipt of notice of a general meeting by, any person
entitled to receive such notice shall not invalidate the proceedings of that general meeting.
|
22.
|
PROCEEDINGS AT GENERAL MEETINGS
|
22.1
|
No business shall be transacted at any general meeting unless a quorum is present. The holders of a majority of the Shares being
individuals present in person or by proxy or if a corporation or other non-natural person by its duly authorised representative or proxy shall be a quorum.
|
22.2
|
A person may participate at a general meeting by conference telephone or other communications equipment by means of which all
the persons participating in the meeting can communicate with each other. Participation by a person in a general meeting in this manner is treated as presence in person at that meeting.
|
22.3
|
A resolution (including a Special Resolution) in writing (in one or more counterparts) signed by or on behalf of all of the
Members for the time being entitled to receive notice of and to attend and vote at general meetings (or, being corporations or other non-natural persons, signed by their duly authorised representatives) shall be as valid and effective
as if the resolution had been passed at a general meeting of the Company duly convened and held.
|
22.4
|
If a quorum is not present within half an hour from the time appointed for the meeting to commence, the meeting shall stand
adjourned to the same day in the next week at the same time and/or place or to such other day, time and/or place as the Directors may determine, and if at the adjourned meeting a quorum is not present within half an hour from the time
appointed for the meeting to commence, the Members present shall be a quorum.
|
22.5
|
The Directors may, at any time prior to the time appointed for the meeting to commence, appoint any person to act as chairman of
a general meeting of the Company or, if the Directors do not make any such appointment, the chairman, if any, of the board of Directors shall preside as chairman at such general meeting. If there is no such chairman, or if he shall not
be present within fifteen minutes after the time appointed for the meeting to commence, or is unwilling to act, the Directors present shall elect one of their number to be chairman of the meeting.
|
22.6
|
If no Director is willing to act as chairman or if no Director is present within fifteen minutes after the time appointed for
the meeting to commence, the Members present shall choose one of their number to be chairman of the meeting.
|
22.7
|
The chairman may, with the consent of a meeting at which a quorum is present (and shall if so directed
|
TABLE OF CONTENTS
by the meeting) adjourn the meeting from time to time and from place to place, but
no business shall be transacted at any adjourned meeting other than the business left unfinished at the meeting from which the adjournment took place.
22.8
|
When a general meeting is adjourned for thirty days or more, notice of the adjourned meeting shall be given as in the case of an
original meeting. Otherwise it shall not be necessary to give any such notice of an adjourned meeting.
|
22.9
|
If, prior to a Business Combination, a notice is issued in respect of a general meeting and the Directors, in their absolute
discretion, consider that it is impractical or undesirable for any reason to hold that general meeting at the place, the day and the hour specified in the notice calling such general meeting, the Directors may postpone the general
meeting to another place, day and/or hour provided that notice of the place, the day and the hour of the rearranged general meeting is promptly given to all Members. No business shall be transacted at any postponed meeting other than
the business specified in the notice of the original meeting.
|
22.10
|
When a general meeting is postponed for thirty days or more, notice of the postponed meeting shall be given as in the case of an
original meeting. Otherwise it shall not be necessary to give any such notice of a postponed meeting. All proxy forms submitted for the original general meeting shall remain valid for the postponed meeting. The Directors may postpone a
general meeting which has already been postponed.
|
22.11
|
A resolution put to the vote of the meeting shall be decided on a poll.
|
22.12
|
A poll shall be taken as the chairman directs, and the result of the poll shall be deemed to be the resolution of the general
meeting at which the poll was demanded.
|
22.13
|
A poll demanded on the election of a chairman or on a question of adjournment shall be taken forthwith. A poll demanded on any
other question shall be taken at such date, time and place as the chairman of the general meeting directs, and any business other than that upon which a poll has been demanded or is contingent thereon may proceed pending the taking of
the poll.
|
22.14
|
In the case of an equality of votes the chairman shall be entitled to a second or casting vote.
|
23.1
|
Subject to any rights or restrictions attached to any Shares, every Member present in any such manner shall have one vote for
every Share of which he is the holder.
|
23.2
|
In the case of joint holders the vote of the senior holder who tenders a vote, whether in person or by proxy (or, in the case of
a corporation or other non-natural person, by its duly authorised representative or proxy), shall be accepted to the exclusion of the votes of the other joint holders, and seniority shall be determined by the order in which the names of
the holders stand in the Register of Members.
|
23.3
|
A Member of unsound mind, or in respect of whom an order has been made by any court, having jurisdiction in lunacy, may vote by
his committee, receiver, curator bonis, or other person on such Member’s behalf appointed by that court, and any such committee, receiver, curator bonis or other person may vote by proxy.
|
23.4
|
No person shall be entitled to vote at any general meeting unless he is registered as a Member on the record date for such
meeting nor unless all calls or other monies then payable by him in respect of Shares have been paid.
|
23.5
|
No objection shall be raised as to the qualification of any voter except at the general meeting or adjourned general meeting at
which the vote objected to is given or tendered and every vote not disallowed at the meeting shall be valid. Any objection made in due time in accordance with this Article shall be referred to the chairman whose decision shall be final
and conclusive.
|
23.6
|
Votes may be cast either personally or by proxy (or in the case of a corporation or other non-natural person by its duly
authorised representative or proxy). A Member may appoint more than one proxy or the same proxy under one or more instruments to attend and vote at a meeting. Where a Member appoints more than one proxy the instrument of proxy shall
specify the number of Shares in respect of which each proxy is entitled to exercise the related votes.
|
TABLE OF CONTENTS
23.7
|
A Member holding more than one Share need not cast the votes in respect of his Shares in the same way on any resolution and
therefore may vote a Share or some or all such Shares either for or against a resolution and/or abstain from voting a Share or some or all of the Shares and, subject to the terms of the instrument appointing him, a proxy appointed under
one or more instruments may vote a Share or some or all of the Shares in respect of which he is appointed either for or against a resolution and/or abstain from voting a Share or some or all of the Shares in respect of which he is
appointed.
|
24.1
|
The instrument appointing a proxy shall be in writing and shall be executed under the hand of the appointor or of his attorney
duly authorised in writing, or, if the appointor is a corporation or other non natural person, under the hand of its duly authorised representative. A proxy need not be a Member.
|
24.2
|
The Directors may, in the notice convening any meeting or adjourned meeting, or in an instrument of proxy sent out by the
Company, specify the manner by which the instrument appointing a proxy shall be deposited and the place and the time (being not later than the time appointed for the commencement of the meeting or adjourned meeting to which the proxy
relates) at which the instrument appointing a proxy shall be deposited. In the absence of any such direction from the Directors in the notice convening any meeting or adjourned meeting or in an instrument of proxy sent out by the
Company, the instrument appointing a proxy shall be deposited physically at the Registered Office not less than 48 hours before the time appointed for the meeting or adjourned meeting to commence at which the person named in the
instrument proposes to vote.
|
24.3
|
The chairman may in any event at his discretion declare that an instrument of proxy shall be deemed to have been duly deposited.
An instrument of proxy that is not deposited in the manner permitted, or which has not been declared to have been duly deposited by the chairman, shall be invalid.
|
24.4
|
The instrument appointing a proxy may be in any usual or common form (or such other form as the Directors may approve) and may
be expressed to be for a particular meeting or any adjournment thereof or generally until revoked. An instrument appointing a proxy shall be deemed to include the power to demand or join or concur in demanding a poll.
|
24.5
|
Votes given in accordance with the terms of an instrument of proxy shall be valid notwithstanding the previous death or insanity
of the principal or revocation of the proxy or of the authority under which the proxy was executed, or the transfer of the Share in respect of which the proxy is given unless notice in writing of such death, insanity, revocation or
transfer was received by the Company at the Registered Office before the commencement of the general meeting, or adjourned meeting at which it is sought to use the proxy.
|
25.1
|
Any corporation or other non-natural person which is a Member may in accordance with its constitutional documents, or in the
absence of such provision by resolution of its directors or other governing body, authorise such person as it thinks fit to act as its representative at any meeting of the Company or of any class of Members, and the person so authorised
shall be entitled to exercise the same powers on behalf of the corporation which he represents as the corporation could exercise if it were an individual Member.
|
25.2
|
If a Clearing House (or its nominee(s)), being a corporation, is a Member, it may authorise such persons as it sees fit to act
as its representative at any meeting of the Company or at any meeting of any class of Members provided that the authorisation shall specify the number and class of Shares in respect of which each such representative is so authorised.
Each person so authorised under the provisions of this Article shall be deemed to have been duly authorised without further evidence of the facts and be entitled to exercise the same rights and powers on behalf of the Clearing House (or
its nominee(s)) as if such person was the registered holder of such Shares held by the Clearing House (or its nominee(s)).
|
TABLE OF CONTENTS
26.
|
SHARES THAT MAY NOT BE VOTED
|
Shares in the Company that are beneficially owned by the Company shall not be voted,
directly or indirectly, at any meeting and shall not be counted in determining the total number of outstanding Shares at any given time.
27.1
|
There shall be a board of Directors consisting of not less than one person provided however that the Company may by Ordinary
Resolution increase or reduce the limits in the number of Directors.
|
27.2
|
The Directors shall be divided into three classes: Class I, Class II and Class III. The number of Directors in each class shall
be as nearly equal as possible. Upon the adoption of the Articles, the existing Directors shall by resolution classify themselves as Class I, Class II or Class III Directors. The Class I Directors shall stand elected for a term expiring
at the Company’s first annual general meeting, the Class II Directors shall stand elected for a term expiring at the Company’s second annual general meeting and the Class III Directors shall stand elected for a term expiring at the
Company’s third annual general meeting. Commencing at the Company’s first annual general meeting, and at each annual general meeting thereafter, Directors elected to succeed those Directors whose terms expire shall be elected for a term
of office to expire at the third succeeding annual general meeting after their election. Except as the Statute or other Applicable Law may otherwise require, in the interim between annual general meetings or extraordinary general
meetings called for the election of Directors and/or the removal of one or more Directors and the filling of any vacancy in that connection, additional Directors and any vacancies in the board of Directors, including unfilled vacancies
resulting from the removal of Directors for cause, may be filled by the vote of a majority of the remaining Directors then in office, although less than a quorum (as defined in the Articles), or by the sole remaining Director. All
Directors shall hold office until the expiration of their respective terms of office and until their successors shall have been elected and qualified. A Director elected to fill a vacancy resulting from the death, resignation or removal
of a Director shall serve for the remainder of the full term of the Director whose death, resignation or removal shall have created such vacancy and until his successor shall have been elected and qualified.
|
28.1
|
Subject to the provisions of the Statute, the Memorandum and the Articles and to any directions given by Special Resolution, the
business of the Company shall be managed by the Directors who may exercise all the powers of the Company. No alteration of the Memorandum or Articles and no such direction shall invalidate any prior act of the Directors which would have
been valid if that alteration had not been made or that direction had not been given. A duly convened meeting of Directors at which a quorum is present may exercise all powers exercisable by the Directors.
|
28.2
|
All cheques, promissory notes, drafts, bills of exchange and other negotiable or transferable instruments and all receipts for
monies paid to the Company shall be signed, drawn, accepted, endorsed or otherwise executed as the case may be in such manner as the Directors shall determine by resolution.
|
28.3
|
The Directors on behalf of the Company may pay a gratuity or pension or allowance on retirement to any Director who has held any
other salaried office or place of profit with the Company or to his widow or dependants and may make contributions to any fund and pay premiums for the purchase or provision of any such gratuity, pension or allowance.
|
28.4
|
The Directors may exercise all the powers of the Company to borrow money and to mortgage or charge its undertaking, property and
assets (present and future) and uncalled capital or any part thereof and to issue debentures, debenture stock, mortgages, bonds and other such securities whether outright or as security for any debt, liability or obligation of the
Company or of any third party.
|
29.
|
APPOINTMENT AND REMOVAL OF DIRECTORS
|
29.1
|
Prior to the closing of a Business Combination, the Company may by Ordinary Resolution of the holders of the Class B Shares
appoint any person to be a Director or may by Ordinary Resolution of
|
TABLE OF CONTENTS
the holders of the Class B Shares remove any Director. For the avoidance of doubt,
prior to the closing of a Business Combination, holders of Class A Shares shall have no right to vote on the appointment or removal of any Director.
29.2
|
The Directors may appoint any person to be a Director, either to fill a vacancy or as an additional Director provided that the
appointment does not cause the number of Directors to exceed any number fixed by or in accordance with the Articles as the maximum number of Directors.
|
29.3
|
After the closing of a Business Combination, the Company may by Ordinary Resolution appoint any person to be a Director or may
by Ordinary Resolution remove any Director.
|
30.
|
VACATION OF OFFICE OF DIRECTOR
|
The office of a Director shall be vacated if:
(a)
|
the Director gives notice in writing to the Company that he resigns the office of Director; or
|
(b)
|
the Director absents himself (for the avoidance of doubt, without being represented by proxy) from three consecutive meetings of
the board of Directors without special leave of absence from the Directors, and the Directors pass a resolution that he has by reason of such absence vacated office; or
|
(c)
|
the Director dies, becomes bankrupt or makes any arrangement or composition with his creditors generally; or
|
(d)
|
the Director is found to be or becomes of unsound mind; or
|
(e)
|
all of the other Directors (being not less than two in number) determine that he should be removed as a Director, either by a
resolution passed by all of the other Directors at a meeting of the Directors duly convened and held in accordance with the Articles or by a resolution in writing signed by all of the other Directors.
|
31.
|
PROCEEDINGS OF DIRECTORS
|
31.1
|
The quorum for the transaction of the business of the Directors may be fixed by the Directors, and unless so fixed shall be a
majority of the Directors then in office.
|
31.2
|
Subject to the provisions of the Articles, the Directors may regulate their proceedings as they think fit. Questions arising at
any meeting shall be decided by a majority of votes. In the case of an equality of votes, the chairman shall have a second or casting vote.
|
31.3
|
A person may participate in a meeting of the Directors or any committee of Directors by conference telephone or other
communications equipment by means of which all the persons participating in the meeting can communicate with each other at the same time. Participation by a person in a meeting in this manner is treated as presence in person at that
meeting. Unless otherwise determined by the Directors, the meeting shall be deemed to be held at the place where the chairman is located at the start of the meeting.
|
31.4
|
A resolution in writing (in one or more counterparts) signed by all the Directors or all the members of a committee of the
Directors or, in the case of a resolution in writing relating to the removal of any Director or the vacation of office by any Director, all of the Directors other than the Director who is the subject of such resolution shall be as valid
and effectual as if it had been passed at a meeting of the Directors, or committee of Directors as the case may be, duly convened and held.
|
31.5
|
A Director may, or other Officer on the direction of a Director shall, call a meeting of the Directors by at least two days’
notice in writing to every Director which notice shall set forth the general nature of the business to be considered unless notice is waived by all the Directors either at, before or after the meeting is held. To any such notice of a
meeting of the Directors all the provisions of the Articles relating to the giving of notices by the Company to the Members shall apply mutatis mutandis.
|
31.6
|
The continuing Directors (or a sole continuing Director, as the case may be) may act notwithstanding any vacancy in their body,
but if and so long as their number is reduced below the number fixed by or pursuant to the Articles as the necessary quorum of Directors the continuing Directors or Director may
|
TABLE OF CONTENTS
act for the purpose of increasing the number of Directors to be equal to such fixed
number, or of summoning a general meeting of the Company, but for no other purpose.
31.7
|
The Directors may elect a chairman of their board and determine the period for which he is to hold office; but if no such
chairman is elected, or if at any meeting the chairman is not present within five minutes after the time appointed for the meeting to commence, the Directors present may choose one of their number to be chairman of the meeting.
|
31.8
|
All acts done by any meeting of the Directors or of a committee of the Directors shall, notwithstanding that it is afterwards
discovered that there was some defect in the appointment of any Director, and/or that they or any of them were disqualified, and/or had vacated their office and/or were not entitled to vote, be as valid as if every such person had been
duly appointed and/or not disqualified to be a Director and/or had not vacated their office and/or had been entitled to vote, as the case may be.
|
31.9
|
A Director may be represented at any meetings of the board of Directors by a proxy appointed in writing by him. The proxy shall
count towards the quorum and the vote of the proxy shall for all purposes be deemed to be that of the appointing Director.
|
32.
|
PRESUMPTION OF ASSENT
|
A Director who is present at a meeting of the board of Directors at which action on
any Company matter is taken shall be presumed to have assented to the action taken unless his dissent shall be entered in the minutes of the meeting or unless he shall file his written dissent from such action with the person acting as the
chairman or secretary of the meeting before the adjournment thereof or shall forward such dissent by registered post to such person immediately after the adjournment of the meeting. Such right to dissent shall not apply to a Director who voted
in favour of such action.
33.1
|
A Director may hold any other office or place of profit under the Company (other than the office of Auditor) in conjunction with
his office of Director for such period and on such terms as to remuneration and otherwise as the Directors may determine.
|
33.2
|
A Director may act by himself or by, through or on behalf of his firm in a professional capacity for the Company and he or his
firm shall be entitled to remuneration for professional services as if he were not a Director.
|
33.3
|
A Director may be or become a director or other officer of or otherwise interested in any company promoted by the Company or in
which the Company may be interested as a shareholder, a contracting party or otherwise, and no such Director shall be accountable to the Company for any remuneration or other benefits received by him as a director or officer of, or from
his interest in, such other company.
|
33.4
|
No person shall be disqualified from the office of Director or prevented by such office from contracting with the Company,
either as vendor, purchaser or otherwise, nor shall any such contract or any contract or transaction entered into by or on behalf of the Company in which any Director shall be in any way interested be or be liable to be avoided, nor
shall any Director so contracting or being so interested be liable to account to the Company for any profit realised by or arising in connection with any such contract or transaction by reason of such Director holding office or of the
fiduciary relationship thereby established. A Director shall be at liberty to vote in respect of any contract or transaction in which he is interested provided that the nature of the interest of any Director in any such contract or
transaction shall be disclosed by him at or prior to its consideration and any vote thereon.
|
33.5
|
A general notice that a Director is a shareholder, director, officer or employee of any specified firm or company and is to be
regarded as interested in any transaction with such firm or company shall be sufficient disclosure for the purposes of voting on a resolution in respect of a contract or transaction in which he has an interest, and after such general
notice it shall not be necessary to give special notice relating to any particular transaction.
|
TABLE OF CONTENTS
The Directors shall cause minutes to be made in books kept for the purpose of
recording all appointments of Officers made by the Directors, all proceedings at meetings of the Company or the holders of any class of Shares and of the Directors, and of committees of the Directors, including the names of the Directors
present at each meeting.
35.
|
DELEGATION OF DIRECTORS’ POWERS
|
35.1
|
The Directors may delegate any of their powers, authorities and discretions, including the power to sub-delegate, to any
committee consisting of one or more Directors (including, without limitation, the Audit Committee, the Compensation Committee and the Nominating and Corporate Governance Committee). Any such delegation may be made subject to any
conditions the Directors may impose and either collaterally with or to the exclusion of their own powers and any such delegation may be revoked or altered by the Directors. Subject to any such conditions, the proceedings of a committee
of Directors shall be governed by the Articles regulating the proceedings of Directors, so far as they are capable of applying.
|
35.2
|
The Directors may establish any committees, local boards or agencies or appoint any person to be a manager or agent for managing
the affairs of the Company and may appoint any person to be a member of such committees, local boards or agencies. Any such appointment may be made subject to any conditions the Directors may impose, and either collaterally with or to
the exclusion of their own powers and any such appointment may be revoked or altered by the Directors. Subject to any such conditions, the proceedings of any such committee, local board or agency shall be governed by the Articles
regulating the proceedings of Directors, so far as they are capable of applying.
|
35.3
|
The Directors may adopt formal written charters for committees and, if so adopted, shall review and assess the adequacy of such
formal written charters on an annual basis. Each of these committees shall be empowered to do all things necessary to exercise the rights of such committee set forth in the Articles and shall have such powers as the Directors may
delegate pursuant to the Articles and as required by the rules and regulations of the Designated Stock Exchange, the Securities and Exchange Commission and/or any other competent regulatory authority or otherwise under Applicable Law.
Each of the Audit Committee, the Compensation Committee and the Nominating and Corporate Governance Committee, if established, shall consist of such number of Directors as the Directors shall from time to time determine (or such minimum
number as may be required from time to time by the rules and regulations of the Designated Stock Exchange, the Securities and Exchange Commission and/or any other competent regulatory authority or otherwise under Applicable Law). For so
long as any class of Shares is listed on the Designated Stock Exchange, the Audit Committee, the Compensation Committee and the Nominating and Corporate Governance Committee shall be made up of such number of Independent Directors as is
required from time to time by the rules and regulations of the Designated Stock Exchange, the Securities and Exchange Commission and/or any other competent regulatory authority or otherwise under Applicable Law.
|
35.4
|
The Directors may by power of attorney or otherwise appoint any person to be the agent of the Company on such conditions as the
Directors may determine, provided that the delegation is not to the exclusion of their own powers and may be revoked by the Directors at any time.
|
35.5
|
The Directors may by power of attorney or otherwise appoint any company, firm, person or body of persons, whether nominated
directly or indirectly by the Directors, to be the attorney or authorised signatory of the Company for such purpose and with such powers, authorities and discretions (not exceeding those vested in or exercisable by the Directors under
the Articles) and for such period and subject to such conditions as they may think fit, and any such powers of attorney or other appointment may contain such provisions for the protection and convenience of persons dealing with any such
attorneys or authorised signatories as the Directors may think fit and may also authorise any such attorney or authorised signatory to delegate all or any of the powers, authorities and discretions vested in him.
|
35.6
|
The Directors may appoint such Officers as they consider necessary on such terms, at such remuneration and to perform such
duties, and subject to such provisions as to disqualification and removal as the Directors may think fit. Unless otherwise specified in the terms of his appointment an
|
TABLE OF CONTENTS
Officer may be removed by resolution of the Directors or Members. An Officer may
vacate his office at any time if he gives notice in writing to the Company that he resigns his office.
36.
|
NO MINIMUM SHAREHOLDING
|
The Company in general meeting may fix a minimum shareholding required to be held by a
Director, but unless and until such a shareholding qualification is fixed a Director is not required to hold Shares.
37.
|
REMUNERATION OF DIRECTORS
|
37.1
|
The remuneration to be paid to the Directors, if any, shall be such remuneration as the Directors shall determine, provided that
no cash remuneration shall be paid to any Director by the Company prior to the consummation of a Business Combination. The Directors shall also, whether prior to or after the consummation of a Business Combination, be entitled to be
paid all travelling, hotel and other expenses properly incurred by them in connection with their attendance at meetings of Directors or committees of Directors, or general meetings of the Company, or separate meetings of the holders of
any class of Shares or debentures of the Company, or otherwise in connection with the business of the Company or the discharge of their duties as a Director, or to receive a fixed allowance in respect thereof as may be determined by the
Directors, or a combination partly of one such method and partly the other.
|
37.2
|
The Directors may by resolution approve additional remuneration to any Director for any services which in the opinion of the
Directors go beyond his ordinary routine work as a Director. Any fees paid to a Director who is also counsel, attorney or solicitor to the Company, or otherwise serves it in a professional capacity shall be in addition to his
remuneration as a Director.
|
38.1
|
The Company may, if the Directors so determine, have a Seal. The Seal shall only be used by the authority of the Directors or of
a committee of the Directors authorised by the Directors. Every instrument to which the Seal has been affixed shall be signed by at least one person who shall be either a Director or some Officer or other person appointed by the
Directors for the purpose.
|
38.2
|
The Company may have for use in any place or places outside the Cayman Islands a duplicate Seal or Seals each of which shall be
a facsimile of the common Seal of the Company and, if the Directors so determine, with the addition on its face of the name of every place where it is to be used.
|
38.3
|
A Director or Officer, representative or attorney of the Company may without further authority of the Directors affix the Seal
over his signature alone to any document of the Company required to be authenticated by him under seal or to be filed with the Registrar of Companies in the Cayman Islands or elsewhere wheresoever.
|
39.
|
DIVIDENDS, DISTRIBUTIONS AND RESERVE
|
39.1
|
Subject to the Statute and this Article and except as otherwise provided by the rights attached to any Shares, the Directors may
resolve to pay Dividends and other distributions on Shares in issue and authorise payment of the Dividends or other distributions out of the funds of the Company lawfully available therefor. A Dividend shall be deemed to be an interim
Dividend unless the terms of the resolution pursuant to which the Directors resolve to pay such Dividend specifically state that such Dividend shall be a final Dividend. No Dividend or other distribution shall be paid except out of the
realised or unrealised profits of the Company, out of the share premium account or as otherwise permitted by law.
|
39.2
|
Except as otherwise provided by the rights attached to any Shares, all Dividends and other distributions shall be paid according
to the par value of the Shares that a Member holds. If any Share is issued on terms providing that it shall rank for Dividend as from a particular date, that Share shall rank for Dividend accordingly.
|
39.3
|
The Directors may deduct from any Dividend or other distribution payable to any Member all sums of money (if any) then payable
by him to the Company on account of calls or otherwise.
|
39.4
|
The Directors may resolve that any Dividend or other distribution be paid wholly or partly by the
|
TABLE OF CONTENTS
distribution of specific assets and in particular (but without limitation) by the
distribution of shares, debentures, or securities of any other company or in any one or more of such ways and where any difficulty arises in regard to such distribution, the Directors may settle the same as they think expedient and in
particular may issue fractional Shares and may fix the value for distribution of such specific assets or any part thereof and may determine that cash payments shall be made to any Members upon the basis of the value so fixed in order to adjust
the rights of all Members and may vest any such specific assets in trustees in such manner as may seem expedient to the Directors.
39.5
|
Except as otherwise provided by the rights attached to any Shares, Dividends and other distributions may be paid in any
currency. The Directors may determine the basis of conversion for any currency conversions that may be required and how any costs involved are to be met.
|
39.6
|
The Directors may, before resolving to pay any Dividend or other distribution, set aside such sums as they think proper as a
reserve or reserves which shall, at the discretion of the Directors, be applicable for any purpose of the Company and pending such application may, at the discretion of the Directors, be employed in the business of the Company.
|
39.7
|
Any Dividend, other distribution, interest or other monies payable in cash in respect of Shares may be paid by wire transfer to
the holder or by cheque or warrant sent through the post directed to the registered address of the holder or, in the case of joint holders, to the registered address of the holder who is first named on the Register of Members or to such
person and to such address as such holder or joint holders may in writing direct. Every such cheque or warrant shall be made payable to the order of the person to whom it is sent. Any one of two or more joint holders may give effectual
receipts for any Dividends, other distributions, bonuses, or other monies payable in respect of the Share held by them as joint holders.
|
39.8
|
No Dividend or other distribution shall bear interest against the Company.
|
39.9
|
Any Dividend or other distribution which cannot be paid to a Member and/or which remains unclaimed after six months from the
date on which such Dividend or other distribution becomes payable may, in the discretion of the Directors, be paid into a separate account in the Company’s name, provided that the Company shall not be constituted as a trustee in respect
of that account and the Dividend or other distribution shall remain as a debt due to the Member. Any Dividend or other distribution which remains unclaimed after a period of six years from the date on which such Dividend or other
distribution becomes payable shall be forfeited and shall revert to the Company.
|
The Directors may at any time capitalise any sum standing to the credit of any of the
Company’s reserve accounts or funds (including the share premium account and capital redemption reserve fund) or any sum standing to the credit of the profit and loss account or otherwise available for distribution; appropriate such sum to
Members in the proportions in which such sum would have been divisible amongst such Members had the same been a distribution of profits by way of Dividend or other distribution; and apply such sum on their behalf in paying up in full unissued
Shares for allotment and distribution credited as fully paid-up to and amongst them in the proportion aforesaid. In such event the Directors shall do all acts and things required to give effect to such capitalisation, with full power given to
the Directors to make such provisions as they think fit in the case of Shares becoming distributable in fractions (including provisions whereby the benefit of fractional entitlements accrue to the Company rather than to the Members concerned).
The Directors may authorise any person to enter on behalf of all of the Members interested into an agreement with the Company providing for such capitalisation and matters incidental or relating thereto and any agreement made under such
authority shall be effective and binding on all such Members and the Company.
41.1
|
The Directors shall cause proper books of account (including, where applicable, material underlying documentation including
contracts and invoices) to be kept with respect to all sums of money received and expended by the Company and the matters in respect of which the receipt or expenditure takes place, all sales and purchases of goods by the Company and
the assets and liabilities of the Company.
|
TABLE OF CONTENTS
Such books of account must be retained for a minimum period of five years from the
date on which they are prepared. Proper books shall not be deemed to be kept if there are not kept such books of account as are necessary to give a true and fair view of the state of the Company’s affairs and to explain its transactions.
41.2
|
The Directors shall determine whether and to what extent and at what times and places and under what conditions or regulations
the accounts and books of the Company or any of them shall be open to the inspection of Members not being Directors and no Member (not being a Director) shall have any right of inspecting any account or book or document of the Company
except as conferred by Statute or authorised by the Directors or by the Company in general meeting.
|
41.3
|
The Directors may cause to be prepared and to be laid before the Company in general meeting profit and loss accounts, balance
sheets, group accounts (if any) and such other reports and accounts as may be required by law.
|
42.1
|
The Directors may appoint an Auditor of the Company who shall hold office on such terms as the Directors determine.
|
42.2
|
Without prejudice to the freedom of the Directors to establish any other committee, if the Shares (or depositary receipts
therefor) are listed or quoted on the Designated Stock Exchange, and if required by the rules and regulations of the Designated Stock Exchange, the Securities and Exchange Commission and/or any other competent regulatory authority or
otherwise under Applicable Law, the Directors shall establish and maintain an Audit Committee as a committee of the Directors and shall adopt a formal written Audit Committee charter and review and assess the adequacy of the formal
written charter on an annual basis. The composition and responsibilities of the Audit Committee shall comply with the rules and regulations of the Designated Stock Exchange, the Securities and Exchange Commission and/or any other
competent regulatory authority or otherwise under Applicable Law.
|
42.3
|
If the Shares (or depositary receipts therefor) are listed or quoted on the Designated Stock Exchange, the Company shall conduct
an appropriate review of all related party transactions on an ongoing basis and shall utilise the Audit Committee for the review and approval of potential conflicts of interest.
|
42.4
|
The remuneration of the Auditor shall be fixed by the Audit Committee (if one exists).
|
42.5
|
If the office of Auditor becomes vacant by resignation or death of the Auditor, or by his becoming incapable of acting by reason
of illness or other disability at a time when his services are required, the Directors shall fill the vacancy and determine the remuneration of such Auditor.
|
42.6
|
Every Auditor of the Company shall have a right of access at all times to the books and accounts and vouchers of the Company and
shall be entitled to require from the Directors and Officers such information and explanation as may be necessary for the performance of the duties of the Auditor.
|
42.7
|
Auditors shall, if so required by the Directors, make a report on the accounts of the Company during their tenure of office at
the next annual general meeting following their appointment in the case of a company which is registered with the Registrar of Companies as an ordinary company, and at the next extraordinary general meeting following their appointment
in the case of a company which is registered with the Registrar of Companies as an exempted company, and at any other time during their term of office, upon request of the Directors or any general meeting of the Members.
|
43.1
|
Notices shall be in writing and may be given by the Company to any Member either personally or by sending it by courier, post,
cable, telex, fax or e-mail to him or to his address as shown in the Register of Members (or where the notice is given by e-mail by sending it to the e-mail address provided by such Member). Notice may also be served by Electronic
Communication in accordance with the rules and regulations of the Designated Stock Exchange, the Securities and Exchange Commission and/or any other competent regulatory authority or by placing it on the Company’s Website.
|
TABLE OF CONTENTS
43.2
|
Where a notice is sent by:
|
(a)
|
courier; service of the notice shall be deemed to be effected by delivery of the notice to a courier company, and shall be
deemed to have been received on the third day (not including Saturdays or Sundays or public holidays) following the day on which the notice was delivered to the courier;
|
(b)
|
post; service of the notice shall be deemed to be effected by properly addressing, pre paying and posting a letter containing
the notice, and shall be deemed to have been received on the fifth day (not including Saturdays or Sundays or public holidays in the Cayman Islands) following the day on which the notice was posted;
|
(c)
|
cable, telex or fax; service of the notice shall be deemed to be effected by properly addressing and sending such notice and
shall be deemed to have been received on the same day that it was transmitted;
|
(d)
|
e-mail or other Electronic Communication; service of the notice shall be deemed to be effected by transmitting the e-mail to the
e-mail address provided by the intended recipient and shall be deemed to have been received on the same day that it was sent, and it shall not be necessary for the receipt of the e-mail to be acknowledged by the recipient; and
|
(e)
|
placing it on the Company’s Website; service of the notice shall be deemed to have been effected one hour after the notice or
document was placed on the Company’s Website.
|
43.3
|
A notice may be given by the Company to the person or persons which the Company has been advised are entitled to a Share or
Shares in consequence of the death or bankruptcy of a Member in the same manner as other notices which are required to be given under the Articles and shall be addressed to them by name, or by the title of representatives of the
deceased, or trustee of the bankrupt, or by any like description at the address supplied for that purpose by the persons claiming to be so entitled, or at the option of the Company by giving the notice in any manner in which the same
might have been given if the death or bankruptcy had not occurred.
|
43.4
|
Notice of every general meeting shall be given in any manner authorised by the Articles to every holder of Shares carrying an
entitlement to receive such notice on the record date for such meeting except that in the case of joint holders the notice shall be sufficient if given to the joint holder first named in the Register of Members and every person upon
whom the ownership of a Share devolves by reason of his being a legal personal representative or a trustee in bankruptcy of a Member where the Member but for his death or bankruptcy would be entitled to receive notice of the meeting,
and no other person shall be entitled to receive notices of general meetings.
|
44.1
|
If the Company shall be wound up, the liquidator shall apply the assets of the Company in satisfaction of creditors’ claims in
such manner and order as such liquidator thinks fit. Subject to the rights attaching to any Shares, in a winding up:
|
(a)
|
if the assets available for distribution amongst the Members shall be insufficient to repay the whole of the Company’s issued
share capital, such assets shall be distributed so that, as nearly as may be, the losses shall be borne by the Members in proportion to the par value of the Shares held by them; or
|
(b)
|
if the assets available for distribution amongst the Members shall be more than sufficient to repay the whole of the Company’s
issued share capital at the commencement of the winding up, the surplus shall be distributed amongst the Members in proportion to the par value of the Shares held by them at the commencement of the winding up subject to a deduction from
those Shares in respect of which there are monies due, of all monies payable to the Company for unpaid calls or otherwise.
|
44.2
|
If the Company shall be wound up the liquidator may, subject to the rights attaching to any Shares and with the approval of a
Special Resolution of the Company and any other approval required by the Statute, divide amongst the Members in kind the whole or any part of the assets of the Company (whether such assets shall consist of property of the same kind or
not) and may for that purpose value
|
TABLE OF CONTENTS
any assets and determine how the division shall be carried out as between the
Members or different classes of Members. The liquidator may, with the like approval, vest the whole or any part of such assets in trustees upon such trusts for the benefit of the Members as the liquidator, with the like approval, shall think
fit, but so that no Member shall be compelled to accept any asset upon which there is a liability.
45.
|
INDEMNITY AND INSURANCE
|
45.1
|
Every Director and Officer (which for the avoidance of doubt, shall not include auditors of the Company), together with every
former Director and former Officer (each an “Indemnified Person”) shall be indemnified out of the assets of the Company against any liability, action, proceeding, claim, demand, costs, damages or
expenses, including legal expenses, whatsoever which they or any of them may incur as a result of any act or failure to act in carrying out their functions other than such liability (if any) that they may incur by reason of their own
actual fraud, wilful neglect or wilful default. No Indemnified Person shall be liable to the Company for any loss or damage incurred by the Company as a result (whether direct or indirect) of the carrying out of their functions unless
that liability arises through the actual fraud, wilful neglect or wilful default of such Indemnified Person. No person shall be found to have committed actual fraud, wilful neglect or wilful default under this Article unless or until a
court of competent jurisdiction shall have made a finding to that effect.
|
45.2
|
The Company shall advance to each Indemnified Person reasonable attorneys’ fees and other costs and expenses incurred in
connection with the defence of any action, suit, proceeding or investigation involving such Indemnified Person for which indemnity will or could be sought. In connection with any advance of any expenses hereunder, the Indemnified Person
shall execute an undertaking to repay the advanced amount to the Company if it shall be determined by final judgment or other final adjudication that such Indemnified Person was not entitled to indemnification pursuant to this Article.
If it shall be determined by a final judgment or other final adjudication that such Indemnified Person was not entitled to indemnification with respect to such judgment, costs or expenses, then such party shall not be indemnified with
respect to such judgment, costs or expenses and any advancement shall be returned to the Company (without interest) by the Indemnified Person.
|
45.3
|
The Directors, on behalf of the Company, may purchase and maintain insurance for the benefit of any Director or Officer against
any liability which, by virtue of any rule of law, would otherwise attach to such person in respect of any negligence, default, breach of duty or breach of trust of which such person may be guilty in relation to the Company.
|
Unless the Directors otherwise prescribe, the financial year of the Company shall end
on 31st December in each year and, following the year of incorporation, shall begin on 1st January in each year.
47.
|
TRANSFER BY WAY OF CONTINUATION
|
If the Company is exempted as defined in the Statute, it shall, subject to the
provisions of the Statute and with the approval of a Special Resolution, have the power to register by way of continuation as a body corporate under the laws of any jurisdiction outside the Cayman Islands and to be deregistered in the Cayman
Islands.
48.
|
MERGERS AND CONSOLIDATIONS
|
The Company shall have the power to merge or consolidate with one or more other
constituent companies (as defined in the Statute) upon such terms as the Directors may determine and (to the extent required by the Statute) with the approval of a Special Resolution.
49.1
|
Notwithstanding any other provision of the Articles, this Article shall apply during the period commencing upon the adoption of
the Articles and terminating upon the first to occur of the consummation of a Business Combination and the full distribution of the Trust Account pursuant to this Article. In the event of a conflict between this Article and any other
Articles, the provisions of this Article shall prevail.
|
TABLE OF CONTENTS
49.2
|
Prior to the consummation of a Business Combination, the Company shall either:
|
(a)
|
submit such Business Combination to its Members for approval; or
|
(b)
|
provide Members with the opportunity to have their Shares repurchased by means of a tender offer for a per-Share repurchase
price payable in cash, equal to the aggregate amount then on deposit in the Trust Account, calculated as of two business days prior to the consummation of such Business Combination, including interest earned on the Trust Account (net of
taxes paid or payable and amounts withdrawn to fund the Company’s working capital requirements, if any), divided by the number of then issued Public Shares. Such obligation to repurchase Shares is subject to the completion of the
proposed Business Combination to which it relates.
|
49.3
|
If the Company initiates any tender offer in accordance with Rule 13e-4 and Regulation 14E of the Exchange Act in connection
with a proposed Business Combination, it shall file tender offer documents with the Securities and Exchange Commission prior to completing such Business Combination which contain substantially the same financial and other information
about such Business Combination and the redemption rights as is required under Regulation 14A of the Exchange Act. If, alternatively, the Company holds a general meeting to approve a proposed Business Combination, the Company will
conduct any redemptions in conjunction with a proxy solicitation pursuant to Regulation 14A of the Exchange Act, and not pursuant to the tender offer rules, and file proxy materials with the Securities and Exchange Commission.
|
49.4
|
At a general meeting called for the purposes of approving a Business Combination pursuant to this Article, in the event that
such Business Combination is approved by Ordinary Resolution, the Company shall be authorised to consummate such Business Combination.
|
49.5
|
Any Member holding Public Shares who is not the Sponsor, a Founder, Officer or Director may, at least two business days prior to
any vote on a Business Combination, elect to have their Public Shares redeemed for cash, in accordance with any applicable requirements provided for in the related proxy materials (the “IPO Redemption”),
provided that no such Member acting together with any Affiliate of his or any other person with whom he is acting in concert or as a partnership, limited partnership, syndicate, or other group for the purposes of acquiring, holding, or
disposing of Shares may exercise this redemption right with respect to more than 15 per cent of the Public Shares in the aggregate without the prior consent of the Company and provided further that any beneficial holder of Public Shares
on whose behalf a redemption right is being exercised must identify itself to the Company in connection with any redemption election in order to validly redeem such Public Shares. If so demanded, the Company shall pay any such redeeming
Member, regardless of whether he is voting for or against such proposed Business Combination, a per-Share redemption price payable in cash, equal to the aggregate amount then on deposit in the Trust Account calculated as of two business
days prior to the consummation of the Business Combination, including interest earned on the Trust Account (such interest shall be net of taxes payable and amounts withdrawn to fund the Company’s working capital requirements) and not
previously released to the Company to pay its taxes or fund the Company’s working capital requirements, divided by the number of then issued Public Shares (such redemption price being referred to herein as the “Redemption Price”), but only in the event that the applicable proposed Business Combination is approved and consummated.
|
49.6
|
A Member may not withdraw a Redemption Notice once submitted to the Company unless the Directors determine (in their sole
discretion) to permit the withdrawal of such redemption request (which they may do in whole or in part).
|
49.7
|
In the event that the Company does not consummate a Business Combination on or before February 9, 2024, or such later time as
the Members may approve in accordance with the Articles, the Company shall:
|
(a)
|
cease all operations except for the purpose of winding up;
|
(b)
|
as promptly as reasonably possible but not more than ten business days thereafter, redeem the Public Shares, at a per-Share
price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest earned on the funds held in the Trust Account and not previously released to the Company (less taxes payable, expenses
relating to the administration of
|
TABLE OF CONTENTS
the trust account, amounts withdrawn to fund the Company’s working capital
requirements and up to US$100,000 of interest to pay dissolution expenses), divided by the number of then Public Shares in issue, which redemption will completely extinguish public Members’ rights as Members (including the right to receive
further liquidation distributions, if any); and
(c)
|
as promptly as reasonably possible following such redemption, subject to the approval of the Company’s remaining Members and the
Directors, liquidate and dissolve,
|
subject in each case to its obligations under Cayman Islands law to provide for claims
of creditors and other requirements of Applicable Law.
49.8
|
In the event that any amendment is made to this Article:
|
(a)
|
to modify the substance or timing of the Company’s obligation to allow redemption in connection with a Business Combination or
redeem 100 per cent of the Public Shares if the Company does not consummate a Business Combination on or before February 9, 2024; or
|
(b)
|
with respect to any other provision relating to Members’ rights or pre-Business Combination activity, the Company shall provide
the holders of Public Shares with the opportunity to redeem their Public Shares upon the approval or effectiveness of any such amendment at a per-Share price, payable in cash, equal to the aggregate amount then on deposit in the Trust
Account, including interest earned on the funds held in the Trust Account and not previously released to the Company to pay its taxes or fund the Company’s working capital requirements, divided by the number of then outstanding Public
Shares.
|
49.9
|
A holder of Public Shares shall be entitled to receive distributions from the Trust Account only in the event of an IPO
Redemption, a repurchase of Shares by means of a tender offer pursuant to this Article, or a distribution of the Trust Account pursuant to this Article. In no other circumstance shall a holder of Public Shares have any right or interest
of any kind in the Trust Account.
|
49.10
|
After the issue of Public Shares, and prior to the consummation of a Business Combination, the Company shall not issue
additional Shares or any other securities that would entitle the holders thereof to:
|
(a)
|
receive funds from the Trust Account; or
|
(b)
|
vote as a class with Public Shares on a Business Combination.
|
49.11
|
The uninterested Independent Directors shall approve any transaction or transactions between the Company and any of the
following parties:
|
(a)
|
any Member owning an interest in the voting power of the Company that gives such Member a significant influence over the
Company; and
|
(b)
|
any Director or Officer and any Affiliate of such Director or Officer.
|
49.12
|
A Director may vote in respect of a Business Combination in which such Director has a conflict of interest with respect to the
evaluation of such Business Combination. Such Director must disclose such interest or conflict to the other Directors.
|
49.13
|
As long as the securities of the Company are listed on the Nasdaq Capital Market, the Company must complete one or more Business
Combinations having an aggregate fair market value of at least 80 per cent of the assets held in the Trust Account (net of amounts previously disbursed to the Company’s management for taxes, amounts withdrawn to fund the Company’s
working capital requirements and excluding the amount of deferred underwriting discounts held in the Trust Account) at the time of the Company’s signing a definitive agreement in connection with a Business Combination. A Business
Combination must not be effectuated with another blank cheque company or a similar company with nominal operations.
|
49.14
|
The Company may enter into a Business Combination with a target business that is Affiliated with the Sponsor, a Founder, a
Director or an Officer. In the event the Company seeks to complete a Business Combination with a target that is Affiliated with the Sponsor, a Founder, a Director or an Officer, the
|
TABLE OF CONTENTS
Company, or a committee of Independent Directors, will obtain an opinion from an
independent investment banking firm or another valuation or appraisal firm that regularly renders fairness opinions on the type of target business the Company is seeking to acquire that such a Business Combination is fair to the Company from a
financial point of view.
50.
|
BUSINESS OPPORTUNITIES
|
50.1
|
To the fullest extent permitted by Applicable Law, no individual serving as a Director or an Officer (“Management”) shall have any duty, except and to the extent expressly assumed by contract, to refrain from engaging directly or indirectly in the same or similar business activities or lines of business as the Company. To
the fullest extent permitted by Applicable Law, the Company renounces any interest or expectancy of the Company in, or in being offered an opportunity to participate in, any potential transaction or matter which may be a corporate
opportunity for Management, on the one hand, and the Company, on the other. Except to the extent expressly assumed by contract, to the fullest extent permitted by Applicable Law, Management shall have no duty to communicate or offer any
such corporate opportunity to the Company and shall not be liable to the Company or its Members for breach of any fiduciary duty as a Member, Director and/or Officer solely by reason of the fact that such party pursues or acquires such
corporate opportunity for itself, himself or herself, directs such corporate opportunity to another person, or does not communicate information regarding such corporate opportunity to the Company.
|
50.2
|
Except as provided elsewhere in this Article, the Company hereby renounces any interest or expectancy of the Company in, or in
being offered an opportunity to participate in, any potential transaction or matter which may be a corporate opportunity for both the Company and Management, about which a Director and/or Officer who is also a member of Management
acquires knowledge.
|
50.3
|
To the extent a court might hold that the conduct of any activity related to a corporate opportunity that is renounced in this
Article to be a breach of duty to the Company or its Members, the Company hereby waives, to the fullest extent permitted by Applicable Law, any and all claims and causes of action that the Company may have for such activities. To the
fullest extent permitted by Applicable Law, the provisions of this Article apply equally to activities conducted in the future and that have been conducted in the past.
|
TABLE OF CONTENTS
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
H2B2 ELECTROLYSIS TECHNOLOGIES, INC.
ARTICLE I
NAME
The name of the corporation is H2B2 Electrolysis Technologies, Inc.
(the “Corporation”).
ARTICLE II
REGISTERED OFFICE AND AGENT
The address of the Corporation’s registered office in the State of
Delaware is 8 The Green A, in the City of Dover, Kent County, 19901, and the name of its registered agent at such address is A Registered Agent, Inc..
ARTICLE III
PURPOSE
The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation Law of the State of Delaware (the “DGCL”) as it now exists or may hereafter be amended and supplemented.
ARTICLE IV
CAPITAL STOCK
The Corporation is authorized to issue two classes of stock to be
designated, respectively, “Common Stock” and “Preferred Stock.” The total number of shares of capital stock which the Corporation shall have authority to issue is . The total number of shares of Common Stock that the
Corporation is authorized to issue is , having a par value of $0.0001 per share, and the total number of shares of Preferred Stock that the Corporation is authorized to issue is , having a par value of $0.0001 per share.
The Corporation has the authority to create and issue rights,
warrants and options entitling the holders thereof to acquire from the Corporation any shares of its capital stock of any class or classes, with such rights, warrants and options to be evidenced by or in instrument(s) approved by the Board of
Directors of the Corporation (the “Board of Directors”). The Board of Directors is empowered to set the exercise price, duration, times for exercise and other terms and conditions of such rights, warrants or options; provided, however,
that the consideration to be received for any shares of capital stock issuable upon exercise thereof may not be less than the par value thereof.
The designations and the powers, privileges and rights, and the
qualifications, limitations or restrictions thereof in respect of each class of capital stock of the Corporation are as follows:
A. COMMON STOCK.
1. General. The voting, dividend, liquidation, and other
rights and powers of the Common Stock are subject to and qualified by the rights (preferential or otherwise) and powers of any series of Preferred Stock as may be designated by the Board of Directors and outstanding from time to time.
2. Voting.
a. Except as otherwise provided herein (including any Certificate of
Designation (as defined below)) or otherwise required by law, the holders of the shares of Common Stock shall exclusively possess all voting power with respect to the Corporation.
b. Except as otherwise provided herein or expressly required by law,
each holder of Common Stock, as such, shall be entitled to vote on each matter submitted to a vote of stockholders and shall be entitled to one (1) vote for each share of Common Stock held of record by such holder as of the record date for
determining stockholders entitled to vote on such matter.
TABLE OF CONTENTS
c. Except as otherwise provided herein (including any Certificate
of Designation) or otherwise required by law, at any annual or special meeting of the stockholders of the Corporation, holders of the Common Stock shall have the exclusive right to vote for the election of directors and on all other matters
properly submitted to a vote of the stockholders.
d. Except as otherwise required by law, holders of Common Stock, as
such, shall not be entitled to vote on any amendment to this Certificate (including any Certificate of Designation) that relates solely to the rights (preferential or otherwise), powers (or the qualifications, limitations or restrictions
thereof) or other terms of one or more outstanding series of Preferred Stock if the holders of such affected series are entitled, either separately or together with the holders of one or more other such series, to vote thereon pursuant to this
Amended and Restated Certificate of Incorporation (this “Certificate”) (including any Certificate of Designation) or pursuant to the DGCL.
Subject to the rights of any holders of any outstanding series of
Preferred Stock, the number of authorized shares of Common Stock may be increased or decreased (but not below the number of shares thereof then outstanding) by the affirmative vote of the holders of a majority of the stock of the Corporation
entitled to vote thereon, irrespective of the provisions of Section 242(b)(2) of the DGCL.
3. Dividends. Subject to any preferential or other rights of
any holders of any outstanding series of Preferred Stock, the holders of Common Stock, as such, shall be entitled to the payment of dividends on the Common Stock when, as and if declared by the Board of Directors in accordance with applicable
law.
4. Liquidation. Subject to any preferential or other rights
of any holders of any shares of any outstanding series of Preferred Stock, in the event of any liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, the funds and assets of the Corporation that may be
legally distributed to the Corporation’s stockholders shall be distributed among the holders of the then outstanding Common Stock pro rata in accordance with the number of shares of Common Stock held
by each such holder.
B. PREFERRED STOCK
Shares of Preferred Stock may be issued from time to time in one or
more series, each of such series to have such terms as stated or expressed herein and in the resolution or resolutions providing for the creation and issuance of such series adopted by the Board of Directors as hereinafter provided.
Authority is hereby expressly granted to the Board of Directors from
time to time to issue the Preferred Stock in one or more series, and in connection with the creation of any such series, by adopting a resolution or resolutions providing for the issuance of the shares thereof and by filing a certificate of
designation relating thereto in accordance with the DGCL (a “Certificate of Designation”), to determine and fix the number of shares of such series and such voting powers, full or limited, or no voting powers, and such designations and
relative participating, optional, preferential or other special rights, and qualifications, limitations or restrictions thereof, including without limitation thereof, dividend rights, conversion rights, redemption privileges and liquidation
preferences, and to increase or decrease (but not below the number of shares of such series then outstanding) the number of shares of any series as shall be stated and expressed in such resolutions, all to the fullest extent now or hereafter
permitted by the DGCL. Without limiting the generality of the foregoing, the resolution or resolutions providing for the creation and issuance of any series of Preferred Stock may provide that such series shall be superior or rank equally or be
junior to any other series of Preferred Stock to the extent permitted by law and this Certificate (including any Certificate of Designation). Except as otherwise required by law, holders of any series of Preferred Stock shall be entitled only
to such voting rights, if any, as shall expressly be granted thereto by this Certificate (including any Certificate of Designation).
The number of authorized shares of Preferred Stock may be increased
or decreased (but not below the number of shares thereof then outstanding) by the affirmative vote of the holders of a majority of the stock of the Corporation entitled to vote thereon, irrespective of the provisions of Section 242(b)(2) of the
DGCL.
TABLE OF CONTENTS
ARTICLE V
BOARD OF DIRECTORS
For the management of the business and for the conduct of the affairs
of the Corporation it is further provided that:
A. Subject to the special rights of the holders of one or more
outstanding series of Preferred Stock to elect directors, at each annual meeting of the stockholders of the Corporation beginning with the first annual meeting of the stockholders following the date of this Certificate, the successors of the
directors whose term expires at that meeting shall be elected to hold office for a term expiring at the annual meeting of the stockholders held in the year following the year of their election. Each director shall hold office until his or her
successor is duly elected and qualified or until his or her earlier death, resignation, disqualification or removal. No decrease in the number of directors shall shorten the term of any incumbent director.
B. Except as otherwise expressly provided by the DGCL or this
Certificate, the business and affairs of the Corporation shall be managed by or under the direction of the Board of Directors. The number of directors which shall constitute the whole Board of Directors shall initially be nine (9) directors and
thereafter shall be fixed exclusively by one or more resolutions adopted from time to time by the Board of Directors. Directors shall be elected by a plurality of the votes cast by the stockholders present in person or represented by proxy at
the meeting and entitled to vote thereon.
C. Subject to the special rights of the holders of one or more
outstanding series of Preferred Stock to elect directors, the Board of Directors or any individual director may be removed from office at any time, but only for cause and only by the affirmative vote of the holders of at least two-thirds (66
and 2/3%) of the voting power of all of the then outstanding shares of voting stock of the Corporation entitled to vote at an election of directors.
D. Subject to the special rights of the holders of one or more
outstanding series of Preferred Stock to elect directors, except as otherwise provided by law, any vacancies on the Board of Directors resulting from death, resignation, disqualification, retirement, removal or other causes and any newly
created directorships resulting from any increase in the number of directors shall be filled exclusively by the affirmative vote of a majority of the directors then in office, even though less than a quorum, or by a sole remaining director
(other than any directors elected by the separate vote of one or more outstanding series of Preferred Stock), and shall not be filled by the stockholders. Any director appointed in accordance with the preceding sentence shall hold office until
the expiration of the term to which such director shall have been appointed or until his or her earlier death, resignation, retirement, disqualification, or removal.
E. Whenever the holders of any one or more series of Preferred Stock
issued by the Corporation shall have the right, voting separately as a series or separately as a class with one or more such other series, to elect directors at an annual or special meeting of stockholders, the election, term of office, removal
and other features of such directorships shall be governed by the terms of this Certificate (including any Certificate of Designation). Notwithstanding anything to the contrary in this Article V, the number of directors that may be
elected by the holders of any such series of Preferred Stock shall be in addition to the number fixed pursuant to paragraph B of this Article V, and the total number of directors constituting the whole Board of Directors shall be
automatically adjusted accordingly. Except as otherwise provided in the Certificate of Designation(s) in respect of one or more series of Preferred Stock, whenever the holders of any series of Preferred Stock having such right to elect
additional directors are divested of such right pursuant to the provisions of such Certificate of Designation(s), the terms of office of all such additional directors elected by the holders of such series of Preferred Stock, or elected to fill
any vacancies resulting from the death, resignation, disqualification or removal of such additional directors, shall forthwith terminate (in which case each such director thereupon shall cease to be qualified as, and shall cease to be, a
director) and the total authorized number of directors of the Corporation shall automatically be reduced accordingly.
F. In furtherance and not in limitation of the powers conferred by
statute, the Board of Directors is expressly authorized to adopt, amend or repeal the Bylaws of the Corporation (as amended and/or restated from time to time, the “Bylaws”). Any adoption, amendment or repeal of the Bylaws shall require
the approval of a majority of the Board of Directors. In addition to any vote of the holders of any class or series of stock of the Corporation required by applicable law or by this Certificate (including any Certificate of Designation in
respect of one or more series of Preferred Stock) or the Bylaws of the Corporation, the adoption, amendment or repeal
TABLE OF CONTENTS
of the Bylaws of the Corporation by the stockholders of the Corporation shall require
the affirmative vote of the holders of at least two-thirds (66 and 2/3%) of the voting power of all of the then outstanding shares of voting stock of the Corporation entitled to vote generally in an election of directors.
G. The directors of the Corporation need not be elected by written
ballot unless the Bylaws so provide.
ARTICLE VI
STOCKHOLDERS
A. Any action required or permitted to be taken by the stockholders
of the Corporation must be effected at an annual or special meeting of the stockholders of the Corporation, and shall not be taken by written consent in lieu of a meeting. Notwithstanding the foregoing, any action required or permitted to be
taken by the holders of any series of Preferred Stock, voting separately as a series or separately as a class with one or more other such series, may be taken without a meeting, without prior notice and without a vote, to the extent expressly
so provided by the applicable Certificate of Designation relating to such series of Preferred Stock, if a consent or consents in writing, setting forth the action so taken, shall be signed by the holders of outstanding shares of the relevant
series of Preferred Stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted and shall be delivered to the
Corporation in accordance with the applicable provisions of the DGCL.
B. Subject to the special rights of the holders of one or more series
of Preferred Stock, special meetings of the stockholders of the Corporation may be called, for any purpose or purposes, at any time only by or at the direction of the Board of Directors, the Chairperson of the Board of Directors, the Chief
Executive Officer or the President, and shall not be called by any other person or persons.
C. Advance notice of stockholder nominations for the election of
directors and of other business proposed to be brought by stockholders before any meeting of the stockholders of the Corporation shall be given in the manner provided in the Bylaws.
ARTICLE VII
LIABILITY
No director or officer of the Corporation shall have any personal
liability to the Corporation or its stockholders for monetary damages for any breach of fiduciary duty as a director or officer, except to the extent such exemption from liability or limitation thereof is not permitted under the DGCL as the
same exists or hereafter may be amended. Any amendment, repeal or modification of this Article VIII, or the adoption of any provision of this Certificate inconsistent with this Article VII, shall not adversely affect any right
or protection of a director or officer of the Corporation with respect to any act or omission occurring prior to such amendment, repeal, modification or adoption. If the DGCL is amended after approval by the stockholders of this Article VII
to authorize corporate action further eliminating or limiting the personal liability of directors or officers, then the liability of a director or officer of the Corporation shall be eliminated or limited to the fullest extent permitted by the
DGCL as so amended.
ARTICLE VIII
INDEMNIFICATION
A. To the fullest extent permitted by the DGCL or any other
applicable law, as it presently exists or may hereafter be amended, the Corporation shall indemnify and hold harmless each person who is or was made a party or is threatened to be made a party to or is otherwise involved in any action, suit or
proceeding, whether civil, criminal, administrative or investigative (a “proceeding”) by reason of the fact that he or she or a person for whom he or she is the legal representative is or was a director or officer of the Corporation or,
while serving as a director or officer of the Corporation, is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation or of a partnership, joint venture, trust, other enterprise or
nonprofit entity, including service with respect to an employee benefit plan (an “indemnitee”), whether the basis of such proceeding is alleged action in an official capacity as a director, officer, employee or agent, or in any other
capacity while serving as a director, officer, employee or agent, against all liability and loss suffered and expenses (including, attorneys’ fees, judgments, fines, ERISA excise taxes and penalties and amounts paid in settlement) reasonably
incurred by such indemnitee in connection with such proceeding; provided that such indemnitee acted in good faith and in a manner such indemnitee reasonably believed to be in or not opposed to
TABLE OF CONTENTS
the best interests of the Corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe such indemnitee’s conduct was unlawful. The Corporation shall to the fullest extent not prohibited by applicable law pay the expenses (including attorneys’ fees) incurred by an indemnitee in
defending or otherwise participating in any proceeding in advance of its final disposition; provided, however, that, to the extent required by applicable law, such payment of expenses in advance of the final disposition of the proceeding shall
be made only upon receipt of an undertaking, by or on behalf of the indemnitee, to repay all amounts so advanced if it shall ultimately be determined that the indemnitee is not entitled to be indemnified under this Article VIII or
otherwise. The rights to indemnification and advancement of expenses conferred by this Article VIII shall be contract rights and such rights shall continue as to an indemnitee who has ceased to be a director, officer, employee or agent
and shall inure to the benefit of his or her heirs, executors and administrators. Notwithstanding the foregoing provisions of this Article VIII, except for proceedings to enforce rights to indemnification and advancement of expenses,
the Corporation shall indemnify and advance expenses to an indemnitee in connection with a proceeding (or part thereof) initiated by such indemnitee only if such proceeding (or part thereof) was authorized by the Board.
B. The rights to indemnification and advancement of expenses
conferred on any indemnitee by this Article VIII shall not be exclusive of any other rights that any indemnitee may have or hereafter acquire under law, this Certificate, the Bylaws, an agreement, vote of stockholders or disinterested
directors, or otherwise.
C. Any repeal or amendment of this Article VIII by the
stockholders of the Corporation or by changes in law, or the adoption of any other provision of this Certificate inconsistent with this Article VIII, shall, unless otherwise required by law, be prospective only (except to the extent
such amendment or change in law permits the Corporation to provide broader indemnification rights on a retroactive basis than permitted prior thereto), and shall not in any way diminish or adversely affect any right or protection existing at
the time of such repeal or amendment or adoption of such inconsistent provision in respect of any proceeding (regardless of when such proceeding is first threatened, commenced or completed) arising out of, or related to, any act or omission
occurring prior to such repeal or amendment or adoption of such inconsistent provision.
D. This Article VIII shall not limit the right of the
Corporation, to the extent and in the manner authorized or permitted by law, to indemnify and to advance expenses to persons other than indemnitees.
ARTICLE IX
FORUM SELECTION
Unless the Corporation consents in writing to the selection of an
alternative forum, (a) the Court of Chancery of the State of Delaware (the “Chancery Court”) (or, solely in the event that the Chancery Court lacks subject matter jurisdiction, the federal district court for the District of Delaware or
other state courts of the State of Delaware) shall, to the fullest extent permitted by law, be the sole and exclusive forum for (i) any derivative action, suit or proceeding brought on behalf of the Corporation, (ii) any action, suit or
proceeding asserting a claim of breach of a fiduciary duty owed by any current or former director, officer or other employee of the Corporation or any stockholder of the Corporation to the Corporation or to the Corporation’s stockholders,
(iii) any action, suit or proceeding arising pursuant to any provision of the DGCL or the Bylaws or this Certificate (as either may be amended from time to time), (iv) any action, suit or proceeding asserting a claim against the Corporation
governed by the internal affairs doctrine, (v) any action or proceeding to interpret, apply, enforce or determine the validity of this Certificate or the Bylaws (including any right, obligation or remedy thereunder) and (vi) any action or
proceeding as to which the DGCL confers jurisdiction to the Court of Chancery; and (b) subject to the preceding provisions of this Article IX, the federal district courts of the United States of America shall be the exclusive forum for
the resolution of any complaint asserting a cause of action arising under the Securities Act of 1933, as amended, including all causes of action asserted against any defendant to such complaint. If any action the subject matter of which is
within the scope of clause (a) of the immediately preceding sentence is filed in a court other than the courts in the State of Delaware (a “Foreign Action”) in the name of any stockholder, such stockholder shall be deemed to have
consented to (x) the personal jurisdiction of the state and federal courts in the State of Delaware in connection with any action brought in any such court to enforce the provisions of clause (a) of the immediately preceding sentence and (y)
having service of process made upon such stockholder in any such action by service upon such stockholder’s counsel in the Foreign Action as agent for such stockholder.
Any person or entity purchasing or otherwise acquiring any interest
in any security of the Corporation shall be deemed to have notice of and consented to this Article IX. This Article IX is intended to benefit and may be
TABLE OF CONTENTS
enforced by the Corporation, its officers and directors, the underwriters to any
offering giving rise to such complaint, and any other professional or entity whose profession gives authority to a statement made by that person or entity and who has prepared or certified any part of the documents underlying the offering.
Notwithstanding the foregoing, the provisions of this Article IX shall not apply to suits brought to enforce any liability or duty created by the Securities Exchange Act of 1934, as amended, or any other claim for which the federal
courts of the United States have exclusive jurisdiction.
ARTICLE X
AMENDMENTS
A. Notwithstanding anything contained in this Certificate to the
contrary, in addition to any vote required by applicable law, the following provisions in this Certificate may be amended, altered, repealed or rescinded, in whole or in part, or any provision inconsistent therewith or herewith may be adopted,
only by the affirmative vote of the holders of at least two-thirds (66 and 2/3%) of the total voting power of all the then outstanding shares of stock of the Corporation entitled to vote thereon, voting together as a single class: Part B of Article
IV, Article V, Article VI, Article VII, Article VIII, Article IX, and this Article X.
B. If any provision or provisions of this Certificate shall be held
to be invalid, illegal or unenforceable as applied to any circumstance for any reason whatsoever: (i) the validity, legality and enforceability of such provisions in any other circumstance and of the remaining provisions of this Certificate
(including, without limitation, each portion of any paragraph of this Certificate containing any such provision held to be invalid, illegal or unenforceable that is not itself held to be invalid, illegal or unenforceable) shall not, to the
fullest extent permitted by applicable law, in any way be affected or impaired thereby and (ii) to the fullest extent permitted by applicable law, the provisions of this Certificate (including, without limitation, each such portion of any
paragraph of this Certificate containing any such provision held to be invalid, illegal or unenforceable) shall be construed so as to permit the Corporation to protect its directors, officers, employees and agents from personal liability in
respect of their good faith service to or for the benefit of the Corporation to the fullest extent permitted by law.
TABLE OF CONTENTS
Amended and Restated
Bylaws of
H2B2 Electrolysis Technologies, Inc.
(a Delaware corporation)
Effective , 2023
TABLE OF CONTENTS
Table of Contents
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TABLE OF CONTENTS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TABLE OF CONTENTS
Bylaws of
H2B2 Electrolysis Technologies, Inc.
Corporate Offices
The address of the registered office of H2B2 Electrolysis
Technologies, Inc. (the “Corporation”) in the State of Delaware, and the name of its registered agent at such address, shall be as set forth in the Corporation’s certificate of incorporation, as the same may be amended and/or restated
from time to time (the “Certificate of Incorporation”).
The Corporation may have additional offices at any place or places,
within or outside the State of Delaware, as the Corporation’s board of directors (the “Board”) may from time to time establish or as the business and affairs of the Corporation may require.
Meetings of Stockholders
Meetings of stockholders shall be held at any place, within or
outside the State of Delaware, designated by the Board. The Board may, in its sole discretion, determine that a meeting of stockholders shall not be held at any place, but may instead be held solely by means of remote communication as
authorized by Section 211(a)(2) of the General Corporation Law of the State of Delaware (the “DGCL”). In the absence of any such designation or determination, stockholders’ meetings shall be held at the Corporation’s principal executive
office, whether within or outside of the State of Delaware.
The Board shall designate the date and time of the annual meeting. At
the annual meeting, the stockholders entitled to vote on such matters shall elect those directors of the Corporation to fill any term of a directorship that expires on the date of such annual meeting and may transact any other business as may
properly be brought before the meeting in accordance with Section 2.4. The Board may postpone, reschedule or cancel any previously scheduled annual meeting of stockholders.
Special meetings of the stockholders may be called only by such
persons and only in such manner as set forth in the Certificate of Incorporation.
No business may be transacted at any special meeting of stockholders
other than the business specified in the notice of such meeting. The Board may postpone, reschedule or cancel any previously scheduled special meeting of stockholders.
2.4
Notice of Business to be
Brought before a Meeting.
(a) At an annual meeting of the stockholders, only such business
shall be conducted as shall have been properly brought before the meeting. To be properly brought before an annual meeting, business must be (i) specified in the Corporation’s notice of meeting (or any supplement thereto) given by or at the
direction of the Board, (ii) if not specified in a notice of meeting, otherwise brought before the meeting by or at the direction of the Board or the Chairperson of the Board or (iii) otherwise properly brought before the meeting by a
stockholder present in person who (A) (1) was a record owner of shares of the Corporation both at the time of giving the notice provided for in this Section 2.4 and at the time of the meeting, (2) is entitled to vote at the meeting and
(3) has complied with this Section 2.4 in all applicable respects or (B) properly made such proposal in accordance with Rule 14a-8 under the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated
thereunder (as so amended and inclusive of such rules and regulations, the “Exchange Act”). The foregoing clause (iii) shall be the exclusive means for a stockholder to propose business to be brought before an annual meeting of the
stockholders. The only matters that may be brought before a special meeting are the matters specified in the notice of meeting
TABLE OF CONTENTS
given by or at the direction of the person calling the meeting pursuant to Section
2.3, and stockholders shall not be permitted to propose business to be brought before a special meeting of the stockholders. For purposes of this Section 2.4, “present in person” shall mean that the stockholder proposing that the
business be brought before the annual meeting of the Corporation, or a qualified representative of such proposing stockholder, appear at such annual meeting. A “qualified representative” of such proposing stockholder shall be a duly authorized
officer, manager or partner of such stockholder or any other person authorized by a writing executed by such stockholder or an electronic transmission delivered by such stockholder to act for such stockholder as proxy at the meeting of
stockholders and such person must produce such writing or electronic transmission, or a reliable reproduction of the writing or electronic transmission, at the meeting of stockholders. Stockholders seeking to nominate persons for election to
the Board must comply with Section 2.5, and this Section 2.4 shall not be applicable to nominations except as expressly provided in Section 2.5.
(b) For business to be properly brought before an annual meeting by
a stockholder, the stockholder must (i) provide Timely Notice (as defined below) thereof in writing and in proper form to the Secretary of the Corporation and (ii) provide any updates or supplements to such notice at the times and in the forms
required by this Section 2.4. To be timely, a stockholder’s notice must be delivered to, or mailed and received at, the principal executive offices of the Corporation not less than ninety (90) days nor more than one hundred twenty (120)
days prior to the one-year anniversary of the preceding year’s annual meeting; provided, however, that if no annual meeting was held in the preceding year, to be timely, a stockholder’s notice must be
so delivered, or mailed and received, not earlier than the close of business on the one hundred and twentieth (120th) day prior to such annual meeting and not later than the close of business on the later of the ninetieth (90th)
day prior to such annual meeting or, if later, the tenth (10th) day following the day on which public disclosure of the date of such annual meeting was first made by the Corporation; provided,
further, that if the date of the annual meeting is more than thirty (30) days before or more than sixty (60) days after such anniversary date, to be timely, a stockholder’s notice must be so delivered, or mailed and received, not later
than the ninetieth (90th) day prior to such annual meeting or, if later, the tenth (10th) day following the day on which public disclosure of the date of such annual meeting was first made by the Corporation (such notice
within such time periods, “Timely Notice”). In no event shall any adjournment or postponement of an annual meeting or the announcement thereof commence a new time period for the giving of Timely Notice as described above.
(c) To be in proper form for purposes of this Section 2.4, a
stockholder’s notice to the Secretary of the Corporation shall set forth:
(i) As to each Proposing Person (as defined below), (A) the name and
address of such Proposing Person (including, if applicable, the name and address that appear on the Corporation’s books and records); and (B) the class or series and number of shares of the Corporation that are, directly or indirectly, owned of
record or beneficially owned (within the meaning of Rule 13d-3 under the Exchange Act) by such Proposing Person, except that such Proposing Person shall in all events be deemed to beneficially own any shares of any class or series of the
Corporation as to which such Proposing Person has a right to acquire beneficial ownership at any time in the future (the disclosures to be made pursuant to the foregoing clauses (A) and (B) are referred to as “Stockholder Information”);
(ii) As to each Proposing Person, (A) the full notional amount of
any securities that, directly or indirectly, underlie any “derivative security” (as such term is defined in Rule 16a-1(c) under the Exchange Act) that constitutes a “call equivalent position” (as such term is defined in Rule 16a-1(b) under the
Exchange Act) (“Synthetic Equity Position”) and that is, directly or indirectly, held or maintained by such Proposing Person with respect to any shares of any class or series of shares of the Corporation; provided that, for the purposes of the definition of “Synthetic Equity Position,” the term “derivative security” shall also include any security or instrument that would not otherwise constitute a “derivative security” as a
result of any feature that would make any conversion, exercise or similar right or privilege of such security or instrument becoming determinable only at some future date or upon the happening of a future occurrence, in which case the
determination of the amount of securities into which such security or instrument would be convertible or exercisable shall be made assuming that such security or instrument is immediately convertible or exercisable at the time of such
determination; and, provided, further, that any Proposing Person satisfying the requirements of Rule 13d-1(b)(1) under
TABLE OF CONTENTS
the Exchange Act (other than a Proposing Person that so satisfies Rule 13d-1(b)(1)
under the Exchange Act solely by reason of Rule 13d-1(b)(1)(ii)(E)) shall not be deemed to hold or maintain the notional amount of any securities that underlie a Synthetic Equity Position held by such Proposing Person as a hedge with respect to
a bona fide derivatives trade or position of such Proposing Person arising in the ordinary course of such Proposing Person’s business as a derivatives dealer, (B) any rights to dividends on the shares of any class or series of shares of the
Corporation owned beneficially by such Proposing Person that are separated or separable from the underlying shares of the Corporation, (C) any material pending or threatened legal proceeding in which such Proposing Person is a party or material
participant involving the Corporation or any of its officers or directors, or any affiliate of the Corporation, (D) any other material relationship between such Proposing Person, on the one hand, and the Corporation or any affiliate of the
Corporation, on the other hand, (E) any direct or indirect material interest in any material contract or agreement of such Proposing Person with the Corporation or any affiliate of the Corporation (including, in any such case, any employment
agreement, collective bargaining agreement or consulting agreement), (F) a representation that such Proposing Person intends or is part of a group that intends to deliver a proxy statement or form of proxy to holders of at least the percentage
of the Corporation’s outstanding capital stock required to approve or adopt the proposal or otherwise solicit proxies from stockholders in support of such proposal and (G) any other information relating to such Proposing Person that would be
required to be disclosed in a proxy statement or other filing required to be made in connection with solicitations of proxies or consents by such Proposing Person in support of the business proposed to be brought before the meeting pursuant to
Section 14(a) of the Exchange Act (the disclosures to be made pursuant to the foregoing clauses (A) through (G) are referred to as “Disclosable Interests”); provided, however, that Disclosable Interests shall not include any such disclosures with respect to the ordinary course business activities of any broker, dealer, commercial bank, trust company or other nominee who
is a Proposing Person solely as a result of being the stockholder directed to prepare and submit the notice required by these bylaws on behalf of a beneficial owner; and
(iii) As to each item of business that the stockholder proposes to
bring before the annual meeting, (A) a brief description of the business desired to be brought before the annual meeting, the reasons for conducting such business at the annual meeting and any material interest in such business of each
Proposing Person, (B) the text of the proposal or business (including the text of any resolutions proposed for consideration and in the event that such business includes a proposal to amend the bylaws, the language of the proposed amendment),
and (C) a reasonably detailed description of all agreements, arrangements and understandings (x) between or among any of the Proposing Persons or (y) between or among any Proposing Person and any other person or entity (including their names)
in connection with the proposal of such business by such stockholder; and (D) any other information relating to such item of business that would be required to be disclosed in a proxy statement or other filing required to be made in connection
with solicitations of proxies in support of the business proposed to be brought before the meeting pursuant to Section 14(a) of the Exchange Act; provided, however,
that the disclosures required by this Section 2.4(c)(iii) shall not include any disclosures with respect to any broker, dealer, commercial bank, trust company or other nominee who is a Proposing Person solely as a result of being the
stockholder directed to prepare and submit the notice required by these bylaws on behalf of a beneficial owner.
For purposes of this Section 2.4, the term “Proposing
Person” shall mean (i) the stockholder providing the notice of business proposed to be brought before an annual meeting, (ii) the beneficial owner or beneficial owners, if different, on whose
behalf the notice of the business proposed to be brought before the annual meeting is made, and (iii) any participant (as defined in paragraphs (a)(ii)-(vi) of Instruction 3 to Item 4 of Schedule 14A) with such stockholder in such solicitation.
(d) A Proposing Person shall update and supplement its notice to the
Corporation of its intent to propose business at an annual meeting, if necessary, so that the information provided or required to be provided in such notice pursuant to this Section 2.4 shall be true and correct as of the record date
for stockholders entitled to vote at the meeting and as of the date that is ten (10) business days prior to the meeting or any adjournment or postponement thereof, and such update and supplement shall be delivered to, or mailed and received by,
the Secretary of the Corporation at the principal executive offices of the Corporation not later than five (5) business days after the record date for stockholders entitled to vote at the
TABLE OF CONTENTS
meeting (in the case of the update and supplement required to be made as of such
record date), and not later than eight (8) business days prior to the date for the meeting or, if practicable, any adjournment or postponement thereof (and, if not practicable, on the first practicable date prior to the date to which the
meeting has been adjourned or postponed) (in the case of the update and supplement required to be made as of ten (10) business days prior to the meeting or any adjournment or postponement thereof). For the avoidance of doubt, the obligation to
update and supplement as set forth in this paragraph or any other Section of these bylaws shall not limit the Corporation’s rights with respect to any deficiencies in any notice provided by a stockholder, extend any applicable deadlines
hereunder or enable or be deemed to permit a stockholder who has previously submitted notice hereunder to amend or update any proposal or to submit any new proposal, including by changing or adding matters, business or resolutions proposed to
be brought before a meeting of the stockholders.
(e) Notwithstanding anything in these bylaws to the contrary, no
business shall be conducted at an annual meeting that is not properly brought before the meeting in accordance with this Section 2.4. The presiding officer of the meeting shall, if the facts warrant, determine that the business was not
properly brought before the meeting in accordance with this Section 2.4, and if he or she should so determine, he or she shall so declare to the meeting and any such business not properly brought before the meeting shall not be
transacted.
(f) This Section 2.4 is expressly intended to apply to any
business proposed to be brought before an annual meeting of stockholders other than any proposal made in accordance with Rule 14a-8 under the Exchange Act and included in the Corporation’s proxy statement. In addition to the requirements of
this Section 2.4 with respect to any business proposed to be brought before an annual meeting, each Proposing Person shall comply with all applicable requirements of the Exchange Act with respect to any such business. Nothing in this Section
2.4 shall be deemed to affect the rights of stockholders to request inclusion of proposals in the Corporation’s proxy statement pursuant to Rule 14a-8 under the Exchange Act.
(g) For purposes of these bylaws, “public disclosure” shall
mean disclosure in a press release reported by a national news service or in a document publicly filed by the Corporation with the Securities and Exchange Commission pursuant to Sections 13, 14 or 15(d) of the Exchange Act.
2.5
Notice of Nominations for
Election to the Board.
(a) Nominations of any person for election to the Board at an annual
meeting or at a special meeting (but only if the election of directors is a matter specified in the notice of meeting given by or at the direction of the person calling such special meeting) may be made at such meeting only (i) by or at the
direction of the Board, including by any committee or persons authorized to do so by the Board or these bylaws, or (ii) by a stockholder present in person (A) who was a record owner of shares of the Corporation both at the time of giving the
notice provided for in this Section 2.5 and at the time of the meeting, (B) is entitled to vote at the meeting, and (C) has complied with this Section 2.5 as to such notice and nomination. For purposes of this Section 2.5,
“present in person” shall mean that the stockholder proposing that the business be brought before the meeting of the Corporation, or a qualified representative of such stockholder, appear at such meeting. A “qualified representative”
of such proposing stockholder shall be a duly authorized officer, manager or partner of such stockholder or any other person authorized by a writing executed by such stockholder or an electronic transmission delivered by such stockholder to act
for such stockholder as proxy at the meeting of stockholders and such person must produce such writing or electronic transmission, or a reliable reproduction of the writing or electronic transmission, at the meeting of stockholders. The
foregoing clause (ii) shall be the exclusive means for a stockholder to make any nomination of a person or persons for election to the Board at an annual meeting or special meeting.
(b) (i) Without qualification, for a stockholder to make any
nomination of a person or persons for election to the Board at an annual meeting, the stockholder must (1) provide Timely Notice (as defined in Section 2.4) thereof in writing and in proper form to the Secretary of the Corporation, (2)
provide the information, agreements and questionnaires with respect to such stockholder and its candidate for nomination as required to be set forth by this Section 2.5 and (3) provide any updates or supplements to such notice at the
times and in the forms required by this Section 2.5.
(ii) Without qualification, if the election of directors is a matter
specified in the notice of meeting given by or at the direction of the person calling a special meeting, then for a stockholder to
TABLE OF CONTENTS
make any nomination of a person or persons for election to the Board at a special
meeting, the stockholder must (i) provide Timely Notice thereof in writing and in proper form to the Secretary of the Corporation at the principal executive offices of the Corporation, (ii) provide the information with respect to such
stockholder and its candidate for nomination as required by this Section 2.5 and (iii) provide any updates or supplements to such notice at the times and in the forms required by this Section 2.5. To be timely, a stockholder’s
notice for nominations to be made at a special meeting must be delivered to, or mailed and received at, the principal executive offices of the Corporation not earlier than the one hundred twentieth (120th) day prior to such special
meeting and not later than the ninetieth (90th) day prior to such special meeting or, if later, the tenth (10th) day following the day on which public disclosure (as defined in Section 2.4) of the date of such
special meeting was first made.
(iii) In no event shall any adjournment or postponement of an annual
meeting or special meeting or the announcement thereof commence a new time period for the giving of a stockholder’s notice as described above.
(iv) In no event may a Nominating Person provide Timely Notice with
respect to a greater number of director candidates than are subject to election by shareholders at the applicable meeting. If the Corporation shall, subsequent to such notice, increase the number of directors subject to election at the meeting,
such notice as to any additional nominees shall be due on the later of (i) the conclusion of the time period for Timely Notice, (ii) the date set forth in Section 2.5(b)(ii) or (iii) the tenth day following the date of public disclosure
(as defined in Section 2.4) of such increase.
(c) To be in proper form for purposes of this Section 2.5, a
stockholder’s notice to the Secretary of the Corporation shall set forth:
(i) As to each Nominating Person (as defined below), the Stockholder
Information (as defined in Section 2.4(c)(i), except that for purposes of this Section 2.5, the term “Nominating Person” shall be substituted for the term “Proposing Person” in all places it appears in Section
2.4(c)(i));
(ii) As to each Nominating Person, any Disclosable Interests (as
defined in Section 2.4(c)(ii), except that for purposes of this Section 2.5, the term “Nominating Person” shall be substituted for the term “Proposing Person” in all places it appears in Section 2.4(c)(ii)
and the disclosure with respect to the business to be brought before the meeting in Section 2.4(c)(ii) shall be made with respect to the election of directors at the meeting); and
(iii) As to each candidate whom a Nominating Person proposes to
nominate for election as a director, (A) all information with respect to such candidate for nomination that would be required to be set forth in a stockholder’s notice pursuant to this Section 2.5 if such candidate for nomination were a
Nominating Person, (B) all information relating to such candidate for nomination that is required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors in
a contested election pursuant to Section 14(a) under the Exchange Act (including such candidate’s written consent to being named in the proxy statement as a nominee and to serving as a director if elected), (C) a description of any direct or
indirect material interest in any material contract or agreement between or among any Nominating Person, on the one hand, and each candidate for nomination or his or her respective associates or any other participants in such solicitation, on
the other hand, including, without limitation, all information that would be required to be disclosed pursuant to Item 404 under Regulation S-K if such Nominating Person were the “registrant” for purposes of such rule and the candidate for
nomination were a director or executive officer of such registrant and (D) a completed and signed questionnaire, representation and agreement as provided in Section 2.5(f).
For purposes of this Section 2.5, the term “Nominating
Person” shall mean (i) the stockholder providing the notice of the nomination proposed to be made at the meeting, (ii) the beneficial owner or beneficial owners, if different, on whose behalf the notice of the nomination proposed to be
made at the meeting is made, and (iii) any other participant in such solicitation.
(d) A stockholder providing notice of any nomination proposed to be
made at a meeting shall further update and supplement such notice, if necessary, so that the information provided or required to be provided in such notice pursuant to this Section 2.5 shall be true and correct as of the record date for
stockholders entitled to
TABLE OF CONTENTS
vote at the meeting and as of the date that is ten (10) business days prior to the
meeting or any adjournment or postponement thereof, and such update and supplement shall be delivered to, or mailed and received by, the Secretary of the Corporation at the principal executive offices of the Corporation not later than five (5)
business days after the record date for stockholders entitled to vote at the meeting (in the case of the update and supplement required to be made as of such record date), and not later than eight (8) business days prior to the date for the
meeting or, if practicable, any adjournment or postponement thereof (and, if not practicable, on the first practicable date prior to the date to which the meeting has been adjourned or postponed) (in the case of the update and supplement
required to be made as of ten (10) business days prior to the meeting or any adjournment or postponement thereof). For the avoidance of doubt, the obligation to update and supplement as set forth in this paragraph or any other Section of these
bylaws shall not limit the Corporation’s rights with respect to any deficiencies in any notice provided by a stockholder, extend any applicable deadlines hereunder or enable or be deemed to permit a stockholder who has previously submitted
notice hereunder to amend or update any nomination or to submit any new nomination.
(e) In addition to the requirements of this Section 2.5 with
respect to any nomination proposed to be made at a meeting, each Nominating Person shall comply with all applicable requirements of the Exchange Act with respect to any such nominations.
(f) To be eligible to be a candidate for election as a director of
the Corporation at an annual or special meeting, a candidate must be nominated in the manner prescribed in Section 2.5 and the candidate for nomination, whether nominated by the Board or by a stockholder of record, must have previously
delivered (in accordance with the time period prescribed for delivery in a notice to such candidate given by or on behalf of the Board), to the Secretary of the Corporation at the principal executive offices of the Corporation, (i) a completed
written questionnaire (in a form provided by the Corporation) with respect to the background, qualifications, stock ownership and independence of such proposed nominee and (ii) a written representation and agreement (in form provided by the
Corporation) that such candidate for nomination (A) is not and, if elected as a director during his or her term of office, will not become a party to (1) any agreement, arrangement or understanding with, and has not given and will not give any
commitment or assurance to, any person or entity as to how such proposed nominee, if elected as a director of the Corporation, will act or vote on any issue or question (a “Voting Commitment”) or (2) any Voting Commitment that could
limit or interfere with such proposed nominee’s ability to comply, if elected as a director of the Corporation, with such proposed nominee’s fiduciary duties under applicable law, (B) is not, and will not become a party to, any agreement,
arrangement or understanding with any person or entity other than the Corporation with respect to any direct or indirect compensation or reimbursement for service as a director that has not been disclosed to the Corporation and (C) if elected
as a director of the Corporation, will comply with all applicable corporate governance, conflict of interest, confidentiality, stock ownership and trading and other policies and guidelines of the Corporation applicable to directors and in
effect during such person’s term in office as a director (and, if requested by any candidate for nomination, the Secretary of the Corporation shall provide to such candidate for nomination all such policies and guidelines then in effect).
(g) The Board may also require any proposed candidate for nomination
as a Director to furnish such other information as may reasonably be requested by the Board in writing prior to the meeting of stockholders at which such candidate’s nomination is to be acted upon in order for the Board to determine the
eligibility of such candidate for nomination to be an independent director of the Corporation in accordance with the Corporation’s corporate governance guidelines.
(h) A candidate for nomination as a director shall further update
and supplement the materials delivered pursuant to this Section 2.5, if necessary, so that the information provided or required to be provided pursuant to this Section 2.5 shall be true and correct as of the record date for
stockholders entitled to vote at the meeting and as of the date that is ten (10) business days prior to the meeting or any adjournment or postponement thereof, and such update and supplement shall be delivered to, or mailed and received by, the
Secretary of the Corporation at the principal executive offices of the Corporation (or any other office specified by the Corporation in any public announcement) not later than five (5) business days after the record date for stockholders
entitled to vote at the meeting (in the case of the update and supplement required to be made as of such record date), and not later than eight (8) business days prior to the date for the meeting or, if practicable, any adjournment or
postponement thereof (and, if not practicable,
TABLE OF CONTENTS
on the first practicable date prior to the date to which the meeting has been
adjourned or postponed) (in the case of the update and supplement required to be made as of ten (10) business days prior to the meeting or any adjournment or postponement thereof). For the avoidance of doubt, the obligation to update and
supplement as set forth in this paragraph or any other Section of these bylaws shall not limit the Corporation’s rights with respect to any deficiencies in any notice provided by a stockholder, extend any applicable deadlines hereunder or
enable or be deemed to permit a stockholder who has previously submitted notice hereunder to amend or update any proposal or to submit any new proposal, including by changing or adding nominees, matters, business or resolutions proposed to be
brought before a meeting of the stockholders.
(i) No candidate shall be eligible for nomination as a director of
the Corporation unless such candidate for nomination and the Nominating Person seeking to place such candidate’s name in nomination has complied with this Section 2.5. The presiding officer at the meeting shall, if the facts warrant,
determine that a nomination was not properly made in accordance with Section 2.5, and if he or she should so determine, he or she shall so declare such determination to the meeting, the defective nomination shall be disregarded and any
ballots cast for the candidate in question (but in the case of any form of ballot listing other qualified nominees, only the ballots cast for the nominee in question) shall be void and of no force or effect.
(j) Notwithstanding anything in these bylaws to the contrary, no
candidate for nomination shall be eligible to be seated as a director of the Corporation unless nominated and elected in accordance with Section 2.5.
2.6
Notice of Stockholders’
Meetings.
Unless otherwise provided by law, the Certificate of Incorporation or
these bylaws, the notice of any meeting of stockholders shall be sent or otherwise given in accordance with Section 8.1 not less than ten (10) nor more than sixty (60) days before the date of the meeting to each stockholder entitled to
vote at such meeting. The notice shall specify the place, if any, date and time of the meeting, the means of remote communication, if any, by which stockholders and proxy holders may be deemed to be present in person and vote at such meeting,
and, in the case of a special meeting, the purpose or purposes for which the meeting is called.
Unless otherwise provided by law, the Certificate of Incorporation or
these bylaws, the holders of a majority in voting power of the stock issued and outstanding and entitled to vote, present in person, or by remote communication, if applicable, or represented by proxy, shall constitute a quorum for the
transaction of business at all meetings of the stockholders. A quorum, once established at a meeting, shall not be broken by the withdrawal of enough votes to leave less than a quorum. If, however, a quorum is not present or represented at any
meeting of the stockholders, then either (i) the person presiding over the meeting or (ii) a majority in voting power of the stockholders entitled to vote at the meeting, present in person, or by remote communication, if applicable, or
represented by proxy, shall have power to recess the meeting or adjourn the meeting from time to time in the manner provided in Section 2.8 until a quorum is present or represented. At any recessed or adjourned meeting at which a quorum
is present or represented, any business may be transacted that might have been transacted at the meeting as originally noticed.
2.8
Adjourned Meeting; Notice.
When a meeting is adjourned to another time or place, unless these
bylaws otherwise require, notice need not be given of the adjourned meeting if the time, place, if any, thereof, and the means of remote communications, if any, by which stockholders and proxy holders may be deemed to be present in person and
vote at such adjourned meeting are announced at the meeting at which the adjournment is taken or are provided in any other manner permitted by the DGCL. At any adjourned meeting, the Corporation may transact any business which might have been
transacted at the original meeting. If the adjournment is for more than thirty (30) days, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. If after the adjournment a new record date
for determination of stockholders entitled to vote is fixed for the adjourned meeting, the Board shall fix as the record date for determining stockholders entitled to notice of such adjourned meeting the same or an earlier date as that fixed
for determination of stockholders entitled to vote at the adjourned meeting, and shall give notice of the adjourned meeting to each stockholder of record entitled to vote at such meeting as of the record date so fixed for notice of such
adjourned meeting.
TABLE OF CONTENTS
The date and time of the opening and the closing of the polls for
each matter upon which the stockholders will vote at a meeting shall be announced at the meeting by the person presiding over the meeting. The Board may adopt by resolution such rules and regulations for the conduct of the meeting of
stockholders as it shall deem appropriate. Except to the extent inconsistent with such rules and regulations as adopted by the Board, the person presiding over any meeting of stockholders shall have the right and authority to convene and (for
any or no reason) to recess and/or adjourn the meeting, to prescribe such rules, regulations and procedures (which need not be in writing) and to do all such acts as, in the judgment of such presiding person, are appropriate for the proper
conduct of the meeting. Such rules, regulations or procedures, whether adopted by the Board or prescribed by the person presiding over the meeting, may include, without limitation, the following: (i) the establishment of an agenda or order of
business for the meeting; (ii) rules and procedures for maintaining order at the meeting and the safety of those present (including, without limitation, rules and procedures for removal of disruptive persons from the meeting); (iii) limitations
on attendance at or participation in the meeting to stockholders entitled to vote at the meeting, their duly authorized and constituted proxies or such other persons as the person presiding over the meeting shall determine; (iv) restrictions on
entry to the meeting after the time fixed for the commencement thereof; and (v) limitations on the time allotted to questions or comments by participants. The presiding person at any meeting of stockholders, in addition to making any other
determinations that may be appropriate to the conduct of the meeting (including, without limitation, determinations with respect to the administration and/or interpretation of any of the rules, regulations or procedures of the meeting, whether
adopted by the Board or prescribed by the person presiding over the meeting), shall, if the facts warrant, determine and declare to the meeting that a matter of business was not properly brought before the meeting and if such presiding person
should so determine, such presiding person shall so declare to the meeting and any such matter or business not properly brought before the meeting shall not be transacted or considered. Unless and to the extent determined by the Board or the
person presiding over the meeting, meetings of stockholders shall not be required to be held in accordance with the rules of parliamentary procedure.
Except as may be otherwise provided in the Certificate of
Incorporation, these bylaws or the DGCL, each stockholder shall be entitled to one (1) vote for each share of capital stock held by such stockholder.
Except as otherwise provided by the Certificate of Incorporation, at
all duly called or convened meetings of stockholders at which a quorum is present, for the election of directors, a plurality of the votes cast shall be sufficient to elect a director. Except as otherwise provided by the Certificate of
Incorporation, these bylaws, the rules or regulations of any stock exchange applicable to the Corporation, or applicable law or pursuant to any regulation applicable to the Corporation or its securities, each other matter presented to the
stockholders at a duly called or convened meeting at which a quorum is present shall be decided by the affirmative vote of the holders of a majority in voting power of the votes cast (excluding abstentions and broker non-votes) on such matter.
2.11
Record Date for
Stockholder Meetings and Other Purposes.
In order that the Corporation may determine the stockholders entitled
to notice of or to vote at any meeting of stockholders or any adjournment thereof, the Board may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board, and which
record date shall, unless otherwise required by law, not be more than sixty (60) days nor less than ten (10) days before the date of such meeting. If the Board so fixes a date, such date shall also be the record date for determining the
stockholders entitled to vote at such meeting unless the Board determines, at the time it fixes such record date, that a later date on or before the date of the meeting shall be the date for making such determination. If no record date is fixed
by the Board, the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be the close of business on the next day preceding the day on which notice is first given, or, if notice is waived,
at the close of business on the day next preceding the day on which the meeting is held. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board may fix a new record date for determination of stockholders entitled to vote at the adjourned meeting; and in such case shall also fix as the record date for stockholders
entitled to notice of such adjourned meeting the same or an earlier date as that fixed for determination of stockholders entitled to vote in accordance herewith at the adjourned meeting.
TABLE OF CONTENTS
In order that the Corporation may determine the stockholders
entitled to receive payment of any dividend or other distribution or allotment or any rights or the stockholders entitled to exercise any rights in respect of any change, conversion or exchange of capital stock, or for the purposes of any other
lawful action, the Board may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted, and which record date shall be not more than sixty (60) days prior to such action. If no
record date is fixed, the record date for determining stockholders for any such purpose shall be at the close of business on the day on which the Board adopts the resolution relating thereto.
Each stockholder entitled to vote at a meeting of stockholders may
authorize another person or persons to act for such stockholder by proxy authorized by an instrument in writing or by a transmission permitted by law filed in accordance with the procedure established for the meeting, but no such proxy shall be
voted or acted upon after three (3) years from its date, unless the proxy provides for a longer period. The revocability of a proxy that states on its face that it is irrevocable shall be governed by the provisions of Section 212 of the DGCL. A
proxy may be in the form of an electronic transmission which sets forth or is submitted with information from which it can be determined that the transmission was authorized by the stockholder.
2.13
List of Stockholders
Entitled to Vote.
The Corporation shall prepare, at least ten (10) days before every
meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting (provided, however, that if the record date for determining the stockholders entitled to vote is less than ten
(10) days before the date of the meeting, the list shall reflect the stockholders entitled to vote as of the tenth (10th) day before the meeting date), arranged in alphabetical order, and showing the address of each stockholder and
the number of shares registered in the name of each stockholder. The Corporation shall not be required to include electronic mail addresses or other electronic contact information on such list. Such list shall be open to the examination of any
stockholder, for any purpose germane to the meeting for a period of at least ten (10) days prior to the meeting: (i) on a reasonably accessible electronic network, provided that the information
required to gain access to such list is provided with the notice of the meeting, or (ii) during ordinary business hours, at the Corporation’s principal executive office. In the event that the Corporation determines to make the list available on
an electronic network, the Corporation may take reasonable steps to ensure that such information is available only to stockholders of the Corporation. If the meeting is to be held at a place, then the list shall be produced and kept at the time
and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present. If the meeting is to be held solely by means of remote communication, then the list shall also be open to the examination of any
stockholder during the whole time of the meeting on a reasonably accessible electronic network, and the information required to access such list shall be provided with the notice of the meeting. Such list shall presumptively determine the
identity of the stockholders entitled to vote at the meeting and the number of shares held by each of them. Except as otherwise provided by law, the stock ledger shall be the only evidence as to who are the stockholders entitled to examine the
list of stockholders required by this Section 2.13 or to vote in person or by proxy at any meeting of stockholders.
2.14
Inspectors of Election.
Before any meeting of stockholders, the Corporation shall appoint an
inspector or inspectors of election to act at the meeting or its adjournment and make a written report thereof. The Corporation may designate one or more persons as alternate inspectors to replace any inspector who fails to act. If any person
appointed as inspector or any alternate fails to appear or fails or refuses to act, then the person presiding over the meeting shall appoint a person to fill that vacancy.
TABLE OF CONTENTS
Such inspectors shall:
(i) determine the number of shares outstanding and the voting power
of each, the number of shares represented at the meeting and the validity of any proxies and ballots;
(ii) count all votes or ballots;
(iii) count and tabulate all votes;
(iv) determine and retain for a reasonable period a record of the
disposition of any challenges made to any determination by the inspector(s); and
(v) certify its or their determination of the number of shares
represented at the meeting and its or their count of all votes and ballots.
Each inspector, before entering upon the discharge of the duties of
inspector, shall take and sign an oath faithfully to execute the duties of inspection with strict impartiality and according to the best of such inspector’s ability. Any report or certificate made by the inspectors of election is prima facie evidence of the facts stated therein. The inspectors of election may appoint such persons to assist them in performing their duties as they determine.
2.15
Delivery to the
Corporation.
Whenever this Article II requires one (1) or more persons
(including a record or beneficial owner of stock) to deliver a document or information to the Corporation or any officer, employee or agent thereof (including any notice, request, questionnaire, revocation, representation or other document or
agreement), such document or information shall be in writing exclusively (and not in an electronic transmission) and shall be delivered exclusively by hand (including, without limitation, overnight courier service) or by certified or registered
mail, return receipt requested, and the Corporation shall not be required to accept delivery of any document not in such written form or so delivered. For the avoidance of doubt, the Corporation expressly opts out of Section 116 of the DGCL
with respect to the delivery of information and documents to the Corporation required by this Article II.
Directors
Except as otherwise provided by the Certificate of Incorporation or
the DGCL, the business and affairs of the Corporation shall be managed by or under the direction of the Board.
Subject to the Certificate of Incorporation, the total number of
directors constituting the Board shall be determined from time to time by resolution of the Board. No reduction of the authorized number of directors shall have the effect of removing any director before that director’s term of office expires.
3.3
Election, Qualification
and Term of Office of Directors.
Except as provided in Section 3.4, and subject to the
Certificate of Incorporation, each director, including a director elected to fill a vacancy or newly created directorship, shall hold office until such director’s successor is duly elected and qualified or until such director’s earlier death,
resignation, disqualification or removal. Directors need not be stockholders or residents of the State of Delaware. The Certificate of Incorporation or these bylaws may prescribe qualifications for directors.
3.4
Resignation and Vacancies.
Any director may resign at any time upon notice given in writing or
by electronic transmission to the Corporation. The resignation shall take effect at the time specified therein or upon the happening of an event specified therein, and if no time or event is specified, at the time of its receipt. When one or
more directors so resigns and the resignation is effective at a future date or upon the happening of an event to occur on a future date, a majority of the directors then in office, including those who have so resigned, shall have power to fill
such vacancy or vacancies, the vote thereon to take effect when such resignation or resignations shall become effective, and each director so chosen shall hold office as provided in Section 3.3.
Unless otherwise provided in the Certificate of Incorporation or
these bylaws, vacancies resulting from the death, resignation, disqualification or removal of any director, and newly created directorships resulting from any
TABLE OF CONTENTS
increase in the authorized number of directors shall be filled only by a majority of
the directors then in office, although less than a quorum, or by a sole remaining director.
3.5
Place of Meetings;
Meetings by Telephone.
The Board may hold meetings, both regular and special, either
within or outside the State of Delaware.
Unless otherwise restricted by the Certificate of Incorporation or
these bylaws, members of the Board, or any committee designated by the Board, may participate in a meeting of the Board, or any committee, by means of conference telephone or other communications equipment by means of which all persons
participating in the meeting can hear each other, and such participation in a meeting pursuant to this bylaw shall constitute presence in person at the meeting.
Regular meetings of the Board may be held within or outside the State
of Delaware and at such time and at such place as which has been designated by the Board and publicized among all directors, either orally or in writing, by telephone, including a voice-messaging system or other system designed to record and
communicate messages, facsimile, telegraph or telex, or by electronic mail or other means of electronic transmission. No further notice shall be required for regular meetings of the Board.
3.7
Special Meetings; Notice.
Special meetings of the Board for any purpose or purposes may be
called at any time by the Chairperson of the Board, the Chief Executive Officer, the President or the Secretary of the Corporation or a majority of the total number of directors constituting the Board.
Notice of the time and place of special meetings shall be:
(i) delivered personally by hand, by courier or by telephone;
(ii) sent by United States first-class mail, postage prepaid;
(iii) sent by facsimile or electronic mail; or
(iv) sent by other means of electronic transmission,
directed to each director at that director’s address, telephone
number, facsimile number or electronic mail address, or other address for electronic transmission, as the case may be, as shown on the Corporation’s records.
If the notice is (i) delivered personally by hand, by courier or by
telephone, (ii) sent by facsimile or electronic mail, or (iii) sent by other means of electronic transmission, it shall be delivered or sent at least twenty-four (24) hours before the time of the holding of the meeting. If the notice is sent by
U.S. mail, it shall be deposited in the U.S. mail at least four (4) days before the time of the holding of the meeting. The notice need not specify the place of the meeting (if the meeting is to be held at the Corporation’s principal executive
office) nor the purpose of the meeting.
At all meetings of the Board, unless otherwise provided by the
Certificate of Incorporation, a majority of the total number of directors shall constitute a quorum for the transaction of business. The vote of a majority of the directors present at any meeting at which a quorum is present shall be the act of
the Board, except as may be otherwise specifically provided by statute, the Certificate of Incorporation or these bylaws. If a quorum is not present at any meeting of the Board, then the directors present thereat may adjourn the meeting from
time to time, without notice other than announcement at the meeting, until a quorum is present.
3.9
Board Action without a
Meeting.
Unless otherwise restricted by the Certificate of Incorporation or
these bylaws, any action required or permitted to be taken at any meeting of the Board, or of any committee thereof, may be taken without a meeting if all members of the Board or committee, as the case may be, consent thereto in writing or by
electronic
TABLE OF CONTENTS
transmission. After an action is taken, the consent or consents relating thereto
shall be filed with the minutes of the proceedings of the Board, or the committee thereof, in the same paper or electronic form as the minutes are maintained. Such action by written consent or consent by electronic transmission shall have the
same force and effect as a unanimous vote of the Board.
3.10
Fees and Compensation
of Directors.
Unless otherwise restricted by the Certificate of Incorporation or
these bylaws, the Board shall have the authority to fix the compensation, including fees and reimbursement of expenses, of directors for services to the Corporation in any capacity.
Committees
4.1
Committees of Directors.
The Board may designate one (1) or more committees, each committee to
consist, of one (1) or more of the directors of the Corporation. The Board may designate one (1) or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the
absence or disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not such member or members constitute a quorum, may unanimously appoint another member of
the Board to act at the meeting in the place of any such absent or disqualified member. Any such committee, to the extent provided in the resolution of the Board or in these bylaws, shall have and may exercise all the powers and authority of
the Board in the management of the business and affairs of the Corporation, and may authorize the seal of the Corporation to be affixed to all papers that may require it; but no such committee shall have the power or authority to (i) approve or
adopt, or recommend to the stockholders, any action or matter expressly required by the DGCL to be submitted to stockholders for approval, or (ii) adopt, amend or repeal any bylaw of the Corporation.
Each committee shall keep regular minutes of its meetings and
report the same to the Board when required.
4.3
Meetings and Actions of
Committees.
Meetings and actions of committees shall be governed by, and held and
taken in accordance with, the provisions of:
(i) Section 3.5 (place of meetings; meetings by telephone);
(ii) Section 3.6 (regular meetings);
(iii) Section 3.7 (special meetings; notice);
(iv) Section 3.9 (board action without a meeting); and
(v) Section 7.13 (waiver of notice),
with such changes in the context of those bylaws as are necessary to
substitute the committee and its members for the Board and its members; provided, however, that:
(i) the time of regular meetings of committees may be determined
either by resolution of the Board or by resolution of the committee;
(ii) special meetings of committees may also be called by resolution
of the Board or the chairperson of the applicable committee; and
(iii) the Board may adopt rules for the governance of any committee
to override the provisions that would otherwise apply to the committee pursuant to this Section 4.3, provided that such rules do not violate the provisions of the Certificate of Incorporation or applicable law.
TABLE OF CONTENTS
Unless otherwise provided in the Certificate of Incorporation, these
bylaws or the resolutions of the Board designating the committee, a committee may create one (1) or more subcommittees, each subcommittee to consist of one (1) or more members of the committee, and delegate to a subcommittee any or all of the
powers and authority of the committee.
Officers
The officers of the Corporation shall include a Chief Executive
Officer, a President and a Secretary. The Corporation may also have, at the discretion of the Board, a Chairperson of the Board, a Vice Chairperson of the Board, a Chief Financial Officer, a Chief Operating Officer, a Treasurer, one (1) or more
Vice Presidents, one (1) or more Assistant Vice Presidents, one (1) or more Assistant Treasurers, one (1) or more Assistant Secretaries, and any such other officers as may be appointed in accordance with the provisions of these bylaws. Any
number of offices may be held by the same person. No officer need be a stockholder or director of the Corporation.
5.2
Appointment of Officers.
The Board shall appoint the officers of the Corporation, except such
officers as may be appointed in accordance with the provisions of Section 5.3.
5.3
Subordinate Officers.
The Board may appoint, or empower the Chief Executive Officer or, in
the absence of a Chief Executive Officer, the President, to appoint, such other officers and agents as the business of the Corporation may require. Each of such officers and agents shall hold office for such period, have such authority, and
perform such duties as are provided in these bylaws or as the Board may from time to time determine.
5.4
Removal and Resignation of
Officers.
Subject to the rights, if any, of an officer under any contract of
employment, any officer may be removed, either with or without cause, by the Board or, except in the case of an officer chosen by the Board, by any officer upon whom such power of removal may be conferred by the Board.
Any officer may resign at any time by giving written notice to the
Corporation. Any resignation shall take effect at the date of the receipt of that notice or at any later time specified in that notice. Unless otherwise specified in the notice of resignation, the acceptance of the resignation shall not be
necessary to make it effective. Any resignation is without prejudice to the rights, if any, of the Corporation under any contract to which the officer is a party.
5.5
Vacancies in Offices.
Any vacancy occurring in any office of the Corporation shall be
filled by the Board or as provided in Section 5.2.
5.6
Representation of Shares
of Other Corporations.
The Chairperson of the Board, the Chief Executive Officer, or the
President of this Corporation, or any other person authorized by the Board, the Chief Executive Officer or the President, is authorized to vote, represent and exercise on behalf of this Corporation all rights incident to any and all shares or
voting securities of any other corporation or other person standing in the name of this Corporation. The authority granted herein may be exercised either by such person directly or by any other person authorized to do so by proxy or power of
attorney duly executed by such person having the authority.
5.7
Authority and Duties of
Officers.
All officers of the Corporation shall respectively have such
authority and perform such duties in the management of the business of the Corporation as may be provided herein or designated from time to time by the Board and, to the extent not so provided, as generally pertain to their respective offices,
subject to the control of the Board.
TABLE OF CONTENTS
The compensation of the officers of the Corporation for their
services as such shall be fixed from time to time by or at the direction of the Board. An officer of the Corporation shall not be prevented from receiving compensation by reason of the fact that he or she is also a director of the Corporation.
Records
A stock ledger consisting of one or more records in which the names
of all of the Corporation’s stockholders of record, the address and number of shares registered in the name of each such stockholder, and all issuances and transfers of stock of the corporation are recorded in accordance with Section 224 of the
DGCL shall be administered by or on behalf of the Corporation. Any records administered by or on behalf of the Corporation in the regular course of its business, including its stock ledger, books of account, and minute books, may be kept on, or
by means of, or be in the form of, any information storage device, or method, or one or more electronic networks or databases (including one or more distributed electronic networks or databases), provided that
the records so kept can be converted into clearly legible paper form within a reasonable time and, with respect to the stock ledger, that the records so kept (i) can be used to prepare the list of stockholders specified in Sections 219 and 220
of the DGCL, (ii) record the information specified in Sections 156, 159, 217(a) and 218 of the DGCL, and (iii) record transfers of stock as governed by Article 8 of the Uniform Commercial Code as adopted in the State of Delaware.
General Matters
7.1
Execution of Corporate
Contracts and Instruments.
The Board, except as otherwise provided in these bylaws, may
authorize any officer or officers, or agent or agents, to enter into any contract or execute any instrument in the name of and on behalf of the Corporation; such authority may be general or confined to specific instances.
The shares of the Corporation shall be represented by certificates or
shall be uncertificated. Certificates for the shares of stock, if any, shall be in such form as is consistent with the Certificate of Incorporation and applicable law. Every holder of stock represented by a certificate shall be entitled to have
a certificate signed by, or in the name of the Corporation by, any two officers authorized to sign stock certificates representing the number of shares registered in certificate form. The Chairperson or Vice Chairperson of the Board, the Chief
Executive Officer, the President, Vice President, the Treasurer, any Assistant Treasurer, the Secretary or any Assistant Secretary of the Corporation shall be specifically authorized to sign stock certificates. Any or all of the signatures on
the certificate may be a facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate has ceased to be such officer, transfer agent or registrar before such
certificate is issued, it may be issued by the Corporation with the same effect as if he or she were such officer, transfer agent or registrar at the date of issue.
The Corporation may issue the whole or any part of its shares as
partly paid and subject to call for the remainder of the consideration to be paid therefor. Upon the face or back of each stock certificate issued to represent any such partly paid shares, or upon the books and records of the Corporation in the
case of uncertificated partly paid shares, the total amount of the consideration to be paid therefor and the amount paid thereon shall be stated. Upon the declaration of any dividend on fully paid shares, the Corporation shall declare a
dividend upon partly paid shares of the same class, but only upon the basis of the percentage of the consideration actually paid thereon.
7.3
Special Designation of
Certificates.
If the Corporation is authorized to issue more than one class of
stock or more than one series of any class, then the powers, the designations, the preferences and the relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or
restrictions of such preferences and/or rights shall be set forth in full or summarized on the face or on the back of the certificate that the Corporation shall issue to represent such class or series of stock (or, in the case of uncertificated
shares, set forth
TABLE OF CONTENTS
in a notice provided pursuant to Section 151 of the DGCL); provided, however, that except as otherwise provided in Section 202 of the DGCL, in lieu of the foregoing requirements, there may be set forth on the face of back of the certificate that the Corporation shall issue to
represent such class or series of stock (or, in the case of any uncertificated shares, included in the aforementioned notice) a statement that the Corporation will furnish without charge to each stockholder who so requests the powers, the
designations, the preferences and the relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights.
Except as provided in this Section 7.4, no new certificates
for shares shall be issued to replace a previously issued certificate unless the latter is surrendered to the Corporation and canceled at the same time. The Corporation may issue a new certificate of stock or uncertificated shares in the place
of any certificate theretofore issued by it, alleged to have been lost, stolen or destroyed, and the Corporation may require the owner of the lost, stolen or destroyed certificate, or such owner’s legal representative, to give the Corporation a
bond sufficient to indemnify it against any claim that may be made against it on account of the alleged loss, theft or destruction of any such certificate or the issuance of such new certificate or uncertificated shares.
7.5
Shares Without
Certificates
The Corporation may adopt a system of issuance, recordation and
transfer of its shares of stock by electronic or other means not involving the issuance of certificates, provided the use of such system by the Corporation is permitted in accordance with applicable law.
7.6
Construction;
Definitions.
Unless the context requires otherwise, the general provisions, rules
of construction and definitions in the DGCL shall govern the construction of these bylaws. Without limiting the generality of this provision, the singular number includes the plural and the plural number includes the singular.
The Board, subject to any restrictions contained in either (i) the
DGCL or (ii) the Certificate of Incorporation, may declare and pay dividends upon the shares of its capital stock. Dividends may be paid in cash, in property or in shares of the Corporation’s capital stock.
The Board may set apart out of any of the funds of the Corporation
available for dividends a reserve or reserves for any proper purpose and may abolish any such reserve. Such purposes shall include but not be limited to equalizing dividends, repairing or maintaining any property of the Corporation, and meeting
contingencies.
The fiscal year of the Corporation shall be fixed by resolution of
the Board and may be changed by the Board.
The Corporation may adopt a corporate seal, which shall be adopted
and which may be altered by the Board. The Corporation may use the corporate seal by causing it or a facsimile thereof to be impressed or affixed or in any other manner reproduced.
Shares of the stock of the Corporation shall be transferable in the
manner prescribed by law and in these bylaws. Shares of stock of the Corporation shall be transferred on the books of the Corporation only by the holder of record thereof or by such holder’s attorney duly authorized in writing, upon surrender
to the Corporation of the certificate or certificates representing such shares endorsed by the appropriate person or persons (or by delivery of duly executed instructions with respect to uncertificated shares), with such evidence of the
authenticity of such endorsement or execution, transfer, authorization and other matters as the Corporation may reasonably require, and accompanied by all necessary stock transfer stamps. No transfer of stock shall be valid as against the
Corporation for any purpose until it shall have been entered in the stock records of the Corporation by an entry showing the names of the persons from and to whom it was transferred.
TABLE OF CONTENTS
7.11
Stock Transfer
Agreements.
The Corporation shall have power to enter into and perform any
agreement with any number of stockholders of any one or more classes or series of stock of the Corporation to restrict the transfer of shares of stock of the Corporation of any one or more classes owned by such stockholders in any manner not
prohibited by the DGCL.
7.12
Registered
Stockholders.
The Corporation:
(i) shall be entitled to recognize the exclusive right of a person
registered on its books as the owner of shares to receive dividends and to vote as such owner; and
(ii) shall not be bound to recognize any equitable or other claim to
or interest in such share or shares on the part of another person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of the State of Delaware.
Whenever notice is required to be given under any provision of the
DGCL, the Certificate of Incorporation or these bylaws, a written waiver, signed by the person entitled to notice, or a waiver by electronic transmission by the person entitled to notice, whether before or after the time of the event for which
notice is to be given, shall be deemed equivalent to notice. Attendance of a person at a meeting shall constitute a waiver of notice of such meeting, except when the person attends a meeting for the express purpose of objecting at the beginning
of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the stockholders need be specified in any
written waiver of notice or any waiver by electronic transmission unless so required by the Certificate of Incorporation or these bylaws.
Notice
8.1
Delivery of Notice; Notice
by Electronic Transmission.
Without limiting the manner by which notice otherwise may be given
effectively to stockholders, any notice to stockholders given by the Corporation under any provisions of the DGCL, the Certificate of Incorporation, or these bylaws may be given in writing directed to the stockholder’s mailing address (or by
electronic transmission directed to the stockholder’s electronic mail address, as applicable) as it appears on the records of the Corporation and shall be given (1) if mailed, when the notice is deposited in the U.S. mail, postage prepaid,
(2) if delivered by courier service, the earlier of when the notice is received or left at such stockholder’s address or (3) if given by electronic mail, when directed to such stockholder’s electronic mail address unless the stockholder has
notified the Corporation in writing or by electronic transmission of an objection to receiving notice by electronic mail. A notice by electronic mail must include a prominent legend that the communication is an important notice regarding the
Corporation.
Without limiting the manner by which notice otherwise may be given
effectively to stockholders, any notice to stockholders given by the Corporation under any provision of the DGCL, the Certificate of Incorporation or these bylaws shall be effective if given by a form of electronic transmission consented to by
the stockholder to whom the notice is given. Any such consent shall be revocable by the stockholder by written notice or electronic transmission to the Corporation. Notwithstanding the provisions of this paragraph, the Corporation may give a
notice by electronic mail in accordance with the first paragraph of this Section 8.1 without obtaining the consent required by this paragraph.
Any notice given pursuant to the preceding paragraph shall be deemed
given:
(i) if by facsimile telecommunication, when directed to a number at
which the stockholder has consented to receive notice;
(ii) if by a posting on an electronic network together with separate
notice to the stockholder of such specific posting, upon the later of (A) such posting and (B) the giving of such separate notice; and
(iii) if by any other form of electronic transmission, when directed
to the stockholder.
TABLE OF CONTENTS
Notwithstanding the foregoing, a notice may not be given by an
electronic transmission from and after the time that (1) the Corporation is unable to deliver by such electronic transmission two (2) consecutive notices given by the Corporation and (2) such inability becomes known to the Secretary or an
Assistant Secretary of the Corporation or to the transfer agent, or other person responsible for the giving of notice; provided, however, that the inadvertent failure to discover such inability shall
not invalidate any meeting or other action.
An affidavit of the Secretary or an Assistant Secretary of the
Corporation or of the transfer agent or other agent of the Corporation that the notice has been given shall, in the absence of fraud, be prima facie evidence of the facts stated therein.
Indemnification
9.1
Indemnification of
Directors and Officers.
The Corporation shall indemnify and hold harmless, to the fullest
extent permitted by the DGCL or any other applicable law, as it presently exists or may hereafter be amended, any person who was or is made or is threatened to be made a party or is otherwise involved in any action, suit or proceeding, whether
civil, criminal, administrative or investigative (a “Proceeding”) by reason of the fact that he or she, or a person for whom he or she is the legal representative, is or was a director or officer of the Corporation or, while serving as a
director or officer of the Corporation, is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation or of a partnership, joint venture, trust, other enterprise or non-profit entity,
including service with respect to employee benefit plans (hereinafter, an “indemnitee”), whether the basis of such proceeding is alleged action in an official capacity as director, officer, employee, or agent, or in any other capacity
while serving as director, officer, employee or agent, against all liability and loss suffered and expenses (including attorneys’ fees, judgments, fines ERISA excise taxes or penalties and amounts paid in settlement) reasonably incurred by such
indemnitee in connection with any such Proceeding; provided that such indemnitee acted in good faith and in a manner such indemnitee reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe such indemnitee’s conduct was unlawful. Notwithstanding the preceding sentence, except as otherwise provided in Section 9.4, the Corporation shall be required to
indemnify a person in connection with a Proceeding initiated by such indemnitee only if the Proceeding was authorized in the specific case by the Board.
9.2
Indemnification of Others.
The Corporation shall have the power to indemnify and hold harmless,
to the fullest extent permitted by the DGCL or any other applicable law, as it presently exists or may hereafter be amended, any employee or agent of the Corporation who was or is made or is threatened to be made a party or is otherwise
involved in any Proceeding by reason of the fact that he or she, or a person for whom he or she is the legal representative, is or was an employee or agent of the Corporation or is or was serving at the request of the Corporation as a director,
officer, employee or agent of another corporation or of a partnership, joint venture, trust, enterprise or non-profit entity, including service with respect to employee benefit plans, against all liability and loss suffered and expenses
reasonably incurred by such person in connection with any such Proceeding.
9.3
Prepayment of Expenses.
In addition to the obligation to indemnify conferred in Section
9.1, the Corporation shall to the fullest extent not prohibited by the DGCL or any other applicable law pay the expenses (including attorneys’ fees) incurred by any indemnitee, and may pay the expenses incurred by any employee or agent of
the Corporation, in defending any Proceeding in advance of its final disposition; provided, however, that such payment of expenses in advance of the final disposition of the Proceeding shall be made
only upon receipt of an undertaking by or on behalf of the person to repay all amounts advanced if it should be ultimately determined that the person is not entitled to be indemnified under this Article IX or otherwise.
9.4
Determination; Claim.
If a claim for indemnification (following the final disposition of
such Proceeding) under this Article IX is not paid in full within sixty (60) days, or a claim for advancement of expenses under this Article IX is not paid in full within thirty (30) days, after a written claim therefor has
been received by the Corporation the indemnitee may thereafter (but not before) file suit to recover the unpaid amount of such claim and, if successful in whole or in part, shall be entitled to be paid the expense of prosecuting such claim to
the fullest extent permitted by
TABLE OF CONTENTS
law. In any such action the Corporation shall have the burden of proving that the
claimant was not entitled to the requested indemnification or payment of expenses under applicable law.
9.5
Non-Exclusivity of
Rights.
The rights conferred on any person by this Article IX shall
not be exclusive of any other rights which such person may have or hereafter acquire under any statute, provision of the Certificate of Incorporation, these bylaws, agreement, vote of stockholders or disinterested directors or otherwise.
The Corporation shall purchase and maintain insurance on behalf of
any person who is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust
enterprise or non-profit entity against any liability asserted against him or her and incurred by him or her in any such capacity, or arising out of his or her status as such, whether or not the Corporation would have the power to indemnify him
or her against such liability under the provisions of the DGCL.
9.7
Other Indemnification.
The Corporation’s obligation, if any, to indemnify or advance
expenses to any person who was or is serving at its request as a director, officer, employee or agent of another corporation, partnership, joint venture, trust, enterprise or non-profit entity shall be reduced by any amount such person may
collect as indemnification or advancement of expenses from such other corporation, partnership, joint venture, trust, enterprise or non-profit enterprise.
9.8
Continuation of
Indemnification.
The rights to indemnification and to prepayment of expenses provided
by, or granted pursuant to, this Article IX shall continue notwithstanding that the person has ceased to be a director or officer of the Corporation and shall inure to the benefit of the estate, heirs, executors, administrators, legatees and
distributees of such person.
9.9
Amendment or Repeal;
Interpretation.
The provisions of this Article IX shall constitute a contract between
the Corporation, on the one hand, and, on the other hand, each individual who serves or has served as a director or officer of the Corporation (whether before or after the adoption of these bylaws), in consideration of such person’s performance
of such services, and pursuant to this Article IX the Corporation intends to be legally bound to each such current or former director or officer of the Corporation. With respect to current and former directors and officers of the Corporation,
the rights conferred under this Article IX are present contractual rights and such rights are fully vested, and shall be deemed to have vested fully, immediately upon adoption of theses bylaws. With respect to any directors or officers of the
Corporation who commence service following adoption of these bylaws, the rights conferred under this provision shall be present contractual rights and such rights shall fully vest, and be deemed to have vested fully, immediately upon such
director or officer commencing service as a director or officer of the Corporation. Any repeal or modification of the foregoing provisions of this Article IX shall not adversely affect any right or protection (i) hereunder of any person in
respect of any act or omission occurring prior to the time of such repeal or modification or (ii) under any agreement providing for indemnification or advancement of expenses to an officer or director of the Corporation in effect prior to the
time of such repeal or modification.
Any reference to an officer of the Corporation in this Article IX
shall be deemed to refer exclusively to the Chief Executive Officer, the President and the Secretary of the Corporation, or other officer of the Corporation appointed by (x) the Board pursuant to Article V or (y) an officer to whom the Board
has delegated the power to appoint officers pursuant to Article V, and any reference to an officer of any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise shall be deemed to refer exclusively to an
officer appointed by the board of directors (or equivalent governing body) of such other entity pursuant to the certificate of incorporation and bylaws (or equivalent organizational documents) of such other corporation, partnership, joint
venture, trust, employee benefit plan or other enterprise. The fact that any person who is or was an employee of the Corporation or an employee of any other corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise has been given or has used the title of “Vice President” or any other title that could be construed to suggest or imply that such person is or may be an officer of the Corporation or of such other
TABLE OF CONTENTS
corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise shall not result in such person being constituted as, or being deemed to be, an officer of the Corporation or of such other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise for purposes of
this Article IX.
Amendments
The Board is expressly empowered to adopt, amend or repeal the bylaws
of the Corporation. The stockholders also shall have power to adopt, amend or repeal the bylaws of the Corporation; provided, however, that such action by stockholders shall require, in addition to any
other vote required by the Certificate of Incorporation or applicable law, the affirmative vote of the holders of at least two-thirds of the voting power of all the then-outstanding shares of voting stock of the Corporation with the power to
vote generally in an election of directors, voting together as a single class.
Definitions
As used in these bylaws, unless the context otherwise requires, the
following terms shall have the following meanings:
An “electronic transmission” means any form of communication,
not directly involving the physical transmission of paper, including the use of, or participation in, one or more electronic networks or databases (including one or more distributed electronic networks or databases), that creates a record that
may be retained, retrieved and reviewed by a recipient thereof, and that may be directly reproduced in paper form by such a recipient through an automated process.
An “electronic mail” means an electronic transmission directed
to a unique electronic mail address (which electronic mail shall be deemed to include any files attached thereto and any information hyperlinked to a website if such electronic mail includes the contact information of an officer or agent of the
Corporation who is available to assist with accessing such files and information).
An “electronic mail address” means a destination, commonly
expressed as a string of characters, consisting of a unique user name or mailbox (commonly referred to as the “local part” of the address) and a reference to an internet domain (commonly referred to as the “domain part” of the address), whether
or not displayed, to which electronic mail can be sent or delivered.
The term “person” means any individual, general partnership,
limited partnership, limited liability company, corporation, trust, business trust, joint stock company, joint venture, unincorporated association, cooperative or association or any other legal entity or organization of whatever nature, and
shall include any successor (by merger or otherwise) of such entity.
TABLE OF CONTENTS
[H2B2 ELECTROLYSIS TECHNOLOGIES, INC.]
2023 INCENTIVE AWARD PLAN
ARTICLE I.
Purpose
The Plan’s purpose is to enhance the Company’s ability to attract,
retain and motivate persons who make (or are expected to make) important contributions to the Company by providing these individuals with equity ownership opportunities and/or equity-linked compensatory opportunities. Capitalized terms used in
the Plan are defined in Article XI.
ARTICLE II.
Eligibility
Service Providers are eligible to be granted Awards under the Plan,
subject to the limitations described herein.
ARTICLE III.
Administration and Delegation
3.1 Administration. The Plan is administered by the
Administrator. The Administrator has authority to determine which Service Providers receive Awards, grant Awards and set Award terms and conditions, subject to the conditions and limitations in the Plan. The Administrator also has the authority
to take all actions and make all determinations under the Plan, to interpret the Plan and Award Agreements and to adopt, amend and repeal Plan administrative rules, guidelines and practices as it deems advisable. The Administrator may correct
defects and ambiguities, supply omissions and reconcile inconsistencies in the Plan or any Award Agreement as it deems necessary or appropriate to administer the Plan and any Awards. The Administrator’s determinations under the Plan are in its
sole discretion and will be final and binding on all persons having or claiming any interest in the Plan or any Award.
3.2 Appointment of Committees. To the extent
Applicable Laws permit, the Board or the Administrator may delegate any or all of its powers under the Plan to one or more Committees or committees of officers of the Company or any of its Subsidiaries; provided, that in no event shall any
officer of the Company be delegated the authority to grant Awards to, or amend Awards held by, individuals who are subject to Section 16 of the Exchange Act or officers of the Company (or non-employee Directors) to whom the authority to grant
or amend Awards has been delegated hereunder. The Board or the Administrator, as applicable, may rescind any such delegation, abolish any such Committee or committee and/or re-vest in itself any previously delegated authority at any time.
ARTICLE IV.
Stock Available for Awards
4.1 Number of Shares. Subject to adjustment under Article VIII
and further subject to the terms of this Article IV, the maximum number of Shares that may be issued pursuant to Awards under the Plan shall be equal to the Overall Share Limit. Shares issued under the Plan may consist of authorized but
unissued Shares, Shares purchased on the open market or treasury Shares.
4.2 Share Recycling. If all or any part of an Award expires,
lapses or is terminated, exchanged for or settled in cash, surrendered, repurchased, canceled without having been fully exercised/settled or forfeited, in any case, in a manner that results in the Company acquiring Shares covered by the Award
at a price not greater than the price (as adjusted to reflect any Equity Restructuring) paid by the Participant for such Shares or not issuing any Shares covered by the Award, the unused Shares covered by the Award will, as applicable, become
or again be available for Award grants under the Plan. In addition, Shares delivered (either by actual delivery or attestation) to the Company by a Participant to satisfy the applicable exercise or purchase price of an Award and/or to satisfy
any applicable tax withholding obligation with respect to an Award (including Shares retained by the Company from the Award being exercised or purchased and/or creating the tax obligation) will, as
TABLE OF CONTENTS
applicable, become or again be available for Award grants under the Plan. The payment
of Dividend Equivalents in cash in conjunction with any outstanding Awards shall not count against the Overall Share Limit. Notwithstanding anything to the contrary contained herein, the following Shares shall not be added to the Shares
authorized for grant under Section 4.1 and shall not be available for future grants of Awards: (a) Shares subject to a Stock Appreciation Right that are not issued in connection with the stock settlement of the Stock Appreciation Right on
exercise thereof; and (b) Shares purchased on the open market with the cash proceeds from the exercise of Options.
4.3 Incentive Stock Option Limitations. Notwithstanding
anything to the contrary herein, no more than [ ] Shares may be issued pursuant to the exercise of Incentive Stock Options.
4.4 Substitute Awards. In connection with an entity’s
merger or consolidation with the Company or any Subsidiary or the Company’s or any Subsidiary’s acquisition of an entity’s property or equity securities, the Administrator may grant Awards in substitution for any options or other equity or
equity-based awards granted before such merger or consolidation by such entity or its affiliate. Substitute Awards may be granted on such terms as the Administrator deems appropriate, notwithstanding limitations on Awards in the Plan.
Substitute Awards will not count against the Overall Share Limit (nor shall Shares subject to a Substitute Award be added to the Shares available for Awards under the Plan as provided above), except that Shares acquired by exercise of
substitute Incentive Stock Options will count against the maximum number of Shares that may be issued pursuant to the exercise of Incentive Stock Options under the Plan. Additionally, in the event that a company acquired by the Company or any
Subsidiary or with which the Company or any Subsidiary combines has equity securities available under a pre-existing plan approved by equityholders and not adopted in contemplation of such acquisition or combination, the equity securities
available for grant pursuant to the terms of such pre-existing plan (as adjusted, to the extent appropriate, using the exchange ratio or other adjustment or valuation ratio or formula used in such acquisition or combination to determine the
consideration payable to the equityholders of the entities party to such acquisition or combination) may be used for Awards under the Plan and shall not reduce the Shares authorized for grant under the Plan (and Shares subject to such Awards
shall not be added to the Shares available for Awards under the Plan as provided above); provided that Awards using such available Shares shall not be made after the date awards or grants could have been made under the terms of the pre-existing
plan, absent the acquisition or combination, and shall only be made to individuals who were not Service Providers prior to such acquisition or combination.
4.5 Non-Employee Director Compensation.
Notwithstanding any provision to the contrary in the Plan, the Administrator may establish compensation for non-employee Directors from time to time, subject to the limitations in the Plan. The Administrator will from time to time determine the
terms, conditions and amounts of all such non-employee Director compensation in its discretion and pursuant to the exercise of its business judgment, taking into account such factors, circumstances and considerations as it shall deem relevant
from time to time; provided that, the sum of any cash compensation, or other compensation, and the value (determined as of the grant date in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718, or
any successor thereto) of Awards granted to a non-employee Director as compensation for services as a non-employee Director during any fiscal year of the Company may not exceed $[ ] (the “Non-Employee Director Limit”).
ARTICLE V.
Stock Options and Stock Appreciation Rights
5.1 General. The Administrator may grant Options or Stock
Appreciation Rights to Service Providers subject to the limitations in the Plan, including any limitations in the Plan that apply to Incentive Stock Options. The Administrator will determine the number of Shares covered by each Option and Stock
Appreciation Right, and the conditions and limitations applicable to the exercise of each Option and Stock Appreciation Right. A Stock Appreciation Right will entitle the Participant (or other person entitled to exercise the Stock Appreciation
Right) to receive from the Company upon exercise of the exercisable portion of the Stock Appreciation Right an amount determined by multiplying the excess, if any, of the Fair Market Value of one Share on the date of exercise over the exercise
price per Share of the Stock Appreciation Right by the number of Shares with respect to which the Stock Appreciation Right is exercised, subject to any limitations of the Plan or that the Administrator may impose, and which amount shall be
payable in cash, Shares valued at Fair Market Value or a combination of the two as the Administrator may determine or provide in the applicable Award Agreement.
TABLE OF CONTENTS
5.2 Exercise Price. The Administrator will
establish each Option’s and Stock Appreciation Right’s exercise price and specify the exercise price in the Award Agreement. Unless otherwise determined by the Administrator, the exercise price will not be less than 100% of the Fair Market
Value on the grant date of the Option (subject to Section 5.6) or Stock Appreciation Right. Notwithstanding the foregoing, in the case of an Option or a Stock Appreciation Right that is a Substitute Award, the exercise price per share of the
Shares subject to such Option or Stock Appreciation Right, as applicable, may be less than the Fair Market Value per share on the date of grant; provided that the exercise price of any Substitute Award
shall be determined in accordance with the applicable requirements of Sections 424 and 409A of the Code.
5.3 Duration. Each Option or Stock Appreciation Right will be
exercisable at such times and as specified in the Award Agreement, provided that, subject to Section 5.6, the term of an Option or Stock Appreciation Right will not exceed ten years. Notwithstanding the foregoing and unless determined otherwise
by the Company, in the event that on the last business day of the term of an Option or Stock Appreciation Right (other than an Incentive Stock Option) (i) the exercise of the Option or Stock Appreciation Right is prohibited by Applicable Law,
as determined by the Company, or (ii) Shares may not be purchased or sold by the applicable Participant due to any Company insider trading policy (including blackout periods) or a “lock-up” agreement undertaken in connection with an issuance of
securities by the Company, the term of the Option or Stock Appreciation Right shall be automatically extended until the date that is 30 days after the end of the legal prohibition, black-out period or lock-up agreement, as determined by the
Company; provided, however, in no event shall the extension last beyond the ten year term (or any shorter maximum, if applicable) of the applicable Option or Stock Appreciation Right.
5.4 Exercise. Options and Stock Appreciation Rights may be
exercised by delivering to the Company (or its Agent) a written notice of exercise, in a form approved by the Administrator (which may be electronic and provided through the online platform maintained by an Agent), signed or submitted by the
person authorized to exercise the Option or Stock Appreciation Right, together with, as applicable, payment in full of the required amount(s), in each case, as applicable, (i) as specified in Section 5.5 for the number of Shares for which the
Award is exercised and (ii) as specified in Section 9.5 for any applicable taxes. Unless the Administrator otherwise determines, an Option or Stock Appreciation Right may not be exercised for a fraction of a Share.
5.5 Payment Upon Exercise. Subject to Section 10.8,
any Company insider trading policy (including blackout periods) and Applicable Laws, the exercise price of an Option must be paid by online payment through the Agent’s electronic platform or by wire transfer of immediately available funds to
the Agent (or, in each case, if the Company has no Agent accepting payment, by wire transfer of immediately available funds to the Company) or, solely with the consent of the Administrator (in its discretion), by:
(a) cash, wire transfer of immediately available funds or check
payable to the order of the Company, provided that the Administrator may limit the use of one of the foregoing payment forms if one or more of the payment forms below is permitted;
(b) if there is a public market for Shares at the time of exercise,
unless the Administrator otherwise determines, (A) delivery (including electronically or telephonically to the extent permitted by the Administrator) of an irrevocable and unconditional undertaking by a broker acceptable to the Administrator to
deliver promptly to the Company sufficient funds to pay the exercise price, or (B) the Participant’s delivery to the Company of a copy of irrevocable and unconditional instructions to a broker acceptable to the Administrator to deliver promptly
to the Company cash or a check sufficient to pay the exercise price; provided that such amount is paid to the Company at such time as may be required by the Administrator;
(c) delivery (either by actual delivery or attestation) of Shares
owned by the Participant valued at their Fair Market Value;
(d) surrendering Shares then issuable upon the Option’s exercise
valued at their Fair Market Value on the exercise date;
(e) other than for Participants subject to Section 13(k) of the
Exchange Act with respect to the Company or its Subsidiaries, delivery of a promissory note, in a form determined by or acceptable to the Administrator, or any other property that the Administrator determines is good and valuable consideration;
or
(f) any combination of the above payment forms approved by the
Administrator.
TABLE OF CONTENTS
5.6 Additional Terms of Incentive Stock Options.
The Administrator may grant Incentive Stock Options only to employees of the Company, any of its present or future parent or subsidiary corporations, as defined in Sections 424(e) or (f) of the Code, respectively, and any other entities the
employees of which are eligible to receive Incentive Stock Options under the Code. If an Incentive Stock Option is granted to a Greater Than 10% Stockholder, the exercise price will not be less than 110% of the Fair Market Value on the Option’s
grant date, and the term of the Option will not exceed five years. All Incentive Stock Options will be subject to and construed consistently with Section 422 of the Code. By accepting an Incentive Stock Option, the Participant agrees to give
prompt notice to the Company of dispositions or other transfers (other than in connection with a Change in Control) of Shares acquired under the Option made within (i) two years from the grant date of the Option or (ii) one year after the
transfer of such Shares to the Participant, specifying the date of the disposition or other transfer and the amount the Participant realized, in cash, other property, assumption of indebtedness or other consideration, in such disposition or
other transfer. Neither the Company nor the Administrator will be liable to a Participant, or any other party, if an Incentive Stock Option fails or ceases to qualify as an “incentive stock option” under Section 422 of the Code. Any Incentive
Stock Option or portion thereof that fails to qualify as an “incentive stock option” under Section 422 of the Code for any reason, including becoming exercisable with respect to Shares having a fair market value exceeding the $100,000
limitation under Treasury Regulation Section 1.422-4, will be a Non-Qualified Stock Option.
5.7 No Dividends or Dividend Equivalents. No dividends
or Dividend Equivalents shall be payable with respect to Options or Stock Appreciation Rights.
ARTICLE VI.
Restricted Stock; Restricted Stock Units
6.1 General. The Administrator may grant Restricted Stock, or
the right to purchase Restricted Stock, to any Service Provider, subject to the Company’s right to repurchase all or part of such Shares at their issue price or other stated or formula price from the Participant (or to require forfeiture of
such Shares) if conditions the Administrator specifies in the Award Agreement are not satisfied before the end of the applicable restriction period or periods that the Administrator establishes for such Award. In addition, the Administrator may
grant Restricted Stock Units to any Service Provider, which may be subject to vesting and forfeiture conditions during the applicable restriction period or periods, as set forth in an Award Agreement. The Administrator will determine and set
forth in the Award Agreement the terms and conditions for each Restricted Stock and Restricted Stock Unit Award, subject to the conditions and limitations contained in the Plan.
6.2 Restricted Stock.
(a) Dividends. Participants holding Shares of Restricted
Stock will be entitled to all ordinary cash dividends paid with respect to such Shares, unless the Administrator provides otherwise in the Award Agreement. In addition, unless the Administrator provides otherwise, if any dividends or
distributions are paid in Shares, or consist of a dividend or distribution to holders of Common Stock of property other than an ordinary cash dividend, the Shares or other property will be subject to the same restrictions on transferability and
forfeitability as the Shares of Restricted Stock with respect to which they were paid. Notwithstanding anything to the contrary herein, with respect to any award of Restricted Stock, dividends which are paid to holders of Common Stock prior to
vesting shall only be paid out to the Participant holding such Restricted Stock to the extent that the vesting conditions are subsequently satisfied. All such dividend payments will be made no later than March 15 of the calendar year following
the calendar year in which the right to the dividend payment becomes nonforfeitable.
(b) Stock Certificates. The Company may require that
the Participant deposit in escrow with the Company (or its designee) any stock certificates issued in respect of Shares of Restricted Stock, together with a stock power endorsed in blank.
6.3 Restricted Stock Units.
(a) Settlement. The Administrator may provide that settlement
of Restricted Stock Units will occur upon or as soon as reasonably practicable after the Restricted Stock Units vest or will instead be deferred, on a mandatory basis or at the Participant’s election, in a manner intended to comply with Section
409A. Restricted Stock Units may be settled in cash or in Shares, as determined by the Administrator and set forth in the applicable Award Agreement.
TABLE OF CONTENTS
(b) Stockholder Rights. A Participant will have no rights
of a stockholder with respect to Shares subject to any Restricted Stock Unit unless and until the Shares are delivered in settlement of the Restricted Stock Unit.
(c) Dividend Equivalents. For clarity, Dividend Equivalents
with respect to an Award of Restricted Stock Units shall only be paid out to the Participant to the extent that the vesting conditions applicable to the underlying Award are satisfied. All such Dividend Equivalent payments will be made no later
than March 15 of the calendar year following calendar year in which the right to the Dividend Equivalent payment becomes nonforfeitable in accordance with the foregoing, unless otherwise determined by the Administrator or unless deferred in a
manner intended to comply with Section 409A.
ARTICLE VII.
Other Stock or Cash Based Awards; DIVIDEND EQUIVALENTS
7.1 Other Stock or Cash Based Awards. Other Stock or
Cash Based Awards may be granted to Participants, including Awards entitling Participants to receive Shares to be delivered in the future and including annual or other periodic or long-term cash bonus awards (whether based on specified
Performance Criteria or otherwise), in each case subject to any conditions and limitations in the Plan. Such Other Stock or Cash Based Awards will also be available as a payment form in the settlement of other Awards, as standalone payments and
as payment in lieu of compensation to which a Participant is otherwise entitled. Other Stock or Cash Based Awards may be paid in Shares, cash or other property, or any combination of the foregoing, as the Administrator determines. Subject to
the provisions of the Plan, the Administrator will determine the terms and conditions of each Other Stock or Cash Based Award, including any purchase price, performance goal(s) (which may be based on the Performance Criteria), transfer
restrictions, and vesting conditions, which will be set forth in the applicable Award Agreement. In addition, the Company may adopt subplans or programs under the Plan pursuant to which it makes Awards available in a manner consistent with the
terms and conditions of the Plan.
7.2 Dividend Equivalents. A grant of Restricted Stock Units or
Other Stock or Cash Based Award may provide a Participant with the right to receive Dividend Equivalents, and no dividends or Dividend Equivalents shall be payable with respect to Options or Stock Appreciation Rights. Dividend Equivalents may
be paid currently or credited to an account for the Participant, settled in cash or Shares and subject to the same restrictions on transferability and forfeitability as the Award with respect to which the Dividend Equivalents are paid and
subject to other terms and conditions as set forth in the Award Agreement. Notwithstanding anything to the contrary herein, Dividend Equivalents with respect to an Award shall only be paid out to the Participant to the extent that the vesting
conditions applicable to the underlying Award are satisfied. All such Dividend Equivalent payments will be made no later than March 15 of the calendar year following calendar year in which the right to the Dividend Equivalent payment becomes
nonforfeitable in accordance with the foregoing, unless otherwise determined by the Administrator.
ARTICLE VIII.
Adjustments for Changes in Common Stock
and Certain Other Events
8.1 Equity Restructuring. In connection with any
Equity Restructuring, notwithstanding anything to the contrary in this Article VIII, the Administrator will equitably adjust each outstanding Award as it deems appropriate to reflect the Equity Restructuring, which may include adjusting the
number and type of securities subject to each outstanding Award and/or the Award’s exercise price or grant price (if applicable), granting new Awards to Participants, and/or making a cash payment to Participants. The adjustments provided under
this Section 8.1 will be nondiscretionary and final and binding on the affected Participant and the Company; provided that the Administrator will determine whether an adjustment is equitable.
8.2 Corporate Transactions. In the event of any dividend or
other distribution (whether in the form of cash, Common Stock, other securities, or other property), reorganization, merger, consolidation, combination, amalgamation, repurchase, recapitalization, liquidation, dissolution, or sale, transfer,
exchange or other disposition of all or substantially all of the assets of the Company, or sale or exchange of Common Stock or other securities of the Company, Change in Control, issuance of warrants or other rights to purchase Common Stock or
other securities of the Company, other similar corporate transaction or event, other unusual or nonrecurring transaction or event affecting the Company or its financial statements or any change in any Applicable Laws or accounting
TABLE OF CONTENTS
principles, the Administrator, on such terms and conditions as it deems appropriate,
either by the terms of the Award or by action taken prior to the occurrence of such transaction or event (except that action to give effect to a change in Applicable Law or accounting principles may be made within a reasonable period of time
after such change), is hereby authorized to take any one or more of the following actions whenever the Administrator determines that such action is appropriate in order to (x) prevent dilution or enlargement of the benefits or potential
benefits intended by the Company to be made available under the Plan or with respect to any Award granted or issued under the Plan, (y) to facilitate such transaction or event or (z) give effect to such changes in Applicable Laws or accounting
principles:
(a) To provide for the cancellation of any such Award in exchange
for either an amount of cash or other property with a value equal to the amount that could have been obtained upon the exercise or settlement of the vested portion of such Award or realization of the Participant’s rights under the vested
portion of such Award, as applicable; provided that, if the amount that could have been obtained upon the exercise or settlement of the vested portion of such Award or realization of the Participant’s rights, in any case, is equal to or less
than zero, then the Award may be terminated without payment;
(b) To provide that such Award shall vest and, to the extent
applicable, be exercisable as to all Shares covered thereby, notwithstanding anything to the contrary in the Plan or the provisions of such Award;
(c) To provide that such Award be assumed by the successor or
survivor corporation, or a parent or subsidiary thereof, or shall be substituted for by awards covering the stock of the successor or survivor corporation, or a parent or subsidiary thereof, or equivalent value thereof in cash, with appropriate
adjustments as to the number and kind of shares and/or applicable exercise or purchase price, in all cases, as determined by the Administrator;
(d) To make adjustments in the number and type of Shares (or other
securities or property) subject to outstanding Awards and/or with respect to which Awards may be granted under the Plan (including, but not limited to, adjustments of the limitations in Article IV hereof on the maximum number and kind of shares
which may be issued) and/or in the terms and conditions of (including the grant or exercise price or applicable performance goals), and the criteria included in, outstanding Awards;
(e) To replace such Award with other rights or property selected
by the Administrator; and/or
(f) To provide that the Award will terminate and cannot vest, be
exercised or become payable after the applicable event.
8.3 Effect of Non-Assumption in a Change in Control.
Notwithstanding the provisions of Section 8.2, if a Change in Control occurs and a Participant’s Award is not continued, converted, assumed, or replaced with an award (which may include, without limitation, a cash-based award) with
substantially the same value, and vesting terms that are no less favorable than those applicable to the underlying award, in each case, as of immediately prior to the Change in Control by (a) the Company, or (b) a successor entity or its parent
or subsidiary (an “Assumption”), and provided that the Participant has not had a Termination of Service, then, immediately prior to the Change in Control, such Award shall become fully
vested, exercisable and/or payable, as applicable, and all forfeiture, repurchase and other restrictions on such Award shall lapse, in which case, such Award shall be canceled upon the consummation of the Change in Control in exchange for the
right to receive the Change in Control consideration payable to other holders of Common Stock (i) which may be on such terms and conditions as apply generally to holders of Common Stock under the Change in Control documents (including, without
limitation, any escrow, earn-out or other deferred consideration provisions) or such other terms and conditions as the Administrator may provide, and (ii) determined by reference to the number of Shares subject to such Award and net of any
applicable exercise price; provided that to the extent that any Award constitutes “nonqualified deferred compensation” that may not be paid upon the Change in Control under Section 409A (to the extent applicable to such Award) without the
imposition of taxes thereon under Section 409A, the timing of such payments shall be governed by the applicable Award Agreement (subject to any deferred consideration provisions applicable under the Change in Control documents); and provided,
further, that if the amount to which the Participant would be entitled upon the settlement or exercise of such Award at the time of the Change in Control is equal to or less than zero, then such Award may be terminated without payment. The
Administrator shall determine whether an Assumption of an Award has occurred in connection with a Change in Control.
TABLE OF CONTENTS
8.4 Administrative Stand Still. In the event of any
pending stock dividend, stock split, combination or exchange of shares, merger, consolidation or other distribution (other than normal cash dividends) of Company assets to stockholders, or any other extraordinary transaction or change affecting
the Shares or the share price of Common Stock, including any Equity Restructuring or any securities offering or other similar transaction, for administrative convenience, the Administrator may refuse to permit the exercise of any Award for up
to 60 days before or after such transaction.
8.5 General. Except as expressly provided in the Plan or the
Administrator’s action under the Plan, no Participant will have any rights due to any subdivision or consolidation of Shares of any class, dividend payment, increase or decrease in the number of Shares of any class or dissolution, liquidation,
merger, or consolidation of the Company or other corporation. Except as expressly provided with respect to an Equity Restructuring under Section 8.1 or the Administrator’s action under the Plan, no issuance by the Company of Shares of any
class, or securities convertible into Shares of any class, will affect, and no adjustment will be made regarding, the number of Shares subject to an Award or the Award’s grant or exercise price. The existence of the Plan, any Award Agreements
and the Awards granted hereunder will not affect or restrict in any way the Company’s right or power to make or authorize (i) any adjustment, recapitalization, reorganization or other change in the Company’s capital structure or its business,
(ii) any merger, consolidation dissolution or liquidation of the Company or sale of Company assets or (iii) any sale or issuance of securities, including securities with rights superior to those of the Shares or securities convertible into or
exchangeable for Shares. The Administrator may treat Participants and Awards (or portions thereof) differently under this Article VIII.
ARTICLE IX.
General Provisions Applicable to Awards
9.1 Transferability. Except as the Administrator may determine
or provide in an Award Agreement or otherwise for Awards other than Incentive Stock Options, Awards may not be sold, assigned, transferred, pledged or otherwise encumbered, either voluntarily or by operation of law, except for certain
beneficiary designations, by will or the laws of descent and distribution, or, subject to the Administrator’s consent, pursuant to a domestic relations order, and, during the life of the Participant, will be exercisable only by the Participant.
Any permitted transfer of an Award hereunder shall be without consideration, except as required by Applicable Law. References to a Participant, to the extent relevant in the context, will include references to a Participant’s authorized
transferee that the Administrator specifically approves.
9.2 Documentation. Each Award will be evidenced in an Award
Agreement, which may be written or electronic, as the Administrator determines. The Award Agreement will contain the terms and conditions applicable to an Award. Each Award may contain terms and conditions in addition to those set forth in the
Plan.
9.3 Discretion. Except as the Plan otherwise provides, each
Award may be made alone or in addition or in relation to any other Award. The terms of each Award to a Participant need not be identical, and the Administrator need not treat Participants or Awards (or portions thereof) uniformly.
9.4 Termination of Status. The Administrator will determine
how a Participant’s Disability, death, retirement or authorized leave of absence or any other change or purported change in a Participant’s Service Provider status affects an Award (including whether and when a Termination of Service has
occurred) and the extent to which, and the period during which the Participant, the Participant’s legal representative, conservator, guardian or Designated Beneficiary may exercise rights under the Award, if applicable.
9.5 Withholding. Each Participant must pay the Company, or
make provision satisfactory to the Administrator for payment of, any taxes required by Applicable Law to be withheld in connection with such Participant’s Awards by the date of the event creating the tax liability. The Company or one of its
Subsidiaries may deduct an amount sufficient to satisfy such tax obligations based on the applicable statutory withholding rates (or such other rate as may be determined by the Administrator after considering any accounting consequences or
costs) from any payment of any kind otherwise due to a Participant. Subject to Section 10.8 and any Company insider trading policy (including blackout periods), Participants may satisfy such tax obligations through the Agent’s electronic
platform or by wire transfer of immediately available funds to the Agent (or, in each case, if the Company has no Agent accepting payment, by wire transfer of immediately available funds to the Company) or, solely with the consent of the
Administrator, by (i) cash, wire transfer of immediately available funds or check made payable to the order of the Company, provided that the Administrator may limit the use of the foregoing payment forms in its discretion, (ii) to the extent
permitted by the Administrator, delivery of Shares
TABLE OF CONTENTS
(in whole or in part), including Shares delivered by attestation and Shares retained
from the Award creating the tax obligation, valued at their Fair Market Value on the date of delivery, (iii) if there is a public market for Shares at the time the tax obligations are satisfied, unless the Administrator otherwise determines,
(A) delivery (including electronically or telephonically to the extent permitted by the Administrator) of an irrevocable and unconditional undertaking by a broker acceptable to the Administrator to deliver promptly to the Company sufficient
funds to satisfy the tax obligations, or (B) delivery by the Participant to the Company of a copy of irrevocable and unconditional instructions to a broker acceptable to the Administrator to deliver promptly to the Company cash or a check
sufficient to satisfy the tax withholding; provided that such amount is paid to the Company at such time as may be required by the Administrator, or (iv) to the extent permitted by the Administrator, any combination of the foregoing payment
forms approved by the Administrator. Notwithstanding any other provision of the Plan, the number of Shares which may be so delivered or retained pursuant to clause (ii) of the immediately preceding sentence shall be limited to the number of
Shares which have a Fair Market Value on the date of delivery or retention no greater than the aggregate amount of such liabilities based on the maximum individual statutory tax rate in the applicable jurisdiction at the time of such
withholding (or such other rate as may be required to avoid the liability classification of the applicable award under generally accepted accounting principles in the United States of America), and for clarity, may be less than such maximum
individual statutory tax rate if so determined by the Administrator. If any tax withholding obligation will be satisfied under clause (ii) above by the Company’s retention of Shares from the Award creating the tax obligation and there is a
public market for Shares at the time the tax obligation is satisfied, the Company may elect to instruct any brokerage firm determined acceptable to the Company for such purpose to sell on the applicable Participant’s behalf some or all of the
Shares retained and to remit the proceeds of the sale to the Company or its designee, and each Participant’s acceptance of an Award under the Plan will constitute the Participant’s authorization to the Company and instruction and authorization
to such brokerage firm to complete the transactions described in this sentence.
9.6 Amendment of Award; Repricing. The Administrator may
amend, modify or terminate any outstanding Award, including by substituting another Award of the same or a different type, changing the exercise or settlement date, and converting an Incentive Stock Option to a Non-Qualified Stock Option. The
Participant’s consent to such action will be required unless (i) the action, taking into account any related action, does not materially and adversely affect the Participant’s rights under the Award, or (ii) the change is permitted under
Article VIII or pursuant to Section 10.6. Notwithstanding the foregoing or anything in the Plan to the contrary, the Administrator may, without the approval of the stockholders of the Company, (i) reduce the exercise price per share of
outstanding Options or Stock Appreciation Rights or (ii) cancel outstanding Options or Stock Appreciation Rights in exchange for cash, other Awards or Options or Stock Appreciation Rights with an exercise price per share that is less than the
exercise price per share of the original Options or Stock Appreciation Rights.
9.7 Conditions on Delivery of Stock. The Company will
not be obligated to deliver any Shares under the Plan or remove restrictions from Shares previously delivered under the Plan until (i) all Award conditions have been met or removed to the Company’s satisfaction, (ii) as determined by the
Company, all other legal matters regarding the issuance and delivery of such Shares have been satisfied, including any applicable securities laws and stock exchange or stock market rules and regulations, and (iii) the Participant has executed
and delivered to the Company such representations or agreements as the Administrator deems necessary or appropriate to satisfy any Applicable Laws. The Company’s inability to obtain authority from any regulatory body having jurisdiction, which
the Administrator determines is necessary to the lawful issuance and sale of any securities, will relieve the Company of any liability for failing to issue or sell such Shares as to which such requisite authority has not been obtained.
9.8 Acceleration. The Administrator may at any time provide
that any Award will become immediately vested and fully or partially exercisable, free of some or all restrictions or conditions, or otherwise fully or partially realizable.
9.9 Cash Settlement. Without limiting the generality
of any other provision of the Plan, the Administrator may provide, in an Award Agreement or subsequent to the grant of an Award, in its discretion, that any Award may be settled in cash, Shares or a combination thereof.
9.10 Broker-Assisted Sales. In the event of a
broker-assisted sale of Shares in connection with the payment of amounts owed by a Participant under or with respect to the Plan or Awards, including amounts to be
TABLE OF CONTENTS
paid under the final sentence of Section 9.5: (i) any Shares to be sold through the
broker-assisted sale will be sold on the day the payment first becomes due, or as soon thereafter as practicable; (ii) such Shares may be sold as part of a block trade with other Participants in the Plan in which all participants receive an
average price; (iii) the applicable Participant will be responsible for all broker’s fees and other costs of sale, and by accepting an Award, each Participant agrees to indemnify and hold the Company and its Subsidiaries harmless from any
losses, costs, damages, or expenses relating to any such sale; (iv) to the extent the Company, its Subsidiaries or their designee receives proceeds of such sale that exceed the amount owed, the Company or its Subsidiary will pay such excess in
cash to the applicable Participant as soon as reasonably practicable; (v) the Company, its Subsidiaries and their designees are under no obligation to arrange for such sale at any particular price; and (vi) in the event the proceeds of such
sale are insufficient to satisfy the Participant’s applicable obligation, the Participant may be required to pay immediately upon demand to the Company, its Subsidiaries or their designee an amount in cash sufficient to satisfy any remaining
portion of the Participant’s obligation.
ARTICLE X.
Miscellaneous
10.1 No Right to Employment or Other Status. No person will
have any claim or right to be granted an Award, and the grant of an Award will not be construed as giving a Participant the right to continued employment or any other relationship with the Company or any of its Subsidiaries. The Company and its
Subsidiaries expressly reserve the right at any time to dismiss or otherwise terminate their respective relationships with a Participant free from any liability or claim under the Plan or any Award, except as expressly provided in an Award
Agreement or in the Plan.
10.2 No Rights as Stockholder; Certificates. Subject
to the Award Agreement, no Participant or Designated Beneficiary will have any rights as a stockholder with respect to any Shares to be distributed under an Award until becoming the record holder of such Shares. Notwithstanding any other
provision of the Plan, unless the Administrator otherwise determines or Applicable Laws require, the Company will not be required to deliver to any Participant certificates evidencing Shares issued in connection with any Award and instead such
Shares may be recorded in the books of the Company (or, as applicable, its transfer agent or stock plan administrator). The Company may place legends on stock certificates issued under the Plan that the Administrator deems necessary or
appropriate to comply with Applicable Laws.
10.3 Effective Date and Term of Plan. Unless earlier
terminated by the Board, the Plan will become effective on the date on which the Closing is consummated (the “Effective Date”) and will remain in effect until the tenth anniversary of
the Effective Date, but Awards previously granted may extend beyond that date in accordance with the Plan. Notwithstanding anything to the contrary in the Plan, an Incentive Stock Option may not be granted under the Plan after 10 years from the
earlier of (i) the date the Board adopted the Plan or (ii) the date the Company’s stockholders approved the Plan. If the Plan is not approved by the Company’s stockholders, the Plan will not become effective and no Awards will be granted under
the Plan.
10.4 Amendment of Plan. The Board may amend, suspend
or terminate the Plan at any time; provided that no amendment, other than (a) as permitted by the applicable Award Agreement, (b) as provided under Sections 10.6 and 10.15, or (c) an amendment to increase the Overall Share Limit, may materially
and adversely affect any Award outstanding at the time of such amendment without the affected Participant’s consent. No Awards may be granted under the Plan during any suspension period or after the Plan’s termination. Awards outstanding at the
time of any Plan suspension or termination will continue to be governed by the Plan and the Award Agreement, as in effect before such suspension or termination. The Board will obtain stockholder approval of any Plan amendment to increase the
Non-Employee Director Limit or to the extent necessary to comply with Applicable Laws.
10.5 Provisions for Foreign Participants. The
Administrator may modify Awards granted to Participants who are foreign nationals or employed outside the United States or establish subplans or procedures under the Plan to address differences in laws, rules, regulations or customs of such
foreign jurisdictions with respect to tax, securities, currency, employee benefit or other matters.
10.6 Section 409A.
(a) General. To the extent that the Administrator determines
that any Award granted under the Plan is subject to Section 409A, the Award Agreement evidencing such Award shall incorporate the terms and conditions required by Section 409A. To the extent applicable, the Plan and the Award Agreements shall
be
TABLE OF CONTENTS
interpreted in accordance with Section 409A, such that no adverse tax consequences,
interest, or penalties under Section 409A apply. Notwithstanding anything in the Plan or any Award Agreement to the contrary, the Administrator may, without a Participant’s consent, amend this Plan or Awards, adopt policies and procedures, or
take any other actions (including amendments, policies, procedures and retroactive actions) as are necessary or appropriate to preserve the intended tax treatment of Awards, including any such actions intended to (A) exempt this Plan or any
Award from Section 409A, or (B) comply with Section 409A, including regulations, guidance, compliance programs and other interpretative authority that may be issued after an Award’s grant date. The Company makes no representations or warranties
as to an Award’s tax treatment under Section 409A or otherwise. The Company will have no obligation under this Section 10.6 or otherwise to avoid the taxes, penalties or interest under Section 409A with respect to any Award and will have no
liability to any Participant or any other person if any Award, compensation or other benefits under the Plan are determined to constitute noncompliant “nonqualified deferred compensation” subject to taxes, penalties or interest under Section
409A. Notwithstanding any contrary provision of the Plan or any Award Agreement, any payment of “nonqualified deferred compensation” under the Plan that may be made in installments shall be treated as a right to receive a series of separate and
distinct payments.
(b) Separation from Service. If an Award is subject
to and constitutes “nonqualified deferred compensation” under Section 409A, any payment or settlement of such Award upon a termination of a Participant’s Service Provider relationship will, to the extent necessary to avoid taxes under Section
409A, be made only upon the Participant’s “separation from service” (within the meaning of Section 409A), whether such “separation from service” occurs upon or after the termination of the Participant’s Service Provider relationship. For
purposes of this Plan or any Award Agreement relating to any such payments or benefits, references to a “termination,” “termination of employment” or like terms means a “separation from service.”
(c) Payments to Specified Employees. Notwithstanding any
contrary provision in the Plan or any Award Agreement, any payment(s) of “nonqualified deferred compensation” required to be made under an Award subject to Section 409A to a “specified employee” (as defined under Section 409A and as the
Administrator determines) due to his or her “separation from service” will, to the extent necessary to avoid taxes under Section 409A(a)(2)(B)(i) of the Code, be delayed for the six-month period immediately following such “separation from
service” (or, if earlier, until the specified employee’s death) and will instead be paid (as set forth in the Award Agreement) on the day immediately following such six-month period or as soon as administratively practicable thereafter (without
interest). Any payments of “nonqualified deferred compensation” under such Award payable more than six months following the Participant’s “separation from service” will be paid at the time or times the payments are otherwise scheduled to be
made.
10.7 Limitations on Liability. Notwithstanding any other
provisions of the Plan, no individual acting as a director, officer, other employee or agent of the Company or any Subsidiary will be liable to any Participant, former Participant, spouse, beneficiary, or any other person for any claim, loss,
liability, or expense incurred in connection with the Plan or any Award, and such individual will not be personally liable with respect to the Plan because of any contract or other instrument executed in his, her or its capacity as an
Administrator, director, officer, other employee or agent of the Company or any Subsidiary. The Company will indemnify and hold harmless each director, officer, other employee and agent of the Company or any Subsidiary that has been or will be
granted or delegated any duty or power relating to the Plan’s administration or interpretation, against any cost or expense (including attorneys’ fees) or liability (including any sum paid in settlement of a claim with the Administrator’s
approval) arising from any act or omission concerning this Plan unless arising from such person’s own fraud or bad faith.
10.8 Lock-Up Period. The Company may, at the request of any
underwriter representative or otherwise, in connection with registering the offering of any Company securities under the Securities Act, prohibit Participants from, directly or indirectly, selling or otherwise transferring any Shares or other
Company securities during a period of up to 180 days following the effective date of a Company registration statement filed under the Securities Act, or such longer period as determined by the underwriter.
10.9 Data Privacy. As a condition for receiving any
Award, each Participant explicitly and unambiguously consents to the collection, use and transfer, in electronic or other form, of personal data as described in this section by and among the Company and its Subsidiaries and affiliates
exclusively for
TABLE OF CONTENTS
implementing, administering and managing the Participant’s participation in the Plan.
The Company and its Subsidiaries and affiliates may hold certain personal information about a Participant, including the Participant’s name, address and telephone number; birthdate; social security number, insurance number or other
identification number; salary; nationality; job title(s); any Shares held in the Company or its Subsidiaries and affiliates; and Award details, to implement, manage and administer the Plan and Awards (the “Data”). The Company and its Subsidiaries and affiliates may transfer the Data amongst themselves as necessary to implement, administer and manage a Participant’s participation in the Plan, and the Company and its
Subsidiaries and affiliates may transfer the Data to third parties assisting the Company with Plan implementation, administration and management. These recipients may be located in the Participant’s country, or elsewhere, and the Participant’s
country may have different data privacy laws and protections than the recipients’ country. By accepting an Award, each Participant authorizes such recipients to receive, possess, use, retain and transfer the Data, in electronic or other form,
to implement, administer and manage the Participant’s participation in the Plan, including any required Data transfer to a broker or other third party with whom the Company or the Participant may elect to deposit any Shares. The Data related to
a Participant will be held only as long as necessary to implement, administer, and manage the Participant’s participation in the Plan. A Participant may, at any time, view the Data that the Company and its Subsidiaries hold regarding such
Participant, request additional information about the storage and processing of the Data regarding such Participant, recommend any necessary corrections to the Data regarding the Participant or refuse or withdraw the consents provided for in
this Section 10.9 in writing, without cost, by contacting the local human resources representative. If the Participant refuses or withdraws the consents provided for in this Section 10.9, the Company may cancel Participant’s ability to
participate in the Plan and, in the Administrator’s discretion, the Participant may forfeit any outstanding Awards. For more information on the consequences of refusing or withdrawing consent, Participants may contact their local human
resources representative.
10.10 Severability. If any portion of the Plan or any action
taken under it is held illegal or invalid for any reason, the illegality or invalidity will not affect the remaining parts of the Plan, and the Plan will be construed and enforced as if the illegal or invalid provisions had been excluded, and
the illegal or invalid action will be null and void.
10.11 Governing Documents. If any contradiction occurs between
the Plan and any Award Agreement or other written agreement between a Participant and the Company (or any Subsidiary) that the Administrator has approved, the Plan will govern, unless it is expressly specified in such Award Agreement or other
written document that the specific provision of the Plan will not apply. For clarity, the foregoing sentence shall not limit the applicability of any additive language contained in an Award Agreement or other written agreement which provides
supplemental or additional terms not inconsistent with the Plan.
10.12 Governing Law. The Plan and all Awards will be governed
by and interpreted in accordance with the laws of the State of Delaware, disregarding any state’s choice-of-law principles requiring the application of a jurisdiction’s laws other than the State of Delaware.
10.13 Claw-back Provisions. All Awards (including,
without limitation, any proceeds, gains or other economic benefit actually or constructively received by a Participant upon any receipt or exercise of any Award or upon the receipt or resale of any Shares underlying the Award) shall be subject
to the provisions of any claw-back policy implemented by the Company, including, without limitation, any claw-back policy adopted to comply with Applicable Laws (including the Dodd-Frank Wall Street Reform and Consumer Protection Act and any
rules or regulations promulgated thereunder) as and to the extent set forth in such claw-back policy or the Award Agreement.
10.14 Titles and Headings. The titles and headings in the Plan
are for convenience of reference only and, if any conflict, the Plan’s text, rather than such titles or headings, will control.
10.15 Conformity to Securities Laws. Participant
acknowledges that the Plan is intended to conform to the extent necessary with Applicable Laws. Notwithstanding anything herein to the contrary, the Plan and all Awards will be administered only in conformance with Applicable Laws. To the
extent Applicable Laws permit, the Plan and all Award Agreements will be deemed amended as necessary to conform to Applicable Laws.
10.16 Unfunded Status of Awards. The Plan is intended to be an
“unfunded” plan for incentive compensation. With respect to any payments not yet made to a Participant pursuant to an Award, nothing contained in the Plan or any Award Agreement shall give the Participant any rights that are greater than those
of a general creditor of the Company or any Subsidiary.
TABLE OF CONTENTS
10.17 Relationship to Other Benefits. No payment under the
Plan will be taken into account in determining any benefits under any pension, retirement, savings, profit sharing, group insurance, welfare or other benefit plan of the Company or any Subsidiary except as expressly provided in writing in such
other plan or an agreement thereunder.
ARTICLE XI.
Definitions
As used in the Plan, the following words and phrases will have the
following meanings:
11.1 “Administrator”means
the Board or a Committee to the extent that the Board’s powers or authority under the Plan have been delegated to such Committee. Notwithstanding anything herein to the contrary, the Board shall conduct the general administration of the Plan
with respect to Awards granted to non-employee Directors and, with respect to such Awards, the term “Administrator” as used in the Plan shall mean and refer to the Board.
11.2 “Agent”means the brokerage firm, bank or other financial institution, entity or person(s), if any, engaged, retained, appointed or authorized to act as the agent of the Company or a
Participant with regard to the Plan.
11.3 “Applicable
Laws”means the requirements relating to the administration of equity incentive plans under U.S. federal and state securities, tax and other applicable laws, rules and regulations, the applicable rules of any stock exchange or quotation
system on which the Common Stock is listed or quoted and the applicable laws and rules of any foreign country or other jurisdiction where Awards are granted.
11.4 “Award”means,
individually or collectively, a grant under the Plan of Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units, Dividend Equivalents, or Other Stock or Cash Based Awards.
11.5 “Award
Agreement”means a written agreement evidencing an Award, which may be electronic, that contains such terms and conditions as the Administrator determines, consistent with and subject to the terms and conditions of the Plan.
11.6 “Board”means
the Board of Directors of the Company.
11.7 “Cause”means,
in respect of a Participant, either (a) the definition of “Cause” contained in the Participant’s Award Agreement or an effective, written service or employment agreement between the Participant and the Company or a Subsidiary of the Company or
otherwise defined under the law applicable to the service or employment agreement; or (b) if no such agreement exists or such agreement or applicable law does not define Cause, then Cause shall mean (i) the Participant’s unauthorized use or
disclosure of confidential information or trade secrets of the Company or any of its Subsidiaries or any material breach of a written agreement between the Participant and the Company or any of its Subsidiaries, including without limitation a
material breach of any employment, confidentiality, non-compete, non-solicit or similar agreement; (ii) the Participant’s commission of, indictment for or the entry of a plea of guilty or nolo contendere
by the Participant to, a felony under the laws of the United States or any state thereof or any crime involving dishonesty or moral turpitude (or any similar crime in any jurisdiction outside the United States); (iii) the Participant’s
negligence or willful misconduct in the performance of the Participant’s duties or the Participant’s willful or repeated failure or refusal to substantially perform assigned duties; (iv) any act of fraud, embezzlement, material misappropriation
or dishonesty committed by the Participant against the Company or any of its Subsidiaries; or (v) any acts, omissions or statements by a Participant which the Company determines to be materially detrimental or damaging to the reputation,
operations, prospects or business relations of the Company or any of its Subsidiaries. The findings and decision of the Administrator with respect to any Cause determination will be final and binding for all purposes.
11.8 “Change in
Control”means and includes each of the following:
(a) A transaction or series of transactions (other than an offering
of Common Stock to the general public through a registration statement filed with the Securities and Exchange Commission or a transaction or series of transactions that meets the requirements of clauses (i) and (ii) of subsection (c) below)
whereby any “person” or related “group” of “persons” (as such terms are used in Sections 13(d) and 14(d)(2) of the Exchange Act) (other than the Company, any of its Subsidiaries, an employee benefit plan maintained by the Company or any of its
Subsidiaries or a “person” that, prior to such transaction, directly or indirectly controls, is controlled by, or is under common control with, the Company) directly or indirectly acquires
TABLE OF CONTENTS
beneficial ownership (within the meaning of Rule 13d-3 under the Exchange Act) of
securities of the Company possessing more than 50% of the total combined voting power of the Company’s securities outstanding immediately after such acquisition; or
(b) During any period of two consecutive years, individuals who, at
the beginning of such period, constitute the Board together with any new Director(s) (other than a Director designated by a person who shall have entered into an agreement with the Company to effect a transaction described in subsections (a) or
(c)) whose election by the Board or nomination for election by the Company’s stockholders was approved by a vote of at least two-thirds of the Directors then still in office who either were Directors at the beginning of the two-year period or
whose election or nomination for election was previously so approved, cease for any reason to constitute a majority thereof; or
(c) The consummation by the Company (whether directly involving the
Company or indirectly involving the Company through one or more intermediaries) of (x) a merger, consolidation, reorganization, or business combination or (y) a sale or other disposition of all or substantially all of the Company’s assets in
any single transaction or series of related transactions or (z) the acquisition of assets or stock of another entity, in each case other than a transaction:
(i) which results in the Company’s voting securities outstanding
immediately before the transaction continuing to represent (either by remaining outstanding or by being converted into voting securities of the Company or the person that, as a result of the transaction, controls, directly or indirectly, the
Company or owns, directly or indirectly, all or substantially all of the Company’s assets or otherwise succeeds to the business of the Company (the Company or such person, the “Successor
Entity”)) directly or indirectly, at least a majority of the combined voting power of the Successor Entity’s outstanding voting securities immediately after the transaction, and
(ii) after which no person or group beneficially owns voting
securities representing 50% or more of the combined voting power of the Successor Entity; provided, however, that no person or group shall be treated for purposes of this clause (ii) as beneficially owning 50% or more of the
combined voting power of the Successor Entity solely as a result of the voting power held in the Company prior to the consummation of the transaction.
Notwithstanding the foregoing, if a Change in Control constitutes a
payment event with respect to any Award (or portion of any Award) that provides for the deferral of compensation that is subject to Section 409A, to the extent required to avoid the imposition of additional taxes under Section 409A, the
transaction or event described in subsection (a), (b) or (c) with respect to such Award (or portion thereof) shall only constitute a Change in Control for purposes of the payment timing of such Award if such transaction also constitutes a
“change in control event,” as defined in Treasury Regulation Section 1.409A-3(i)(5).
The Administrator shall have full and final authority, which shall be
exercised in its discretion, to determine conclusively whether a Change in Control has occurred pursuant to the above definition, the date of the occurrence of such Change in Control and any incidental matters relating thereto; provided that
any exercise of authority in conjunction with a determination of whether a Change in Control is a “change in control event” as defined in Treasury Regulation Section 1.409A-3(i)(5) shall be consistent with such regulation.
11.9 “Closing”
means the closing of the transactions contemplated by that certain Agreement and Plan of Merger, dated , 2023, by and between RMG Acquisition Corp. III and the Company.
11.10 “Code”
means the Internal Revenue Code of 1986, as amended, and the regulations issued thereunder.
11.11 “Committee”
means one or more committees or subcommittees of the Board, which may include one or more Company directors or executive officers, to the extent Applicable Laws permit. To the extent required to comply with the provisions of Rule 16b-3, it is
intended that each member of the Committee will be, at the time the Committee takes any action with respect to an Award that is subject to Rule 16b-3, a “non-employee director” within the meaning of Rule 16b-3; however, a Committee member’s
failure to qualify as a “non-employee director” within the meaning of Rule 16b-3 will not invalidate any Award granted by the Committee that is otherwise validly granted under the Plan.
11.12 “Common
Stock”means the common stock of the Company.
TABLE OF CONTENTS
11.13 “Company”
means [H2B2 Electrolysis Technologies, Inc.], a Delaware corporation, or any successor.
11.14 “Consultant”
means any consultant or advisor engaged by the Company or any of its Subsidiaries to render services to such entity that qualifies as a consultant or advisor under the applicable rules of Form S-8 Registration Statements.
11.15 “Designated
Beneficiary”means the beneficiary or beneficiaries the Participant designates, in a manner the Administrator determines, to receive amounts due or exercise the Participant’s rights if the Participant dies or becomes incapacitated.
Without a Participant’s effective designation, “Designated Beneficiary” will mean the Participant’s estate.
11.16 “Director”means
a Board member.
11.17 “Disability”
means that the Participant is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period
of not less than 12 months.
11.18 “Dividend
Equivalents”means a right granted to a Participant under the Plan to receive the equivalent value (in cash or Shares) of dividends paid on Shares.
11.19 “Employee”means
any employee of the Company or its Subsidiaries.
11.20 “Equity
Restructuring”means, as determined by the Administrator, a non-reciprocal transaction between the Company and its stockholders, such as a stock dividend, stock split, spin-off or recapitalization through a large, nonrecurring cash
dividend, or other large, nonrecurring cash dividend, that affects the number or kind of Shares (or other securities of the Company) or the share price of Common Stock (or other securities of the Company) and causes a change in the per share
value of the Common Stock underlying outstanding Awards.
11.21 “Exchange
Act”means the Securities Exchange Act of 1934, as amended.
11.22 “Fair
Market Value”means, as of any date, the value of a Share determined as follows: (a) if the Common Stock is listed on any established stock exchange, its Fair Market Value will be the closing sales price for such Common Stock as quoted
on such exchange for such date, or if no sale occurred on such date, the last day preceding such date during which a sale occurred, as reported in The Wall Street Journal or another source the
Administrator deems reliable; (b) if the Common Stock is not traded on a stock exchange but is quoted on a national market or other quotation system, the closing sales price on such date, or if no sales occurred on such date, then on the last
date preceding such date during which a sale occurred, as reported in The Wall Street Journal or another source the Administrator deems reliable; or (c) without an established market for the Common
Stock, the Administrator will determine the Fair Market Value in its discretion.
11.23 “Greater
Than 10% Stockholder”means an individual then owning (within the meaning of Section 424(d) of the Code) more than 10% of the total combined voting power of all classes of stock of the Company or its parent or subsidiary corporation, as
defined in Section 424(e) and (f) of the Code, respectively.
11.24 “Incentive
Stock Option”means an Option intended to qualify as an “incentive stock option” as defined in Section 422 of the Code.
11.25 “Non-Qualified
Stock Option”means an Option, or portion thereof, not intended or not qualifying as an Incentive Stock Option.
11.26 “Option”
means an option to purchase Shares, which will either be an Incentive Stock Option or a Non-Qualified Stock Option.
11.27 “Other
Stock or Cash Based Awards”means cash awards, awards of Shares, and other awards valued wholly or partially by referring to, or are otherwise based on, Shares or other property awarded to a Participant under Article VII.
11.28 “Overall
Share Limit”means [____].
11.29 “Participant”means
a Service Provider who has been granted an Award.
11.30 “Performance
Criteria”means the criteria (and adjustments) that the Administrator may select for an Award to establish performance goals for a performance period, which may include (but is not limited to) the
TABLE OF CONTENTS
following: net earnings or losses (either before or after one or more of interest,
taxes, depreciation, amortization, and non-cash equity-based compensation expense); gross or net sales or revenue or sales or revenue growth; net income (either before or after taxes) or adjusted net income; profits (including but not limited
to gross profits, net profits, profit growth, net operation profit or economic profit), profit return ratios or operating margin; operating efficiency; budget or operating earnings (either before or after taxes or before or after allocation of
corporate overhead and bonus); cash flow (including operating cash flow and free cash flow or cash flow return on capital); return on assets; return on capital or invested capital; cost of capital; return on stockholders’ equity; total
stockholder return; return on sales; costs, reductions in costs and cost control measures; expenses; working capital; earnings or loss per share; adjusted earnings or loss per share; price per share or dividends per share (or appreciation in or
maintenance of such price or dividends); regulatory achievements or compliance; implementation, completion or attainment of objectives relating to research, development, technology, regulatory, commercial, or strategic milestones or
developments; market share; economic value or economic value added models; division, group or corporate financial goals; customer satisfaction/growth; customer service; employee satisfaction; recruitment and maintenance of personnel; human
resources management; supervision of litigation and other legal matters; strategic partnerships, collaborations and transactions; financial ratios (including those measuring liquidity, activity, profitability or leverage); debt levels or
reductions; sales-related goals; financing and other capital raising transactions; cash on hand; acquisition, licensing or divestiture activity; investment sourcing activity; and marketing initiatives, any of which may be measured in absolute
terms or as compared to any incremental increase or decrease. Such performance goals also may be (i) based solely by reference to the Company’s performance or the performance of a Subsidiary, division, business segment or business unit of the
Company or a Subsidiary, (ii) based upon performance relative to performance of other companies or upon comparisons of any of the indicators of performance relative to performance of other companies, (iii) based on GAAP or non-GAAP metrics,
and/or (iv) adjusted to reflect the impact of unusual or non-recurring transactions, extraordinary events or otherwise as determined by the Administrator.
11.31 “Plan”means
this 2023 Incentive Award Plan.
11.32 “Restricted
Stock”means Shares awarded to a Participant under Article VI subject to certain vesting conditions and other restrictions.
11.33 “Restricted
Stock Unit”means an unfunded, unsecured right to receive, on the applicable settlement date, one Share or an amount in cash or other consideration determined by the Administrator to be of equal value as of such settlement date awarded
to a Participant under Article VI subject to certain vesting conditions and other restrictions.
11.34 “Rule
16b-3”means Rule 16b-3 promulgated under the Exchange Act.
11.35 “Section
409A”means Section 409A of the Code and all regulations, guidance, compliance programs and other interpretative authority thereunder.
11.36 “Securities
Act”means the Securities Act of 1933, as amended.
11.37 “Service
Provider”means an Employee, Consultant or Director.
11.38 “Shares”means
shares of Common Stock.
11.39 “Stock
Appreciation Right”means a stock appreciation right granted under Article V.
11.40 “Subsidiary”
means any entity (other than the Company), whether domestic or foreign, in an unbroken chain of entities beginning with the Company if each of the entities other than the last entity in the unbroken chain beneficially owns, at the time of the
determination, securities or interests representing at least 50% of the total combined voting power of all classes of securities or interests in one of the other entities in such chain.
11.41 “Substitute
Awards”means Awards granted or Shares issued by the Company in assumption of, or in substitution or exchange for, awards previously granted, or the right or obligation to make future awards, in each case by a company acquired by the
Company or any Subsidiary or with which the Company or any Subsidiary combines.
11.42 “Termination
of Service”means the date the Participant ceases to be a Service Provider.
* * * * *
TABLE OF CONTENTS
WARRANT AMENDMENT
[To be filed with an amended filing]
TABLE OF CONTENTS
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 20.
|
Indemnification of directors and officers.
|
Cayman Islands law does not limit the extent to which a company’s
memorandum and articles of association may provide for indemnification of officers and directors, except to the extent any such provision may be held by the Cayman Islands courts to be contrary to public policy, such as to provide
indemnification against willful default, willful neglect, civil fraud or the consequences of committing a crime. The RMG III Governing Documents provided for indemnification of RMG III’s officers and directors, including for any liability
incurred in their capacities as such, except through their own actual fraud, willful default or willful neglect.
RMG III has entered into agreements with RMG III’s officers and
directors to provide contractual indemnification in addition to the indemnification provided for in the RMG III Governing Documents. RMG III has purchased a policy of directors’ and officers’ liability insurance that insures RMG III’s officers
and directors against the cost of defense, settlement or payment of a judgment in some circumstances and insures RMG III against RMG III’s obligations to indemnify RMG III’s officers and directors.
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers or persons controlling us pursuant to the foregoing provisions, RMG III has been informed that in the opinion of the SEC such indemnification is against public policy as expressed in the
Securities Act and is therefore unenforceable.
Item 21.
|
Exhibits and Financial Statements Schedules.
|
(a) Exhibits.
|
|
|
Agreement and Plan of Merger, dated as of May 9, 2023, by and between the
Registrant, and H2B2 Electrolysis Technologies, Inc. (included as Annex A to the proxy statement/prospectus)
|
|
|
|
|
|
|
|
Plan of Domestication, dated as of , 2023
|
|
|
|
|
|
|
|
Third Amended and Restated Memorandum and Articles of Association of the
Registrant. (included as Annex F to the proxy statement/prospectus)
|
|
|
|
|
|
|
|
Form of Certificate of Incorporation of H2B2 Electrolysis Technologies,
Inc., to become effective upon Closing (included as Annex G to the proxy statement/prospectus)
|
|
|
|
|
|
|
|
Form of Bylaws of H2B2 Electrolysis Technologies, Inc., to become effective
upon Closing (included as Annex H to the proxy statement/prospectus)
|
|
|
|
|
|
|
|
Specimen Unit Certificate of the Registrant
|
|
|
|
|
|
|
|
Specimen Class A Ordinary Share Certificate of the Registrant
|
|
|
|
|
|
|
|
Specimen Warrant Certificate of the Registrant
|
|
|
|
|
|
|
|
Warrant Agreement, dated as of February 4, 2021, by and between Continental
Stock Transfer & Trust Company and the Registrant
|
|
|
|
|
4.5*
|
|
|
Specimen Common Stock Certificate of H2B2 Electrolysis Technologies, Inc.
|
|
|
|
|
|
|
|
Form of Certificate of Domestication of RMG Acquisition Corp. III, to be
filed with the Secretary of the State of Delaware.
|
|
|
|
|
5.1*
|
|
|
Opinion of Skadden, Arps, Slate, Meagher & Flom (UK) LLP as to the
validity of the Surviving Corporation Common Stock
|
TABLE OF CONTENTS
|
|
|
Opinion of Skadden, Arps, Slate, Meagher & Flom LLP regarding certain
U.S. federal income tax matters
|
|
|
|
|
|
|
|
Sponsor Support Agreement, dated as of May 9, 2023, by and among the
Registrant, RMG Sponsor III LLC and H2B2 Electrolysis Technologies, Inc. (included as Annex B to the proxy statement/prospectus)
|
|
|
|
|
|
|
|
Company Stockholder Support Agreement, dated as of May 9, 2023, by and among
the Registrant, H2B2 Electrolysis Technologies, Inc. and the persons set forth on Schedule I thereto (included as Annex C to the proxy statement/prospectus)
|
|
|
|
|
|
|
|
Form of Amended and Restated Registration Rights Agreement (included as
Annex D to the proxy statement/prospectus)
|
|
|
|
|
|
|
|
Form of Lock-up Agreement (included as Annex E to the proxy
statement/prospectus)
|
|
|
|
|
|
|
|
Letter Agreement, dated as of February 4, 2021, by and among the Registrant,
RMG Sponsor III, LLC and the Registrant’s officers and directors
|
|
|
|
|
|
|
|
Investment Management Trust Account Agreement, dated February 4, 2021, by
and between Continental Stock Transfer & Trust Company and the Registrant
|
|
|
|
|
|
|
|
Administrative Services Agreement, dated as of February 4, 2021, by and
between the Registrant and RMG Acquisition Management, LLC
|
|
|
|
|
|
|
|
Sponsor Warrants Purchase Agreement, dated as of February 4, 2021, by and
between the Registrant and RMG Sponsor III, LLC
|
|
|
|
|
|
|
|
Form of H2B2 Electrolysis Technologies, Inc. 2023 Incentive Award Plan
(included as Annex I to the proxy statement/prospectus)
|
|
|
|
|
|
|
|
Employment Contract, dated as of June 27, 2016, by and between Anselmo
Andrade Fernández de Mesa and H2B2 Electrolysis Technologies, S.L.
|
|
|
|
|
|
|
|
Common Stock Option Agreement, dated as of January 1, 2021, by and between
Anselmo Andrade Fernández de Mesa and H2B2 Electrolysis Technologies, Inc.
|
|
|
|
|
|
|
|
Amendment to the Common Stock Option Agreement, dated as of January 1, 2021,
by and between Anselmo Andrade Fernández de Mesa and H2B2 Electrolysis Technologies, Inc.
|
|
|
|
|
|
|
|
Letter Agreement, dated May 9, 2023, by and between Anselmo Andrade
Fernández de Mesa and H2B2 Electrolysis Technologies, Inc.
|
|
|
|
|
|
|
|
Service Agreement as Sole Director, dated May 9, 2023, by and between
Anselmo Andrade Fernández de Mesa and H2B2 Corp, S.L.
|
|
|
|
|
|
|
|
Employment Contract, dated June 7, 2016, by and between Florencio Ferrea
Saldana and H2B2 Electrolysis Technologies, S.L.
|
|
|
|
|
|
|
|
Common Stock Option Agreement, dated July 1, 2021, by and between Florencio
Ferrea Saldana and H2B2 Electrolysis Technologies, Inc.
|
|
|
|
|
|
|
|
Employment Contract, dated October 1, 2016, by and between Felipe Benjumea
Llorente and H2B2 Electrolysis Technologies, S.L.
|
TABLE OF CONTENTS
|
|
|
Service Agreement, dated January 7, 2023, by and between Felipe Benjumea
Llorente and H2B2 Electrolysis Technologies S.L.
|
|
|
|
|
|
|
|
Employment Contract, dated June 7, 2016, by and between Jose Javier Brey
Sánchez and H2B2 Electrolysis Technologies, S.L.
|
|
|
|
|
|
|
|
Common Stock Option Agreement, dated January 1, 2021, by and between Jose
Javier Brey Sánchez and H2B2 Electrolysis Technologies, Inc.
|
|
|
|
|
|
|
|
Service Agreement, dated December 15, 2022, by and between Jose Antonio
Vázquez Romero and H2B2 Electrolysis Technologies, S.L.
|
|
|
|
|
|
|
|
Non-Residental Lease Agreement, dated July 8, 2021, by and between VGP Park
Sevilla Dos Hermanas, S.L.U. and H2B2 Electrolysis Technologies, S.L.
|
|
|
|
|
|
|
|
Sublease Agreement, dated July 10, 2020, by and between Bar 20 Darily, LLC
and H2B2 USA, LLC.
|
|
|
|
|
|
|
|
Solar Energy Systems Sublease, dated June 23, 2022, by and between Bar 20
Darily, LLC and H2B2 USA, LLC.
|
|
|
|
|
|
|
|
Supply Agreement, dated June 19, 2020, by and among Giner ELX, Inc. (and
acquired and assumed by Plug Power Inc.) and H2B2 Electrolysis Technologies, Inc.
|
|
|
|
|
|
|
|
Public Deed of Sale and Purchase of Shares of H2B2 Electrolysis
Technologies, Inc., dated May 30, 2023, by and among Arraut Y Sala Reixachs, S.L.P, as the bankruptcy administration, Ardachon, S.L., as the seller, and H2B2 Electrolysis Technolgoies, Inc., as the buyer.
|
|
|
|
|
|
|
|
Loan Agreement, dated May 30, 2023, by and between Apenet, S.L.U. and H2B2
Electrolysis Technologies, Inc.
|
|
|
|
|
21.1*
|
|
|
List of Subsidiaries of H2B2 Electrolysis Technologies, Inc.
|
|
|
|
|
|
|
|
Consent of Marcum LLP
|
|
|
|
|
|
|
|
Consent of RSM US LLP
|
|
|
|
|
23.3*
|
|
|
Consent of Skadden, Arps, Slate, Meagher & Flom (UK) LLP (included as
part of Exhibit 5.1)
|
|
|
|
|
|
|
|
Filing Fee Table
|
*
|
To be filed by amendment.
|
†
|
Schedules and exhibits have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The Registrant agrees to furnish
supplementally a copy of any omitted schedule or exhibit to the SEC upon request.
|
^
|
Portions of this exhibit have been redacted in compliance with Regulation S-K Item 601(b)(10).
|
#
|
Indicates a management contract or compensatory plan, contract or arrangement.
|
(1)
|
Incorporated by reference to the Registrant’s Current Report on Form 8-K filed on August 7, 2023.
|
(2)
|
Incorporated by reference to the Exhibit 4.1 filed with Amendment No. 1 to the Form S-1 filed by the Registrant on February 2,
2021.
|
(3)
|
Incorporated by reference to the Exhibit 4.2 filed with Amendment No. 1 to the Form S-1 filed by the Registrant on February 2,
2021.
|
(4)
|
Incorporated by reference to Exhibit 4.1 filed with the Registrant’s Current Report on Form 8-K filed on February 4, 2021.
|
(5)
|
Incorporated by reference to the Registrant’s Current Report on Form 8-K filed on February 4, 2021.
|
TABLE OF CONTENTS
1. The undersigned Registrant hereby undertakes:
(a) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of this Registration Statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in this Registration Statement.
Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20% change in the maximum aggregate offering price
set forth in the “Calculation of Registration Fee” table in the effective registration statement; and
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in this Registration Statement or any material change to such information in this Registration Statement; and
(b) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment that contains a form of prospectus will be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time will be
deemed to be the initial bona fide offering thereof.
(c) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the termination of the offering.
(d) That, for the purpose of determining liability under the
Securities Act of 1933 to any purchaser, each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in
reliance on Rule 430A, will be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part
of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of
sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use.
(e) That, for the purpose of determining liability of the registrant
under the Securities Act of 1933 to any purchaser in the initial distribution of the securities, the undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration
statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller
to the purchaser and will be considered to offer or sell such securities to such purchaser:
(i) Any preliminary prospectus or prospectus of the undersigned
registrant relating to the offering required to be filed pursuant to Rule 424;
(ii) Any free writing prospectus relating to the offering prepared
by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant;
(iii) The portion of any other free writing prospectus relating to
the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and
(iv) Any other communication that is an offer in the offering made
by the undersigned registrant to the purchaser.
TABLE OF CONTENTS
2. Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the SEC such indemnification is
against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by
a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by them is against public policy as expressed in
the Securities Act of 1933 and will be governed by the final adjudication of such issue.
3. The undersigned registrant hereby undertakes as follows: that
prior to any public reoffering of the securities registered hereunder through use of a prospectus which is a part of this registration statement, by any person or party who is deemed to be an underwriter within the meaning of Rule 145(c), the
issuer undertakes that such reoffering prospectus will contain the information called for by the applicable registration form with respect to reofferings by persons who may be deemed underwriters, in addition to the information called for by
the other items of the applicable form.
4. The registrant undertakes that every prospectus: (i) that is filed
pursuant to the immediately preceding paragraph, or (ii) that purports to meet the requirements of Section 10(a)(3) of the Act and is used in connection with an offering of securities subject to Rule 415, will be filed as a part of an amendment
to the registration statement and will not be used until such amendment is effective, and that, for purposes of determining any liability under the Securities Act of 1933, each such post-effective amendment will be deemed to be a new
registration statement relating to the securities offered therein, and the offering of such securities at that time will be deemed to be the initial bona fide offering thereof.
5. The undersigned Registrant hereby undertakes to respond to
requests for information that is incorporated by reference into the prospectus pursuant to Items 4, 10(b), 11, or 13 of this Form S-4, within one business day of receipt of such request, and to send the incorporated documents by first class
mail or other equally prompt means. This includes information contained in documents filed subsequent to the effective date of the Registration Statement through the date of responding to the request.
6. The undersigned Registrant hereby undertakes to supply by means of
a post-effective amendment all information concerning a transaction, and the company being acquired involved therein, that was not the subject of and included in the Registration Statement when it became effective.
TABLE OF CONTENTS
Pursuant to the requirements of the Securities Act of 1933, as
amended, the Registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in Miami Beach, Florida, on the 14th day of August, 2023.
|
|
|
RMG Acquisition Corp. III
|
|
|
|
|
|
|
|
|
|
|
By:
|
|
|
/s/ Robert S. Mancini
|
|
|
|
Name:
|
|
|
Robert S. Mancini
|
|
|
|
Title:
|
|
|
Chief Executive Officer
|
|
|
|
|
|
|
|
/s/ D. James Carpenter
|
|
|
Chairman of the Board and Director
|
|
|
August 14, 2023
|
D. James Carpenter
|
|
|
|
|
|
|
|
|
/s/ Robert S. Mancini
|
|
|
Chief Executive Officer (Principal Executive Officer) and Director
|
|
|
August 14, 2023
|
Robert S. Mancini
|
|
|
|
|
|
|
|
|
/s/ Philip Kassin
|
|
|
President, Chief Operating Officer
and Director
|
|
|
August 14, 2023
|
Philip Kassin
|
|
|
|
|
|
|
|
|
/s/ Wesley Sima
|
|
|
Chief Financial Officer (Principal Financial and Accounting Officer)
|
|
|
August 14, 2023
|
Wesley Sima
|
|
|
|
|
|
|
|
|
/s/ Craig Broderick
|
|
|
Director
|
|
|
August 14, 2023
|
Craig Broderick
|
|
|
|
|
|
|
|
|
/s/ W. Thaddeus Miller
|
|
|
Director
|
|
|
August 14, 2023
|
W. Thaddeus Miller
|
|
|
|
|
|
|
|
|
/s/ Catherine D. Rice
|
|
|
Director
|
|
|
August 14, 2023
|
Catherine D. Rice
|
|
Exhibit 2.2
PLAN OF DOMESTICATION
This PLAN OF DOMESTICATION (the “Plan of Domestication”) is made on , , and sets forth the terms pursuant to which RMG Acquisition Corp. III, a Cayman Islands exempted company
limited by shares (“RMG”), shall de-register as an exempted company incorporated in the Cayman Islands by way of continuation to the State of Delaware and effect a domestication and become a Delaware corporation (the “Domestication”) to
be known as RMG Acquisition Corp. III, Inc. (the “Domesticated Corporation”), pursuant to Part XII of the Companies Act (As Revised) of the Cayman Islands (the “Companies Act”) and Section 388 of the General Corporation Law of the State
of Delaware (the “DGCL”).
RECITALS
WHEREAS, RMG is a Cayman Islands exempted company limited by shares duly incorporated and validly existing under the laws of the Cayman Islands;
WHEREAS, the Board of Directors of RMG (the “Board”) has determined that it is advisable and in the best interests of RMG that RMG de-register as an exempted company incorporated in the Cayman Islands by way of continuation
to the State of Delaware and become domesticated, and continue to exist as, a Delaware corporation in accordance with Part XII of the Companies Act and Section 388 of the DGCL;
WHEREAS, the Board has duly approved, authorized, adopted, ratified and confirmed the Domestication, this Plan of Domestication and each corporate action to be taken by the Domesticated Corporation in connection with the
Domestication as set forth in this Plan of Domestication, all in accordance with the Amended and Restated Memorandum and Articles of Association of RMG, effective as of February 4, 2021, as amended on January 11, 2023 and August 4, 2023 (the “Cayman
Organizational Documents”) and the Companies Act and pursuant to Section 388 of the DGCL; and
WHEREAS, the shareholders of RMG have duly approved, authorized and adopted the Domestication, this Plan of Domestication and each corporate action to be taken by the Domesticated Corporation in connection with the Domestication
as set forth in this Plan of Domestication, all in accordance with the Cayman Organizational Documents and the Companies Act and pursuant to Section 388 of the DGCL.
NOW, THEREFORE, in consideration and respect of the foregoing, RMG hereby adopts this Plan of Domestication setting forth the terms governing the Domestication as follows:
1. De-Registration. Upon the filing of the special resolution approving the de-registration of RMG as an exempted company incorporated in the
Cayman Islands by way of continuation to the State of Delaware (along with such other documents as required) with the Registrar of Companies of the Cayman Islands, RMG shall be de-registered in the Cayman
Islands. Any director or officer of RMG is authorized to execute any undertakings, confirmations or affidavits required by the Companies Act in connection with the application for de-registration.
2. Domestication. Upon the filing of a certificate of corporate domestication in the form attached hereto as Exhibit A (the “Certificate
of Domestication”), and a certificate of incorporation in the form attached hereto as Exhibit B (the “Certificate of Incorporation”), with the Secretary of State of the State of Delaware pursuant to Sections 103 and 388 of the
DGCL (the “Effective Time”), RMG shall become domesticated as a Delaware corporation pursuant to Section 388 of the DGCL, under the name “[RMG Acquisition Corp. III, Inc.]” and will, for all purposes of the laws of the State of Delaware, be
deemed to be the same entity as RMG. RMG will not be required to wind up its affairs or pay its liabilities and distribute its assets, and the Domestication will not be deemed to constitute a dissolution of RMG and will constitute a continuation of
the existence of RMG in the form of a Delaware corporation. At the Effective Time, the registered office of the Domesticated Corporation shall be the offices of in , Delaware , United States of America. In connection with
the foregoing, any officer or agent of RMG (or any other person or entity authorized by such officer or agent) is authorized to act as the incorporator of the Domesticated Corporation and, in such capacity, execute the Certificate of Incorporation
and a consent of the incorporator.
3. Conversion of Securities. As a result of and at the Effective Time, pursuant to the Domestication:
|
(a) |
each of the then-issued and outstanding Class A ordinary shares, par value $0.0001 per share, of RMG shall convert automatically, on a one-for-one basis, into one (1) share of Class A stock, par value $0.0001 per share, of the Domesticated
Corporation (“Domesticated Corporation Class A Stock”), having the rights, powers and privileges, and the obligations, set forth in the Certificate of Incorporation;
|
|
(b) |
each of the then-issued and outstanding Class B ordinary shares, par value $0.0001 per share, of RMG shall convert automatically, on a one-for-one basis, into one (1) share of Class B stock, par value $0.0001 per share, of the Domesticated
Corporation, having the rights, powers and privileges, and the obligations, set forth in the Certificate of Incorporation;
|
|
(c) |
each of the then-issued and outstanding public warrants of RMG shall convert automatically into one (1) public warrant to acquire one (1) share of Domesticated Corporation Class A Stock (“Domesticated Corporation Public Warrant”)
pursuant to the Warrant Agreement, dated February 4, 2021, between RMG and Continental Stock Transfer & Trust Company, as warrant agent, as amended (the “Warrant Agreement”);
|
|
(d) |
each of the then-issued and outstanding private warrants of RMG shall convert automatically into one (1) private warrant to acquire one (1) share of Domesticated Corporation Class A Stock pursuant to the Warrant Agreement; and
|
|
(e) |
each of the then-issued and outstanding units of RMG shall be cancelled and entitle each holder thereof to one (1) share of Domesticated Corporation Class A Stock and one-fifth of one (1) Domesticated Corporation Public Warrant.
|
4. Tax Matters. For United States federal income tax purposes, the Domestication is intended to qualify as a “reorganization” within the
meaning of Section 368(a)(1)(F) of the Internal Revenue Code of 1986, as amended, and this Plan of Domestication is intended to constitute a “plan of reorganization” within the meaning of Treasury Regulations Sections 1.368-2(g) and 1.368-3.
5. Governing Documents. (a) At the Effective Time, the Cayman Organizational Documents shall be terminated and be of no further force or
effect, and (b) from and after the Effective Time, the Certificate of Incorporation, and the By-Laws of the Domesticated Corporation, in the form attached hereto as Exhibit C (the “By-Laws”), shall govern the affairs of the
Domesticated Corporation and the conduct of its business, until thereafter amended in accordance with the DGCL and their respective terms.
6. Board of Directors. Each member of the Board as of immediately prior to the Effective Time shall be a director of the Domesticated
Corporation from and after the Effective Time, each of whom shall serve as directors of the Domesticated Corporation until such time as their respective successors have been duly elected and qualified, or until such director’s earlier removal,
resignation, death or disability, in each case, in accordance with the DGCL, the Certificate of Incorporation and the By-Laws.
7. Officers. Each officer of RMG as of immediately prior to the Effective Time shall be an officer of the Domesticated Corporation from and
after the Effective Time and shall retain the same title with the Domesticated Corporation from and after the Effective Time as such officer had with RMG immediately prior to the Effective Time, each of whom shall serve until such time as their
respective successors have been designated by the Board, or until such officer’s earlier removal, resignation, death or disability, in each case, in accordance with the DGCL, the Certificate of Incorporation and the By-Laws.
8. Effects of Domestication. Immediately upon the Effective Time, the Domestication shall have the effects set forth in Section 388 of the
DGCL, including, without limitation, all of the rights, privileges and powers of RMG, and all property, real, personal and mixed, and all debts due to RMG, as well as all other things and causes of action belonging to RMG, shall remain vested in the
Domesticated Corporation and shall be the property of the Domesticated Corporation and the title to any real property vested by deed or otherwise in RMG shall not revert or be in any way impaired by reason of the DGCL. Following the Domestication,
all rights of creditors and all liens upon any property of RMG shall be preserved unimpaired, and all debts, liabilities and duties of RMG shall remain attached to the Domesticated Corporation, and may be enforced against the Domesticated Corporation
to the same extent as if said debts, liabilities and duties had originally been incurred or contracted by the Domesticated Corporation. The rights, privileges, powers and interests in property of RMG, as well as the debts, liabilities and duties of
RMG, shall not be deemed, as a consequence of the Domestication, to have been transferred to the Domesticated Corporation for any purpose of the laws of the State of Delaware, including the DGCL.
9. Further Assurances. Each corporate action that was approved by the shareholders of RMG at the extraordinary general meeting of shareholders
of RMG held on , at which this Plan of Domestication was approved shall be deemed authorized, adopted and approved by the Domesticated Corporation and its Board of Directors and stockholders. If at any time the Domesticated Corporation, or its
successors or assigns, shall consider or be advised that any further assignments or assurances in law or any other acts are necessary or desirable to carry out the purposes of this Plan of Domestication, RMG and its Board and authorized officers
shall be deemed to have granted to the Domesticated Corporation an irrevocable power of attorney and authorization to execute and deliver all such proper deeds, assignments and assurances in law and to do all acts necessary or proper to vest, perfect
or confirm title to and possession of such rights, properties or assets in the Domesticated Corporation and otherwise to carry out the purposes of this Plan of Domestication, and the directors and authorized officers of the Domesticated Corporation
are fully authorized to take any and all such action.
10. Amendment or Termination. This Plan of Domestication may be amended or terminated at any time before the Effective Time by action of the
Board.
11. Miscellaneous. This Plan of Domestication shall be governed by and construed in accordance with the laws of the State of Delaware,
including the DGCL, without giving effect to any choice of law or conflict of law provisions or rule (except to the extent that the laws of the Cayman Islands govern the Domestication and the adoption and approval of this Plan of Domestication and
each corporate action to be taken by the Domesticated Corporation in connection with the Domestication as set forth in this Plan of Domestication) that would cause the application of the laws of any jurisdiction other than the State of Delaware.
***
IN WITNESS WHEREOF, this Plan of Domestication has been duly executed and delivered by a duly authorized officer of RMG as of the date first written above.
|
RMG ACQUISITION CORP. III
|
|
|
|
By:
|
|
|
Name:
|
|
Title:
|
[Signature Page to Plan of Domestication]
Exhibit A
Certificate of Domestication
[intentionally omitted]
Exhibit B
Certificate of Incorporation
[intentionally omitted]
Exhibit C
By-Laws
[intentionally omitted]
C-1
Exhibit 4.6
CERTIFICATE OF DOMESTICATION
DOMESTICATING
RMG ACQUISITION CORP. III
AS
RMG ACQUISITION CORP. III, INC.
Pursuant to Sections 103 and 388 of the General
Corporation Law of the State of Delaware
RMG Acquisition Corp. III, a Cayman Islands exempted company limited by shares (the “Corporation”), does hereby certify to the following facts relating to the domestication of the
Corporation from the Cayman Islands to the State of Delaware:
1. The Corporation was originally incorporated on the 23rd day of December, 2020, under the laws of the Cayman
Islands.
2. The name of the Corporation immediately prior to the filing of this Certificate of Domestication is RMG Acquisition Corp. III.
3. The name of the Corporation as set forth in its Certificate of Incorporation filed in accordance with Section 388(b) of the General Corporation Law of the State of Delaware (the “DGCL”)
is [RMG Acquisition Corp. III, Inc.].
4. The jurisdiction that constituted the seat, siege social or principal place of business or central administration of the Corporation immediately prior to the filing of this Certificate of
Domestication is the Cayman Islands.
5. The domestication has been approved in the manner provided for by the document, instrument, agreement or other writing, as the case may be, governing the internal affairs of the Corporation
and the conduct of its business or by applicable non-United States law, as appropriate.
6. A plan of domestication has been adopted in accordance with Section 388(l) of the DGCL, and all provisions of such plan of domestication have been approved in accordance with all applicable
non-United States law, including any approval required under non-United States law for the authorization of the type of corporate action specified in such plan of domestication.
IN WITNESS WHEREOF, the Corporation has caused this Certificate of Domestication to be executed in its name this day of , .
|
RMG ACQUISITION CORP. III
|
|
|
|
By:
|
|
|
Name:
|
|
Title:
|
|
Authorized Officer
|
[Signature Page to Certificate of Domestication]
Exhibit 8.1
SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP
|
|
ONE MANHATTAN WEST
NEW YORK, NY 10001
TEL: (212) 735-3000
FAX: (212) 735-2000
|
FIRM/AFFILIATE OFFICES
BOSTON
CHICAGO
HOUSTON
LOS ANGELES
PALO ALTO
WASHINGTON, D.C.
WILMINGTON
BEIJING
BRUSSELS
FRANKFURT
HONG KONG
LONDON
MUNICH
PARIS
SÃO PAULO
SEOUL
SHANGHAI
SINGAPORE
TOKYO
TORONTO
|
|
|
RMG Acquisition Corp. III
57 Ocean, Suite 403, 5775 Collins Avenue
Miami Beach, Florida 33140
|
RE: |
U.S. Federal Income Tax Considerations
|
Ladies and Gentlemen:
We have acted as United States tax counsel to RMG Acquisition Corp. III, a Cayman Islands exempted company (“RMG III”),
in connection with the Agreement and Plan of Merger, dated as of May 9, 2023 (as amended, modified or supplemented, the “Merger Agreement”), by and among RMG
III and H2B2 Electrolysis Technologies, Inc., a Delaware corporation (“H2B2”), which, among other things, intends to effect a deregistration under the Cayman
Islands Companies Law (as amended) and a domestication under Section 388 of the Delaware General Corporation Law (the “Domestication”), pursuant to which RMG
III’s jurisdiction of incorporation will be changed from the Cayman Islands to the State of Delaware. This opinion is being delivered in connection with the Registration Statement (File No. 333-273150) of RMG III on Form S-4 filed on July 6,
2023 with the Securities and Exchange Commission (“SEC”), as amended and supplemented through the date hereof (the “Registration Statement”).
In rendering the opinion set forth below, we have examined and relied upon, without independent investigation or verification, the accuracy and completeness of the facts, information, factual
representations, covenants and agreements contained in originals or copies, certified or otherwise identified to our satisfaction, of (i) the Merger Agreement, (ii) the Registration Statement, and (iii) such other documents as we have deemed
necessary or appropriate as a basis for the opinion set forth below. We have assumed that the transactions contemplated by the foregoing documents have been or will be consummated in accordance with the operative documents and that such
documents accurately and completely reflect the material facts of such transactions. In addition, we have relied upon the accuracy and completeness of certain statements, factual representations, covenants and agreements made by RMG III,
including the accuracy and completeness of all factual representations and covenants set forth in a certificate dated as of the date hereof from an officer of RMG III (the “Officer’s Certificate”). For purposes of rendering our opinion, we have assumed that such statements, factual representations, covenants and agreements are, and will continue to be, including through the completion of the
Domestication, true and correct without regard to any qualification as to knowledge or belief. Our opinion assumes and is expressly conditioned on, among other things, the initial and continuing accuracy and completeness of the facts,
information, factual representations, covenants and agreements set forth in the documents referred to above and the statements, factual representations, covenants and agreements made by RMG III, including those set forth in the Officer’s
Certificate.
RMG Acquisition Corp. III
August 12, 2023
Page 2
For purposes of our opinion, we have assumed the legal capacity of all natural persons, the genuineness of all signatures, the authenticity of all documents submitted to us as originals, the
conformity to original documents of all documents submitted to us as certified, conformed, photostatic or electronic copies, and the authenticity of the originals of such latter documents. We have assumed that such documents, certificates, and
records are duly authorized, valid, and enforceable. In making our examination of documents, we have assumed that the parties thereto had the power, corporate or otherwise, to enter into and perform all obligations thereunder and have also
assumed the due authorization by all requisite action, corporate or otherwise, and the execution and delivery by such parties of such documents and the validity and binding effect thereof on such parties.
Our opinion is based on the Internal Revenue Code of 1986, as amended (the “Code”), Treasury regulations
promulgated thereunder, judicial decisions, published positions of the Internal Revenue Service (the “Service”), and such other authorities as we have
considered relevant, all as in effect on the date of this opinion and all of which are subject to change or differing interpretations, possibly with retroactive effect. A change in the authorities upon which our opinion is based could affect
the conclusions expressed herein. Moreover, there can be no assurance that our opinion will be accepted by the Service or, if challenged, by a court.
Based upon the foregoing and subject to the assumptions, exceptions, limitations and qualifications set forth herein and in the Registration Statement under the heading “U.S. Federal Income Tax
Considerations,” we are of the opinion that, for United States federal income tax purposes, the Domestication will qualify as a “reorganization” within the meaning of Section 368(a)(1)(F) of the Code. We express no opinion on the potential
United States federal income tax consequences of the Domestication pursuant to Section 367 of the Code or the passive foreign investment company rules.
RMG Acquisition Corp. III
August 12, 2023
Page 3
Except as expressly set forth above, we express no other opinion. This opinion is being delivered prior to the consummation of the Domestication and therefore is prospective and dependent on future
events. This opinion is expressed as of the date hereof, and we are under no obligation to supplement or revise our opinion to reflect any legal developments, any factual matters arising subsequent to the date hereof, or the impact of any
information, document, certificate, record, statement, factual representation, covenant, or assumption relied upon herein that becomes incorrect or untrue. No assurances can be given that future legislative, judicial, or administrative changes,
on either a prospective or a retroactive basis, or future factual developments, would not adversely affect the accuracy of the conclusion stated herein.
In accordance with the requirements of Item 601(b)(23) of Regulation S-K under the Securities Act of 1933, we hereby consent to the filing of this opinion as an exhibit to the Registration
Statement and the use of our name under the headings “U.S. Federal Income Tax Considerations” in the Registration Statement. In giving this consent, we do not admit that we come within the category of persons whose consent is required under
Section 7 of the Securities Act of 1933 or the rules and regulations of the SEC thereunder.
|
Very truly yours,
|
|
|
|
/s/ Skadden, Arps, Slate, Meagher & Flom LLP
|
Exhibit 10.10
IN ACCORDANCE WITH ITEM 601(A)(6) OF REGULATION S-K, CERTAIN INFORMATION HAS BEEN OMITTED
FROM THIS EXHIBIT BECAUSE IT CONTAINS PERSONALLY IDENTIFIABLE INFORMATION.
[***] INDICATES THAT INFORMATION HAS BEEN REDACTED.
INDEFINITE EMPLOYMENT CONTRACT
COMPANY DATA
CIF/NIF/NIE
[***]
|
|
|
Mrs.
ARESTI ESCRIVA DE ROMANI,
|
NIF/NIE
[***]
|
AS (1)
DIRECTOR
|
COMPANY NAME
H2B2 ELECTROLYSIS TECHNOLOGIES, S.L.
|
REGISTERED OFFICE
[***] 19 EN
|
COUNTRY |
MUNICIPALITY |
C. POSTAL
[***]
|
|
|
[***] |
|
|
|
|
|
|
|
QUOTE ACCOUNT DATA
REGIMEN |
|
CODE. PROV. |
NUMBER |
DIG. CONTR. |
ECONOMIC ACTIVITY |
[***] |
|
[***] |
[***] |
[***] |
|
[***] |
|
|
|
|
|
|
|
|
|
WORK CENTER DATA
COUNTRY |
MUNICIPALITY |
|
|
[***] |
41038 |
|
|
|
|
EMPLOYEE DATA
Ms.
ANDRADE FERNÁNDEZ DE MESA, ANSELMO
|
NIF/NIE
[***]
|
DATE OF BIRTH
[***]
|
No. OF AFFILIATION S.S.
[***]
|
TRAINING LEVEL |
NATIONALITY |
[***] |
55 |
[***] |
724 |
MUNICIPALITY OF DOMICILE |
DOMICILE COUNTRY |
[***] |
2879 |
|
724 |
|
|
|
|
|
|
|
|
|
|
with the legal assistance, if applicable, of Mr./Ms. ________________ with NIF./NIE.______, in its capacity as (2)________________.
That they meet the requirements for the execution of this contract and, consequently, agree to formalize it in accordance with the following:
FIRST: The worker will provide his/her services as ADMINISTRATIVE STAFF included in the professional group of ADMINISTRATIVE STAFF for the performance of the
functions (4) ADMINISTRATIVE STAFF accordance with the professional classification system in force in the company. On site
of work located at (street, no. and town) [***]
☐ |
REMOTE WORK, at the address located at |
and town) |
|
SECOND: The contract is concluded to carry out periodic seasonal nature consisting of ________________(5) within the intermittent cyclical activity of (6)
________________whose duration will be (7) ________________
The estimated duration of activity will be (8) ______________. Workers will be called in the order and form determined in the Collective
Bargaining Agreement of ENGINEERING COMPANIES AND OFFICES OF TECHNICAL STUDIES. The estimated day within the activity period will be ______________________________hours (9) ___and the hourly distribution will be
If the collective bargaining agreement on a sectoral level allows for the use of part-time in discontinuous fixed contracts, indicate whether is welcome to the same SI ☐ NO ☒ |
|
T |
THIRD: The working day will be:
☒ |
Full-time: the workday will be 40 hours per week, provided from Monday to Friday, with breaks established legally or conventionally |
|
|
☐ |
Part-time: the regular workday will be _______________, hours ☐ per day,☐ per week, ☐
per month, ☐ per year (10)
|
|
This day is less than that of a comparable full-time worker |
The distribution of work time will be (10) in _______________________________ accordance with the provisions of the collective bargaining
agreement.
In the case of part-time work, indicate whether or not there is an agreement on the performance of additional hours (11):
Yes ☐ No ☐
FOURTH: The duration of this contract will be INDEFINITE, with the employment relationship starting on 27/06/16 and a probationary period of (12) according to
collective bargaining agreement is established.
FIFTH: The worker will receive a total remuneration of €15,000 gross (15) ANNUALLY that will be distributed in the following salary items (14) CBA SALARY
+ NOT CONSOLIDABLE IMPROVEMENTS
SIXTH: The duration of the annual vacation will be (15) 23 working days.
SEVEN: In what is not provided for in this contract, the current legislation resulting from the application will be followed, and in particular,
the Workers' Statute, approved by Royal Legislative Decree 2/2015, of 23 October (BOE of 24 October) and in the Collective Bargaining Agreement of ENGINEERING COMPANIES AND OFFICES OF TECHNICAL STUDIES.
EIGHTH: This contract is formalized under the modality of the respite contract: YES ☐ NO ☒
Worker:
☐ |
That he/she is unemployed and registered as a plaintiff in the Public Employment Service of |
|
|
☐ |
That it has entered into a contract with the company for a certain duration that was registered with the Public Service of Employment of __________, with the number ______dated |
The Company Representative:
That the company worker, Mr/Mrs. ________________________born on _______________, who provides her services at the work center located at
(street, no. and town) [***], with the profession of , included in the professional group/job/level/category _____________________________, in accordance with the professional classification
system in force in the company that reduces its ordinary workday and salary by one __(18), for accessing the partial retirement situation, regulated in Royal Decree-Law 5/2013 of March 15, it has signed on _______________and until _______________the
corresponding part-time employment contract registered with the Public Employment Service _______________under number _________and on.
NINTH: THIS CONTRACT MAY BE CO-FUNDED BY THE EUROPEAN SOCIAL FUND.
TEN: The content of this contract will be communicated to the Public Employment Service of MADRID, within 10 days of its agreement.
ELEVENTH: DATA PROTECTION.- The data included in this form will be protected by the Organic Law 15/1999, of 13 December (BOE of 14 December).
|
(1) |
Director, Manager, etc. |
|
(2) |
Parent, guardian, or person or institution under his or her care. |
|
(3) |
Indicate the corresponding professional group or professional level, according to the professional classification system in force in the company. |
|
(4) |
Indicate profession. Roles can be all or only some of the roles in the professional group. |
|
(5) |
Indicate the professional activity to be carried out by the worker. |
|
(6) |
Indicate the discontinuous or seasonal fixed activity of the company and its duration. |
|
(7) |
Indicate the duration of the activity to be carried out by the worker. |
|
(8) |
Daily, weekly, monthly or annual. Detail Agreement. |
|
(9) |
Indicate the number of hours according to the collective bargaining agreement for full-time, legal maximum or full-time worker. |
|
(10) |
Indicate the worker’s day. |
|
(11) |
Indicate as appropriate and if so, attach the annex if there are continuation sheets. |
|
(12) |
Respecting the provisions of art. 14.1 of the Consolidated Text of the Workers' Statute Law, approved by Royal Legislative Decree 1/1995, of 24 March (BOE of 29 March).In
the event of applying art. 4 of Law 31/2012, the trial period will be one year. Indicate what is applicable and, if so, attach the annex if there are additional hours. |
|
(13) |
Daily, weekly, monthly or annual. |
|
(14) |
Base salary, salary supplements, bonuses. |
|
(15) |
Minimum: 30 calendar days. |
|
(16) |
A minimum of 25% and a maximum of 75% |
That the INDEFINITE CONTRACT that is entered into (check the corresponding box) is made with the following specific clauses:
☒ |
INDEFINITE ORDINARY WITH OR WITHOUT QUOTA REDUCTION. |
Pg. 4 |
☐ |
OF PEOPLE BENEFITING FROM THE NATIONAL YOUTH GUARANTEE SYSTEM |
Pg. 5 |
☐ |
OF PEOPLE WITH DISABILITIES.
|
Pg. 6
|
☐ |
OF PEOPLE WITH DISABILITIES IN SPECIAL EMPLOYMENT CENTERS. |
Pg. 7 |
☐ |
OF PEOPLE WITH DISABILITIES FROM WORK ENVIRONMENTS. |
Pg. 8 |
☐ |
OF LONG-TERM UNEMPLOYED PEOPLE. |
Pg. 8 |
☐ |
OF WORKERS IN A SITUATION OF SOCIAL EXCLUSION, VICTIMS OF GENDER-BASED VIOLENCE, DOMESTIC, VICTIMS OF TERRORISM, OR VICTIMS OF HUMAN TRAFFICKING. |
Pg. 9 |
☐ |
OF EXCLUDED IN INSERTION COMPANIES. |
Pg. 10 |
☐ |
OF THE FAMILY MEMBER OF THE SELF-EMPLOYED PERSON. |
Pg. 11 |
☐ |
OVER THE AGE OF 52 BENEFICIARIES OF UNEMPLOYMENT SUBSIDIES. |
Pg. 12 |
☐ |
FROM A CONTRACT FOR ETT TRAINING AND LEARNING. |
Pg. 13 |
☐ |
FROM A CONTRACT IN ETT PRACTICES. |
Pg. 14 |
☐ |
OF FAMILY HOME SERVICE. |
Pg. 15 |
☐ |
OTHER SITUATIONS. |
Pg. 16 |
☐ |
CONVERSION OF TEMPORARY CONTRACT INTO INDEFINITE CONTRACT. |
Pg. 17 |
and meets the requirements of the regulatory standard.
☐ |
☐ |
WITHOUT SPECIFIC CLAUSES (ORDINARY) |
|
|
|
☐ |
☒ |
INDEFINITELY WITH REDUCTION OF QUOTAS TO THE SOCIAL SECURITY SYSTEM LAW 25/2015 |
☐
That the worker is admitted to the Employment Activation Program and is in possession of the accreditation document or SEPE
resolution.
In witness whereof, this contract is executed in three copies at the place and date above mentioned and signed by the parties hereto.
In DOS HERMANAS on 27 JUNE 2016 |
|
|
/s/ Anselmo Andrade Fernández de Mesa
|
/s/ María Aresti Escrivá de Romaní
|
|
|
The Employee |
The Company’s representative |
ADDITIONAL CLAUSES TO THE EMPLOYMENT AGREEMENT
FIRST.- ENTRY INTO FORCE AND TERM OF THE AGREEMENT
The agreement is agreed for an indefinite term, entering into force on 3 June 2016, and is subject to the trial periods established by the
Legislation in force. When the Agreement is suspended for any of the reasons provided for in the Legislation in force at any time, such suspension shall automatically entail the suspension of the trial period. This trial period shall be restarted as
soon as the Agreement is resumed, with only the trial period that has elapsed until its suspension being counted.
SECOND.- OBJECT OF THE AGREEMENT
The Professional shall provide his services as an engineer.
In this respect, the Professional shall provide his services to the Company on an exclusive basis with respect to the direct or indirect
competition of the Company. In other words, the Professional shall be free to alternate his services to the Company with other professional services provided that:
|
● |
Comply with the obligations established in this employment agreement |
|
● |
Professional services performed outside the Company are not provided, directly or indirectly, for the direct or indirect competition of the Company. |
This consideration is included in the agreement with respect to the agreed remuneration. Specifically, 10% of the agreed remuneration is
specifically attributed to compensation for this obligation, which is expressly considered appropriate by the Professional.
THIRD.- WORKING DAY
The Professional shall work full time, i.e. forty (40) hours per week, within the working hours in force in the Company from time to time.
For the purposes of calculating the maximum working day, the obligatory break in each continuous working day and the periods devoted to voluntary
professional training shall not be considered as effective working time.
Likewise, the time spent by the Professional travelling or waiting shall not be counted for the purposes of the maximum working day, unless
during this time they carry out activities specific to their profession or activity for the Company.
Any such travel or waiting time shall be taken into account in determining their remuneration.
The timetable and distribution of working time shall likewise be that in force in the Company at each specific moment in time.
In order to allow for an irregular distribution of the agreed working day according to the pace of activity, the duration of the working day
shall be calculated on an annual basis, so that the hours of daily excess can be compensated in equivalent rest time within the agreed annual reference period.
The time devoted to education and vocational training for the Professional may be concentrated or alternated with that devoted to the provision
of services for the Company, according to the phases of the training process to be established.
FOURTH.- WORKPLACE
The Professional will initially provide his services at the center of [***].
In any case, taking into account the corporate purpose of the Company and the staff and/or potential clients spread throughout Spain and abroad,
the Professional undertakes to travel to the appropriate place to provide services to clients in the best possible conditions, as often and for as long as necessary for this purpose.
The reimbursement of travel and subsistence expenses arising from the Professional's travel shall be made in accordance with the policies and
systems in force at any given time in the Company.
Such reimbursements shall not be considered salary and shall only be subject to tax or withholding when they exceed the limits established by the
legislation in force from time to time.
FIFTH.- HOLIDAYS, BREAKS, PUBLIC HOLIDAYS AND LEAVES OF ABSENCE
The Professional shall be entitled to the holiday days, rest days, holidays and leaves established in the applicable regulations, the agreement
and the internal policies of the Company.
In any case, the Professional's choice of the aforementioned holiday periods and their approval by the Company shall be based on the matters
entrusted to him or the actions to be performed by the Professional.
SIXTH.- REMUNERATION
The Professional shall receive a total remuneration equal to that established in this same Agreement, which shall be distributed in the salary
items that, where appropriate, the Company may provide for in fourteen (14) payments. The aforementioned remuneration includes all legally or, if applicable, conventionally applicable items, as well as the compensation for exclusivity foreseen in
Clause Two above.
Tax withholdings and deductions, Social Security contributions or any other legally applicable deductions and shall be applied to the
aforementioned items.
SEVENTH.- SUSPENSION OF THE EMPLOYMENT AGREEMENT
The agreement shall be suspended for the reasons and with the effects set out in Article 45 et seq. following of the Workers' Statute.
In the event of voluntary leave of absence, if the Professional exercises his profession in other companies competing with the Company during the
same, without the corresponding prior authorization from the latter, he shall lose the right to reinstatement, and the Agreement shall be terminated for all effects and purposes.
EIGHTH.- TERMINATION OF THE AGREEMENT
The Professional may terminate the Agreement at his own will with the obligation to expressly notify the Company of this decision at least by
giving fifteen (15) days’ notice.
Failure by the Professional to comply with his duty to give notice shall give rise to his obligation to compensate the Company with an amount
equivalent to the remuneration corresponding to the period of notice not given, as well as with the amount of any damages that may have been caused to him.
The Company may terminate the Agreement for the causes established in current legislation, as well as in the following cases:
|
I. |
When there is a manifest and serious breach of trust between the Professional and the Company arising out of the Professional's professional conduct or his relationship with clients. |
|
II. |
When it becomes evident that the Professional does not maintain an adequate professional level and, consequently, cannot exercise the profession with full guarantees for the interests of his
client. |
In the event of null and void dismissal, both parties establish that the Professional shall not be reinstated, being replaced by the payment of
the compensation provided for unfair dismissal, as well as, if applicable, the corresponding processing salaries.
In any case, and regardless of the cause of termination, the Professional must inform his managers at the Company of the situation of the matters
in which he or she has been involved and shall make the corresponding documentation available to the Company so that the matters can be handled and the services offered by the Company can be continued.
Failure to comply with this obligation shall entitle the Company to take legal action, in accordance with articles 1.152 and 1.153 of the Civil
Code, in order to recover any damages it may have incurred.
NINTH.- CONFIDENTIALITY
During the term of the Agreement, the Professional shall have access to information belonging to the Company (including its partners, employees
and external staff) and to clients, suppliers or third parties related to the Company, and it is therefore agreed that such information, to the fullest extent and regardless of the medium in which it is found, is absolutely confidential and is
expressly subject to the duty of confidentiality. All of the above is independent of the ethical obligations arising from the exercise of the Professional's profession, which shall in all cases reinforce the confidentiality and reserve nature of the
information.
By virtue of the foregoing, both during the term of the Contract and upon its termination, the Professional may not, directly or indirectly, use,
disclose, divulge, supply or make available for use (except in cases where it is necessary for the proper performance of his obligations) by third parties or for his own benefit, any information, data, products, procedures, methods, formulas, forms,
models, lists of clients or jobs, plans, as well as any other business, internal or organizational information of the Company, its clients, suppliers and other employees, positions, administrators or external professionals.
Failure to comply with any of the foregoing obligations shall be considered a breach of contractual good faith and breach of trust in the
performance of work, punishable even by disciplinary dismissal. Irrespective of the foregoing, such breach shall give rise to compensation for damages caused to the Company or its clients.
Upon termination of the employment relationship for any reason, the Professional shall return to the Company all goods, equipment or working
tools provided for the performance of his work, including computers and magnetic media used, as well as, by way of example, the notes or documents (whatever their medium, including magnetic and computer media) that may have been made by the
Professional, or with his collaboration, or that have come into his possession in any way, and which shall in any case be the property of the Company. The Professional may not retain or appropriate copies of the above documents, nor allow them to be
used by any other person outside the Company.
In addition to the obligation to comply with the computer filing systems established by the Company during the term of the Contract, the
Professional shall, upon termination of the said relationship, have recorded or filed all the professional documents or documents related to his activity in the Company that he has in his files where indicated by the Company. In the event of failure to
do so, the Professional hereby authorizes the Company to access his personal files for the sole purpose of retrieving the documents of a professional nature or relating to his activity that he has not filed in the manner provided for in this paragraph.
The Professional declares that he is aware of and accepts the "Policy on the use and control of technological resources and communication
systems", on the regulations governing the use of electronic tools, which is attached as an annex to the Contract and of which it forms an integral part.
TENTH.- INTERNAL POLICIES AND ETHICAL STANDARDS
The Professional must comply with all internal and
professional policies and standards indicated by the Company, as well as respect the ethical standards of the profession at all times.
ELEVENTH.- INTELLECTUAL AND INDUSTRIAL PROPERTY
The Professional acknowledges that all services
performed by him on behalf of the Company or its clients, as well as the result thereof, are the property of the Company to the fullest extent and are the cause of the Contract, whatever their content, medium or manifestation.
Therefore, the Professional hereby assigns to the
Company, on an exclusive basis, all creations expressed by any means or medium, tangible or intangible, currently known or to be invented later, contained in the Intellectual Property Law, which have been made by the Professional during the term of
the Agreement within the employment relationship and the services or activity carried out by the Professional for the Company or for the Professional’s clients, or for the Company’s activities in relation to third parties. All of the above has been
taken into account by both parties when setting the Professional’s remuneration, and therefore shall not entail any additional financial compensation.
Likewise, the Professional may not take possession
of any rights deriving from industrial property legislation related to the Company’s usual activity.
By virtue of the foregoing, the Professional shall
sign the Assignment of Intellectual and Industrial Property Rights document, which is attached as an annex to the Agreement and of which it forms an integral part.
TWELFTH.- APPLICABLE LAW
In all matters not provided for in the Agreement, the labour legislation in force at any
given time shall apply.
THIRTEENTH.- DATA PROTECTION
In accordance with the current Law 15/1999, of 13
December, on the Protection of Personal Data and Royal Decree 1720/2007, of 21 December, the Professional expressly consents and authorizes the Company to:
|
● |
Include the data provided as part of the Agreement, those that may be provided in the future, as well as any other data that may be generated
as a result of the employment relationship, in the employee data file maintained by the Company. |
|
● |
To process such data for the purpose of using them for the management of the employment relationship or of the Company’s commercial or other
relationships with other companies and organizations, as well as to maintain them once the employment relationship has ended, in this case solely for the fulfilment of legal obligations. |
|
● |
To transfer the aforementioned data to the companies and organizations mentioned in the previous paragraph and to other companies that may
belong to the same group of companies as the Company, both in Spain and abroad, including countries that do not provide a level of protection comparable to that offered by Spanish legislation, for the same purposes described in the previous
paragraph. |
In accordance with the provisions of the
aforementioned Law 15/1999, the affected party has the rights of opposition, access, rectification and cancellation with respect to the data provided, which may be exercised in accordance with the applicable legislation, by writing to the person in
charge who is notified or, failing that, to the person in charge of human resources. The Professional’s data will be treated by the Company in a confidential manner and with the maintenance of due security conditions that prevent its alteration, loss
or unauthorized access by third parties.
In addition, the Professional accepts:
|
1. |
Maintain absolute confidentiality, reserve and strict professional secrecy with respect to information and / or personal data that may become
known on the occasion of the performance of the services provided, not disclosing, publishing, disseminating or making it available to third parties, either directly or indirectly, without the prior written consent of H2B2 Electrolysis
Technologies S.L., not even for the purpose of conservation. |
|
2. |
Observe and adopt the security and privacy measures established by H2B2 Electrolysis Technologies S.L. for information and personal data to
ensure the confidentiality, secrecy, availability and integrity of personal data to which it has access, as well as to observe and implement all security measures required by the legislation to regulate the processing of personal data and
confidential information. |
|
3. |
In the event that, for any reason related to their work, they come into possession of confidential information - regardless of the type of
medium on which it is held - it is understood that this possession is strictly temporary, with an obligation of secrecy and without this conferring any right of possession or ownership or copy of the information. Likewise, all those supports,
or materials must be returned to H2B2 Electrolysis Technologies S.L., or destroyed, immediately after the end of the tasks that have originated the temporary use of the same, and in any case, at the end of the project or the employment
relationship. |
This obligation shall survive the termination of your relationship with
the owner of the information or, where applicable, with H2B2 Electrolysis Technologies S.L.
Failure to comply with these measures could be considered as an
employment offence and lead to disciplinary sanctions.
In addition, the Professional knows that it is forbidden to send
confidential information of the Company to the outside, by means of material supports or by any means of communication, including the simple visualization or access, with the exception
of the express authorization of the File Manager. Likewise, the Professional shall keep, for an indefinite period of time, the utmost confidentiality and shall not disclose or use, either directly or through third parties or companies, personal data,
confidential information, documentation and other information of a personal nature. confidential information, documentation and other information to which he has access during his working relationship with the Company, whether in documentary or
electronic format.
In the event that, for reasons directly related to the job, the
Professional comes into possession of confidential information in any type of support, it shall be understood that this possession is strictly temporary, with the obligation to This circumstance does not grant him any right of possession or ownership
or copy of the aforementioned information.
The Professional will have to return the aforementioned materials to the
Company or destroy them, once the tasks that have given rise to their temporary use have been completed and, in any case, at the end of the employment relationship.
The continued use of the information, in any format or medium, in a
manner different from that agreed and without the knowledge of the Company, shall not, under any circumstances, imply a modification of this clause.
The Professional may not:
|
● |
Create personal data files without the authorization of the Data Controller. |
|
● |
Cross-reference information relating to data from different files or services, without the express authorisation of the Data Controller |
|
● |
Carry out any other activity expressly prohibited in this document, the Instructions of the Data Protection Officer or in the regulations on data protection. |
In relation to the temporary files, the Professional and the Company
agree that:
|
● |
They may be created from existing files. |
|
● |
The same security rules as those applied to the original files must be maintained and complied with. |
|
● |
A temporary file will maintain the same purpose for which the original file was defined. |
|
● |
Once the life of the temporary file has ended, it will be deleted. |
In the event that these obligations and rights have to be applied to
files on non-automated media, it is agreed that:
|
● |
Files in paper format have the same status as computer files, and are applied in the same way by Law 15/1999 on the Protection of Personal Data, with the same criteria:
duty of secrecy, correct use, access only by authorized users, etc. |
|
● |
The documentation used by each Professional in the course of his work is the property of the Company. |
|
● |
The Professional is responsible for the custody and confidentiality of documentation containing personal data while they are in use. |
|
● |
It is mandatory to ensure that the documents processed are not destroyed or damaged. |
|
● |
The disclosure of the documents without the express authorization of the Company is expressly prohibited. |
Finally, the Company and the Professional agree
that once the legal validity and processing needs have expired, the media containing personal data shall be destroyed in a controlled manner. When the files are automated, the Security Officer shall be notified of their obsolescence and shall apply
the necessary measures to destroy them. In the case of non-automated files, each user shall be responsible for the correct application of the measures to ensure that the information is not recoverable, in accordance with the Company’s instructions.
FOURTEENTH.- TRADE UNION REPRESENTATION
The Company does not have trade union representation at the time of signing this agreement.
FIFTEEN.- OCCUPATIONAL RISK
The Professional has been informed of the risks of
his workplace, of the protection systems and their use, as well as of the actions and evacuation in the event of an emergency.
SIXTEEN.- NULLITY OF THE AGREEMENT
The nullity or total or partial invalidity of any
of the clauses of the Agreement shall not imply the nullity or invalidity of the partially affected clause or of the Agreement as a whole, unless there is a manifest imbalance between the rights and obligations assumed by the parties.
SEVENTEENTH.- AMENDMENTS
The Agreement may not be cancelled, changed,
modified or amended orally, and its cancellation, change, modification or amendment shall not be effective or binding unless made in writing and signed by the parties.
EIGHTEENTH.- COMPETENT JURISDICTION
Any conflict that may arise in interpretation or application of the
agreement must be settled before the Social Courts.
In witness whereof, this Agreement is issued in three counterparts at
the place and on the date indicated below, signed by the interested parties.
In Dos Hermanas, on 2 June 2016.
/s/ Anselmo Andrade Fernández de Mesa |
/s/ María Aresti Escrivá de Romaní |
|
|
The Professional |
The Company |
POLICY FOR THE USE AND CONTROL AND CONTROL OF TECHNOLOGICAL RESOURCES AND COMMUNICATION SYSTEMS OF THE COMPANY
|
1 |
Object, purpose and scope of the application |
The Company implements this Policy on the Use and Control of Technology Resources and communication systems for the purpose of:
|
• |
Verify the correct functioning of the technological resources and communication systems under the ownership or license of the Company and made available to the user. |
|
• |
Ensure the security, performance, reliability, privacy and confidentiality of communications and their content. |
|
• |
Preserve user privacy and security and generally ensure effective service delivery compliance. |
The Company and the user are aware of the need for adequate use of technological resources and communication systems in the provision of the
service.
The Company and the user acknowledge that they are aware of this policy and assume the commitments and standards for the proper use of
technological resources and communication systems, taking all appropriate measures for their strict compliance.
For this purpose, the Company may carry out the necessary investigations and controls of the technological resources provided to the user by the
Company.
For the purposes of the policy on the use and control of technological resources and communication systems, the following shall be understood:
Technology Resources: Elements that integrate Information and Communication Technologies, such as electronic devices, software, hardware,
cabling, nodes and access to public or private networks, servers and in general all infrastructure used by communication systems.
Communication Systems: They include landline, mobile, IP telephony, fax, e-mail, instant messaging systems, peer-to-peer networks or any other
electronic means that the Company makes available to the user to communicate within the scope of the provision of services.
Use and Control Policy: The set of provisions that regulate, in this document, the use and control of the Technology Resources and Communication
Systems intended for the fulfillment of the purposes of the Company.
User: Refers to those persons who, within the scope of their provision of services, use the Communication Systems and Technology Resources under
the ownership or license of the Company.
Systems Officer: Responsible for the management and administration of Communication Systems and Technology Resources, as well as for resolving
problems and incidents arising from their use. For these purposes, the Company will communicate to the User the identity of the System Officer.
Security Officer: Responsible for directing the measures and actions for compliance with this Use and Control Policy. For these purposes, the
Company will communicate to the User the identity of the Security Manager.
|
1.2 |
Ownership of Technology Resources and Communication Systems |
All Technology Resources and Communication Systems made available to the User are owned or licensed by the Company and, for this purpose, the use
of the aforementioned resources and systems must be made in accordance with this Use and Control Policy and the prescriptions imposed by the license holder.
|
1.3 |
Access to Technology Resources and Communication Systems |
All access to the Technological Resources and Communication Systems shall be controlled and authorized by the System Officer. It is strictly
forbidden for the User to attempt to access the Communication Systems or Technological Resources to which he does not have express authorization from the Systems Officer.
All authorized Users have access to the Communication Systems by means of a personal and non-transferable user name and password, undertaking to
treat it with the utmost diligence and confidentiality, being solely responsible for its proper use.
The Authorized User shall be solely and directly responsible for everything executed in the system under his user name and password. Likewise,
attempts, by any means, to obtain access to passwords of other users without their consent are strictly forbidden.
It is forbidden to divulge by any means the access codes to any of the services provided to the User, who undertakes to notify the Systems
Officer and/or the Security Officer immediately of any incident or anomaly detected in the accesses to the Communication Systems or in the security of the same.
The User undertakes to respect the rights of third parties in the shared use systems, undertaking not to access the private information of other
Users without prior authorisation. Likewise, the User undertakes not to share files or documents of any kind with other users without implementing the necessary measures to guarantee the security of the information and operating systems. Any identity
theft will be sanctioned in accordance with the applicable legislation in force.
|
(ii) |
Systems Officer and Security Officer Access |
The Systems Officer and Security Officer is obliged to act with absolute diligence, keeping all data, documents and other information to which he
may have access in the performance of his duties completely confidential. By way of example, but not limitation, the following may be included:
|
• |
Access to Technology Resources and Communication Systems to carry out maintenance tasks. |
|
• |
Access to Technology Resources and Communication Systems for security reasons. |
|
• |
Authorize the Users’ access to the Communication Systems that they require for the fulfillment of their tasks. |
|
• |
Access to Technology Resources and Communication Systems due to security incidents. |
In any case, both the Systems Officer and the Security Officer have the duty and obligation to keep absolutely confidential all information to which they have access
for the performance of their activities, and it is strictly forbidden to communicate or provide it, directly or indirectly, to any third party.
|
2 |
Assignment of passwords and password policy |
|
2.1 |
Password assignment procedures |
Each User with authorized access to the Company’s Technology Resources and Communication Systems will have a personalized username for their
identification, as well as a password to access the Communication Systems.
The communication to the User of their username and password will be provided by the Security Officer, who will communicate it personally or by
email, guaranteeing in any case their confidentiality and secrecy, as well as providing the User with the possibility of subsequently modifying only the password.
All incidents in the use of the Company’s Technology Resources, or that by any circumstance, direct or indirect, may compromise the security of
the information, must be notified as soon as possible to the Security Officer. The Security Officer will be responsible for recording, diagnosing and monitoring all incidents reported by Users. In addition, you must keep the incident record up to date,
specifying the type of incident and the resolution thereof, periodically checking that the incidents are resolved, and the security of the communication is guaranteed.
|
2.3 |
Security, Confidentiality and Data Protection |
The Company and the User undertake to keep the communications secret, respect the privacy and confidentiality of all the Company’s data and
information stored in the Company’s Technology Resources and Communication Systems, and not assign to third parties the data and information both those of the Company and those of a personal nature obtained in the fulfillment of its direct activities or any other of the business sphere, in accordance with the Law on the Protection of Personal Data and other applicable regulations.
|
3 |
Use of Technology Resources and Communication Systems |
The User undertakes to respect the integrity and proper use of the Technological Resources and Communication Systems whose ownership or licence
belongs to the Company and to which he has access for the performance of the tasks within the scope of the provision of the service, it being strictly forbidden to carry out or facilitate any third party in the commission of any of the following
events:
|
• |
Alter all or part of the hardware, software and operating system configurations of the computer equipment assigned to the same User or other users, without proper authorization. |
|
• |
Use unauthorized computer applications that saturate networks, servers, or hinder the operation of computer equipment. |
|
• |
Make privilege or permission modifications without authorization from the System Officer. |
|
• |
Cause physical or logical damage, due to misuse or negligence, to computer equipment, applications, computer tools and any technological device or means. |
|
• |
Developing or accidentally or intentionally using malicious programs or access to resources restricted by the Systems Administrator. |
|
• |
Failure to maintain with due diligence any keys, passwords, Usernames or any other identifiers that may be provided to the User for use any of the tools, or to access equipment or systems owned or licensed by the Company. |
|
3.2 |
Use of personal email |
|
• |
The use of personal email accounts based on web access (but not limited to: gmail, hotmail or yahoo), as well as the instant message services authorized by the Company but not limited to: whatsapp, telegram, line...), may only be used in the
scope of the provision of services for the fulfillment thereof, excluding their use for a recreational purpose. |
|
• |
The use of personal email, as well as instant messaging services through the Company’s Technology Resources and Communication Systems for personal and private purposes is strictly prohibited. |
|
• |
The forwarding of your own work documentation to personal email accounts or those outside the scope of the provision of the service within the Company is strictly prohibited. |
|
3.3 |
Use of Corporate Mail |
Corporate email, distribution lists, instant messaging services and other electronic communication services authorized by the Company are tools
whose purpose is the provision of the service by the User. The Company and the User agree that the use of the Technology Resources and Communication Systems and dissemination of the information will be subject to the following conditions:
|
• |
The use of Communication Systems and Technology Resources for activities outside the provision of the service is prohibited. Emailing offensive, threatening, illicit or fraudulent messages is also prohibited. |
|
• |
The use of e-mail for profit or commercial purposes, for recreational use or any other purpose unrelated to the provision of the service is prohibited. |
|
• |
The use of email for the registration of “newsletter”, or the like that are not directly related to the professional activity carried out by the User and that are of full confidence is prohibited. |
|
• |
Mail distribution lists may only be used for the Company’s own purposes, and never for advertising, commercial or personal purposes that are not related to the activities of professional performance. |
|
• |
Unauthorized access to communications that circulate the network, as well as their manipulation, destruction and misappropriation, is prohibited. |
|
4 |
Internet browsing restrictions |
The use of the network to browse Internet sites, including social media, for uses other than those permitted for the performance of its activity
is prohibited.
Internet browsing will use appropriate software to filter access to sites that, in the opinion of the System Administrator, are inappropriate for
the Company, or unnecessary for the provision of the service.
Browsing websites, sending messages, registering, registering, filling in forms and any other activity carried out via the Internet shall be the
full responsibility of the User who, in any case, must assume the consequences arising from their actions.
In particular, it is strictly forbidden to access pages with illicit content, pornographic material, racist or sexual content, or any material that violates the
dignity of persons.
|
5 |
Prohibition on the use of P2Ptools and networks |
The installation of any type of P2P program (peer to peer) or any other application for the exchange of files that saturate the bandwidth of the
connection to the internet, preventing access to other users or hindering connections to the network, is strictly prohibited, unless authorized by the Company.
|
6 |
Instant Messaging Software Use and Control Policy and Restrictions |
No telematic service or instant messaging software may be installed without the express authorization of the Company.
It is expressly forbidden to use obscene, aggressive, offensive or discriminatory language in the sending of communications via instant messaging
services is expressly prohibited.
The use of any instant messaging service within the scope of the provision of the service shall be exclusively for the fulfilment of the
activities related to the provision of the service, and the transfer of files, images or any communication not related to the provision of the service is prohibited.
For security reasons, attachments from unknown senders must not be downloaded for any reason whatsoever.
|
7 |
Monitoring and Control Programs and Devices |
The System Officer shall implement automated control tools to analyze and detect improper or illicit use and behavior on the network, and such
control shall not imply any violation of the privacy or intimacy of the Users.
The User and the Company agree that, for security reasons, all information circulating on the network, as well as via e-mail and instant
messaging systems, may be monitored and subject to periodic controls and reports on its use, providing extensive information to the Company (by way of example, this will consist of: user identification, date of access, time of access, bytes
transferred, file storage, access to servers, sites visited, time spent browsing the network).
The control and access to the resources provided by the Company, including the documents generated by the users and the communications
originating therefrom, may be carried out on a preventive, temporary and/or continuous basis, taking into account the nature of said Technological Resources and Communication Systems provided by the Company.
The control of these resources shall be carried out without harming and without infringing the dignity or privacy of the User, in consideration
of the prior knowledge that the User has of the object and existence of the present control and supervision to which the Users are subject.
The generic purposes of this control are as follows:
|
• |
Protection of the Communication System and Technology Resources, in order to protect their integrity. |
|
• |
Ensure the continuity of the work in the event that the User is absent due to illness, vacation or other similar. |
|
• |
Prevention of third-party liability. |
|
• |
Verification of compliance with the User’s obligations in the field of providing services. |
|
• |
Verification of the existence or not of the abusive use of the Technology Resources and Communication Systems provided by the Company for personal and private uses |
Therefore, all stored content, information and files, including temporary information, may be accessed by the Company or by those responsible designated for this
purpose.
|
8 |
Use of Technology Resources outside the Company |
The inputs and outputs of the Technology Resources necessary for the development of the provision of services must be authorized by the Security
Manager. The User is obliged to make the reasoned request in writing, indicating the equipment to be used outside the Company, date of departure and expected date of delivery, the Security Manager being obliged to respond in writing to the request.
The Security Manager shall implement the necessary measures to ensure the integrity and security of the computer equipment outside the Company,
as well as to keep an updated record of the entry and exit thereof.
|
9 |
Use of Software Licenses |
The User is obliged to respect the terms and conditions of use of the licences and industrial and intellectual property rights of the software
installed on the computer equipment, and is responsible for its proper use.
All software protected by industrial and intellectual property rights may not be copied, altered, modified, decompiled, disassembled, translated,
published, nor may any information protected by patents, trademarks or intellectual property rights be made available to the user. any information protected by patents, trademarks or industrial and intellectual property rights may not be made
available.
The User shall be liable for any failure to comply with the obligations set out in this Clause.
|
10 |
Consequences arising from non-compliance with the Use and Control Policy |
The User undertakes to cooperate with the Systems Officer to carry out any investigation aimed at finding possible causes arising from the misuse
of the Technological Resources and Communication Systems.
The User who fails to comply with this Use and Control Policy will be sanctioned with the removal of access to the Technological Resources and
Communication Systems, the application of sanctions for non-compliance with the terms and conditions that, where appropriate, emanate from the User’s contract, without prejudice to the legal sanctions established in the applicable regulations in force.
/s/ María Aresti Escrivá de Romani |
/s/ Anselmo Andrade Fernández de Mesa |
|
|
The Company |
The User |
ASSIGNMENT OF INTELLECTUAL AND INDUSTRIAL PROPERTY RIGHTS
In Seville, on 2 June 2016
On the one hand, the Professional, under the terms defined in this agreement, and hereinafter the INVENTOR.
On the other hand, María Aresti Escrivá de Romaní with Spanish ID number. [***] with address in [***], acting as sole director of H282
Electrolysis Technologies S.L. (formerly Global Aerco S.L.), with Spanish Tax ID number [***], hereinafter THE COMPANY.
Both parties acknowledge their full capacity to enter into this agreement, so in the representations they hold, freely and spontaneously
WHEREAS
1. That the INVENTOR develops, or will develop, within the framework of its functions and deriving from the employment agreement that
binds it to the COMPANY, and in collaboration with others (if applicable) and, in any case, at the request of the COMPANY, certain intellectual and industrial property developments that may be patented or registered, hereinafter referred to as THE
DEVELOPMENTS.
2. That in accordance with the legislation in force, the employment agreement between INVENTOR and the COMPANY, it is understood that all
non-material rights of the DEVELOPMENTS belong to the COMPANY, but that it is nevertheless the intention of INVENTOR and the COMPANY to enter into this agreement to ratify this situation.
IV.- Both parties have reached an agreement to enter into this agreement, which will be subject to the following
CLAUSES
First.- The INVENTOR assigns to the COMPANY all non-material rights of the DEVELOPMENTS, in any form and, in particular, on a
non-exclusive basis, the economic exploitation of the DEVELOPMENTS.
Second.- The INVENTOR may not exploit the DEVELOPMENTS, either on its own or through related persons or companies.
Third.- The rights assigned in this contract are assigned for the duration of the term established by the applicable law in each case.
Four.- This assignment is worldwide.
Fifth. - This assignment shall not lose its effect even if the employment relationship between the INVENTOR and the COMPANY ceases.
Six.- This agreement may be made public by either of the parties, and the costs of
this procedure shall be borne by the party that does so.
Seventh.- This agreement and any disputes that may arise from it are subject to Spanish law. The parties submit, waiving their own
jurisdiction that may correspond to them, to the Courts of the city of Sevilla.
Eighth.- In the event that any of the clauses of this contract should be declared null and void, the contract shall not lose its validity
and both parties shall meet to agree on one that, following the same economic purpose, is in accordance with the law.
Ninth.- This agreement binds both the signatory parties and their successors in title and/or their related parties through any legal
instrument. The change of corporate name and/or change of corporate purpose or any other commercial event of a similar nature of any of the parties shall not affect the content of this contract, as the COMPANY shall continue to maintain its rights
regardless of these variables. At in the event of a merger, spin-off or liquidation or any other commercial event of a similar nature of any of the parties, the COMPANY shall continue to maintain its rights irrespective of these variables.
|
• |
the INVENTOR shall maintain the same obligations conferred by this agreement, regardless of the legal form, company name or event that has affected it |
|
• |
the COMPANY shall maintain the same rights conferred by this agreement, subject always to the specific agreements that have been reached based on the commercial event or the nature thereof. |
Tenth.- The INVENTOR shall at all times have a duty of confidentiality with regard to any information relating to the DEVELOPMENT. The
INVENTOR may not pass on any information relating to the DEVELOPMENT to any person, whether natural or legal, with the exception of other persons with employment or commercial ties to the COMPANY, and provided that such ties have been established,
inter alia, for the purpose of carrying out the DEVELOPMENT. The INVENTOR may only transfer information relating to the DEVELOPMENT to third parties if authorized by the COMPANY and if such authorization is recorded in a document on the transfer and
use of information. The confidentiality obligation for the INVENTOR shall not lose its effect even if the employment relationship between the INVENTOR and the COMPANY ceases. The COMPANY may claim all types of damages from the INVENTOR who breaches
this confidentiality obligation, regardless of the liabilities and indemnities that the COMPANY may request from the third parties involved.
And with the parties being satisfied in all of the foregoing and recorded herein, in which content they affirm, ratify and accept, they sign it
for a single purpose in the place “ut supra”.
/s/ María Aresti Escrivá de Romaní |
/s/ Anselmo Andrade Fernández de Mesa |
|
|
The Company |
Inventor |
26
Exhibit 10.11
IN ACCORDANCE WITH ITEM 601(A)(6) OF REGULATION S-K, CERTAIN INFORMATION HAS BEEN OMITTED
FROM THIS EXHIBIT BECAUSE IT CONTAINS PERSONALLY IDENTIFIABLE INFORMATION.
[***] INDICATES THAT INFORMATION HAS BEEN REDACTED.
H2B2 ELECTROLYSIS TECHNOLOGIES, INC.
COMMON STOCK OPTION AGREEMENT
H2B2 ELECTROLYSIS TECHNOLOGIES, INC.
COMMON STOCK
OPTION AGREEMENT
This Common Stock Option Agreement (this “Agreement”) is dated as 1st January 2021 and is between H2B2 Electrolysis Technologies, Inc., a Delaware corporation (the “Company”), and Anselmo Andrade Fernandez de Mesa
(Tax Number [***]) of Spain (“Investor”).
SECTION 1
AUTHORIZATION, SALE AND ISSUANCE
1.1 Authorization. The Company will, prior to the date of this
Agreement, authorize the sale and issuance of up to 125,000 shares (the “Shares”) of the Company’s Common Stock, par value $0.00001 per share (the “Common Stock”), having the rights, privileges, preferences and restrictions set forth in the
certificate of incorporation of the Company, (the “Certificate”).
1.2 Sale and Issuance of Shares. Subject to the
terms and conditions of this Agreement, Investor is entitled to purchase, and the Company agrees to sell to Investor should he decide it, up to 125,000 shares, at a global price provided in Section 2.2 (the “Purchase Price”).
SECTION 2
OPTION EXERCISE, EXECUTION AND DELIVERY
2.1 Option exercise and execution.
|
(a) |
Upon signature of the Agreement, the Investor is acquiring a free option to purchase the Shares. |
|
(b) |
The Option shall be fully exercised and executed between 1st January 2026 and 31st March 2026, according to the conditions in 2.1.(e). |
|
(c) |
The execution of the Option shall be notified to Company at least 15 calendar days before the execution. The notification must include the specific execution date. |
|
(d) |
The execution date shall be understood as the Closing Date. |
|
(e) |
This Option shall be only valid: |
● In case the Company is public and is listed and traded in a
stock market by 1st January 2026; and
● as long as Investor maintains until the Closing Date a labor
relation with any company of the Company Group. In case of termination of this labor relation, regardless of the cause of the termination or the party terminating that relation, Investor shall lose all its rights to purchase the Shares according to
the Option.
Despite de aforementioned, in case of (i) decease or (ii) sudden impossibility to
carry out the regular job, all Investor rights provided in this Agreement could be exercised by Investor or by its heirs.
2.2 Purchase Price. The Purchase Price will be one (1) USD. This
Purchase Price will be the global price of the 125,000 shares.
2.3 Delivery. After the Closing Date, the Company will deliver to
Investor a certificate registered in such Investor’s name representing the number of Shares that such Investor is purchasing against payment of the purchase price as set forth in section 1.2.
2.4 Impossibility. Should the execution of the Option be
impossible (i) because the Company is not public and/or listed and/or traded by 1st January 2026 in a stock exchange market; or (ii) due to the public market regulations to be applied, this Option shall be terminated on 31st December 2025 and the Investor shall be entitled to a gross salary bonus of 30% of its gross annual salary in 2025, to be paid within the first quarter of 2026.
SECTION 3
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY
The Company hereby represents and warrants to the Investors as follows:
3.1. Organization, Good Standing and Qualification. The Company
is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware. The Company has the requisite corporate power and authority to own and operate its properties and assets, to carry on its business as
presently conducted, to execute and deliver this Agreement, to issue and sell the Shares and to perform its obligations pursuant to this Agreement and the Certificate. The Company is presently qualified to do business as a foreign corporation in each
jurisdiction where the failure to be so qualified could reasonably be expected to have a material adverse effect on the Company’s financial condition or business as now conducted (a “Material Adverse Effect”).
3.2. Subsidiaries. The Company has disclosed all entities or
companies that it owns or control, directly or indirectly, any, interest in any corporation, partnership, limited liability company, association or other business entity.
3.3. Capitalization.
(a) The Company has reserved the Shares for issuance pursuant to
this Agreement. The rights, preferences, privileges and restrictions of the Shares are as stated in the Certificate.
(b) The Shares, when issued and delivered and paid for in
compliance with the provisions of this Agreement, will be validly issued, fully paid and nonassessable. The Shares will be free of any hens or encumbrances, other than any liens or encumbrances created by or imposed upon the Investors; provided,
however, that the Shares could be subject to restrictions on transfer under U.S. state and/or federal securities laws and as set forth herein.
3.4 Authorization. All corporate action on the part of the
Company and its directors, officers and stockholders necessary for the authorization, execution and delivery of this Agreement by the Company, the authorization, sale, issuance and delivery of the Shares, and the performance of all of the Company’s
obligations under this Agreement has been taken or will be taken prior to the date of this Agreement. This Agreement, when executed and delivered by the Company, shall constitute a valid and binding obligation of the Company, enforceable in
accordance with its terms, except (i) as limited by laws of general application relating to bankruptcy, insolvency and the relief of debtors and (ii) as limited by rules of law governing specific performance, injunctive relief or other equitable
remedies and by general principles of equity.
3.5 Offering. Subject to the accuracy of the Investor’s
representations and warranties in Section 4, the offer, sale and issuance of the Shares to be issued in conformity with the terms of this Agreement, could constitute transactions exempt from the registration requirements of Section 5 of the
Securities Act of 1933, as amended (the “Securities Act”).
3.6 No “Bad Actor” Disqualification. The Company has exercised
reasonable care, in accordance with SEC rules and guidance, to determine whether any Covered Person (as defined below) is subject to any of the “bad actor” disqualification described in Rule 506(d)(1)(i) through (viii) under the Securities Act
(“Disqualification Events”). To the Company’s knowledge, no Covered Person is subject to a Disqualification Event, except for a Disqualification Event covered by Rule 506(d)(2) or (d)(3) under the Securities Act. The Company has complied, to the
extent applicable, with any disclosure obligations under Rule 506(e) under the Securities Act. “Covered Persons” are those persons specified in Rule 506(d)(1) under the Securities Act, including the Company; any predecessor or affiliate of the
Company; any director, executive officer, other officer participating in the offering, general partner of managing member of the Company; any beneficial owner of 20% or more of the Company’s outstanding voting equity securities, calculated on the
basis of voting power; any promoter (as defined in rule 405 under the Securities Act) connected with the Company in any capacity at the time of the sale of the Shares; and any person that has been or will be paid (directly or indirectly) remuneration
for solicitation of purchasers in connection with the sale of the Shares (a “Solicitor”), any general partner of managing member of any Solicitor, and any director, executive officer or other officer participating in the offering of any Solicitor or
general partner or managing member of any Solicitor.
3.7 Brokers or Finders. The Company has not incurred, and will
not incur, directly or indirectly, as a result of any action taken by the company, any liability for brokerage of finders’ fees or agents’ commissions or any similar charges in connection with this Agreement or any of the transactions contemplated
hereby.
SECTION 4
REPRESENTATIONS AND WARRANTIES OF THE INVESTOR
Investor hereby represents and warrants to the Company as follows:
4.1 No Registration. The Investor understands that the Shares
have not been, and will not be, registered under the Securities Act by reason of a specific exemption from the registration provisions of the Securities Act, the availability of which depends upon, among other things, the bona fide nature of the
investment intent and the accuracy of the Investor’s representations as expressed herein or otherwise made pursuant hereto.
4.2 Investment Intent. The Investor is acquiring the Shares for
investment for its own account, not as a nominee or agent. The Investor further represents that it does not have any contract, undertaking, agreement or arrangement with any person or entity to sell, transfer or grant participation to such person or
entity or to any third person or entity with respect to any of the Shares.
4.3 Investment Experience. The Investor has substantial
experience in evaluating and investing in private placement transactions of securities in companies similar to the Company and acknowledges that the Investor can protect its own interests. The Investor has such knowledge and experience in financial
and business matters so that the Investor is capable of evaluating the merits and risks of its investment in the Company.
4.4 Speculative Nature of Investment. The Investor understands
and acknowledges that the Company has a limited financial and operating history and that an investment in the Company is highly speculative and involves substantial risks. The Investor can bear the economic risk of the Investor’s investment and is
able, without impairing the Investor’s financial condition, to hold the Shares for an indefinite period of time and to suffer a complete loss of the Investor’s investment.
4.5 Access to Data. The Investor has had an opportunity to ask
questions of, and receive answers from, the officers of the Company concerning this Agreement, the exhibits and schedules attached hereto and the transactions contemplated by this Agreement, as well as the Company’s business, management and financial
affairs, which questions were answered to its satisfaction. The Investor believes that it has received all the information the investor considers necessary or appropriate for deciding whether to purchase the Shares. The Investor understands that such
discussions, as well as any information issued by the Company, were intended to describe certain aspects of the Company’s business and prospects, but were not necessarily a thorough or exhaustive description. The Investor acknowledges that any
business plans prepared by the company have been, and continue to be, subject to change and that any projections included in such business plans or otherwise are necessarily speculative in nature, and it can be expected that some or all of the
assumptions underlying the projections will not materialize or will vary significantly from actual results. The investor also acknowledges that it is relying solely on its own counsel and not on any statements of representations of the Company or its
agents for legal advice with respect to this investment or the transactions contemplated by this Agreement.
4.6 Accredited Investor. The representation in this Section 4
only applies to “accredited investors” within the meaning of regulation D, Rule 501(a), promulgated by the securities and Exchange Commission under the Securities act (each an “Accredited Investor”). The Investor is an Accredited Investor and shall
submit to the Company such further assurances of such status as may be reasonably requested by the Company. The Investor has furnished or made available any and all information requested by the Company or otherwise necessary to satisfy any applicable
verification requirements as to their status as an Accredited Investor. Any such information is true, correct, timely and complete.
4.7 Residency. The residency of the Investor (or, in the case of
a partnership or corporation, such entity’s principal place of business) is correctly set forth on the first page of this Contract.
4.8 No Public Market. The Investor understands and acknowledges
that no public market now exists for any of the securities issued by the Company and that the Company has made no assurances that a public market will ever exist for the Company’s securities.
4.9 Authorization.
(a) The Investor has all requisite power and authority to execute
and deliver this Agreement, to purchase the Shares hereunder and to carry out and perform its obligations under the terms of this Agreement. All action on the part of the Investor necessary for the authorization, execution, delivery and performance
of this Agreement, and the performance of all of the Investor’s obligations under this Agreement, has been taken or will be taken prior to the beginning of the Closing Date.
(b) This Agreement, when executed and delivered by the Investor,
will constitute a valid and legally binding obligation of the Investor, enforceable in accordance with its terms except: (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting
enforcement of creditors’ rights generally and (ii) as limited by laws relating to the availability of specific performance injunctive relief or other equitable remedies by general principles of equity.
(c) No consent, approval, authorization, order, filing,
registration or qualification of or with any court, governmental authority or third person is required to be obtained by the Investor in connection with the execution and delivery of this Agreement by the Investor or the performance of the Investor’s
obligations hereunder.
4.10 Brokers or Finders. The Investor has not engaged any
brokers, finders or agents, and neither the Company nor any other Investor has, nor will, incur, directly or indirectly, as a result of any action taken by the Investor, any liability for brokerage or finders’ fees or agents’ commissions or any
similar charges in connection with this Agreement.
4.11 Tax Advisors. The Investor has reviewed with its own tax
advisors the U.S. federal, state, local and foreign tax consequences of this investment and the transactions contemplated by this Agreement. With respect to such matters, the Investor relies solely on such advisors and not on any statements or
representations of the Company or any of its agents, written or oral. The Investor understands that it (and not the Company) shall be responsible for its own tax liability that may arise as a result of this investment or the transactions contemplated
by this Agreement.
4.12 Legends. The Investor understands and agrees that the
certificates evidencing he Shares, or any other securities issued in respect of the Shares upon any stock split, stock dividend, recapitalization, merger, consolidation or similar event, shall bear the following legend (in addition to any legend
required under applicable state securities laws):
“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE, AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER SUCH ACT AND/OR APPLICABLE STATE SECURITIES LAWS, OR UNLESS THE COMPANY HAS
RECEIVED AN OPINION OF COUNSEL OR OTHER EVIDENCE, REASONABLY SATISFACTORY TO THE COMPANY AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED.”
4.13 No “Bad Actor” Disqualification Events. Neither (i) the
Investor, (ii) any of its directors, executive officers, other officers that may serve as a director or officer of any company in which it invests, general partners or managing members, nor (iii) any beneficial owner of the Company’s voting equity
securities (in accordance with Rule 506(d) of the Securities Act) held by the Investor is subject to any Disqualification Event (as defined in Section 3.6), except for Disqualification Events covered by Rule 506(d)(2)(ii) or (iii) or (d)(3) under the
Securities Act and disclosed reasonably in advance of the Closing Term in writing in reasonable detail to the Company.
4.14 Taxes. Investor fully understands and acknowledges the tax
consequences of the Option stated herein and declares that no claim will be brought against the Company due to this reason.
SECTION 5
CONDITIONS TO INVESTOR’S
OBLIGATIONS TO CLOSE
Investor’s right to purchase the Shares at the date of this Agreement is
subject to the fulfillment on or before the date of this Agreement of each of the following conditions, unless waived by the applicable Investor purchasing the Shares in such date:
5.1 Representations and Warranties. The representations and
warranties made by the Company in Section 3 shall be true and correct in all material respects as of the date of this Agreement.
5.2 Covenants. The Company shall have performed or complied with
all covenants, agreements and conditions contained in this Agreement to be performed or complied with by the Company on or prior to the date of this Agreement in all material respects.
5.3 Blue Sky. The Company shall have obtained all necessary Blue
Sky law permits and qualifications, or have the availability of exemptions therefrom, required by any state for the offer and sale of the Shares.
5.4 Consents and Waivers. The Company shall have obtained any and
all consents, permits and waivers necessary or appropriate for the performance by the Company of its obligations pursuant to this Agreement.
SECTION 6
CONDITIONS TO COMPANY’S OBLIGATION TO CLOSE
The Company’s obligation to sell and issue the Shares at the date of
this Agreement is subject to the fulfillment on or before the Closing Term of the following conditions, unless waived by the Company:
6.1 Representations and Warranties. The representations and
warranties made by the Investors in the date of this Agreement in Section 4 shall be true and correct in all material respects when made and shall be true and correct in all material respects as of the date of such date.
6.2 Covenants. The Investors shall have performed or complied
with all covenants, agreements and conditions contained in this Agreement to be performed or complied with by the Investors on or prior to the date of this Agreement.
6.3 Compliance with Securities Laws. The Company shall be
satisfied that the offer and sale of the Shares shall be qualified or exempt from registration or qualification under all applicable federal and state securities laws (including receipt by the Company of all necessary blue sky law permits and
qualifications required by any state, if any).
6.4 Consents and Waivers. The Company and the Investors shall
have obtained any and all consents, permits and waivers necessary or appropriate for consummation of the transactions contemplated by this Agreement.
SECTION 7
MISCELLANEOUS
7.1 Amendment. Except as expressly provided herein, neither this
Agreement nor any term hereof may be amended, waived, discharged or terminated other than by a written instrument referencing this Agreement and signed by the Company, Investor and the Investors holding a majority of the Common Stock issued pursuant
to this Agreement (excluding any of such shares that have been sold to the public or pursuant to Rule 144); provided, however, that Investors purchasing shares after the date of this Agreement may become parties to this Agreement in accordance with
Section 2.1 without any amendment of this Agreement pursuant to this paragraph or any consent or approval of any other Investor. Any such amendment, waiver, discharge or termination effected in accordance with this paragraph shall be binding upon
each holder of any securities purchased under this Agreement at the time outstanding (including securities into which such securities have been converted or exchanged or for which such securities have been exercised) and each future holder of all
such securities. Investor acknowledges that by the operation of this paragraph, the holders of a majority of the Common Stock issued pursuant to this Agreement (excluding any of such shares that have sold to the public or pursuant to Rule 144) will
have to approve any change concerning the rights of such Investor under this Agreement.
7.2 Notices. All notices and other communications required or
permitted hereunder shall be in writing and shall be mailed by registered or certified mail, postage prepaid, sent by facsimile or electronic mail (if to an Investor or any other holder of Company securities) or otherwise delivered by hand, messenger
or courier service addressed:
(a) if to an Investor, to the Investor’s address, facsimile number
or electronic mail address as shown in the Company’s records, as may be updated in accordance with the provisions hereof;
(b) if to any other holder of any Shares, to such address,
facsimile number or electronic mail address as shown in the Company’s records, or, until any such holder so furnishes an address, facsimile number or electronic mail address to the Company, then to the address, facsimile number or electronic mail
address of the last holder of such Shares for which the Company has contact information in its records; or
(c) if to the Company, to the attention of the Chief Executive
Officer at the current address as the Company shall have furnished to the Investors.
Each such notice or other communication shall for all purposes of this
Agreement be treated as effective or having been given (i) if delivered by hand, messenger or courier service, when delivered (or if sent via a nationally-recognized overnight courier service, freight prepaid, specifying next-business-day delivery,
one business day after deposit with the courier), or (ii) if sent via mail, at the earlier of its receipt or five days after the same has been deposited in a regularly-maintained receptacle for the deposit of the United States mail, addressed and
mailed as aforesaid, or (iii) if sent via facsimile, upon confirmation of facsimile transfer or, if sent via electronic mail, upon confirmation of delivery when directed to the relevant electronic mail address, if sent during normal business hours of
the recipient, or if not sent during normal business hours of the recipient, then on the recipient’s next business day. In the event of any conflict between the Company’s books and records and this Agreement or any notice delivered hereunder, the
Company’s books and records will control absent fraud or error.
Subject to the limitations set forth in Delaware General Corporation Law
§232(e), Investor or other security holder consents to the delivery of any notice to stockholders given by the Company under the Delaware General Corporation Law or the Company’s certificate of incorporation or bylaws by (i) facsimile
telecommunication (ii) electronic mail (iii) posting on an electronic network together with separate notice to the Investor or other security holder of such specific posting or (iv) any other form of electronic transmission (as defined in the
Delaware General Corporation Law) directed to the Investor or other security holder. This consent may be revoked by an Investor or other security holder by written notice to the Company and may be deemed revoked in the circumstances specified in
Delaware General Corporation Law §232.
7.3 Governing Law. This Agreement shall be governed in all
respects by the internal laws of the State of Delaware as applied to agreements entered into among Delaware residents to be performed entirely within Delaware, without regard to principles of conflicts of law.
7.4 Brokers or Finders. The Company shall indemnify and hold
harmless Investor from any liability for any commission or compensation in the nature of a brokerage or finder’s fee or agent’s commission (and the costs and expenses of defending against such liability or asserted liability) for which such Investor
or any of its constituent partners, members, officers, directors, employees or representatives is responsible to the extent such liability is attributable to any inaccuracy or breach of the representations and warranties contained in Section 3.7, and
Investor agrees to indemnify and hold harmless the Company and each other Investor from any liability for any commission or compensation in the nature of a brokerage or finder’s fee or agent’s commission (and the costs and expenses of defending
against such liability or asserted liability) for which the Company, any other Investor or any of their constituent partners, members, officers, directors, employees or representatives is responsible to the extent such liability is attributable to
any inaccuracy or breach of the representations and warranties contained in Section 4.11.
7.5 Expenses. The Company and the Investors shall each pay their
own expenses in connection with the transactions contemplated by this Agreement.
7.6 Survival. The representations, warranties, covenants and
agreements made in this Agreement shall survive any investigation made by any party hereto and the closing of the transactions contemplated hereby for one year from the date of the date of this Agreement.
7.7 Successors and Assigns. This Agreement, and any and all
rights, duties and obligations hereunder, shall not be assigned, transferred, delegated or sublicensed by any Investor without the prior written consent of the Company, unless otherwise stated in this Agreement. Any attempt by an Investor without
such permission to assign, transfer, delegate or sublicense any rights, duties or obligations that arise under this Agreement shall be void. Subject to the foregoing and except as otherwise provided herein, the provisions of this Agreement shall
inure to the benefit of, and be binding upon, the successors, assigns, heirs, executors and administrators of the parties hereto.
7.8 Entire Agreement. This Agreement, including the exhibits
attached hereto, constitutes the full and entire understanding and agreement between the parties with regard to the subjects hereof. No party shall be liable or bound to any other party in any manner with regard to the subjects hereof by any
warranties, representations or covenants except as specifically set forth herein.
7.9 Delays or Omissions. Except as expressly provided herein, no
delay or omission to exercise any right, power or remedy accruing to any party to this Agreement upon any breach or default of any other party under this Agreement shall impair any such right, power or remedy of such non-defaulting party, nor shall
it be construed to be a waiver of any such breach or default, or an acquiescence therein, or of or in any similar breach or default thereafter occurring, nor shall any waiver of any single breach or default be deemed a waiver of any other breach or
default theretofore or thereafter occurring. Any waiver, permit, consent or approval of any kind or character on the part of any party of any breach or default under this Agreement, or any waiver on the part of any party of any provisions or
conditions of this Agreement, must be in writing and shall be effective only to the extent specifically set forth in such writing. All remedies, either under this Agreement or by law or otherwise afforded to any party to this Agreement, shall be
cumulative and not alternative.
7.10 Severability. If any provision of this Agreement becomes or
is declared by a court of competent jurisdiction to be illegal, unenforceable or void, portions of such provision, or such provision in its entirety, to the extent necessary, shall be severed from this Agreement, and such court will replace such
illegal, void or unenforceable provision of this Agreement with a valid and enforceable provision that will achieve, to the extent possible, the same economic, business and other purposes of the illegal, void or unenforceable provision. The balance
of this Agreement shall be enforceable in accordance with its terms.
7.11 Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be enforceable against the parties actually executing such counterparts, and all of which together shall constitute one instrument.
7.12 Telecopy Execution and Delivery. A facsimile, telecopy or
other reproduction of this Agreement may be executed by one or more parties hereto and delivered by such party by facsimile or any similar electronic transmission device pursuant to which the signature of or on behalf of such party can be seen. Such
execution and delivery shall be considered valid, binding and effective for all purposes. At the request of any party hereto, all parties hereto agree to execute and deliver an original of this Agreement as well as any facsimile, telecopy or other
reproduction hereof.
7.13 Arbitration. The parties shall attempt to resolve all
disputes between the parties arising out of or relating to this Stock Purchase Agreement amicably through good faith discussions upon the written request of any party. In the event that any such dispute cannot be resolved thereby within a period of
thirty (30) days after such notice has been given, such dispute shall be finally resolved by binding arbitration in Delaware, using the English language in accordance with the Arbitration Rules and Procedures of JAMS then in effect. The Parties agree
that they shall attempt to select an Arbiter by Agreement, but should they come to such an agreement, the parties shall select an arbitrator in accordance with the arbitrator selection procedures set forth in the Arbitration Rules and Procedures of
JAMS then in effect. The parties agree that the presiding arbitrator shall have the jurisdiction to resolve any disputes arising out of or relating to this Stock Purchase Agreement. The parties consent to the exercise of personal jurisdiction over
each of them by the federal and state courts within the State of Delaware for the purposes of enforcing any arbitration award that may result from arbitration proceedings instituted to resolve any disputes arising out of or related to this Stock
Purchase Agreement, or to prevent any threatened violation of this Stock Purchase Agreement.
7.14 Jury Trial. EaCH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING (WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE)
ARISING OUT OF OR RELATED TO THIS AGREEMENT.
7.15 Attorney’s Fees. In the event that any suit or action is
instituted to enforce any provisions in this Agreement, the prevailing party in such dispute shall be entitled to recover from the losing party all fees, costs and expenses of enforcing any right of such prevailing party under or with respect to this
Agreement, including without limitation, such reasonable fees and expenses of attorneys and accountants, which shall include, without limitation, all fees, costs and expenses of appeals.
7.16 Further Assurances. Each party hereto agrees to execute and
deliver, by the proper exercise of its corporate, limited liability company, partnership or other powers, all such other and additional instruments and documents and do all such other acts and things as may be necessary to more fully effectuate this
Agreement.
7.17 SPECIAL AMENDMENT BY COMPANY. NOTWITHSTANDING ANY PROVISION
IN THIS AGREEMENT TO THE CONTRARY, THE COMPANY MAY UNILATERALLY AMEND IN GOOD FAITH THIS AGREEMENT, WITHOUT THE CONSENT OF INVESTOR TO MAKE A CHANGE THAT IS NECESSARY OR DESIRABLE TO CURE ANY AMBIGUITY OR INCONSISTENCY AND TO MAKE CHANGES TO SATISFY
ANY REQUIREMENTS, CONDITIONS OR GUIDELINES CONTAINED IN ANY OPINION, DIRECTIVE, ORDER, RULING, REGULATION OR STATUTE OF ANY GOVERNMENTAL BODY THAT WILL NOT BE INCONSISTENT WITH THIS AGREEMENT, AND IN ANY CASE SUBJECT TO THE REQUIREMENT THAT THE
INVESTOR NOT BE MATERIALLY AND ADVERSELY AFFECTED. SHOULD THIS HAPPEN, THE COMPANY SHALL PROMPTLY NOTIFY THE INVESTOR WITHIN (10) BUSINESS DAYS.
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by
its duly authorized representative and Investor has executed this Agreement, as of the Effective Date.
H2B2 ELECTROLYSIS TECHNOLOGIES, INC.
/s/ Javier Brey Sánchez
By: Javier Brey Sánchez
Anselmo Andrade Fernández de Mesa
/s/ Anselmo Andrade
Exhibit 10.12
IN ACCORDANCE WITH ITEM 601(A)(6) OF REGULATION S-K, CERTAIN INFORMATION HAS BEEN OMITTED
FROM THIS EXHIBIT BECAUSE IT CONTAINS PERSONALLY IDENTIFIABLE INFORMATION.
[***] INDICATES THAT INFORMATION HAS BEEN REDACTED.
Amendment of the contract to establish the stipulations arising from the status of shareholder in the company H2B2 Electrolysis Technologies, Inc.
In Dos Hermanas, on 1 January 2021
The parties
On one hand, Javier Brey Sánchez, with D.N.I. number [***], of legal age.
On the other hand, Anselmo Andrade Fernández de Mesa, with D.N.I. number [***], of legal age.
Act
The first one in the name and on behalf of H2B2 Electrolysis Technologies, Inc. (hereinafter, H2B2 Inc)
The second one, in his own name and right.
Whereas
First.- On 24 August 2016, the parties entered into a
contract to establish the stipulations arising from the status of shareholder of the company H2B2 Electrolysis Technologies, Inc.
Second.- The parties wishes to partially amend the
previous contract in accordance with the following
Stipulations
First.- The First Stipulation is amended and shall have the following
wording:
“In the event of termination of such a commercial or employment relationship:
|
− |
Voluntarily by decision of Anselmo Andrade Fernández de Mesa
|
|
− |
or at the discretion of H2B2 Electrolysis Technologies, S.L., for objective, disciplinary or similar reasons, regardless of the name they had at the time of the dismissal or termination of the contract,
|
before 1 January 2026, Anselmo Andrade Fernández de Mesa undertakes to deliver to H2B2 Inc., within a maximum period of ten (10) working days from the termination of such commercial or employment relationship, the
shares indicated in the first stipulation of which he was still the owner for the global price of 1 euro. Should any of the returned shares be encumbered by a right in rem, Anselmo Andrade Fernández de Mesa undertakes to remove this right before
the transfer of the shares, so that they may be transferred free of all charges and encumbrances. If he does not do so, H2B2 Inc, will be able to claim from Anselmo Andrade Fernandez de Mesa the relevant damages.
Second.- The rest of the contract remains unchanged.
In witness whereof, this document is signed at the place and on the date indicated above.
/s/ Javier Brey Sánchez
|
|
|
H2B2 Electrolysis Technologies, Inc
|
|
Javier Brey Sánchez |
|
CEO/President
|
|
/s/ Anselmo Andrade Fernández de Mesa
|
|
Anselmo Andrade Fernández de Mesa
|
|
Exhibit 10.13
IN ACCORDANCE WITH ITEM 601(A)(6) OF REGULATION S-K, CERTAIN INFORMATION HAS BEEN OMITTED
FROM THIS EXHIBIT BECAUSE IT CONTAINS PERSONALLY IDENTIFIABLE INFORMATION.
[***] INDICATES THAT INFORMATION HAS BEEN REDACTED.
H2B2 Electrolysis Technologies Inc.
9 May 2023
Anselmo Andrade Fernández de Mesa
[***]
Dear Anselmo:
This letter agreement (“Agreement”) will
confirm and formalize our agreement with respect to your employment with H2B2 Electrolysis Technologies Inc., a Delaware corporation (“H2B2” or, except as otherwise set forth in Section 7, the “Company”). This Agreement is by and among
the Company and you, effective as of date hereof. Capitalized terms not defined herein shall have the meanings set forth in Exhibit A hereto.
1. Term: Effective as of 30
December 2022 or such later date as agreed between the parties (the “Start Date”), the Company shall employ you and you shall remain in the employ of the Company, in the position set forth in Section 2, and subject to the other terms and
conditions herein. The term of employment under this Agreement (the “Term”) shall commence on the Start Date, and will end upon the fifth anniversary of the Start Date (or, if earlier, termination by the Company or you in accordance with
Section 4 below).
|
2. |
Employment: During the Term: |
a. Position. You shall serve as a
member of the Company’s executive leadership team in the position of Chief Executive Officer of H2B2, reporting to the Board of Directors of H2B2 (the “Board”).
b. Duties. You shall have such
responsibilities, duties and authority normally associated with your position as Chief Executive Officer and as may otherwise be assigned to you by the Board from time to time (including, without limitation, responsibilities, duties and authority
consistent with your position on behalf of affiliates of the Company). You shall devote substantially all of your business time and best efforts, business judgment, skill and knowledge exclusively to the advancement of the Company (which shall
include service to its affiliates). You shall not engage in any outside business activities (including serving as an employee or consultant, or on a board of directors (or committee), of any other entity) without the prior written consent of the
Board (which the Board may grant or withhold in its sole and absolute discretion); provided that you shall be permitted to (i) manage your personal, financial and legal affairs; and (ii) participate in trade associations and charitable and
community affairs for no compensation, in each case, subject to compliance with this Agreement and provided that such activities do not interfere with your performance of your duties and responsibilities hereunder. You agree to observe and comply
with the rules and policies of the Company as adopted by the Company from time to time, in each case as amended from time to time (each, a “Company Policy”).
c. Location. You shall perform your
duties hereunder at the offices of the Company located in [***], but from time to time you may be required to travel to other locations in the proper conduct of your responsibilities under this Agreement. You acknowledge that you generally are
expected to work regular business hours on Monday through Friday regardless of your geographic location, and for such additional hours as may be required from time to time, subject to any necessary or appropriate business travel to other locations in
the proper conduct of your responsibilities under this Agreement.
|
3. |
Compensation and Related Matters. During the Term: |
a. Annual Base Salary: You shall
receive a base salary at a rate of 4,894.08 euros per month (that would amount to an annual base salary of 58,729 euros), which shall be paid in accordance with the customary payroll practices of the Company. Your annual base salary shall also be
subject to annual review and potential adjustment from time to time as determined by the Board. Your annual base salary, as it may be adjusted from time to time, is referred to herein as “Annual Base Salary”.
b. Annual Bonus: You will be eligible
to participate in an annual cash incentive program established by the Board, pursuant to which you shall be eligible to earn an annual bonus (“Annual Bonus”) based upon Company and/or individual performance for each fiscal year ending during
the Term, with a maximum annual bonus opportunity of 30.1325% of the Annual Base Salary pro-rated based on portion of the year that you are employed by the Company for any partial year of employment. The terms and conditions of the annual cash
incentive program for each fiscal year will be determined by the Board in its discretion. Any Annual Bonus earned will be paid at the same time annual bonuses are paid to other executives of the Company generally and, in all cases, will be subject to
your continuous, active employment through the date of payment.
c. Equity or Long Term Incentive Cash
Compensation. You will be eligible to participate in stock option plans and other equity compensation and long term incentive cash compensation to be implemented by the Company, with the same conditions applied to other executives of the
Company.
d. Benefits. You shall be eligible to
participate in employee benefit plans, programs and arrangements as the Company may generally from time to time offer to provide to its executives, consistent with the terms thereof and as such plans, programs and arrangements may be amended from
time to time. Notwithstanding the foregoing, nothing herein is intended, or shall be construed, to require the Company to institute or continue any, or any particular, plan or benefit. During the Term, you shall be entitled to paid vacation in
accordance with the Company Policies. Any vacation shall be taken at the reasonable and mutual convenience of the Company and you.
e. Business Expenses. During the
Term, the Company shall reimburse you for all reasonable travel and other business expenses incurred by you in the performance of your duties to the Company in accordance with the applicable Company Policy.
4. Termination of Employment.
Subject to compliance with Sections 4 through 6, your employment hereunder may be terminated by the Company or you, as applicable, at any time without any breach of this Agreement for any or no reason; provided that, any termination of your
employment by you (other than termination due to your death) shall be communicated by a written notice (a “Notice of Termination”) to the Company and will be delivered no less than sixty (60) days before the Date of Termination (provided that,
in the event of your resignation, the Company may accelerate the Date of Termination in its discretion and such acceleration will in no event be deemed a termination by the Company without Cause).
|
5. |
Company Obligations Upon Termination. |
a. Accrued Benefits. Upon
termination of your employment for any reason (including any termination for Cause), you (or your estate) shall be entitled to receive the sum of: (i) the portion of your Annual Base Salary earned through the Date of Termination, but not yet paid to
you; (ii) any accrued but unpaid paid vacation owed to you pursuant to Section 3(d) above, if applicable; (iii) any expenses owed to you pursuant to Section 3(e) above; and (iv) any vested amount earned and arising from your participation in, or
benefits accrued under any employee benefit plans, programs or arrangements, which amounts shall be payable in accordance with the terms and conditions of such employee benefit plans, programs or arrangements (collectively, the “Accrued Benefits”).
Except for the Accrued Benefits or as otherwise expressly required by law or herein, all of your rights to salary, severance, benefits, bonuses and other compensatory amounts hereunder (if any) shall cease upon the Date of Termination and, in no
event shall you be eligible to participate in any severance plan or program of the Company, except as set forth in Section 5(b) below.
b. Severance. If your employment
terminates due to the Company’s termination without Cause (other than due to death or Disability), then, subject to your delivery to the Company of an executed waiver and release of claims in a form approved by the Company (the “Release”) that
becomes effective and irrevocable in accordance with Section 8(c) below, and your continued compliance with Sections 6 and 7 below, you shall receive, in addition to payments and benefits set forth in Section 5(a) above, an amount in cash equal to
100% of the Annual Base Salary payable, less applicable withholdings and deductions, within thirty (30) days after the Release becomes effective and irrevocable or as otherwise provided in Section 8(c) below.
c. Certain Reductions. The Company
shall reduce your severance benefits under this Agreement, in whole or in part, by any other severance benefits, pay in lieu of notice, or other similar benefits payable to you by the Company in connection with your termination, including but not
limited to, payments or benefits pursuant to any applicable legal requirement, including, without limitation, the Worker Adjustment and Retraining Notification Act or any similar state or local law or regulation. The benefits provided under this
Agreement are intended to satisfy, to the greatest extent possible, any and all statutory or other legal obligations that may arise out of your termination of employment. Such reductions shall be applied on a retroactive basis, with severance
benefits previously paid being recharacterized as payments pursuant to the Company’s statutory or other legal obligation.
|
6. |
Your Obligations Upon Termination. |
a. Deemed Resignation. Unless
otherwise determined by the Board, upon termination of your employment for any reason, you shall be deemed to have resigned, effective as of the Date of Termination, from all offices and directorships, if any, then held with the Company or any of its
affiliates.
b. Cooperation. Following the Date
of Termination, you shall reasonably cooperate with and assist the Company and its counsel at any time and in any manner reasonably requested by the Company or its counsel (with due regard for your other commitments) in connection with any litigation
or other legal process affecting the Company or its affiliates of which you have knowledge as a result of your employment with the Company (other than any litigation with respect to this Agreement). If the Company requires your cooperation and
assistance, the Company will reimburse you for any reasonable out-of-pocket expenses incurred directly in relation to such cooperation and assistance.
c. Return of Company Property. You
hereby acknowledge and agree that all Company Property (as defined below) and equipment furnished to, or prepared by, you in the course of, or incident to, your employment, belongs to the Company and shall be promptly returned to the Company upon
termination of your employment (and will not be kept in your possession or delivered to anyone else). For purposes of this Agreement, “Company Property” includes, without limitation, all books, manuals, records, reports, notes, contracts,
lists, blueprints, and other documents, or materials, or copies thereof (including computer files), keys, building card keys, company credit cards, telephone calling cards, computer hardware and software, laptop computers, docking stations, cellular
and portable telephone equipment, personal digital assistant (PDA) devices and all other proprietary information relating to the business of the Company or its affiliates. Following termination, you shall not retain any written or other tangible
material containing any confidential or proprietary information of the Company or its affiliates.
|
7. |
Restrictive Covenants. |
a. Confidentiality Agreement. You
agree to fully comply with the covenants set forth in this Section 7 and acknowledge and agree that such covenants are reasonable and necessary to protect the Company’s legitimate business interests, including its proprietary information and
goodwill. Further, as a condition to the effectiveness of this Agreement, you will execute and deliver to the Company contemporaneously herewith that certain Confidentiality and Proprietary Rights Agreement attached hereto as Exhibit B (the “Confidentiality
Agreement”). You agree to abide by the terms of the Confidentiality Agreement, which are hereby incorporated by reference into this Agreement. You acknowledge that the provisions of the Confidentiality Agreement will survive the termination of
your employment and the termination of the Term for the periods set forth in the Confidentiality Agreement.
b. Non-Solicitation of Company Personnel.
During the term of your employment with the Company and for a period of one year immediately following the termination of such employment for any reason (the “Restricted Period”), you will not, directly or indirectly, for your own
benefit or for the benefit of any other individual or entity: (i) solicit or attempt to solicit for employment or hire any Company Personnel in any capacity; or (ii) entice or induce
any Company Personnel to leave his or her or their employment or engagement with the Company. Notwithstanding the foregoing, a general solicitation or advertisement for job opportunities that you may publish without targeting any Company Personnel
shall not be considered a violation of Section 7(b).
c. Non-Disparagement. You agree that
you shall not, during or after the Term, disparage, criticize, or otherwise make derogatory statements regarding the Company or any of its respective products or practices, or any of its directors, officers, advisors, operating partners, employees,
agents, representatives, or equity holders, either orally or in writing, at any time; provided that you may confer in confidence with your legal representatives and make truthful statements as required by law and nothing in this Section 7
restricts or prohibits you from initiating communications directly with, responding to any inquiries from, providing testimony before, reporting possible violations of law or regulation to, filing a claim with or assisting with an investigation by a
self-regulatory authority or a government agency or entity, including but not limited to the U.S. Securities and Exchange Commission and the federal Occupational Safety and Health Administration, and you do not need the Company’s prior authorization
to engage in such conduct.
d. Tolling Period. Without limiting
the Company’s ability to seek other remedies available in law or equity, if you violate any of the provisions of Section 7(b), the Restricted Period (as applicable for such provision) shall be extended by one day for each day that you are in
violation of such provisions, up to a maximum extension equal to the length of the Restricted Period, so as to give the Company the full benefit of the bargained-for length of forbearance.
e. Advance Notice. Prior to
accepting other employment or any other service relationship during the Restricted Period, you shall provide a copy of this Section 7 to any recruiter or other person or entity who assists you in obtaining other employment or any other service
relationship and to any employer or other person or entity with which you discuss potential employment or any other service relationship. As soon as reasonably practicable following acceptance of any other employment or service relationship following
the Date of Termination (and in any event at least ten (10) business days prior to commencement of such relationship), you shall provide written notice of such relationship to the Company.
f. Interpretation. In the event the
terms of this Section 7 shall be determined by any court of competent jurisdiction to be unenforceable by reason of its extending for too great a period of time or over too great a geographical area or by reason of its being too extensive in any
other respect, it will be interpreted to extend only over the maximum period of time for which it may be enforceable, over the maximum geographical area as to which it may be enforceable, or to the maximum extent in all other respects as to which it
may be enforceable, all as determined by such court in such action.
g. Acknowledgements; Definitions.
You acknowledge and agree that the covenants contained in this Section 7 are necessary to protect the Company’s legitimate interests, including, without limitation, trade secrets, confidential and proprietary information and goodwill, and are no
greater than required to protect such interests, (ii) are not unduly harsh or oppressive and do not impose undue hardship on you, and (iii) are reasonable, including, without limitation, in duration and geographic scope, and such geographic scope
reflects the territory in which you currently have (and will in the future have) contact with Company Business Relations and other material business relations of the Company. You
recognize and acknowledge that a breach of the covenants contained in Section 7 will cause irreparable damage to the Company and its goodwill, the exact amount of which will be difficult or impossible to ascertain, and that the remedies at law for
any such breach will be inadequate. Accordingly, you agree that in the event of a breach of any of the covenants contained in Section 7, in addition to any other remedy which may be available at law or in equity, the Company will be entitled to
specific performance and injunctive relief (without requirement to post a bond or other security). As used in this Section 7 and all related definitions, the term “Company” shall include H2B2 and its parent(s) and direct or indirect subsidiaries, and
other affiliated or related companies.
h. Survival. Notwithstanding anything
to the contrary in this Agreement, the provisions of Sections 6 and 7 of this Agreement will survive the termination of your employment and the termination of the Term.
a. General. The intent of the
parties is that the payments and benefits under this Agreement comply with or be exempt from Section 409A of the Code and the regulations and guidance promulgated thereunder (“Section 409A”) and, accordingly, to the maximum extent permitted,
this Agreement shall be interpreted to be in compliance therewith. Except as otherwise permitted under Section 409A, no payment hereunder shall be accelerated or deferred unless such acceleration or deferral would not result in additional tax or
interest pursuant to Section 409A. If the Company determines that any provision of this Agreement would cause you to incur any additional tax or interest under Section 409A, the Company may (but is not obligated to) take commercially reasonable
efforts to reform such provision to try to comply with or be exempt from Section 409A through good faith modifications to the minimum extent reasonably appropriate to conform with Section 409A, provided that any such modifications shall not
increase the cost or liability to the Company.
b. Separation from Service; Expense
Reimbursement; Installments. Notwithstanding anything in this Agreement to the contrary, any compensation or benefits payable under this Agreement that is considered nonqualified deferred compensation under Section 409A and is designated under
this Agreement as payable upon your termination of employment shall be payable only upon your “separation from service” with the Company within the meaning of Section 409A (a “Separation from Service”). To the extent that any reimbursements
under this Agreement are subject to Section 409A, any such reimbursements payable to you shall be paid to you no later than December 31st of the year following the year
in which the expense was incurred; provided, that you submit your reimbursement request promptly following the date the expense is incurred, the amount of expenses reimbursed in one year shall not affect the amount eligible for reimbursement
in any subsequent year, other than medical expenses referred to in Section 105(b) of the Code, and your right to reimbursement under this Agreement will not be subject to liquidation or exchange for another benefit. Your right to receive any
installment payments under this Agreement, including without limitation any continuation salary payments that are payable on Company payroll dates, shall be treated as a right to receive a series of separate payments and, accordingly, each such
installment payment shall at all times be considered a separate and distinct payment as permitted under Section 409A.
c. Release. Notwithstanding anything
to the contrary in this Agreement, to the extent that any payments due under this Agreement as a result of your termination of employment are subject to your execution and delivery of a Release, (i) the Company shall deliver the Release to you within
five (5) business days following your Date of Termination, and the Company’s failure to deliver a Release prior to the expiration of such five (5) business day period shall constitute a waiver of any requirement to execute a Release, (ii) if you fail
to execute the Release on or prior to the Release Expiration Date (as defined below) or timely revokes your acceptance of the Release thereafter, you shall not be entitled to any payments or benefits otherwise conditioned on the Release, and (iii) in
any case where your Date of Termination and the eighth (8th) day following the Release Expiration Date fall in two separate taxable years, any payments required to be made to you that are conditioned on the Release and are treated as nonqualified
deferred compensation for purposes of Section 409A shall be made in the later taxable year. For purposes hereof, “Release Expiration Date” shall mean the date that is twenty-one (21) days following the date upon which the Company timely
delivers the Release to you, or, in the event that your termination of employment is “in connection with an exit incentive or other employment termination program” (as such phrase is defined in the Age Discrimination in Employment Act of 1967), the
date that is forty-five (45) days following such delivery date. To the extent that any payments of nonqualified deferred compensation (within the meaning of Section 409A) due under this Agreement as a result of your termination of employment are
delayed pursuant to this Section 8(c)(iii), such amounts shall be paid in a lump sum on the first payroll date following the date that you execute and do not revoke the Release (and the applicable revocation period has expired) or, in the case of any
payments subject to Section 8(c)(iii), on the first payroll period to occur in the subsequent taxable year, if later.
9. Representations. You
represent and warrant that (a) your acceptance of employment with the Company and your performance of your duties hereunder will not violate any agreement between you and any other person, firm, organization, or other entity; (b) you are not bound by
the terms of any agreement with any previous employer, service recipient or other person or entity to refrain from competing, directly or indirectly, with the business of such previous employer, service recipient, or other person or entity (or from
taking other actions) that would be violated by you entering into this Agreement and/or providing services to the Company pursuant to the terms of this Agreement; and (c) your
performance of your duties under this Agreement will not require you to, and you shall not, rely on in the performance of your duties or disclose to the Company or any other person or entity or induce the Company in any way to use or rely on any
trade secret or other confidential or proprietary information or material belonging to any previous employer or service recipient. You further represent and warrant that (i) subject to any limitations due to confidentiality or other contractual
obligations between you and any prior employer or service provider, you have provided accurate and complete information regarding the nature of your ongoing or prior employment relationships and your material activities and involvement therewith
(including, without limitation, all facts and circumstances that could affect your ability to provide services to the Company and its affiliates), and (ii) you are not restricted from accepting employment with the Company or fulfilling the position
and duties thereof. You covenant and agree that, during your engagement with the Company, you will honor fully all legal or contractual obligations you have to third parties that may restrict you from soliciting or interfering with customers,
employees or the like or from using or disclosing trade secrets or other proprietary or confidential information. You acknowledge and agree that if (A) the Company determines in good faith that any representation, warranty in this Section 9 is false
or misleading, or (B) you violate the covenant in this Section 9, such determination or violation shall constitute a material breach of this Agreement by you.
10. Indemnification. With
respect to any acts or failures to act during the Term in your capacity as an officer of the Company, you shall be entitled to indemnification (including reimbursement of reasonable attorney’s fees and costs) and liability insurance coverage provided
at the Company’s cost, in each case, on substantially the same basis as other executive officers of the Company; provided, however, that, for the avoidance of doubt, such indemnification will not be provided with respect to (a) any acts or failures
to act that constitute willful misconduct or gross negligence or (b) any dispute arising under or relating to this Agreement.
a. Governing Law; Choice of Venue.
This Agreement shall be governed, construed, interpreted and enforced in accordance with its express terms, and otherwise in accordance with the substantive laws of the State of California without reference to the principles of conflicts of law of
the State of California or any other jurisdiction that would result in application of the laws of a jurisdiction other than the State of California, and where applicable, the laws of the United States. Any disputes arising out of or relating to this
Agreement or the parties’ employment relationship shall be heard exclusively in the Superior Court for the State of California, County of Sacramento or the United States District Court for the Eastern District of California, and the state or federal
courts with appellate jurisdiction over those courts. Each of the parties agrees to the personal jurisdiction of those courts and waives any claim of lack of personal jurisdiction, forum non conveniens or other challenge to the jurisdiction of those
courts with respect to such disputes.
b. Notices. Any notice, request,
claim, demand, document and other communication hereunder to any party shall be effective upon receipt (or refusal of receipt) and shall be in writing and delivered personally or sent by certified or registered mail, postage prepaid, or by electronic
mail as follows: (i) if to the Company, to the email of all the members of the Board (ii) if to you, to the last physical or electronic mail address that the Company has in its personnel records for you, or (iii) at any other physical or electronic
address as any party hereto shall have specified by notice in writing to the other party hereto.
c. Counterparts. This Agreement may
be executed in several counterparts, each of which shall be deemed to be an original, but all of which together will constitute one and the same Agreement. Signatures delivered by facsimile or PDF shall be deemed effective for all purposes.
d. Amendments; Waivers. This
Agreement may not be modified, amended, or terminated except by an instrument in writing, signed by you and a duly authorized representative of Company and approved by the Board. By an instrument in writing similarly executed and approved, you or a
duly authorized representative of the Company may waive compliance by the other party with any specifically identified provision of this Agreement that such other party was or is obligated to comply with or perform; provided, however,
that such waiver shall not operate as a waiver of, or estoppel with respect to, any other or subsequent failure. No failure to exercise and no delay in exercising any right, remedy, or power hereunder preclude any other or further exercise of any
other right, remedy, or power provided herein or by law or in equity.
e. No Inconsistent Actions. The
parties hereto shall not voluntarily undertake or fail to undertake any action or course of action inconsistent with the provisions or essential intent of this Agreement. Furthermore, it is the intent of the parties hereto to act in a fair and
reasonable manner with respect to the interpretation and application of the provisions of this Agreement.
f. Validity; Enforcement. The
invalidity or unenforceability of any provision or provisions of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect. Subject to Section 7(f), if any
provision of this Agreement is held to be illegal, invalid or unenforceable under present or future laws effective during the Term, such provision shall be fully severable; this Agreement shall be construed and enforced as if such illegal, invalid or
unenforceable provision had never comprised a portion of this Agreement; and the remaining provisions of this Agreement shall remain in full force and effect and shall not be affected by the illegal, invalid or unenforceable provision or by its
severance from this Agreement. Furthermore, in lieu of such illegal, invalid or unenforceable provision there shall be added automatically as part of this Agreement a provision as similar in terms to such illegal, invalid or unenforceable provision
as may be possible and be legal, valid and enforceable.
g. Withholding. The Company shall be
entitled to withhold from any amounts payable under this Agreement any federal, state, local or foreign withholding or other taxes or charges that the Company is required to withhold. The Company shall be entitled to rely on an opinion of counsel if
any questions as to the amount or requirement of withholding shall arise.
h. Whistleblower Protections and Trade
Secrets. Notwithstanding anything to the contrary contained herein, nothing in this Agreement prohibits you from reporting possible violations of federal law or regulation to any United States governmental agency or entity in accordance with
the provisions of and rules promulgated under Section 21F of the Securities Exchange Act of 1934 or Section 706 of the Sarbanes-Oxley Act of 2002, or any other whistleblower protection provisions of state or federal law or regulation (including the
right to receive an award for information provided to any such government agencies). Furthermore, in accordance with 18 U.S.C. § 1833, notwithstanding anything to the contrary in this Agreement: (i) you shall not be in breach of this Agreement, and
shall not be held criminally or civilly liable under any federal or state trade secret law (A) for the disclosure of a trade secret that is made in confidence to a federal, state, or local government official or to an attorney solely for the purpose
of reporting or investigating a suspected violation of law, or (B) for the disclosure of a trade secret that is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal; and (ii) if you file a
lawsuit for retaliation by the Company for reporting a suspected violation of law, you may disclose the trade secret to your attorney, and may use the trade secret information in the court proceeding, if you file any document containing the trade
secret under seal, and does not disclose the trade secret, except pursuant to court order.
i. Assignment. The Company may
assign its rights and obligations under this Agreement to any of its affiliates or to any successor to all or substantially all of the business or the assets of the Company or any affiliate thereof (by merger or otherwise). This Agreement shall be
binding upon and inure to the benefit of the Company, you and its and your respective successors, assigns, personnel and legal representatives, executors, administrators, heirs, distributees, devisees, and legatees, as applicable. None of your rights
or obligations may be assigned or transferred by you, other than your rights to payments hereunder, which may be transferred only by will or operation of law. Notwithstanding the foregoing, you shall be entitled, to the extent permitted under
applicable law, to select and change a beneficiary or beneficiaries to receive compensation hereunder following your death by giving written notice thereof to the Company.
j. At-Will Status. Except for the
notice requirements set forth in Section 4, the Company and you acknowledge that your employment is and shall continue to be “at-will,” as defined under applicable law. This “at-will” nature of your employment shall remain unchanged during your
tenure as an employee and may not be changed, except in an express writing signed by you and a duly-authorized representative of the Company. If your employment terminates for any lawful reason, you shall not be entitled to any payments, benefits,
damages, award, or compensation other than as provided in this Agreement.
12. Entire Agreement. The terms
of this Agreement, together with the Confidentiality Agreement, is intended by the parties hereto to be the final expression of their agreement with respect to the subject matter hereof and supersede all prior understandings and agreements, whether
written or oral, including without limitation any prior consulting agreement, employment agreement or offer letter between you and the Company; provided that nothing in this Agreement or Confidentiality Agreement shall supersede, modify or
otherwise affect the Stock Option Agreement dated 1 January 2021 and any prior share o benefit agreement, restrictive covenant, invention assignment or confidentiality obligations imposed under any Company Policy or any other agreement between you
and the Company or any of its affiliates. The parties hereto further intend that this Agreement shall constitute the complete and exclusive statement of their terms and that no extrinsic evidence whatsoever may be introduced in any judicial,
administrative, or other legal proceeding to vary the terms of this Agreement.
* * * * *
Anselmo, we are excited at the prospect of you joining the Company and
believe this will be a challenging and exciting opportunity providing you with both professional and personal growth. Kindly indicate your acceptance of this offer by signing below and return it to me.
|
Sincerely yours, |
|
|
|
H2B2 ELECTROLYSIS TECHNOLOGIES INC. |
|
|
|
/s/ Antonio Vázquez Romero |
|
President: Antonio Vázquez Romero |
Signature Page to Letter Agreement
Acknowledged and agreed by as of the first date set forth above:
/s/ Anselmo Andrade |
|
Anselmo Andrade Fernández de Mesa |
|
Signature Page to Letter Agreement
EXHIBIT A
Certain Defined Terms
1. “Business” means (a) means
any business of promotion, development, financing, design, integration, build, operation or maintenance of hydrogen production systems based on water electrolysis, generation, compression, storage, commercialization, refiling stations and all other
uses of green hydrogen, and (b) any other business or part thereof that develops, designs, manufactures, markets, licenses, sells, distributes or provides any product or service that competes with any product or service developed, designed,
manufactured, marketed, licensed, sold, distributed or provided, or planned to be developed, designed, manufactured, marketed, licensed, sold, distributed or provided, by the Company, in each case of subsection (b), at any time during your employment
or engagement with the Company.
|
2. |
“Cause” shall mean any of the following: |
a. your commission of or indictment for any
felony under any state, federal or foreign law or any crime involving moral turpitude or dishonesty;
b. your commission of an act of fraud,
embezzlement, misappropriation of funds, misrepresentation, malfeasance, breach of fiduciary duty or other material act of misconduct, in each case, against the Company or any of its affiliates;
c. your commission of any act or omission
that results in or could reasonably be expected to result in any material damage to the business, property or reputation of the Company or any of its affiliates;
d. your failure to (A) substantially perform
your material job functions hereunder (other than any such failure resulting from your Disability or due to a force majeure) or (B) carry out or comply with a lawful and reasonable directive of the Board;
e. your breach of any Company Policy which
materially harms or could reasonably be expected to result in material harm to the business, property or reputation of the Company or any of its affiliates;
f. your unlawful use (including being under
the influence) or possession of illegal drugs at the premises of the Company or any of its affiliates or otherwise while performing (or holding yourself as performing) services for or on behalf of the Company or any of its affiliates;
g. your prolonged and unexcused absence from
work (other than by reason of Disability or force majeure); and
h. your breach of any material provision of
this Agreement or any other written agreement between you and the Company or any of its affiliates.
The Board shall determine the existence of “Cause” in its good faith
discretion and any such determination by the Board shall be final, binding and conclusive on all parties hereto.
3. “Code” shall mean the
Internal Revenue Code of 1986, as amended, and the regulations and guidance promulgated thereunder.
4. “Company Business Relation”
means, as of any specified date, any individual or entity who, as of such date, (a) is an existing customer, client, supplier, licensor, distributor, vendor or other business relation of the Company of whom you learned, with whom you had business
contact or about whom you obtained proprietary information at any time during your employment or engagement with the Company, or (b) is a prospective customer, client, supplier, licensor, distributor, vendor or other business relation, of the Company
of whom you learned, with whom you had business contact, or about whom you obtained proprietary information as part of a solicitation of business on behalf of the Company at any time during the one year period prior to such date (or, if earlier, the
date of your termination of employment or engagement with the Company).
5. “Company Personnel” means
any individual or entity who is or was at any time during the six-month period prior to your solicitation or other activity prohibited by Section 7(b), employed or engaged (whether as an employee, consultant, independent contractor or in any other
capacity) by the Company.
6. “Date of Termination” means
the date of the termination of your employment with the Company, which, if your employment is terminated as a result of your death, will be the date of your death, and, if your employment is terminated by you, will be the date specified in a Notice
of Termination (or such earlier date as determined by the Company in accordance with Section 4).
7. “Disability” means
permanent ill health or if you become physically or mentally incapacitated such that you are (or are reasonably expected to be) unable for a period of six (6) months to perform your duties as CEO.
8. “Person” means any
individual, partnership, corporation, limited liability company, association, joint stock company, trust, joint venture, unincorporated organization, other business entity, or governmental body.
EXHIBIT B
EMPLOYEE PROPRIETARY INFORMATION AND INVENTIONS ASSIGNMENT AGREEMENT
In consideration and as a condition of my
employment by H2B2 Electrolysis Technologies Inc., a Delaware corporation (together with any of its subsidiaries or parent companies, and any of their successors or assigns collectively, the “Company”), and my receipt of the compensation paid
to me by the Company in the context of that employment and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, effective as of the date of my signature below (the “Effective Date”), I, the
undersigned, agree as follows:
1. Proprietary Information.
During the term of my employment, I may receive and otherwise be exposed, directly or indirectly, to confidential and proprietary information of the Company whether in graphic, written, electronic or oral form, including without limitation
information relating to the Company’s business, strategies, designs, products, services and technologies and any derivatives, improvements and enhancements relating to any of the foregoing, or to the Company’s suppliers, customers or business
partners (collectively “Proprietary Information”). Proprietary Information may be identified at the time of disclosure as confidential or proprietary or information which by its context would reasonably be deemed to be confidential or
proprietary. “Proprietary Information” may also include without limitation (a)(i) unpublished patent disclosures and patent applications and other filings, know-how, trade secrets, works of authorship and other intellectual property, as well as any
information regarding ideas, Inventions (as defined in Section 5), technology, and processes, including without limitation assays, sketches, schematics, techniques, drawings, designs, descriptions, specifications and technical documentation, (ii)
specifications, protocols, models, designs, equipment, engineering, algorithms, software programs, software source documents, formulae, (iii) information concerning or resulting from any research and development or other project, including without
limitation, experimental work, product development plans, regulatory compliance information, and research, development and regulatory strategies, and (iv) business and financial information, including without limitation purchasing, procurement,
manufacturing, customer lists, information relating to investors, employees, business and contractual relationships, business forecasts, sales and merchandising, business and marketing plans, product plans, and business strategies, including without
limitation information the Company provides regarding third parties, such as, but not limited to, suppliers, customers, employees, investors, or vendors; and (b) any other information, to the extent such information contains, reflects or is based
upon any of the foregoing Proprietary Information. The Proprietary Information may also include information of a third party that is disclosed to me by the Company or such third party at the Company’s direction.
2. Obligations of Non-Use and
Nondisclosure. I acknowledge the confidential and secret character of the Proprietary Information, and agree that the Proprietary Information is the sole, exclusive and valuable property of the Company. Accordingly, I agree not to use the
Proprietary Information except in the performance of my authorized duties as an employee of the Company, and not to disclose all or any part of the Proprietary Information in any form to any third party, either during or after the term of my
employment, without the prior written consent of the Company on a case-by-case basis. Upon termination of my employment, I agree to cease using and to return to the Company all whole and partial copies and derivatives of the Proprietary Information,
whether in my possession or under my direct or indirect control, provided that I am entitled to retain my personal copies of (a) my compensation records, (b) materials distributed to stockholders generally, and (c) this Employee Proprietary
Information and Inventions Assignment Agreement (this “Agreement”). I understand that my obligations of nondisclosure with respect to Proprietary Information shall not apply to information that I can establish by competent proof (x) was
actually in the public domain at the time of disclosure or enters the public domain following disclosure other than as a result of a breach of this Agreement, (y) is already in my possession without breach of any obligations of confidentiality at the
time of disclosure by the Company as shown by my files and records immediately prior to the time of disclosure, or (z) is obtained by me from a third party not under confidentiality obligations and without a breach of any obligations of
confidentiality. If I become compelled by law, regulation (including without limitation the rules of any applicable securities exchange), court order, or other governmental authority to disclose the Proprietary Information, I shall, to the extent
possible and permissible under applicable law, first give the Company prompt notice. I agree to cooperate reasonably with the Company in any proceeding to obtain a protective order or other remedy. If such protective order or other remedy is not
obtained, I shall only disclose that portion of such Proprietary Information required to be disclosed, in the opinion of my legal counsel. I shall request that confidential treatment be accorded such Proprietary Information, where available.
Compulsory disclosures made pursuant to this section shall not relieve me of my obligations of confidentiality and non-use with respect to non-compulsory disclosures. I understand that nothing herein is intended to or shall prevent me from
communicating directly with, cooperating with, or providing information to, any federal, state or local government regulator, including, but not limited to, the U.S. Securities and Exchange Commission, the U.S. Commodity Futures Trading Commission,
or the U.S. Department of Justice. I shall promptly notify my supervisor or any officer of the Company if I learn of any possible unauthorized use or disclosure of Proprietary Information and shall cooperate fully with the Company to enforce its
rights in such information.
3. Defend Trade Secrets Act
Notice of Immunity Rights. I acknowledge that the Company has provided me notice of my immunity rights under the Defend Trade Secrets Act, which states: “(1) An individual shall not be held criminally or civilly liable under any Federal or
State trade secret law for the disclosure of a trade secret that (A) is made (i) in confidence to a Federal, State, or local government official, either directly or indirectly, or to an attorney; and (ii) solely for the purpose of reporting or
investigating a suspected violation of law; or (B) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal; and (2) an individual who files a lawsuit for retaliation by an employer for
reporting a suspected violation of law may disclose a trade secret to the attorney of the individual and use the trade secret information in the court proceeding, if the individual (A) files any document containing the trade secret under seal, and
(B) does not disclose a trade secret, except pursuant to court order.”
4. Property of the Company. I
acknowledge and agree that all notes, memoranda, reports, drawings, blueprints, manuals, materials, data, emails and other papers and records of every kind, or other tangible or intangible materials which shall come into my possession in the course
of my employment with the Company, relating to any Proprietary Information, shall be the sole and exclusive property of the Company and I hereby assign any rights or interests I may obtain in any of the foregoing to my employer. I agree to surrender
this property to my employer upon termination of my employment, or at any time upon request by my employer. I further agree that any property situated on my employer’s data systems or on my employer’s premises and owned by my employer, including
without limitation electronic storage media, filing cabinets or other work areas, is subject to inspection by my employer at any time with or without notice.
5.1 Disclosure and Assignment of
Inventions. For purposes of this Agreement, an “Invention” shall mean any idea, invention or work of authorship, including, without limitation, any documentation, formula, design, device, code, method, software, technique, process, discovery,
concept, improvement, enhancement, development, machine or contribution, in each case whether or not patentable or copyrightable and for purposes of this Section 5, “Company” shall mean the Company entity that is my employer as of the
Effective Date or, if I am subsequently employed by any subsidiary or parent of such Company entity, the applicable subsidiary or parent by which I am employed. I will disclose all Inventions promptly in writing to an officer of the Company or to
attorneys of the Company in accordance with the Company’s policies and procedures. I will, and hereby do, assign to the Company, without requirement of further writing, without royalty or any other further consideration, my entire right, title and
interest throughout the world in and to all Inventions created, conceived, made, developed, and/or reduced to practice by me in the course of my employment by the Company and all intellectual property rights therein. I hereby waive, and agree to
waive, any moral rights I may have in any copyrightable work I create or have created on behalf of the Company. I also hereby agree, that for a period of one year after my employment with the Company, I shall disclose to the Company any Inventions
that I create, conceive, make, develop, reduce to practice or work on that relate to the work I performed for the Company. The Company agrees that it will use commercially reasonable measures to keep Inventions disclosed to it pursuant to this
Section 5.1 that do not constitute Inventions to be owned by the Company in confidence and shall not use any Inventions for its own advantage, unless in either case those Inventions are assigned or assignable to the Company pursuant to this Section
5.1 or otherwise.
5.2 Certain Exemptions. The
obligations to assign Inventions set forth in Section 5.1 apply with respect to all Inventions (a) whether or not such Inventions are conceived, made, developed or worked on by me during my regular hours of employment with the Company; (b) whether or
not the Invention was made at the suggestion of the Company; (c) whether or not the Invention was reduced to drawings, written description, documentation, models or other tangible form; and (d) whether or not the Invention is related to the general
line of business engaged in by the Company, but do not apply to Inventions that (x) I develop entirely on my own time or after the date of this Agreement without using the Company’s equipment, supplies, facilities or Proprietary Information; (y) do
not relate to the Company’s business, or actual or demonstrably anticipated research or development of the Company at the time of conception or reduction to practice of the Invention; and (z) do not result from and are not related to any work
performed by me for the Company. I hereby acknowledge and agree that the Company has notified me that, if I reside in the state of California, assignments provided for in Section 5.1 do not apply to any Invention which qualifies fully for exemption
from assignment under the provisions of Section 2870 of the California Labor Code (“Section 2870”), a copy of which is attached as Exhibit A. If applicable, at the time of disclosure of an Invention that I believe qualifies under
Section 2870, I shall provide to the Company, in writing, evidence to substantiate the belief that such Invention qualifies under Section 2870. I further understand that, to the extent this Agreement shall be construed in accordance with the laws of
any state which precludes a requirement in an employee agreement to assign certain classes of inventions made by an employee, Section 5.1 shall be interpreted not to apply to any Invention which a court rules and/or the Company agrees falls within
such classes.
5.3 Records. I will make and
maintain adequate and current written records of all Inventions covered by Section 5.1. These records may be in the form of notes, sketches, drawings, flow charts, electronic data or recordings, notebooks and any other format. These records shall be
and remain the property of the Company at all times and shall be made available to the Company at all times.
5.4 Patents and Other Rights.
I agree to assist the Company in obtaining, maintaining and enforcing patents, invention assignments and copyright assignments, and other proprietary rights in connection with any Invention covered by Section 5.1, and will otherwise assist the
Company as reasonably required by the Company to perfect in the Company the rights, title and other interests in my work product granted to the Company under this Agreement (both in the United States and foreign countries). I further agree that my
obligations under this Section 5.4 shall continue beyond the termination of my employment with the Company, but if I am requested by the Company to render such assistance after the termination of such employment, I shall be entitled to a fair and
reasonable rate of compensation for such assistance, and to reimbursement of any expenses incurred at the request of the Company relating to such assistance. If the Company is unable for any reason, after reasonable effort, to secure my signature on
any document needed in connection with the actions specified above, I hereby irrevocably designate and appoint the Company and its duly authorized officers and agents as my agent and attorney in fact, which appointment is coupled with an interest, to
act for and in my behalf to execute, verify and file any such documents and to do all other lawfully permitted acts to further the purposes of this Section 5.4 with the same legal force and effect as if executed by me.
5.5 Prior Contracts and
Inventions; Information Belonging to Third Parties. I represent and warrant that, except as set forth on Exhibit B, I am not required, and I have not been required during the course of work for the Company or its predecessors, to assign
Inventions under any other contracts that are now or were previously in existence between me and any other person or entity. I further represent that (a) I am not obligated under any consulting, employment or other agreement that would affect the
Company’s rights or my duties under this Agreement, and I shall not enter into any such agreement or obligation during the period of my employment by the Company, (b) there is no action, investigation, or proceeding pending or threatened, or any
basis therefor known to me involving my prior employment or any consultancy or the use of any information or techniques alleged to be proprietary to any former employer, and (c) the performance of my duties as an employee of the Company do not and
will not breach, or constitute a default under any agreement to which I am bound, including any agreement limiting the use or disclosure of proprietary information acquired in confidence prior to engagement by the Company or if applicable, any
agreement to refrain from competing, directly or indirectly, with the business of such previous employer or any other party or to refrain from soliciting employees, customers or suppliers of such previous employer or other party. I will not, in
connection with my employment by the Company, use or disclose to the Company any confidential, trade secret or other proprietary information of any previous employer or other person to which I am not lawfully entitled. As a matter of record, I attach
as Exhibit B a brief description of all Inventions made or conceived by me prior to my employment with the Company which I desire to be excluded from this Agreement (“Background Technology”). If full disclosure of any Background
Technology would breach or constitute a default under any agreement to which I am bound, including any agreement limiting the use or disclosure of proprietary information acquired in confidence prior to engagement by the Company, I understand that I
am to describe such Background Technology in Exhibit B at the most specific level possible without violating any such prior agreement. Without limiting my obligations or representations under this Section 5.5, if I use (i) any Background
Technology or (ii) any other Inventions in which I have an interest and that are excluded from the assignment of Inventions set forth in Section 5.1 (collectively (i) and (ii), the “Excluded Technology”) in the course of my employment or
incorporate any Excluded Technology in any product, service or other offering of the Company, I hereby grant the Company a non-exclusive, royalty-free, perpetual and irrevocable, worldwide right to use and sublicense the use of Excluded Technology
for the purpose of developing, marketing, selling and supporting Company technology, products and services, either directly or through multiple tiers of distribution, but not for the purpose of marketing Excluded Technology separately from Company
products or services.
5.6 Works Made for Hire. I
acknowledge that all original works of authorship which are made by me (solely or jointly with others) within the scope of my employment with the Company and which are eligible for copyright protection are “works made for hire” as that term is
defined in the United States Copyright Act (17 U.S.C., Section 101).
6. Notification to Other Parties.
In the event of termination of my employment with the Company for any reason, I hereby consent to notification by the Company to my new employer or other party for whom I work about my rights and obligations under this Agreement.
7. Employment at Will. I
understand and agree that my employment with the Company is at will. Accordingly, my employment can be terminated at any time, without cause or notice, at my option or the Company’s option. The at-will nature of my employment also means that I can be
transferred or demoted, and my job title, compensation, benefits and other terms and conditions of employment can be reduced, at any time with or without cause. I acknowledge that such changes shall not affect the enforceability of the terms of this
Agreement. This at-will status of my employment relationship with the Company shall remain in full force and effect throughout my employment with the Company. The at-will status of my employment can be modified only in a written agreement that
expressly alters such status and which is signed by both an authorized officer of the Company and me.
8.1 The parties’ rights and
obligations under this Agreement will bind and inure to the benefit of their respective successors, heirs, executors, and administrators and permitted assigns. I will not assign this Agreement or my obligations hereunder without the prior written
consent of the Company, which consent may be withheld in the Company’s sole discretion, and any such purported assignment without consent shall be null and void from the beginning. I agree that the Company may freely assign or otherwise transfer this
Agreement to any affiliate or successor in interest (whether by way of merger, sale, acquisition or corporate re-organization or any substantially similar process) of the Company.
8.2 This Agreement constitutes the
parties’ final, exclusive and complete understanding and agreement with respect to the subject matter hereof, and supersedes all prior and contemporaneous understandings and agreements, whether oral or written, relating to its subject matter.
8.3 Any subsequent change or changes
in my duties, obligations, rights or compensation will not affect the validity or scope of this Agreement. This Agreement may not be waived, modified or amended unless mutually agreed upon in writing by both parties. No delay or omission by the
Company in exercising any right under this Agreement will operate as a waiver of that or any other right. A waiver or consent given by the Company on any one occasion is effective only in that instance and will not be construed as a bar to or waiver
of any right on any other occasion.
8.4 If any provision of this
Agreement is found by a proper authority to be unenforceable or invalid such unenforceability or invalidity shall not render this Agreement unenforceable or invalid as a whole and in such event, such provision shall be changed and interpreted so as
to best accomplish the objectives of such unenforceable or invalid provision within the limits of applicable law or applicable court decisions and the remainder of the terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated.
8.5 I acknowledge that the Company
will suffer substantial damages not readily ascertainable or compensable in terms of money in the event of the breach of any of my obligations under this Agreement. I therefore agree that the Company shall be entitled (without limitation of any other
rights or remedies otherwise available to the Company) to obtain an injunction from any court of competent jurisdiction prohibiting the continuance or recurrence of any breach of this Agreement.
8.6 The rights and obligations of the
parties under this Agreement shall be governed in all respects by the laws of the State of California exclusively, without reference to any conflict of laws rule that would result in the application of the laws of any other jurisdiction. Any disputes
arising out of or relating to this Agreement shall be heard exclusively in the Superior Court for the State of California, County of Sacramento or the United States District Court for the Eastern District of California, and the state or federal
courts with appellate jurisdiction over those courts. Each of the parties agrees to the personal jurisdiction of those courts and waives any claim of lack of personal jurisdiction, forum non conveniens or other challenge to the jurisdiction of those
courts with respect to such disputes.
8.7 Any notices required or permitted
hereunder shall be given to the appropriate party at the address specified on the signature page to this Agreement or at such other address as the party shall specify in writing. Such notice shall be deemed given upon personal delivery, or sent by
certified or registered mail, postage prepaid, three days after the date of mailing.
8.8 Except as otherwise provided
herein, the provisions of this Agreement shall survive the termination of my employment with the Company for any reason.
8.9 This Agreement may be executed in
any number of counterparts, each of which shall be deemed to be an original and all of which together shall be deemed to be one and the same instrument. A facsimile, PDF (or any electronic signature complying with the U.S. federal ESIGN Act of 2000,
e.g., www.docusign.com) or any other type of copy of an executed version of this Agreement signed by a party is binding upon the signing party to the same extent as the original of the signed agreement.
I ACKNOWLEDGE THAT I HAVE THE RIGHT TO CONSULT WITH INDEPENDENT
LEGAL COUNSEL PRIOR TO SIGNING THIS AGREEMENT AND HAVE HAD A REASONABLE OPPORTUNITY TO DO SO, AND THAT I EITHER HAVE CONSULTED, OR ON MY OWN VOLITION CHOSEN NOT TO CONSULT, WITH SUCH COUNSEL. I FURTHER ACKNOWLEDGE THAT I HAVE READ THIS AGREEMENT
CAREFULLY AND I UNDERSTAND AND ACCEPT THE OBLIGATIONS WHICH IT IMPOSES UPON ME WITHOUT RESERVATION. NO PROMISES OR REPRESENTATIONS HAVE BEEN MADE TO ME TO INDUCE ME TO SIGN THIS AGREEMENT. I SIGN THIS AGREEMENT VOLUNTARILY AND FREELY, IN DUPLICATE,
WITH THE UNDERSTANDING THAT THE COMPANY WILL RETAIN ONE COUNTERPART AND THE OTHER COUNTERPART WILL BE RETAINED BY ME.
(Signature Page Follows)
IN WITNESS WHEREOF, I have executed this document as of 29 December
2022
|
/s/ Anselmo Andrade Fernández de Mesa |
|
Employee: Anselmo Andrade Fernández de Mesa |
AGREED AND ACKNOWLEDGED:
|
H2B2 ELECTROLYSIS TECHNOLOGIES INC. |
|
|
|
/s/ Antonio Vázquez Romero |
|
President: Antonio Vázquez Romero |
EXHIBIT C
CALIFORNIA LABOR CODE
California Labor Code § 2870. Application
of provision providing that employee shall assign or offer to assign rights in invention to employer.
(a) |
Any provision in an employment agreement which provides that an employee shall assign, or offer to assign, any of his or her
rights in an invention to his or her employer shall not apply to an invention that the employee developed entirely on his or her own time without using the employer’s equipment, supplies, facilities, or trade secret information except for those
inventions that either: |
|
(1) |
Relate at the time of conception or reduction to practice of the invention to the employer’s business, or actual or
demonstrably anticipated research or development of the employer; or |
|
(2) |
Result from any work performed by the employee for the employer. |
(b) |
To the extent a provision in an employment agreement purports to require an employee to assign an invention otherwise
excluded from being required to be assigned under subdivision (a), the provision is against the public policy of this state and is unenforceable. |
EXHIBIT D
BACKGROUND TECHNOLOGY
List here prior contracts to assign Inventions that are now in
existence between any other person or entity and you → no contracts
List here previous Inventions which you desire to have specifically
excluded from the operation of this Agreement. Continue on reverse side if necessary → no previous inventions
Exhibit 10.14
IN ACCORDANCE WITH ITEM 601(A)(6) OF REGULATION S-K, CERTAIN INFORMATION HAS BEEN OMITTED
FROM THIS EXHIBIT BECAUSE IT CONTAINS PERSONALLY IDENTIFIABLE INFORMATION.
[***] INDICATES THAT INFORMATION HAS BEEN REDACTED.
SERVICE AGREEMENT AS SOLE DIRECTOR
In Madrid, on 9 May 2023
THE PARTIES
(1)
|
H2B2 Corp, S.L., a limited liability company incorporated, with
registered office at [***], and with tax identification number [***] (“H2B2” or the “Company”), represented by Mr. Florencio Salvador Ferrera Saldaña, as
sole director of the Company.
|
(2) |
Mr. Anselmo Andrade Fernández de Mesa, of Spanish nationality, with
address at [***], with valid DNI number [***], acting in his own name and on his own behalf, (hereinafter, “Mr. Andrade” or the “Sole Director”).
|
The Company and the Sole Director shall together be referred to as the “Parties” and each individually as a “Party”.
WHEREAS
(I) |
On 30 December 2022, Mr. Andrade was appointed Chief Executive Officer of H2B2 Electrolysis Technologies Inc., the sole shareholder of the Company.
|
(II) |
As of today, immediately following the signing of this agreement (the “Agreement”), Mr. Andrade will be appointed sole director of the Company and of all the subsidiaries of the group in Spain.
|
(III) |
Consistent with his appointment as sole director of the Company, the employment contract entered into between the Parties on 3 June 2016, and subsequently novated, has been terminated for all purposes without Mr. Andrade having any right
to claim any amount, compensation or severance of any kind for such termination or for the employment relationship between the Parties up to that date.
|
(IV) |
Likewise, as a consequence of the appointment of Mr. Andrade as sole director of the Company, the Parties have agreed to formalize this Agreement to govern their relationship, regulating the rights and obligations between both Parties, the
functions assigned to the Sole Director and the remuneration to which he shall be entitled for the performance thereof.
|
(V) |
This Agreement is entered into pursuant to the resolution adopted by the General Shareholders’ Meeting today in compliance with the provisions of article 220 of Royal Legislative Decree 1/2010, of 2 July, approving the revised text of the
Spanish Companies Act (“LSC”).
|
(VI) |
For clarification purposes, at the time of signing this Agreement, Mr. Florencio Salvador Ferrera Saldaña is the sole director of the Company and is therefore duly authorized to sign this Agreement on behalf of the Company, although Mr.
Andrade is expected to be appointed as the new Sole Director of the Company today.
|
(VII) |
In accordance with the foregoing, the Parties have agreed to enter into this Agreement which shall be governed by the following
|
CLAUSES
The purpose of this Agreement is to establish the terms and conditions under which Mr. Andrade will provide the Company with the services consisting of the execution of the duties and functions
corresponding to his position as Sole Director, assuming the highest executive responsibilities of the Company.
The relationship between the Company and the Sole Director shall be considered, for all purposes, to be of a commercial nature. Therefore, in the exercise of his duties, functions and powers, Mr.
Andrade shall observe the provisions set forth in the Company’s bylaws, which the Sole Director declares to be familiar with, and in the applicable legislation, observing at all times the fiduciary duties of directors as set forth in articles 225 et
seq. of the LSC.
The functions and tasks to be performed by the Sole Director shall be carried out under the direction, control and supervision of the General Shareholders’ Meeting.
Mr. Andrade undertakes to perform his duties, functions and powers with the utmost diligence and effort. In the exercise of such duties, functions and powers attributed to Mr. Andrade, he will use
his best efforts to defend and protect the interests of the Company at all times, performing such duties, functions and powers with dedication, responsibility and independence. Mr. Andrade shall also comply with the rules of conduct, policies and
procedures of the Company and its group entities.
Mr. Andrade may also hold the position of sole director in other Spanish subsidiaries of the Group, but the position in these companies will be free of charge.
2. |
EFFECTIVE DATE AND DURATION
|
This Agreement shall enter into force as of today, simultaneously with the appointment of Mr. Andrade as Sole Director by the relevant decisions of the sole shareholder of the Company and shall
remain in force until Mr. Andrade ceases to hold the position as Sole Director of the Company.
Pursuant to the provisions of the Company’s bylaws, the position of director is remunerated solely and exclusively for the performance of the duties and powers entrusted by virtue of this Agreement
and for the remuneration items specified therein.
The Sole Director shall receive a fixed gross annual remuneration amounting to EUR 58,729 (hereinafter, “Fixed Remuneration”), which shall be paid in twelve
(12) monthly instalments.
The Fixed Remuneration is understood to refer to the full year, whereby the Sole Director shall receive the amounts accrued in proportion to the time of service rendered in the corresponding year and
in any case from the entry into force of this Agreement.
Notwithstanding the foregoing, as an exceptional and non-recurring remuneration, the Sole Director shall receive an amount of EUR 19,576.33 gross, which shall be paid, at the Company’s choice, either
as a lump sum or pro rata during the first four months after the entry into force of this Agreement at a rate of EUR 4,894.08 gross per month.
3.2 |
Variable remuneration
|
The Sole Director shall receive a variable remuneration of up to 30.1325% of the Fixed Remuneration based on the fulfilment of business and individual objectives determined by the shareholders’
meeting from time to time. The variable remuneration, where applicable, will be paid on the dates on which it is paid to the Company’s executives.
3.3 |
Other remuneration/benefits
|
The Sole Director shall be included as an insured in the accident, life and/or health insurance offered by the Company to its management team.
4. |
TAX AND LEGAL DEDUCTIONS
|
The Sole Director shall assume and be responsible for the payment of the Personal Income Tax arising from the remuneration received for the provision of its professional services.
Social Security contributions shall be borne and distributed between the Parties in accordance with the applicable laws and regulations.
The Sole Director shall be entitled to reimbursement of all reasonable expenses incurred in the performance of his duties provided that he provides proof of payment and receipts in accordance with
the Company’s practices and procedures. Such reimbursements shall in no case be deemed to be salary.
6. |
PLACE AND ORGANIZATION OF THE SERVICES
|
The Sole Director shall provide his services in the best interests of the Company and undertakes to devote to the provision of services the time necessary to meet the needs of the Company and the
responsibilities arising from his position.
Mr. Andrade will provide his services mainly in Madrid. However, the Sole Director shall be available to travel to the extent necessary in connection with the duties he performs in the Company.
In any event, the Sole Director shall organize his work in the manner he deems most convenient, subject only to the guidelines set by the General Meeting of the Company.
7. |
TERMINATION OF THE AGREEMENT
|
This Agreement shall terminate when, for any of the reasons established in the LSC, the Sole Director ceases to hold such position. In particular, but without limitation, the termination as Sole
Director may take place for any of the following reasons:
|
(a) |
The resignation of the Sole Director, subject in all cases to 30 days’ written notice prior to the effective date of the intended termination. In the event of non-compliance with this notice, the Company shall be entitled to claim from the
Sole Director an amount equivalent to the Fixed Remuneration corresponding to the unfulfilled notice period;
|
|
(b) |
Termination by mutual agreement of the Parties;
|
|
(c) |
The resolution of the General Meeting of the Company adopted by the favorable vote of the majority provided for in the Bylaws or, failing this, in the LSC;
|
|
(d) |
The incurrence by the Sole Director of any of the prohibitions or incompatibilities provided for in the Bylaws of the Company, in the LSC and in any other applicable legislation.
|
The Sole Director shall not be entitled to receive any compensation for the termination of the Agreement.
8. |
DEDICATION TO THE POSITION
|
The Sole Director shall provide his services exclusively for the Group, in order to ensure the effective and diligent performance of the administration and management functions inherent to the
positions he holds.
Accordingly, he may not bind himself for third parties, nor provide other services either on his own account or on behalf of third parties, directly or indirectly, except with the express written
consent of the Company or the Group.
Both during the period of performance of his services for the Company and after the termination of the Agreement for any reason whatsoever, Mr. Andrade may not provide, disclose or supply to any
other natural or legal person, either directly or indirectly, any data, ideas, documents, secrets, procedures, methods or, in general, information relating to the finances, business, affairs and activities of the Companies of the group (as this term
is defined in article 42 of the Commercial Code, hereinafter referred to as the “Group”), their respective employees, professionals and administrative bodies, as well as of their customers, suppliers or other
natural or legal persons related thereto, of which it may have knowledge by reason of its services for the Group Companies (all of the foregoing together, the “Information”), except that which is strictly
necessary for the fulfilment of the obligations contained in the Agreement or is of a public nature (unless this is due to breaches of confidentiality obligations).
He may not directly or indirectly, individually or through any other natural or legal person, use the Information for his own benefit, or for the benefit of any third party.
Mr. Andrade expressly agrees that all documents (including, but not limited to, notes, computer programs, disks, DVDs, CDs, files, graphics, presentations, strategies, customer data, designs, manuals
and other address/contact listing systems), written or on magnetic, visual or computer- electronic media, prepared by him or under his instructions and coordination, relating to the Company or the Group or any of the persons and third parties
referred to in the first paragraph of this clause, shall always remain their property and shall be returned to them upon their request and always after the termination of the Agreement.
Any amendment to this Agreement must be in writing and signed by both Parties in due compliance with the requirements of applicable law and, in particular, the LSC.
Any notice or demand arising out of this Agreement shall be sent in writing to the other party by any means that proves both the date of sending and receipt of the communication, as well as its
content, to the addresses indicated in the heading, or to those that modify them and have been duly notified, in accordance with the provisions of this clause.
In the event that any term, condition or provision of this Agreement, in whole or in part, shall be held to be null, void or invalid, it shall have the same effect as if it had not been originally
included in this Agreement, without in any way affecting the remaining terms, conditions and provisions, all of which shall continue in full force, validity and effect.
No waiver by either Party of any of its rights under this Agreement or arising from any breach of this Agreement shall be deemed to be a waiver unless such waiver is expressly made in writing.
If either Party waives any of its rights under this Agreement or any breach by the other Party pursuant to the preceding paragraph, such waiver shall in no way be construed as a waiver of any other
rights under this Agreement or any breach by the other Party, even if they are similar.
This Agreement contains the entire agreement of the Parties with respect to the appointment of Mr. Andrade as Sole Director of the Company and supersedes and renders ineffective all contracts and
agreements relating thereto and all contracts and agreements entered into prior to its entry into force by Mr. Andrade with the Company. Therefore, any other contracts or agreements entered into by Mr. Andrade with the Company are automatically
terminated.
9.6 |
Applicable Law and Jurisdiction
|
This Agreement shall be governed by the provisions of this Agreement and, subsidiarily, by Spanish civil and commercial legislation and shall be subject to the Courts of the city of Madrid.
In witness whereof, the Parties, in their respective capacities, have signed this Agreement, in duplicate, in a single original, on all pages, on the date and at the place indicated above.
The Company:
|
The Sole Director:
|
|
|
Signed: /s/ Florencio Salvador Ferrera Saldaña
|
Signed: /s/ Anselmo
Andrade Fernández de Mesa
|
|
|
Name: Mr. Florencio Salvador Ferrera Saldaña
on behalf of the Company
|
|
|
Name: Mr. Anselmo Andrade
Fernández de Mesa
|
6
Exhibit 10.15
IN ACCORDANCE WITH ITEM 601(A)(6) OF REGULATION S-K, CERTAIN INFORMATION HAS BEEN OMITTED
FROM THIS EXHIBIT BECAUSE IT CONTAINS PERSONALLY IDENTIFIABLE INFORMATION.
[***] INDICATES THAT INFORMATION HAS BEEN REDACTED.
INDEFINITE EMPLOYMENT CONTRACT
COMPANY DATA
CIF/NIF/NIE
|
|
|
|
[***]
|
D./Ms.
BREY SANCHEZ, JOSE JAVIER
|
NIF/NIE
[***]
|
AS (1)
DIRECTOR
|
COMPANY NAME OR COMPANY NAME
H2B2 ELECTROLYSIS TECHNOLOGIES, S.L
|
REGISTERED OFFICE
[***]
|
COUNTRY
[***]
|
|
MUNICIPALITY
[***]
|
|
C. POSTAL
[***]
|
724
|
|
QUOTE ACCOUNT DATA ION
REGIMEN |
|
CODE PROV. NUMBER |
DIG. CONTR. |
ECONOMIC ACTIVITY |
|
[***]
|
|
[***]
|
[***]
|
[***]
|
|
[***]
|
|
WORK CENTER DATA
COUNTRY
[***]
|
|
MUNICIPALITY
|
|
| 724
|
[***]
|
41038
|
EMPLOYEE DATA
D./Ms.^
FERREA SALDAÑA, FLORENCIO
|
NIF/NIE
[***]
|
|
DATE OF BIRTH
[***]
|
|
S.S. AFFILIATION NO.
[***]
|
TRAINING LEVEL
[***]
|
55
|
NATIONALITY
[***]
|
724
|
MUNICIPALITY OF DOMICILE
|
|
DOMICILE COUNTRY
[***]
|
|
|
|
[***]
|
141091
|
|
|
724 |
|
with the legal assistance, if applicable, of Mr./Ms. with NIF./NIE in its capacity as (2).
DECLARE
That they meet the requirements required for the execution of this contract and, consequently, agree to formalize it in accordance with the following:
CLAUSES
FIRST: The worker will provide his/her services as (3) DIRECTOR, included in the professional group of GRADUATE, to perform the functions (4) CORRESPONDING TO HIS POSITION AND CATEGORY in accordance with the
professional classification system in force in the company. At the work center located at (street, no. and town) [***]
☐ Remote work (5)
SECOND: The contract is concluded to carry out periodic work of a seasonal nature consisting of (6) within the intermittent cyclical activity of (7) whose duration will be (8)
The estimated duration of activity will be (9) . Workers will be called in the order and form determined in the Collective Bargaining Agreement of ENGINEERING COMPANIES AND OFFICES OF TECHNICAL STUDIES. The
estimated working day within the activity period will be hours (10) and the hourly distribution will be
If the collective bargaining agreement on a sectoral level allows for the use of part-time in discontinuous fixed contracts, indicate whether is welcomed to it
THIRD: The workday will be.
☒
|
|
Full-time: the workday will be 40 hours per week, provided from Monday to Friday, with breaks established legally or conventionally (11).
|
|
|
|
☐
|
|
Part-time: the ordinary workday will be , hours • per day, • per week, • per month, □ per year (10) this day be- ing less than that of a
comparable full-time worker (12).
|
|
|
|
|
|
The distribution of work time will be (13) in accordance with the provisions of the collective agreement.
|
|
|
|
|
|
In the case the work is part-time indicate whether or not there is an agreement on the performance of additional hours (14) |
FOURTH: The duration of this contract will be INDEFINITE, with the employment relationship starting on 01/07/21 and a probationary period of (15) 6 Months is established.
FIFTH: The worker will receive a total remuneration of € 200,000.00 gross (16) ANNUALLY that will be distributed in the following salary items (17) CBA SALARY + ABSORBIBLE AND NON-CONSOLIDABLE VOLUNTARY IMPROVEMENTS
SIXTH: The duration of the annual vacation will be (18) 23 days.
SEVENTH: As for what is not provided for in this contract, the current legislation resulting from the application will be followed, and in particular, the Workers' Statute, approved by Royal Legislative Decree 2/2015,
of 23 October (BOE of 24 October) and in the Collective Agreement of ENGINEERING COMPANIES AND OFIC.EST.
EIGHTH: This contract is formalized under the modality of the respite contract: YES ☐ NO ☒
|
The worker:
|
|
☐
|
That he/she is unemployed and registered as a plaintiff in the Public Employment Service of
|
|
☐
|
That it has entered into a contract with the company for a certain duration that was registered with the Public Service of Employment of with number dated
|
The Company Representative:
That the company worker, Mr/Ms .born on, that serves at the work center located at (street, No. and locality) [***], with the profession of, included
in the group/job/level/professional in accordance with the professional classification system in force in the company that reduces their ordinary working hours and their salary by one
(19), for accessing the partial retirement situation, regulated in Royal Decree-Law 5/2013 of 15 March has signed on and until the corre- sponding part-time employment contract registered with the Public Employment Service of with number and dated
NINTH: THIS CONTRACT MAY BE CO-FUNDED BY THE EUROPEAN SOCIAL FUND.
TENTH: The content of this contract will be communicated to the Public Employment Service of CONTRAT@ within 10 days following its execution.
ELEVENTH: DATA PROTECTION.- The data recorded in this model will have the protection derived from Regulation (EU) 2016/679 of the European Parliament, of April 27, 2016 and Organic Law 3/2018, of December 5 (BOE of December 6).
(1) |
Director, Manager, etc.
|
(2) |
Parent, guardian, or person or institution under his or her care.
|
(3) |
Indicate the corresponding professional group or professional level, according to the professional classification system in force in the company.
|
(4) |
Indicate profession. The smelters can be all or just a few of them.
|
(5) |
The work at hand is regulated by the provisions of Royal Decree-Law 28/2020, of 22 September (BOE of 23 September), and requires the signing of the corresponding agreement
|
(6) |
This clause shall only be completed in the event of the development of discontinuous fixed work. Indicate the professional activity to be carried out by the worker.
|
(7) |
Indicate the discontinuous or seasonal fixed activity of the company and its duration.
|
(8) |
Indicate the duration of the activity to be carried out by the worker.
|
(9) |
Daily, weekly, monthly or annual. Detail Agreement.
|
(10) |
Indicate the number of hours under collective bargaining agreement for full-time, legal maximum or full-time worker.
|
(11) |
Indicate the worker’s workday.
|
(12) |
A “comparable full-time worker” shall mean a full-time worker from the same company and work center, with the same type of employment contract and who performs identical or si milar work. If there is no comparable full-time worker in the
company, the full-time workday provided for in the collective bargaining agreement will be considered, or, failing that, the maximum legal day.
|
(13) |
Indicate the distribution of work time according to the collective bargaining agreement.
|
(14) |
Indicate what is applicable and, if so, attach the annex if there are additional hours.
|
(15) |
Respecting the provisions of art. 14.1 of! Consolidated Text of the Workers’ Statute Law, approved by Royal Legislative Decree 2/2015, of 23 October (BOE of 24 October). In in the case of taking advantage of Art. 4 of Law 3/2012, the
probationary period will be one year.
|
(16) |
Daily, weekly, monthly or annual.
|
(17) |
Base salary, salary supplements, bonuses.
|
(18) |
Minimum: 30 calendar days.
|
(19) |
A minimum of 25% and a maximum of 75%
|
That the INDEFINITE CONTRACT that is entered into (check the corresponding box) is made with the following specific clauses:
☒ |
INDEFINITE ORDINARY WITH OR WITHOUT QUOTA REDUCTION. |
Pg. 4 |
|
|
|
☐
|
OF PEOPLE BENEFITING FROM THE NATIONAL YOUTH GUARANTEE SYSTEM
|
Pg. 5
|
|
|
|
☐
|
OF PEOPLE WITH DISABILITIES.
|
Pg. 6
|
|
|
|
☐
|
OF PEOPLE WITH DISABILITIES IN SPECIAL EMPLOYMENT CENTERS.
|
Pg. 7
|
|
|
|
☐ |
OF PEOPLE WITH DISABILITIES FROM WORK ENVIRONMENTS.
|
Pg. 8
|
|
|
|
☐
|
OF LONG-TERM UNEMPLOYED PEOPLE.
|
Pg. 8
|
|
|
|
☐
|
OF WORKERS IN A SITUATION OF SOCIAL EXCLUSION, VICTIMS OF GENDER-BASED VIOLENCE,
DOMESTIC, VICTIMS OF TERRORISM, OR VICTIMS OF HUMAN TRAFFICKING.
|
Pg. 9
|
|
|
|
☐
|
OF EXCLUDED IN INSERTION COMPANIES.
|
Pg. 10
|
|
|
|
☐
|
OF THE FAMILY MEMBER OF THE SELF-EMPLOYED PERSON.
|
Pg. 11
|
|
|
|
☐
|
OVER THE AGE OF 52 BENEFICIARIES OF UNEMPLOYMENT SUBSIDIES.
|
Pg. 12
|
|
|
|
☐
|
FROM A CONTRACT FOR ETT TRAINING AND LEARNING.
|
Pg. 13
|
|
|
|
☐
|
FROM A CONTRACT IN ETT PRACTICES.
|
Pg. 14
|
|
|
|
☐
|
OF FAMILY HOME SERVICE.
|
Pg. 15
|
|
|
|
☐
|
OTHER SITUATIONS.
|
Pg. 16
|
|
|
|
☐
|
CONVERSION OF TEMPORARY CONTRACT INTO INDEFINITE CONTRACT.
|
Pg. 17
|
and meets the requirements of the regulatory standard.
ADDITIONAL PROVISIONS
See below additional provisions senior executive agreement
In witness whereof, this contract is executed in three copies at the place and date above mentioned and signed by the parties hereto.
In DOS HERMANAS on 7 JUNE 2016
|
/s/ Florencio Ferrera Saldaña
The Employee
|
/s/ Jose Javier Brey Sanchez
The Company’s representative
|
SENIOR EXECUTIVE EMPLOYMENT AGREEMENT
In Dos Hermanas, on 1 July 2021
PARTIES
On the one hand, the company H2B2 ELECTROLYSIS TECHNOLOGIES, S.L., with CIF [***] and with registered office at [***] (hereinafter, the “Company”),
represented by José Javier Brey Sánchez, in his capacity as sole director.
And on the other hand, Mr. FLORENCIO FERRERA SALDAÑA, of legal age, of Spanish nationality, with D.N.I. No. [***] and domiciled at [***] (hereinafter the “Manager”), acting in his own name and right.
The Company and the Manager (collectively, the “Parties”), both of whom have sufficient capacity for this purpose, which is mutually acknowledged and granted,
WHEREAS
That it is in the interest of the Parties to establish a special senior management employment relationship that will be regulated by means of this employment agreement (hereinafter, the “Agreement”) and in accordance with the follow- ing
CLAUSES
The special senior executive employment relationship that is regulated in the Agreement is based, in a special way, on the mutual trust of the Parties, which will accommodate the exercise of their rights and
obligations to the requirements of good faith, the Manager committing to undertake, with all their dedication and professional knowledge, the functions entrusted to them by the Company.
2. |
OBJECT/RESPONSIBILITIES
|
The purpose of the Agreement shall be the performance, by the Manager, of the functions inherent to the position of General Manager of the Company.
The Agreement will take effect as of 1 July 2021 (hereinafter, the “Effective Date”) and is agreed for an indefinite term.
4. |
PLACE OF PROVISION OF SERVICES
|
4.1 |
The Parties agree that the place of provision of the services of the Manager under the Agreement shall be the Company’s offices located in Dos Hermanas or in any other place that the Company may designate for this purpose, always
respecting the legislation in force at all times.
|
4.2 |
As a result of the work to be carried out, the Company may require the Manager to carry out trips or travel, both within Spain and abroad, a condition that the Manager expressly agrees to comply with.
|
Taking into account the position to be performed by the Manager, the nature of his functions and his high level of responsibilities and remuneration, such remuneration is not based on a certain number of working
hours or linked to hourly references, although a reference day of eight (8) hours per day, Monday through Sunday, will be set to distribute freely according to the needs of the Company.
While the Agreement is in force, the Manager may not at any time (except with the prior written consent of the Com- pany), engage in, get involved or interested, either on their own or on behalf of others, directly
or indirectly, in any business or partnership (hereinafter, the “Other Company”), whether working for it, as an advisor, or otherwise assist- ing the Other Company (whether as a worker, executive, service
provider or otherwise), or either by promoting or financing the business of the Other Company. This consideration is included in the agreement regarding agreed remu- neration. Specifically, 10% of the agreed remuneration is specifically attributed
to the compensation of this obligation, which is expressly considered appropriate by the Manager.
The vacation regime of the Manager shall be in accordance with the provisions of the applicable legislation and in accordance with the internal criteria that are followed in the Company.
8.1 |
The Manager shall receive a fixed annual gross salary (hereinafter the “Fixed Salary”) of TWO HUNDRED THOUSAND EUROS (€200,000.00), which shall be distributed in fourteen (14) equal monthly
payments. This amount is understood as referring to the natural period of the calendar year.
|
8.2 |
In addition, the Manager may sign a stock option agreement on two hundred thousand (200,000) shares of the Company’s parent company, that is H2B2 Electrolysis Technologies Inc., always subject, in any case, to the specific conditions
imposed by said company when offering the stock option agreement on the shares. The Man- ager expressly declares that, unless otherwise mutually agreed, he has no authority to request or require a wording of such agreement other than that
proposed to him by the Company or its parent company.
|
8.3 |
The Fixed Salary may be modified in the future by the Parties by mutual agreement.
|
9.1 |
As of the Effective Date, the Manager shall be entitled to an annual variable remuneration of up to thirty thousand euros (€30,000), depending on whether or not certain objectives will be met that will be set annually. The extent of this
annual variable remuneration, and therefore the fulfillment of such objectives, shall always and in any case take into account the following rule: 80% shall depend on the fulfillment of quantitative objectives related to hiring, sales,
profit and cash flow, while the remaining 20% shall depend on qualitative objectives related to human resources, quality, availability and performance.
|
9.2 |
The objectives referred to in the previous paragraph will be determined and explained at the end of each calendar year in relation to the next calendar year.
|
9.3 |
Variable remuneration may be modified in the future by the Parties by mutual agreement.
|
The Company will reimburse the Manager for any reasonable expenses incurred by the Manager in the performance of his duties under the Agreement. To do so, the Manager must submit receipts corresponding to such
expenses, as well as comply with the rules and policies of the Company regarding expenses. Such reimbursements shall not be considered salary and shall be subject only to tax or withholding when they exceed the limits established by the legislation
in force at any given time.
From the remuneration agreed with the Manager, the amounts that, for Social Security contributions, taxes or any other item, establish the current rules shall be deducted.
The Manager undertakes to comply with and enforce all medical and occupational safety and hygiene standards that are legally or conventionally applicable at all times. The Manager has been informed of the risks of
his job, of the protection systems and their use, as well as of the actions and evacuation in the event of an emergency.
13. |
INDUSTRIAL AND INTELLECTUAL PROPERTY RIGHTS
|
The Manager acknowledges that all services developed by him in favor of the Company or its clients, as well as their result, are the property of the Company to the fullest extent and are the cause of the Agreement,
regardless of its content, support or manifestation.
For all of this, the Manager assigns to the Company, on an exclusive basis, any creation expressed by any means or support, tangible or intangible, currently known or later invented, contained in the Intellectual
Property Law, that has been carried out by the latter during the term of the Agreement within the term of the relationship provided herein and the services or activity carried out by the Manager for the Company or for its clients, or for the
Company’s activities in relation to third parties. All of this has been taken into account by both parties when setting the remuneration of the Manager, so they will not imply additional financial compensation.
Likewise, the Manager may not take possession of any right derived from the industrial property legislation related to the Company’s usual activity.
This is without prejudice to the execution of the intellectual and industrial property rights assignment agreement to be signed by the Manager and the Company.
14. |
FUNDAMENTAL ETHICAL DUTIES
|
14.1 |
The Manager must comply with all internal and professional policies and standards indicated by the Company, as well as respect the ethical standards of the profession at all times.
|
14.2 |
During the term of the Agreement, the Manager will have access to information belonging to the Company (in- cluding its partners, workers and external personnel) and to customers, suppliers or third parties related to the Company, so it
is agreed that said information, to its full extent and whatever the support it is on, is absolutely confidential and is expressly subject to the duty of confidentiality.
|
|
By virtue of this, both during the term and after the termination of the Agreement, the Manager may not, directly or indirectly, disclose such information.
|
|
Failure to comply with any of the foregoing obligations shall be considered a breach of contractual good faith and breach of trust in the performance of the work, punishable even by disciplinary dismissal.
Independently of the foregoing, such breach shall give rise to compensation for damages caused to the Company or its customers.
|
|
At the time in which for any reason the relationship provided for herein is terminated, the Manager shall deliver to the Company all goods, equipment or work tools provided for the performance of his work,
which shall in any case be the property of the Company. The Manager may not retain or appropriate copies of the foregoing docu- ments, nor allow them to be used by any other person outside the Company.
|
The Manager shall perform the duties of his position in the manner established by the Company, in accordance with his instructions and committing himself to the utmost care and diligence in the performance of his duties.
In accordance with the GDPR (the General Data Protection Regulation), the Manager expressly consents and author- izes the Company to:
|
• |
Include the data provided by reason of the Agreement, those that may be provided in the future, as well as any other that may be generated by reason of the employment relationship, to the data file maintained by the Company.
|
|
• |
Process such data for the purpose of using them for the management of the relationship provided herein or the Company’s commercial or other relationships with other companies and agencies, as well as to maintain them once the
relationship provided herein has ended, in this case only for the fulfillment of legal obligations.
|
|
• |
To transfer the aforementioned information to the companies and bodies cited in the previous par- agraph and to other companies that may belong to the same group of companies of the Company, both in the national territory and abroad,
including countries that do not provide a level of protection comparable to that provided by Spanish law, for the same purposes described in the previous paragraph.
|
In accordance with the provisions of the aforementioned Regulation, the affected party has the rights of opposition, access, rectification, deletion, portability, limitation and any other established in the
Regulation with respect to the data provided which may be exercised in accordance with the applicable legislation, by writing to the person in charge, or, failing that, to the person in charge of human resources. The Manager’s data will be treated
by the Company in a confidential manner and with the maintenance of the due security conditions that prevent its alteration, loss or unau- thorized access by third parties.
In addition, the Manager agrees to:
|
• |
Maintain absolute confidentiality, reserve and strict professional secrecy with respect to information and/or personal data that may be known on the occasion of the performance of the services provided, not disclosing, publishing,
disseminating or making it available to third parties, either directly or indirectly, without the prior written consent of the Company, even for the purposes of its conserva- tion.
|
|
• |
Observe and adopt the security and privacy measures established by the Company for personal infor- mation and data to ensure the confidentiality, secrecy, availability and integrity of the personal data to which he has access, as well as
to observe and implement any security measures required by the legislation regulating the processing of personal data and confidential information.
|
|
• |
In the event that, for any reason related to his job, he comes into possession of confidential infor- mation - regardless of the type of support in which it is - it is understood that this possession is strictly temporary, with an
obligation of secrecy and without this granting any right of possession or owner- ship or copy of the information. Likewise, all such media or materials must be returned to the Com- pany, or destroyed, immediately upon completion of the
tasks that have given rise to the temporary use thereof, and in any case, upon termination of the project or employment relationship.
|
This obligation shall survive even after the end of the relationship with the owner of the information, or if applicable, with the Company.
Failure to comply with these measures could be considered a violation and may result in disciplinary sanctions.
In addition, the Manager is aware that it is forbidden to send confidential Company information outside the Company.
The continued use of the information, in any format or medium, in a manner other than that agreed upon and without the knowledge of the Company, will not entail, in any case, a modification of this clause.
Finally, the Company and the Manager agree that, after the expiration of the legal term and the needs of treatment, the media containing personal data shall be destroyed in a controlled manner.
17. |
TERMINATION OF THE AGREEMENT
|
17.1 |
The Agreement may be terminated by the Manager as set forth below:
|
|
(a) |
Without alleging any cause whatsoever, subject to at least three (3) months’ written notice. In this case, the Manager shall not be entitled to receive any compensation. If the Manager fails to comply with all or part of the notice
period, the Company shall be entitled to receive from the Manager an amount equivalent to the salaries corresponding to the non-compliance period.
|
|
In accordance with the causes established in Article 10.3 of Royal Decree 1382/1985, of August 1st, a written notice of three
(3) months must be given, except in the event of serious contractual breach by the Company. In this case, the Manager will receive a compensation equivalent to seven (7) days of cash salary per year of service up to a maximum of six (6)
months’ salary.
|
17.2 |
The Agreement may be terminated by the Company as set forth below:
|
|
(a) |
By termination without cause, subject to at least three (3) months’ written notice. In this case, the Man- ager shall be entitled to receive a compensation equivalent to twenty (20) days’ salary in cash per year of service, up to a
maximum of twelve (12) months’ salary. If the Company fails to comply with all or part of the notice period, the Manager shall be entitled to receive from the Company an amount equiva- lent to the salaries corresponding to the period of
non-compliance.
|
|
(b) |
The Company may also terminate the Agreement through the dismissal of the Manager, in accordance with the provisions of Article 11.2 of Royal Decree 1382/1985, of August 1st. In this case, regardless of the cause of the dismissal, the Manager shall not be entitled to any compensation unless the dismissal is declared unfair, in which case he shall be entitled to compensation equivalent to
twenty (20) days of salary in cash, per year of service, with up to a maximum of twelve (12) months’ salary.
|
17.3 |
Upon termination of the Agreement, the Manager shall immediately return to the Company all objects belonging to the Company and/or other companies related to the Company, which he still has in his possession, as well as all documentation
pertaining to the business of the aforementioned companies or of the Company.
|
17.4 |
Also, at the time of termination of the Agreement, the Manager must immediately and irreversibly delete any information relating to the Company’s activity that is stored on any magnetic or optical disk or memory, as well as any materials
in his possession, custody, care or control, outside the Company’s premises and that, because they are not contained in a physical media, cannot be returned or stored on Company equipment, such as a laptop that will still need to be
returned to the Company and will prove the fulfillment of the referred obligation in case of being required for it by the Company.
|
17.5 |
Failure to comply with these obligations assumed by the Manager on the date of termination of the Agreement will result in the relevant legal liabilities.
|
18. |
POST-CONTRACTUAL NON-COMPETE AND NON-SOLICITATION COVENANTS
|
18.1
|
In accordance with the nature of the functions to be performed by the Manager and which are the subject of this Agreement, and due to the circumstances of the sector in which the Company operates, the
Parties agree that, during the term of the post-contractual restrictions established in this Clause, the Manager undertakes the following:
|
|
(a) |
Not to provide, directly or indirectly (i.e., through any other natural or legal person), professional or commercial services, either on their own behalf or on behalf of others, to competitors of the Company, such competitors being
understood as those who carry out activities similar to those described in the corporate purpose of the Company or those carried out by the Company on a regular basis.
|
|
(b) |
Not to provide services of the type that the Company provides to any third party that is considered an effective customer in the period of twenty-four (24) months immediately prior to the termination of the Agreement.
|
|
(c) |
Not to participate directly or indirectly, as an associate, partner, director, administrator or in any other capacity, in companies that carry out activities similar to those contained in the corporate purpose of the Company.
|
|
(d) |
To scrupulously respect the Company’s client portfolio, not carrying out directly or indirectly any pro- motional, commercialization or other activities that may result in a loss of clients for the Company.
|
|
(e) |
Not to carry out any recruitment activity aimed at persons who, within two (2) years prior to the termi- nation of the Agreement, have been employees or professionals of the Company, which could have the effect of causing them to abandon
their responsibilities in the latter.
|
|
(f) |
Not to induce other employees, suppliers, agents or distributors of the Company to terminate their rela- tionship with the Company.
|
|
(g) |
Not to carry out any other activity that implies competition or concurrence with the activity of the Com- pany or that harms the commercial and industrial interest protected with this post-contractual non-com- pete and non-solicitation
agreement.
|
18.2 |
The post-contractual non-compete and non-solicitation obligations provided for in this Clause shall remain in force for a period of two (2) years from the termination of the Agreement, regardless of the cause of the termi- nation
thereof.
|
18.3 |
The Company and the Manager agree that the compensation of the above post-contractual non-compete and non- solicitation obligations will consist of a gross amount equivalent to forty percent (40%) of the fixed monthly gross salary, as
indicated in Clause 8.1 above, that the Manager was receiving on the date of termination of the Agreement for each of the two (2) years of validity of the post-contractual non-compete and non-solicitation obligations. The above compensation
will be paid in four (4) payments at the end of each semester of the validity of the post-contractual non-compete and non-solicitation obligations.
|
The Manager declares to know and accept the “Policy for the use and control of technological resources and commu- nication systems”, on the regulations for the use of electronic tools, which is attached as an annex
to the Agreement, and which is an inseparable part of the Agreement of which it is indissoluble
20.1 |
The Manager must comply with the timekeeping obligations.
|
20.2 |
The Manager will also perform functions that do not correspond to his professional group or category, both ascending and descending, when there are economic, technical or organizational reasons that justify it and for the time, are
essential to attend to them.
|
20.3 |
The Manager must inform the Company of any variation of personal, family or professional data that may have any relevance to the relationship provided herein or to the Company’s obligations in matters of Social Security or Tax. The
omission of such information will release the Company from any liability for this purpose, with the Manager being obliged to compensate the Company for the damages to which the Company may be entitled.
|
In the event that, for any reason whatsoever, one or more of the clauses of the Agreement should become inapplicable in the future, the invalidity shall apply exclusively to the clause in question, the remainder of
the Agreement being fully valid.
The Agreement replaces all prior letters of offer, agreements or communications, whether oral or written in connection with the contractual relationship between the Parties, and constitutes the only valid agreement
between the Parties. For any amendment to the Agreement to be valid, it must be made in writing on the Agreement, together with the signatures of both the Manager and the Company.
The Agreement shall be governed by the provisions of it by the Parties, failing that by Royal Decree 1382/1985, of the August 1st, and
failing that, by Civil or Commercial Law. The Agreement may be varied at any time by mutual written agreement of the Parties.
THE PARTIES DECLARE THAT THEY HAVE READ THIS DOCUMENT, UNDERSTAND ITS CON- TENTS AND ACCEPT IT IN ITS ENTIRETY, HAVING NO RESERVATION WHATSOEVER IN THIS REGARD.
And in proof of agreement with the foregoing, the parties sign the Agreement in duplicate and to a single effect, in the place and on the dates indicated in the heading of the thereof.
POLICY OF USE AND CONTROL AND CONTROL OF TECHNO-
LOGICAL RESOURCES AND COMMUNICATION SYSTEMS OF
THE COMPANY
1 |
Object, purpose and scope of the application
|
The Company implements this Policy on the Use and Control of Technology Resources and communication systems for the purpose of:
|
• |
Verify the correct functioning of the technological resources and communication systems under the ownership or license of the Company and made available to the user.
|
|
• |
Ensure the security, performance, reliability, privacy and confidentiality of communica- tions and their content.
|
|
• |
Preserve user privacy and security and generally ensure effective service delivery com- pliance.
|
The Company and the user are aware of the need for adequate use of technological resources and communication systems in the provision of the service.
The Company and the user acknowledge that they are aware of this policy and assume the com- mitments and standards for the proper use of technological resources and communication systems, taking all appropriate
measures for their strict compliance.
For this purpose, the Company may carry out the necessary investigations and controls of the technological resources provided to the user by the Company.
For the purposes of the policy on the use and control of technological resources and communi- cation systems, the following shall be understood:
Technology Resources: Elements that integrate Information and Communication Technologies, such as electronic devices, software, hardware, cabling, nodes and access to public or private networks, servers and in
general all infrastructure used by communication systems.
Communication Systems: They include landline, mobile, IP telephony, fax, e-mail, instant mes- saging systems, peer-to-peer networks or any other electronic means that the Company makes available to the user to
communicate within the scope of the provision of services.
Use and Control Policy: The set of provisions that regulate, in this document, the use and control of the Technology Resources and Communication Systems intended for the fulfillment of the purposes of the Company.
User: Refers to those persons who, within the scope of their provision of services, use the Communi- cation Systems and Technology Resources under the ownership or license of the Company.
Systems Officer: Responsible for the management and administration of Communication Systems and Technology Resources, as well as for resolving problems and incidents arising from their use. For these purposes, the
Company will communicate to the User the identity of the System Officer.
Security Officer: Responsible for directing the measures and actions for compliance with this Use and Control Policy. For these purposes, the Company will communicate to the User the identity of the Se- curity
Manager.
1.2 |
Ownership of Technology Resources and Communication Systems
|
All Technology Resources and Communication Systems made available to the User are owned or licensed by the Company and, for this purpose, the use of the aforementioned resources and systems must be made in accordance
with this Use and Control Policy and the prescriptions imposed by the license holder.
1.3 |
Access to Technology Resources and Communication Systems
|
All access to the Technological Resources and Communication Systems shall be controlled and au- thorized by the System Officer. It is strictly forbidden for the User to attempt to access the Commu- nication Systems
or Technological Resources to which he/she does not have express authorization from the Systems Officer.
All authorized Users have access to the Communication Systems by means of a personal and non- transferable user name and password, undertaking to treat it with the utmost diligence and confidenti- ality, being solely
responsible for its proper use.
The Authorized User shall be solely and directly responsible for everything executed in the system under his/her user name and password. Likewise, attempts, by any means, to obtain access to pass- words of other
users without their consent are strictly forbidden.
It is forbidden to divulge by any means the access codes to any of the services provided to the User, who undertakes to notify the Systems Officer and/or the Security Officer immediately of any incident or anomaly
detected in the accesses to the Communication Systems or in the security of the same.
The User undertakes to respect the rights of third parties in the shared use systems, undertaking not to access the private information of other Users without prior authorization. Likewise, the User under- takes not
to share files or documents of any kind with other users without implementing the necessary measures to guarantee the security of the information and operating systems. Any identity theft will be sanctioned in accordance with the applicable
legislation in force.
(i) |
System Officer and Security Officer Access
|
|
• |
The Systems Officer and Security Officer is obliged to act with absolute diligence, keeping all data, documents and other information to which he/she may have access in the performance of his/her duties completely confidential. By way of
example, but not limitation, the following may be included:
|
|
• |
Access to Technology Resources and Communication Systems to carry out maintenance tasks.
|
|
• |
Access to Technology Resources and Communication Systems for reasons of safety.
|
|
• |
Authorize the Users’ access to the Communication Systems that they require for the fulfillment of their tasks.
|
|
• |
Access to Technology Resources and Communication Systems due to security incidents.
|
In any case, both the Systems Officer and the Security Officer have the duty and obligation to keep absolutely confidential all information to which they have access for the performance of their activities, and it is
strictly forbidden to communicate or provide it, directly or indirectly, to any third party..
2 |
Assignments of password policy
|
2.1 |
Password assignment procedures
|
Each User with authorized access to the Company’s Technology Resources and Communication Sys- tems will have a personalized username for their identification, as well as a password to access the Communication
Systems.
The communication to the User of their username and password will be provided by the Security Officer, who will communicate it personally or by email, guaranteeing in any case their confiden- tiality and secrecy, as
well as providing the User with the possibility of subsequently modifying only the password.
All incidents in the use of the Company’s Technology Resources, or that by any circumstance, direct or indirect, may compromise the security of the information, must be notified as soon as possible to the Security
Officer.
The Security Officer will be responsible for recording, diagnosing and monitoring all incidents reported by Users. In addition, you must keep the incident record up to date, specifying the type of incident and the
resolution thereof, periodically checking that the incidents are resolved, and the security of the communication is guaranteed.
2.3 |
Security, Confidentiality and Data Protection
|
The Company and the User undertake to keep the communications secret, respect the privacy and confidentiality of all the Company’s data and information stored in the Company’s Technology Re- sources and Communication
Systems, and not assign to third parties the data and information both those of the Company and those of a personal nature obtained in the fulfillment of its direct activities or any other of the business sphere, in accordance with the Law on the
Protection of Personal Data and other applicable regulations.
3 |
Use of Technology Resources and Communication Systems
|
The User undertakes to respect the integrity and proper use of the Technological Resources and Communication Systems whose ownership or license belongs to the Company and to which he/she has access for the
performance of the tasks within the scope of the provision of the service, it being strictly forbidden to carry out or facilitate any third party in the commission of any of the following events:
|
• |
Alter all or part of the hardware, software and operating system configurations of the computer equipment assigned to the same User or other users, without proper authoriza- tion.
|
|
• |
Use unauthorized computer applications that saturate networks, servers, or hinder the operation of computer equipment.
|
|
• |
Make privilege or permission modifications without authorization from the System Of- ficer.
|
|
• |
Cause physical or logical damage, due to misuse or negligence, to computer equipment, applications, computer tools and any technological device or means.
|
|
• |
Developing or accidentally or intentionally using malicious programs or access to re- sources restricted by the Systems Administrator.
|
|
• |
Failure to maintain with due diligence any keys, passwords, Usernames or any other identifiers that may be provided to the User for use any of the tools, or to access equip- ment or systems owned or licensed by the Company.
|
|
• |
The use of personal email accounts based on web access (but not limited to: gmail, hot- mail or yahoo), as well as the instant message services authorized by the Company but not limited to: whatsapp, telegram, line...), may only be used
in the scope of the provision of services for the fulfillment thereof, excluding their use for a recreational purpose.
|
|
• |
The use of personal email, as well as instant messaging services through the Company’s Technology Resources and Communication Systems for personal and private purposes is strictly prohibited.
|
|
• |
The forwarding of your own work documentation to personal email accounts or those outside the scope of the provision of the service within the Company is strictly prohib- ited.
|
3.3 |
Use of Company or Corporate Mail
|
Corporate email, distribution lists, instant messaging services and other electronic communica- tion services authorized by the Company are tools whose purpose is the provision of the service by the User. The Company
and the User agree that the use of the Technology Resources and Communication Systems and dissemination of the information will be subject to the following conditions:
|
• |
The use of Communication Systems and Technology Resources for activities outside the provision of the service is prohibited. Emailing offensive, threatening, illicit or fraudu- lent messages is also prohibited.
|
|
• |
The use of e-mail for profit or commercial purposes, for recreational use or any other purpose unrelated to the provision of the service is prohibited.
|
|
• |
The use of email for the registration of "newsletter", or the like that are not directly re- lated to the professional activity carried out by the User and that are of full confidence is prohibited.
|
|
• |
Mail distribution lists may only be used for the Company’s own purposes, and never for advertising, commercial or personal purposes that are not related to the activities of pro- fessional performance.
|
|
• |
Unauthorized access to communications that circulate the network, as well as their ma- nipulation, destruction and misappropriation, is prohibited.
|
4 |
Internet browsing restrictions
|
The use of the network to browse Internet sites, including social media, for uses other than those per- mitted for the performance of its activity is prohibited.
Internet browsing will use appropriate software to filter access to sites that, in the opinion of the System Administrator, are inappropriate for the Company, or unnecessary for the provision of the service.
Browsing websites, sending messages, registering, registering, filling in forms and any other activity carried out via the Internet shall be the full responsibility of the User who, in any case, must assume the
consequences arising from their actions.
In particular, it is strictly forbidden to access pages with illicit content, pornographic material, racist or sexual content, or any material that violates the dignity of persons.
5 |
Prohibition on the use of P2P tools and networks
|
The installation of any type of P2P program (peer to peer) or any other application for the exchange of files that saturate the bandwidth of the connection to the internet, preventing access to other users or
hindering connections to the network, is strictly prohibited, unless authorized by the Company.
6 |
Instant Messaging Software Use and Control Policy and Restrictions
|
No telematic service or instant messaging software may be installed without the express authorization of the Company.
It is expressly forbidden to use obscene, aggressive, offensive or discriminatory language in the sending of communications via instant messaging services is expressly prohibited.
The use of any instant messaging service within the scope of the provision of the service shall be ex- clusively for the fulfilment of the activities related to the provision of the service, and the transfer of
files, images or any communication not related to the provision of the service is prohibited.
For security reasons, attachments from unknown senders must not be downloaded for any reason what- soever.
7 |
Monitoring and Control Programs and Devices
|
The System Officer shall implement automated control tools to analyze and detect improper or illicit use and behavior on the network, and such control shall not imply any violation of the privacy or inti- macy of the
Users.
The User and the Company agree that, for security reasons, all information circulating on the network, as well as via e-mail and instant messaging systems, may be monitored and subject to periodic controls and
reports on its use, providing extensive information to the Company (by way of example, this will consist of: user identification, date of access, time of access, bytes transferred, file storage, access to servers, sites visited, time spent browsing
the network).
The control and access to the resources provided by the Company, including the documents generated by the users and the communications originating therefrom, may be carried out on a preventive, tem- porary and/or
continuous basis, taking into account the nature of said Technological Resources and Communication Systems provided by the Company.
The control of these resources shall be carried out without harming and without infringing the dignity or privacy of the User, in consideration of the prior knowledge that the User has of the object and existence of
the present control and supervision to which the Users are subject.
The generic purposes of this control are as follows:
|
• |
Protection of the Communication System and Technology Resources, in order to protect their integrity.
|
|
• |
Ensure the continuity of the work in the event that the User is absent due to illness, vacation or other similar.
|
|
• |
Prevention of third-party liability.
|
|
• |
Verification of compliance with the User’s obligations in the field of providing services.
|
|
• |
Verification of the existence or not of the abusive use of the Technology Resources and Com- munication Systems provided by the Company for personal and private uses
|
Therefore, all stored content, information and files, including temporary information, may be accessed by the Company or by those responsible designated for this purpose.
8 |
Use of Technology Resources outside the Company
|
The inputs and outputs of the Technology Resources necessary for the development of the provision of services must be authorized by the Security Manager.
The User is obliged to make the reasoned request in writing, indicating the equipment to be used outside the Company, date of departure and expected date of delivery, the Security Manager being obliged to respond in
writing to the request.
The Security Manager shall implement the necessary measures to ensure the integrity and security of the computer equipment outside the Company, as well as to keep an updated record of the entry and exit thereof.
9 |
Using Software Licenses
|
The User is obliged to respect the terms and conditions of use of the licenses and industrial and intel- lectual property rights of the software installed on the computer equipment, and is responsible for its proper
use.
All software protected by industrial and intellectual property rights may not be copied, altered, modi- fied, decompiled, disassembled, translated, published, nor may any information protected by patents, trademarks
or intellectual property rights be made available to the user. any information protected by patents, trademarks or industrial and intellectual property rights may not be made available.
The User shall be liable for any failure to comply with the obligations set out in this Clause.
10 |
Consequences arising from non-compliance with the Use and Control Policy
|
The User undertakes to cooperate with the Systems Officer to carry out any investigation aimed at finding possible causes arising from the misuse of the Technological Resources and Communication Systems.
The User who fails to comply with this Use and Control Policy will be sanctioned with the removal of access to the Technological Resources and Communication Systems, the application of sanctions for non-compliance
with the terms and conditions that, where appropriate, emanate from the User's Agree- ment, without prejudice to the legal sanctions established in the applicable regulations in force.
|
/s/ Forencio Ferrera Saldaña
The User
|
/s/ Jose Javier Brey Sanchez
The Company
|
ASSIGNMENT OF INTELLECTUAL AND INDUSTRIAL PROPERTY RIGHTS
In Madrid, on 1 July 2021
On the one hand, the Professional, under the terms defined in this employment contract to which this assignment of rights contract accompanies, and hereinafter the INVENTOR
On the other hand, the Company, under the terms defined in this employment contract to which this assignment of rights contract accompanies, and hereinafter THE COMPANY.
Both parties acknowledge their full capacity to enter into this agreement, so in the representations they hold, freely and spontaneously
WHEREAS
I That the INVENTOR develops, or will develop, within the framework of its functions and deriving from the employment agreement that binds it to the COMPANY, and in collaboration with others (if applicable)
and, in any case, at the request of the COMPANY, certain intellectual and industrial property developments that may be patented or registered, hereinafter referred to as THE DEVELOPMENTS.
II That in accordance with the legislation in force, the employment agreement between INVENTOR and the COMPANY, it is understood that all non-material rights of the DEVELOPMENTS belong to the COMPANY, but that
it is nevertheless the intention of INVENTOR and the COMPANY to enter into this agreement to ratify this situation.
III Both parties have reached an agreement to enter into this agreement, which will be subject to the fol- lowing
CLAUSES
First.- The INVENTOR assigns to the COMPANY all non-material rights of the
DEVELOPMENTS, in any form and, in particular, on a non-exclusive basis, the economic exploitation of the DEVELOPMENTS.
Second.- The INVENTOR may not exploit the DEVELOPMENTS, either on its own
or through related persons or companies.
Third.- The rights assigned in this contract are assigned for the duration
of the term established by the applicable law in each case.
Four.- This assignment is worldwide.
Fifth. - This assignment shall not lose its effect even if the employment
relationship between the INVEN- TOR and the COMPANY ceases.
Six.- This agreement may be made public by either of
the parties, and the costs of this procedure shall be borne by the party that does so.
Seventh.- This agreement and any disputes that may
arise from it are subject to Spanish law. The parties submit, waiving their own jurisdiction that may correspond to them, to the Courts of the city of Sevilla.
Eighth.- In the event that any of the clauses of this
contract should be declared null and void, the contract shall not lose its validity and both parties shall meet to agree on one that, following the same economic purpose, is in accordance with the law.
Ninth.- This agreement binds both the signatory
parties and their successors in title and/or their related parties through any legal instrument. The change of corporate name and/or change of corporate purpose or any other commercial event of a similar nature of any of the parties shall not
affect the content of this contract, as the COMPANY shall continue to maintain its rights regardless of these variables. At in the event of a merger, spin-off or liquidation or any other commercial event of a similar nature of any of the parties,
the COMPANY shall continue to maintain its rights irrespective of these variables.
|
• |
the INVENTOR shall maintain the same obligations conferred by this agreement, regardless of the legal form, company name or event that has affected it
|
|
• |
the COMPANY shall maintain the same rights conferred by this agreement, subject always to the specific agreements that have been reached based on the commercial event or the nature thereof.
|
Tenth.- The INVENTOR shall at all times have a duty
of confidentiality with regard to any information relating to the DEVELOPMENT. The INVENTOR may not pass on any information relating to the DEVELOPMENT to any person, whether natural or legal, with the exception of other persons with employment
or commercial ties to the COMPANY, and provided that such ties have been established, inter alia, for the purpose of carrying out the DEVELOPMENT. The INVENTOR may only transfer information relating to the DEVELOPMENT to third parties if
authorized by the COMPANY and if such authorization is recorded in a document on the transfer and use of information. The confidentiality obligation for the INVENTOR shall not lose its effect even if the employment relationship between the
INVENTOR and the COMPANY ceases. The COMPANY may claim all types of damages from the INVENTOR who breaches this confidentiality obligation, regardless of the liabilities and indemnities that the COMPANY may request from the third parties
involved.
And with the parties being satisfied in all of the foregoing and recorded herein, in which content they affirm, ratify and accept, they sign it for a single purpose in the place "ut supra".
|
/s/ Florencio Ferrera Saldaña
INVENTOR
|
/s/ Jose Javier Brey Sanchez
THE COMPANY
|
Exhibit 10.16
IN ACCORDANCE WITH ITEM 601(A)(6) OF REGULATION S-K, CERTAIN INFORMATION HAS BEEN OMITTED
FROM THIS EXHIBIT BECAUSE IT CONTAINS PERSONALLY IDENTIFIABLE INFORMATION.
[***] INDICATES THAT INFORMATION HAS BEEN REDACTED.
H2B2 ELECTROLYSIS TECHNOLOGIES, INC.
COMMON STOCK OPTION AGREEMENT
H2B2 ELECTROLYSIS TECHNOLOGIES, INC.
COMMON STOCK
OPTION AGREEMENT
This Common Stock Option Agreement (this “Agreement”) is dated as 1st July 2021 and is between H2B2 Electrolysis Technologies, Inc., a Delaware corporation (the “Company”), and Florencio Ferrera Saldaña (Tax Number [***]) of Spain (“Investor”).
SECTION 1
AUTHORIZATION, SALE AND ISSUANCE
1.1 Authorization. The Company will, prior to the date of this
Agreement, authorize the sale and issuance of up to 200,000 shares (the “Shares”) of the Company’s Common Stock, par value $0.00001 per share (the “Common Stock”), having the rights, privileges, preferences and restrictions set forth in the certificate
of incorporation of the Company, (the “Certificate”).
1.2 Sale and Issuance of Shares. Subject to the terms and conditions
of this Agreement, Investor is entitled to purchase, and the Company agrees to sell to Investor should he decide it, up to 200,000 shares, at a global price provided in Section 2.2 (the “Purchase Price”).
SECTION 2
OPTION EXERCISE, EXECUTION AND DELIVERY
2.1 Option exercise and execution.
|
(a) |
Upon signature of the Agreement, the Investor is acquiring a free option to purchase the Shares. |
|
(b) |
The Option shall be fully exercised and executed between pt January 2026 and 31st March 2026, according to the conditions in 2.1.(e). |
|
(c) |
The execution of the Option shall be notified to Company at least 15 calendar days before the execution. The notification must include the specific execution date. |
|
(d) |
The execution date shall be understood as the Closing Date. |
|
(e) |
This Option shall be only valid: |
|
|
● In case the Company is public and is listed and traded in a stock market by 1st January 2026; and |
|
|
● as long as Investor maintains until the Closing Date a labor relation with any company of the Company Group. In case of termination of this labor relation, regardless of the cause of the termination or the party terminating that
relation, Investor shall lose all its rights to purchase the Shares according to the Option. |
Despite de aforementioned, in case of (i) decease or (ii) sudden impossibility to carry out the regular job, all Investor
rights provided in this Agreement could be exercised by Investor or by its heirs.
2.2 Purchase Price. The Purchase Price will be one (1) USD. This
Purchase Price will be the global price of the 200,000 shares.
2.3 Delivery. After the Closing Date, the Company will deliver to
Investor a certificate registered in such Investor’s name representing the number of Shares that such Investor is purchasing against payment of the purchase price as set forth in section 1.2.
2.4 Impossibility. Should the execution of the Option be impossible
(i) because the Company is not public and/or listed and/or traded by 1st January 2026 in a stock exchange market; or (ii) due to the public market regulations to be
applied, this Option shall be terminated on 31st December 2025 and the Investor shall be entitled to a gross salary bonus of 30% of its gross annual salary in 2025, to be
paid within the first quarter of 2026.
SECTION 3
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY
The Company hereby represents and warrants to the Investors as follows:
3.1. Organization, Good Standing and Qualification. The Company is a
corporation duly organized, validly existing and in good standing under the laws of the State of Delaware. The Company has the requisite corporate power and authority to own and operate its properties and assets, to carry on its business as presently
conducted, to execute and deliver this Agreement, to issue and sell the Shares and to perform its obligations pursuant to this Agreement and the Certificate. The Company is presently qualified to do business as a foreign corporation in each
jurisdiction where the failure to be so qualified could reasonably be expected to have a material adverse effect on the Company’s financial condition or business as now conducted (a “Material Adverse Effect”).
3.2. Subsidiaries. The Company has disclosed all entities or companies
that it owns or control, directly or indirectly, any interest in any corporation, partnership, limited liability company, association or other business entity.
3.3. Capitalization.
(a) The Company has reserved the Shares for issuance pursuant to this
Agreement. The rights, preferences, privileges and restrictions of the Shares are as stated in the Certificate.
(b) The Shares, when issued and delivered and paid for in compliance
with the provisions of this Agreement, will be validly issued, fully paid and nonassessable. The Shares will be free of any liens or encumbrances, other than any hens or encumbrances created by or imposed upon the Investors; provided, however, that the
Shares could be subject to restrictions on transfer under U.S. state and/or federal securities laws and as set forth herein.
3.4 Authorization. All corporate action on the part of the Company and
its directors, officers and stockholders necessary for the authorization, execution and delivery of this Agreement by the Company, the authorization, sale, issuance and delivery of the Shares, and the performance of all of the Company’s obligations
under this Agreement has been taken or will be taken prior to the date of this Agreement. This Agreement, when executed and delivered by the Company, shall constitute a valid and binding obligation of the Company, enforceable in accordance with its
terms, except (i) as limited by laws of general application relating to bankruptcy, insolvency and the relief of debtors and (ii) as limited by rules of law governing specific performance, injunctive relief or other equitable remedies and by general
principles of equity.
3.5 Offering. Subject to the accuracy of the Investor’s
representations and warranties in Section 4, the offer, sale and issuance of the Shares to be issued in conformity with the terms of this Agreement, could constitute transactions exempt from the registration requirements of Section 5 of the Securities
Act of 1933, as amended (the “Securities Act”).
3.6 No “Bad Actor” Disqualification. The Company has exercised
reasonable care, in accordance with SEC rules and guidance, to determine whether any Covered Person (as defined below) is subject to any of the “bad actor” disqualifications described in Rule 506(d)(l)(i) through (viii) under the Securities Act
(“Disqualification Events”). To the Company’s knowledge, no Covered Person is subject to a Disqualification Event, except for a Disqualification Event covered by Rule 506(d)(2) or (d)(3) under the Securities Act. The Company has complied, to the extent
applicable, with any disclosure obligations under Rule 506(e) under the Securities Act. “Covered Persons” are those persons specified in Rule 506(d)(1) under the Securities Act, including the Company; any predecessor or affiliate of the Company; any
director, executive officer, other officer participating in the offering, general partner or managing member of the Company; any beneficial owner of 20% or more of the Company’s outstanding voting equity securities, calculated on the basis of voting
power; any promoter (as defined in Rule 405 under the Securities Act) connected with the Company in any capacity at the time of the sale of the Shares; and any person that has been or will be paid (directly or indirectly) remuneration for solicitation
of purchasers in connection with the sale of the Shares (a “Solicitor”), any general partner or managing member of any Solicitor, and any director, executive officer or other officer participating in the offering of any Solicitor or general partner or
managing member of any Solicitor.
3.7 Brokers or Finders. The Company has not incurred, and will not
incur, directly or indirectly, as a result of any action taken by the Company, any liability for brokerage or finders’ fees or agents’ commissions or any similar charges in connection with this Agreement or any of the transactions contemplated hereby.
SECTION 4
REPRESENTATIONS AND WARRANTIES OF THE INVESTOR
Investor hereby represents and warrants to the Company as follows:
4.1 No Registration. The Investor understands that the Shares have not
been, and will not be, registered under the Securities Act by reason of a specific exemption from the registration provisions of the Securities Act, the availability of which depends upon, among other things, the bona fide nature of the investment
intent and the accuracy of the Investor’s representations as expressed herein or otherwise made pursuant hereto.
4.2 Investment Intent. The Investor is acquiring the Shares for
investment for its own account, not as a nominee or agent. The Investor further represents that it does not have any contract, undertaking, agreement or arrangement with any person or entity to sell, transfer or grant participation to such person or
entity or to any third person or entity with respect to any of the Shares.
4.3 Investment Experience. The Investor has substantial experience in
evaluating and investing in private placement transactions of securities in companies similar to the Company and acknowledges that the Investor can protect its own interests. The Investor has such knowledge and experience in financial and business
matters so that the Investor is capable of evaluating the merits and risks of its investment in the Company.
4.4 Speculative Nature of Investment. The Investor understands and
acknowledges that the Company has a limited financial and operating history and that an investment in the Company is highly speculative and involves substantial risks. The Investor can bear the economic risk of the Investor’s investment and is able,
without impairing the Investor’s financial condition, to hold the Shares for an indefinite period of time and to suffer a complete loss of the Investor’s investment.
4.5 Access to Data. The Investor has had an opportunity to ask
questions of, and receive answers from, the officers of the Company concerning this Agreement, the exhibits and schedules attached hereto and the transactions contemplated by this Agreement, as well as the Company’s business, management and financial
affairs, which questions were answered to its satisfaction. The Investor believes that it has received all the information the Investor considers necessary or appropriate for deciding whether to purchase the Shares. The Investor understands that such
discussions, as well as any information issued by the Company, were intended to describe certain aspects of the Company’s business and prospects, but were not necessarily a thorough or exhaustive description. The Investor acknowledges that any business
plans prepared by the Company have been, and continue to be, subject to change and that any projections included in such business plans or otherwise are necessarily speculative in nature, and it can be expected that some or all of the assumptions
underlying the projections will not materialize or will vary significantly from actual results. The Investor also acknowledges that it is relying solely on its own counsel and not on any statements or representations of the Company or its agents for
legal advice with respect to this investment or the transactions contemplated by this Agreement.
4.6 Accredited Investor. The representation in this Section 4 only
applies to “accredited investors” within the meaning of Regulation D, Rule 501(a), promulgated by the Securities and Exchange Commission under the Securities Act (each an “Accredited Investor”). The Investor is an Accredited Investor and shall submit
to the Company such further assurances of such status as may be reasonably requested by the Company. The Investor has furnished or made available any and all information requested by the Company or otherwise necessary to satisfy any applicable
verification requirements as to their status as an Accredited Investor. Any such information is true, correct, timely and complete.
4.7 Residency. The residency of the Investor (or, in the case of a
partnership or corporation, such entity ‘s principal place of business) is correctly set forth on the first page of this Contract.
4.8 No Public Market. The Investor understands and acknowledges that
no public market now exists for any of the securities issued by the Company and that the Company has made no assurances that a public market will ever exist for the Company ‘s securities.
4.9 Authorization.
(a) The Investor has all requisite power and authority to execute and
deliver this Agreement, to purchase the Shares hereunder and to carry out and perform its obligations under the terms of this Agreement. All action on the part of the Investor necessary for the authorization, execution, delivery and performance of this
Agreement, and the performance of all of the Investor’s obligations under this Agreement, has been taken or will be taken prior to the beginning of the Closing Date..
(b) This Agreement, when executed and delivered by the Investor, will
constitute a valid and legally binding obligation of the Investor, enforceable in accordance with its terms except: (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting
enforcement of creditors’ rights generally and (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies or by general principles of equity.
(c) No consent, approval, authorization, order, filing, registration or
qualification of or with any court, governmental authority or third person is required to be obtained by the Investor in connection with the execution and delivery of this Agreement by the Investor or the performance of the Investor ‘s obligations
hereunder.
4.10 Brokers or Finders. The Investor has not engaged any brokers,
finders or agents, and neither the Company nor any other Investor has, nor will, incur, directly or indirectly, as a result of any action taken by the Investor, any liability for brokerage or finders’ fees or agents’ commissions or any similar charges
in connection with this Agreement.
4.11 Tax Advisors. The Investor has reviewed with its own tax advisors
the U.S. federal, state, local and foreign tax consequences of this investment and the transactions contemplated by this Agreement. With respect to such matters, the Investor relies solely on such advisors and not on any statements or representations
of the Company or any of its agents, written or oral. The Investor understands that it (and not the Company) shall be responsible for its own tax liability that may arise as a result of this investment or the transactions contemplated by this
Agreement.
4.12 Legends. The Investor understands and agrees that the certificates
evidencing the Shares, or any other securities issued in respect of the Shares upon any stock split, stock dividend, recapitalization, merger, consolidation or similar event, shall bear the following legend (in addition to any legend required under
applicable state securities laws):
“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE, AND MAY
NOT BE SOLD, TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER SUCH ACT AND/OR APPLICABLE STATE SECURITIES LAWS, OR UNLESS THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL OR OTHER EVIDENCE, REASONABLY SATISFACTORY TO THE
COMPANY AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED. “
4.13 No “Bad Actor” Disqualification Events. Neither (i) the Investor,
(ii) any of its directors, executive officers, other officers that may serve as a director or officer of any company in which it invests, general partners or managing members, nor (iii) any beneficial owner of the Company ‘s voting equity securities
(in accordance with Rule 506(d) of the Securities Act) held by the Investor is subject to any Disqualification Event (as defined in Section 3.6), except for Disqualification Events covered by Rule 506(d)(2)(ii) or (iii) or (d)(3) under the Securities
Act and disclosed reasonably in advance of the Closing Term in writing in reasonable detail to the Company.
4.14 Taxes. Investor fully understands and acknowledges the tax
consequences of the Option stated herein and declares that no claim will be brought against the Company due to this reason.
SECTION 5
CONDITIONS TO INVESTOR’S
OBLIGATIONS TO CLOSE
Investor’s right to purchase the Shares at the date of this Agreement is subject to the fulfillment on or before the date of
this Agreement of each of the following conditions, unless waived by the applicable Investor purchasing the Shares in such date:
5.1 Representations and Warranties. The representations and warranties
made by the Company in Section 3 shall be true and correct in all material respects as of the date of this Agreement.
5.2 Covenants. The Company shall have performed or complied with all
covenants, agreements and conditions contained in this Agreement to be performed or complied with by the Company on or prior to the date of this Agreement in all material respects.
5.3 Blue Sky. The Company shall have obtained all necessary Blue Sky
law permits and qualifications, or have the availability of exemptions therefrom, required by any state for the offer and sale of the Shares.
5.4 Consents and Waivers. The Company shall have obtained any and all
consents, permits and waivers necessary or appropriate for the performance by the Company of its obligations pursuant to this Agreement.
SECTION 6
CONDITIONS TO COMPANY’S OBLIGATION TO CLOSE
The Company ‘s obligation to sell and issue the Shares at the date of this Agreement is subject to the fulfillment on or
before the Closing Term of the following conditions, unless waived by the Company:
6.1 Representations and Warranties. The representations and warranties
made by the Investors in the date of this Agreement in Section 4 shall be true and correct in all material respects when made and shall be true and correct in all material respects as of the date of such date.
6.2 Covenants. The Investors shall have performed or complied with all
covenants, agreements and conditions contained in this Agreement to be performed or complied with by the Investors on or prior to the date of this Agreement.
6.3 Compliance with Securities Laws. The Company shall be satisfied
that the offer and sale of the Shares shall be qualified or exempt from registration or qualification under all applicable federal and state securities laws (including receipt by the Company of all necessary blue sky law permits and qualifications
required by any state, if any).
6.4 Consents and Waivers. The Company and the Investors shall have
obtained any and all consents, permits and waivers necessary or appropriate for consummation of the transactions contemplated by this Agreement.
SECTION 7
MISCELLANEOUS
7.1 Amendment. Except as expressly provided herein, neither this
Agreement nor any term hereof may be amended, waived, discharged or terminated other than by a written instrument referencing this Agreement and signed by the Company, Investor and the Investors holding a majority of the Common Stock issued pursuant to
this Agreement (excluding any of such shares that have been sold to the public or pursuant to Rule 144); provided, however, that Investors purchasing shares after the date of this Agreement may become parties to this Agreement in accordance with
Section 2.1 without any amendment of this Agreement pursuant to this paragraph or any consent or approval of any other Investor. Any such amendment, waiver, discharge or termination effected in accordance with this paragraph shall be binding upon each
holder of any securities purchased under this Agreement at the time outstanding (including securities into which such securities have been converted or exchanged or for which such securities have been exercised) and each future holder of all such
securities. Investor acknowledges that by the operation of this paragraph, the holders of a majority of the Common Stock issued pursuant to this Agreement (excluding any of such shares that have sold to the public or pursuant to Rule 144) will have to
approve any change concerning the rights of such Investor under this Agreement.
7.2 Notices. All notices and other communications required or
permitted hereunder shall be in writing and shall be mailed by registered or certified mail, postage prepaid, sent by facsimile or electronic mail (if to an Investor or any other holder of Company securities) or otherwise delivered by hand, messenger
or courier service addressed:
(a) if to an Investor, to the Investor’s address, facsimile number or
electronic mail address as shown in the Company’s records, as may be updated in accordance with the provisions hereof;
(b) if to any other holder of any Shares, to such address, facsimile
number or electronic mail address as shown in the Company’s records, or, until any such holder so furnishes an address, facsimile number or electronic mail address to the Company, then to the address, facsimile number or electronic mail address of the
last holder of such Shares for which the Company has contact information in its records; or
(c) if to the Company, to the attention of the Chief Executive Officer
at the current address as the Company shall have furnished to the Investors.
Each such notice or other communication shall for all purposes of this Agreement be treated as effective or having been
given (i) if delivered by hand, messenger or courier service, when delivered (or if sent via a nationally-recognized overnight courier service, freight prepaid, specifying next-business-day delivery, one business day after deposit with the courier), or
(ii) if sent via mail, at the earlier of its receipt or five days after the same has been deposited in a regularly-maintained receptacle for the deposit of the United States mail, addressed and mailed as aforesaid, or (iii) if sent via facsimile, upon
confirmation of facsimile transfer or, if sent via electronic mail, upon confirmation of delivery when directed to the relevant electronic mail address, if sent during normal business hours of the recipient, or if not sent during normal business hours
of the recipient, then on the recipient’s next business day. In the event of any conflict between the Company’s books and records and this Agreement or any notice delivered hereunder, the Company’s books and records will control absent fraud or error.
Subject to the limitations set forth in Delaware General Corporation Law §232(e), Investor or other security holder consents
to the delivery of any notice to stockholders given by the Company under the Delaware General Corporation Law or the Company ‘s certificate of incorporation or bylaws by (i) facsimile telecommunication (ii) electronic mail (iii) posting on an
electronic network together with separate notice to the Investor or other security holder of such specific posting or (iv) any other form of electronic transmission (as defined in the Delaware General Corporation Law) directed to the Investor or other
security holder. This consent may be revoked by an Investor or other security holder by written notice to the Company and may be deemed revoked in the circumstances specified in Delaware General Corporation Law §232.
7.3 Governing Law. This Agreement shall be governed in all respects by
the internal laws of the State of Delaware as applied to agreements entered into among Delaware residents to be performed entirely within Delaware, without regard to principles of conflicts.
7.4 Brokers or Finders. The Company shall indemnify and hold harmless
Investor from any liability for any commission or compensation in the nature of a brokerage or finder’s fee or agent’s commission (and the costs and expenses of defending against such liability or asserted liability) for which such Investor or any of
its constituent partners, members, officers, directors, employees or representatives is responsible to the extent such liability is attributable to any inaccuracy or breach of the representations and warranties contained in Section 3.7, and Investor
agrees to indemnify and hold harmless the Company and each other Investor from any liability for any commission or compensation in the nature of a brokerage or finder’s fee or agent’s commission (and the costs and expenses of defending against such
liability or asserted liability) for which the Company, any other Investor or any of their constituent partners, members, officers, directors, employees or representatives is responsible to the extent such liability is attributable to any inaccuracy or
breach of the representations and warranties contained in Section 4.11.
7.5 Expenses. The Company and the Investors shall each pay their own
expenses in connection with the transactions contemplated by this Agreement.
7.6 Survival. The representations, warranties, covenants and
agreements made in this Agreement shall survive any investigation made by any party hereto and the closing of the transactions contemplated hereby for one year from the date of the date of this Agreement.
7.7 Successors and Assigns. This Agreement, and any and all rights,
duties and obligations hereunder, shall not be assigned, transferred, delegated or sublicensed by any Investor without the prior written consent of the Company, unless otherwise stated in this Agreement. Any attempt by an Investor without such
permission to assign, transfer, delegate or sublicense any rights, duties or obligations that arise under this Agreement shall be void. Subject to the foregoing and except as otherwise provided herein, the provisions of this Agreement shall inure to
the benefit of, and be binding upon, the successors, assigns, heirs, executors and administrators of the parties hereto.
7.8 Entire Agreement. This Agreement, including the exhibits attached
hereto, constitutes the full and entire understanding and agreement between the parties with regard to the subjects hereof. No party shall be liable or bound to any other party in any manner with regard to the subjects hereof by any warranties,
representations or covenants except as specifically set forth herein.
7.9 Delays or Omissions. Except as expressly provided herein, no delay
or omission to exercise any right, power or remedy accruing to any party to this Agreement upon any breach or default of any other party under this Agreement shall impair any such right, power or remedy of such non-defaulting party, nor shall it be
construed to be a waiver of any such breach or default, or an acquiescence therein, or of or in any similar breach or default thereafter occurring, nor shall any waiver of any single breach or default be deemed a waiver of any other breach or default
theretofore or thereafter occurring. Any waiver, permit, consent or approval of any kind or character on the part of any party of any breach or default under this Agreement, or any waiver on the part of any party of any provisions or conditions of this
Agreement, must be in writing and shall be effective only to the extent specifically set forth in such writing. All remedies, either under this Agreement or by law or otherwise afforded to any party to this Agreement, shall be cumulative and not
alternative.
7.10 Severability. If any provision of this Agreement becomes or is
declared by a court of competent jurisdiction to be illegal, unenforceable or void, portions of such provision, or such provision in its entirety, to the extent necessary, shall be severed from this Agreement, and such court will replace such illegal,
void or unenforceable provision of this Agreement with a valid and enforceable provision that will achieve, to the extent possible, the same economic, business and other purposes of the illegal, void or unenforceable provision. The balance of this
Agreement shall be enforceable in accordance with its terms.
7.11 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be enforceable against the parties actually executing such counterparts, and all of which together shall constitute one instrument.
7.12 Telecopy Execution and Delivery. A facsimile, telecopy or other
reproduction of this Agreement may be executed by one or more parties hereto and delivered by such party by facsimile or any similar electronic transmission device pursuant to which the signature of or on behalf of such party can be seen. Such
execution and delivery shall be considered valid, binding and effective for all purposes. At the request of any party hereto, all parties hereto agree to execute and deliver an original of this Agreement as well as any facsimile, telecopy or other
reproduction hereof.
7.13 Arbitration. The parties shall attempt to resolve all disputes
between the parties arising out of or relating to this Stock Purchase Agreement amicably through good faith discussions upon the written request of any party. In the event that any such dispute cannot be resolved thereby within a period of thirty (30)
days after such notice has been given, such dispute shall be finally resolved by binding arbitration in Delaware, using the English language in accordance with the Arbitration Rules and Procedures of JAMS then in effect. The Parties agree that they
shall attempt to select an Arbiter by Agreement, but should they come to such an agreement, the parties shall select an arbitrator in accordance with the arbitrator selection procedures set forth in the Arbitration Rules and Procedures of JAMS then in
effect. The parties agree that the presiding arbitrator shall have the jurisdiction to resolve any disputes arising out of or relating to this Stock Purchase Agreement. The parties consent to the exercise of personal jurisdiction over each of them by
the federal and state courts within the State of Delaware for the purposes of enforcing any arbitration award that may result from arbitration proceedings instituted to resolve any disputes arising out of or related to this Stock Purchase Agreement, or
to prevent any threatened violation of this Stock Purchase Agreement.
7.14 Jury Trial. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES,
TO THE FULLEST EXTENT PERMITTED BYLAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING (WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATED TO THIS AGREEMENT.
7.15 Attorney’s Fees. In the event that any suit or action is instituted
to enforce any provisions in this Agreement, the prevailing party in such dispute shall be entitled to recover from the losing party all fees, costs and expenses of enforcing any right of such prevailing party under or with respect to this Agreement,
including without limitation, such reasonable fees and expenses of attorneys and accountants, which shall include, without limitation, all fees, costs and expenses of appeals.
7.16 Further Assurances. Each party hereto agrees to execute and
deliver, by the proper exercise of its corporate, limited liability company, partnership or other powers, all such other and additional instruments and documents and do all such other acts and things as may be necessary to more fully effectuate this
Agreement.
7.17 SPECIAL AMENDMENT BY COMPANY. NOTWITHSTANDING ANY PROVISION IN THIS
AGREEMENT TO THE CONTRARY, THE COMPANY MAY UNILATERALLY AMEND IN GOOD FAITH THIS AGREEMENT, WITHOUT THE CONSENT OF INVESTOR TO MAKE A CHANGE THAT IS NECESSARY OR DESIRABLE TO CURE ANY AMBIGUITY OR INCONSISTENCY AND TO MAKE CHANGES TO SATISFY ANY
REQUIREMENTS, CONDITIONS OR GUIDELINES CONTAINED IN ANY OPINION, DIRECTIVE, ORDER, RULING, REGULATION OR STATUTE OF ANY GOVERNMENTAL BODY THAT WILL NOT BE INCONSISTENT WITH THIS AGREEMENT, AND IN ANY CASE SUBJECT TO THE REQUIREMENT THAT THE INVESTOR
NOT BE MATERIALLY AND ADVERSELY AFFECTED. SHOULD THIS HAPPEN, THE COMPANY SHALL PROMPTLY NOTIFY THE INVESTOR WITHIN (10) BUSINESS DAYS.
(signature page follows)
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its duly authorized representative and Investor has executed this
Agreement, as of the Effective Date.
H2B2 ELECTROLYSIS TECHNOLOGIES, INC.
/s/ Javier Brey Sánchez |
|
|
|
|
Title: |
CEO/President |
|
|
|
|
Dated: |
28th June 2021
|
|
|
|
|
Florencio Ferrera Saldaña
|
|
|
|
|
/s/ Florencio Ferrera Saldaña |
|
|
|
|
Dated:
|
29 June 2021 |
|
Exhibit 10.17
IN ACCORDANCE WITH ITEM 601(A)(6) OF REGULATION S-K, CERTAIN INFORMATION HAS BEEN OMITTED
FROM THIS EXHIBIT BECAUSE IT CONTAINS PERSONALLY IDENTIFIABLE INFORMATION.
[***] INDICATES THAT INFORMATION HAS BEEN REDACTED.
INDEFINITE EMPLOYMENT CONTRACT
COMPANY DATA
CIF/NIF/NIE
[***]
|
|
|
Mrs.
ARESTI ESCRIVA DE ROMANI,
|
NIF/NIE
[***]
|
AS (1)
DIRECTOR
|
COMPANY NAME
H2B2 ELECTROLYSIS TECHNOLOGIES, S.L.
|
REGISTERED OFFICE
[***]
|
19 EN
|
COUNTRY |
MUNICIPALITY |
C. POSTAL
[***]
|
|
|
[***] |
|
|
|
|
|
|
|
QUOTE ACCOUNT DATA
REGIMEN |
|
CODE. PROV. |
NUMBER |
DIG. CONTR. |
ECONOMIC ACTIVITY |
[***] |
|
[***] |
[***] |
[***] |
|
[***] |
|
|
|
|
|
|
|
|
|
WORK CENTER DATA
COUNTRY |
MUNICIPALITY |
|
|
[***] |
41038 |
|
|
|
|
EMPLOYEE DATA
D./Ms.
BENJUMEA LLORENTE, FELIPE
|
NIF/NIE
[***]
|
DATE OF BIRTH
[***]
|
No. OF AFFILIATION S.S.
[***]
|
TRAINING LEVEL |
NATIONALITY |
[***] |
55 |
[***] |
724 |
MUNICIPALITY OF DOMICILE |
DOMICILE COUNTRY |
[***] |
28079 |
|
724 |
|
|
|
|
|
|
|
|
|
|
with the legal assistance, if applicable, of Mr./Ms. ________________ with NIF./NIE.______, in its capacity as (2)________________.
That they meet the requirements for the execution of this contract and, consequently, agree to formalize it in accordance with the following:
FIRST: The worker will provide his services as STRATEGY MANAGER included in the professional group of STRATEGY MANAGER for the performance of the functions (4)
STRATEGY MANAGER in accordance with the professional classification system in force in the company. In the work center located at (street, no. and town) [***]
☐ |
REMOTE WORK, at the address located at |
and town) |
|
SECOND: The contract is concluded to carry out periodic seasonal work consisting of ________________ (5) within the intermittent cyclical activity of (6)
________________ whose duration will be (7) ________________
The estimated duration of activity will be (8) ________________________. Workers will be called in the order and form determined in the Collective
Agreement of ENGINEERING COMPANIES AND OFFICES OF TECHNICAL STUDIES. The estimated day within the activity period will be ___hours (9) ______and the hourly distribution will be
If the collective bargaining agreement on a sectoral level allows for the use of part-time in discontinuous fixed contracts, indicate whether is welcome to the same Yes ☐ NO ☒ |
|
|
THIRD: The working hours will be:
☒ |
Full-time: the workday will be 40 hours per week, provided from Monday to Friday, with breaks established legally or
conventionally |
|
|
☐ |
Part-time: the regular workday will be _______________, hours ☐ per day,☐ per week, ☐
per month, ☐ per year (10)
|
|
This day is less than that of a comparable full-time worker |
The distribution of work time will be (10) in ________________ accordance with the provisions of the collective agreement.
In the case of part-time work, indicate whether or not there is an agreement on the performance of additional hours (11):
Yes ☐ No ☐
FOURTH: The duration of this contract will be INDEFINITE, with the employment relationship starting on 10/01/16 and a probationary period of (12) n/a is
established.
FIFTH: The worker will receive a total remuneration of €100,000 gross (15) ANNUALLY that will be distributed in the following salary items (14) CBA SALARY
+ NOT CONSOLIDABLE IMPROVEMENTS
SIXTH: The duration of the annual vacation will be (15) 23 working days.
SEVEN: In what is not provided for in this contract, the current legislation resulting from the application will be followed, and in particular,
the Workers’ Statute, approved by Royal Legislative Decree 2/2015, of 23 October (BOE of 24 October) and in the Collective Agreement of ENGINEERING COMPANIES AND OFFICES OF TECHNICAL STUDIES.
EIGHTH: This contract is formalized under the modality of the respite contract: YES ☐ NO ☒
Worker:
☐ |
That he/she is unemployed and registered as a plaintiff in the Public Employment Service of |
|
|
☐ |
That it has entered into a contract with the company for a certain duration that was registered with the Public Service of Employment of __________, with the number ______dated |
The Company Representative:
That the company worker, Mr/Mrs. _______________________ born on _____________, who provides her services at the work center located at (street,
no. and town) [***], with the occupation of_____________ , included in the professional group/job/level/category ____________in accordance with the professional classification system in force in the company that reduces its ordinary working
hours and salary by one ____(18), for accessing the partial retirement situation, regulated in Royal Decree-Law 5/2013 of March 15, it has signed on ________and until ________ the corresponding part-time employment contract registered with the Public
Employment Service ________ under number _______ and on______.
NINTH: THIS CONTRACT MAY BE CO-FUNDED BY THE EUROPEAN SOCIAL FUND.
TEN: The content of this contract will be communicated to the Public Employment Service of MADRID, within 10 days of its agreement.
ELEVENTH: DATA PROTECTION.- The data included in this form will be protected by the Organic Law 15/1999, of 13 December (BOE of 14 December).
|
(1) |
Director, Manager, etc. |
|
(2) |
Parent, guardian, or person or institution under his or her care. |
|
(3) |
Indicate the corresponding professional group or professional level, according to the professional classification system in force in the company. |
|
(4) |
Indicate profession. Roles can be all or only some of the roles in the professional group. |
|
(5) |
Indicate the professional activity to be carried out by the worker. |
|
(6) |
Indicate the discontinuous or seasonal fixed activity of the company and its duration. |
|
(7) |
Indicate the duration of the activity to be carried out by the worker. |
|
(8) |
Daily, weekly, monthly or annual. Detail Agreement. |
|
(9) |
Indicate the number of hours according to the collective bargaining agreement for full-time, legal maximum or full-time worker. |
|
(10) |
Indicate the employee’ working hours. |
|
(11) |
Indicate as appropriate and if so, attach the annex if there are continuation sheets. |
|
(12) |
Respecting the provisions of art. 14.1 of the Consolidated Text of the Workers’ Statute Law, approved by Royal Legislative Decree 1/1995, of 24 March (BOE of 29 March).In
the event of applying art. 4 of Law 31/2012, the trial period will be one year. Indicate what is applicable and, if so, attach the annex if there are additional hours. |
|
(13) |
Daily, weekly, monthly or annual. |
|
(14) |
Base salary, salary supplements, bonuses. |
|
(15) |
Minimum: 30 calendar days. |
|
(16) |
A minimum of 25% and a maximum of 75% |
That the INDEFINITE CONTRACT that is entered into (check the corresponding box) is made with the following specific clauses:
☒ |
INDEFINITE ORDINARY WITH OR WITHOUT QUOTA REDUCTION. |
Pg. 4 |
☐ |
OF PEOPLE BENEFITING FROM THE NATIONAL YOUTH GUARANTEE SYSTEM |
Pg. 5 |
☐ |
OF PEOPLE WITH DISABILITIES.
|
Pg. 6
|
☐ |
OF PEOPLE WITH DISABILITIES IN SPECIAL EMPLOYMENT CENTERS. |
Pg. 7 |
☐ |
OF PEOPLE WITH DISABILITIES FROM WORK ENVIRONMENTS. |
Pg. 8 |
☐ |
OF LONG-TERM UNEMPLOYED PEOPLE. |
Pg. 8 |
☐ |
OF WORKERS IN A SITUATION OF SOCIAL EXCLUSION, VICTIMS OF GENDER-BASED VIOLENCE, DOMESTIC, VICTIMS OF TERRORISM, OR VICTIMS OF HUMAN TRAFFICKING. |
Pg. 9 |
☐ |
OF EXCLUDED IN INSERTION COMPANIES. |
Pg. 10 |
☐ |
OF THE FAMILY MEMBER OF THE SELF-EMPLOYED PERSON. |
Pg. 11 |
☐ |
OVER THE AGE OF 52 BENEFICIARIES OF UNEMPLOYMENT SUBSIDIES. |
Pg. 12 |
☐ |
FROM A CONTRACT FOR ETT TRAINING AND LEARNING. |
Pg. 13 |
☐ |
FROM A CONTRACT IN ETT PRACTICES. |
Pg. 14 |
☐ |
OF FAMILY HOME SERVICE. |
Pg. 15 |
☐ |
OTHER SITUATIONS. |
Pg. 16 |
☐ |
CONVERSION OF TEMPORARY CONTRACT INTO INDEFINITE CONTRACT. |
Pg. 17 |
and meets the requirements of the regulatory standard.
☐ |
☐ |
WITHOUT SPECIFIC CLAUSES (ORDINARY) |
|
|
|
☐ |
☒ |
INDEFINITELY WITH REDUCTION OF QUOTAS TO THE SOCIAL SECURITY SYSTEM LAW 25/2015 |
☐
That the worker is admitted to the Employment Activation Program and is in possession of the accreditation document or SEPE
resolution.
In witness whereof, this contract is executed in three copies at the place and date above mentioned and signed by the parties hereto.
In DOS HERMANAS |
|
on 01 OCTOBER 2016 |
/s/ Felipe Benjumea Llorente
|
/s/ María Aresti Escrivá de Romaní
|
The Employee |
The Company’s representative |
ADDITIONAL CLAUSES TO THE EMPLOYMENT AGREEMENT
FIRST.- ENTRY INTO FORCE AND TERM OF THE AGREEMENT
The agreement is agreed for an indefinite term, entering into force on 1 October 2016, and is subject to the trial periods established by the
Legislation in force. When the Agreement is suspended for any of the reasons provided for in the Legislation in force at any time, such suspension shall automatically entail the suspension of the trial period. This trial period shall be restarted as
soon as the Agreement is resumed, with only the trial period that has elapsed until its suspension being counted.
SECOND.- OBJECT OF THE AGREEMENT
The Professional shall provide his services as an engineer.
In this respect, the Professional shall provide his services to the Company on an exclusive basis with respect to the direct or indirect
competition of the Company. In other words, the Professional shall be free to alternate his services to the Company with other professional services provided that:
|
● |
Comply with the obligations established in this employment agreement |
|
● |
Professional services performed outside the Company are not provided, directly or indirectly, for the direct or indirect competition of the Company. |
This consideration is included in the agreement with respect to the agreed remuneration. Specifically, 10% of the agreed remuneration is
specifically attributed to compensation for this obligation, which is expressly considered appropriate by the Professional.
THIRD.- WORKING HOURS
The Professional shall work full time, i.e. forty (40) hours per week, within the working hours in force in the Company at any given time.
For the purposes of calculating the maximum working hours, the obligatory break in each continuous working hours and the periods devoted to
voluntary professional training shall not be considered as effective working time.
Likewise, the time spent by the Professional travelling or waiting shall not be counted for the purposes of the maximum working hours, unless
during this time they carry out activities specific to their profession or activity for the Company.
Any such travel or waiting time shall be taken into account in determining their remuneration.
The timetable and distribution of working time shall likewise be that in force in the Company at each specific moment in time.
In order to allow for an irregular distribution of the agreed working day according to the pace of activity, the duration of the working day
shall be calculated on an annual basis, so that the hours of daily excess can be compensated in equivalent rest time within the agreed annual reference period.
The time devoted to education and vocational training for the Professional may be concentrated or alternated with that devoted to the provision
of services for the Company, according to the phases of the training process to be established.
FOURTH.- WORKPLACE
The Professional will initially provide his services at the work center of [***].
In any case, taking into account the corporate purpose of the Company and the staff and/or potential clients spread throughout Spain and abroad,
the Professional undertakes to travel to the appropriate place to provide services to clients in the best possible conditions, as often and for as long as necessary for this purpose.
The reimbursement of travel and subsistence expenses arising from the Professional’s travel shall be made in accordance with the policies and
systems in force from time to time in the Company.
Such reimbursements shall not be considered salary and shall only be subject to tax or withholding when they exceed the limits established by the
legislation in force from time to time.
FIFTH.- HOLIDAYS, BREAKS, PUBLIC HOLIDAYS AND LEAVES OF ABSENCE
The Professional shall be entitled to the holiday days, rest days, public holidays and leaves of absence established in the applicable
regulations, the collective bargaining agreement and the internal policies of the Company.
In any case, the Professional’s choice of the aforementioned holiday periods and their approval by the Company shall be based on the matters
entrusted to him or the actions to be performed by the Professional.
SIXTH.- REMUNERATION
The Professional shall receive a total remuneration equal to that established in this same Agreement, which shall be distributed in the salary
items that, where appropriate, the Company may provide for in fourteen (14) instalments. The aforementioned remuneration includes all legally or, if applicable, conventionally applicable items, as well as the compensation for exclusivity foreseen in
Clause Two above.
Tax withholdings and deductions, Social Security contributions or any other legally applicable deductions and shall be applied to the
aforementioned items.
SEVENTH.- SUSPENSION OF THE EMPLOYMENT AGREEMENT
The agreement shall be suspended for the reasons and with the effects set out in Article 45 et seq. following of the Worker’ Statute.
In the event of voluntary leave of absence, if the Professional exercises his profession in other companies competing with the Company during the
same, without the corresponding prior authorization from the latter, he shall lose the right to reinstatement, and the Agreement shall be terminated for all effects and purposes.
EIGHTH.- TERMINATION OF THE AGREEMENT
The Professional may terminate the Agreement at his own will with the obligation to expressly notify the Company of this decision at least
fifteen (15) days in advance.
Failure by the Professional to comply with his duty to give notice shall give rise to his obligation to compensate the Company with an amount
equivalent to the remuneration corresponding to the period of notice not given, as well as with the amount of any damages that may have been caused to him.
The Company may terminate the Agreement for the causes established in current legislation, as well as in the following cases:
|
I. |
When there is a manifest and serious breach of trust between the Professional and the Company arising out of the Professional’s professional conduct or his relationship with clients. |
|
II. |
When it becomes evident that the Professional does not maintain an adequate professional level and, consequently, cannot exercise the profession with full guarantees for the interests of his
client. |
In the event of dismissal declared null and void, both parties establish that the Professional shall not be reinstated, being replaced by the
payment of the compensation provided for unfair dismissal, as well as, if applicable, the corresponding processing salaries.
In any case, and regardless of the cause of termination, the Professional must inform his managers at the Company of the situation of the matters
in which he has been involved and shall make the corresponding documentation available to the Company so that the matters can be handled and the services offered by the Company can be continued.
Failure to comply with this obligation shall entitle the Company to take legal action, in accordance with articles 1.152 and 1.153 of the Civil
Code, in order to recover any damages it may have incurred.
NINTH.- CONFIDENTIALITY
During the term of the Agreement, the Professional shall have access to information belonging to the Company (including its partners, employees
and external staff) and to clients, suppliers or third parties related to the Company, and it is therefore agreed that such information, to the fullest extent and regardless of the medium in which it is found, is absolutely confidential and is
expressly subject to the duty of confidentiality. All of the above is independent of the ethical obligations arising from the exercise of the Professional’s profession, which shall in all cases reinforce the confidentiality and reserve nature of the
information.
By virtue of the foregoing, both during the term of the Contract and upon its termination, the Professional may not, directly or indirectly, use,
disclose, divulge, supply or make available for use (except in cases where it is necessary for the proper performance of his obligations) by third parties or for his own benefit, any information, data, products, procedures, methods, formulas, forms,
models, lists of clients or jobs, plans, as well as any other business, internal or organizational information of the Company, its clients, suppliers and other employees, positions, administrators or external professionals.
Failure to comply with any of the foregoing obligations shall be considered a breach of contractual good faith and breach of trust in the
performance of work, punishable even by disciplinary dismissal. Irrespective of the foregoing, such breach shall give rise to compensation for damages caused to the Company or its clients.
Upon termination of the employment relationship for any reason, the Professional shall deliver to the Company all goods, equipment or working
tools provided for the performance of his work, including computers and magnetic media used, as well as, by way of example, the notes or documents (whatever their medium, including magnetic and computer media) that may have been made by the
Professional, or with his collaboration, or that have come into his possession in any way, and which shall in any case be the property of the Company. The Professional may not retain or appropriate copies of the above documents, nor allow them to be
used by any other person outside the Company.
In addition to the obligation to comply with the computer filing systems established by the Company during the term of the Contract, the
Professional shall, upon termination of said relationship, have recorded or filed all the professional documents or documents related to his activity in the Company that he has in his files where indicated by the Company. In the event of failure to do
so, the Professional hereby authorizes the Company to access his personal files for the sole purpose of retrieving the documents of a professional nature or relating to his activity that he has not filed in the manner provided for in this paragraph.
The Professional declares that he is aware of and accepts the “Policy on the use and control of technological resources and communication
systems”, on the regulations governing the use of electronic tools, which is attached as an annex to the Contract and of which it forms an integral part.
TENTH.- INTERNAL POLICIES AND ETHICAL STANDARDS
The Professional must comply with all internal and
professional policies and standards indicated by the Company, as well as respect the ethical standards of the profession at all times.
ELEVENTH.- INTELLECTUAL AND INDUSTRIAL PROPERTY
The Professional acknowledges that all services
performed by him on behalf of the Company or its clients, as well as the result thereof, are the property of the Company to the fullest extent and are the cause of the Contract, whatever their content, medium or manifestation.
Therefore, the Professional hereby assigns to the
Company, on an exclusive basis, all creations expressed by any means or medium, tangible or intangible, currently known or to be invented later, contained in the Intellectual Property Law, which have been made by the Professional during the term of
the Agreement within the employment relationship and the services or activity carried out by the Professional for the Company or for the Professional’s clients, or for the Company’s activities in relation to third parties. All of the above has been
taken into account by both parties when setting the Professional’s remuneration, and therefore shall not entail any additional financial compensation.
Likewise, the Professional may not take possession
of any rights deriving from industrial property legislation related to the Company’s usual activity.
By virtue of the foregoing, the Professional shall
sign the Assignment of Intellectual and Industrial Property Rights document, which is attached as an annex to the Agreement and of which it forms an integral part.
TWELFTH.- APPLICABLE LAW
In all matters not provided for in the Agreement, the labour legislation in force from time
to time shall apply.
THIRTEENTH.- DATA PROTECTION
In accordance with the current Law 15/1999, of 13
December, on the Protection of Personal Data and Royal Decree 1720/2007, of 21 December, the Professional expressly consents and authorizes the Company to:
|
● |
Include the data provided as part of the Agreement, those that may be provided in the future, as well as any other data that may be generated
as a result of the employment relationship, in the employee data file maintained by the Company. |
|
● |
To process such data for the purpose of using them for the management of the employment relationship or of the Company’s commercial or other
relationships with other companies and organizations, as well as to maintain them once the employment relationship has ended, in this case solely for the fulfilment of legal obligations. |
|
● |
To transfer the aforementioned data to the companies and organizations mentioned in the previous paragraph and to other companies that may
belong to the same group of companies as the Company, both in Spain and abroad, including countries that do not provide a level of protection comparable to that offered by Spanish legislation, for the same purposes described in the previous
paragraph. |
In accordance with the provisions of the
aforementioned Law 15/1999, the affected party has the rights of opposition, access, rectification and cancellation with respect to the data provided, which may be exercised in accordance with the applicable legislation, by writing to the person in
charge who is notified or, failing that, to the person in charge of human resources. The Professional’s data will be treated by the Company in a confidential manner and with the maintenance of due security conditions that prevent its alteration, loss
or unauthorized access by third parties.
In addition, the Professional accepts:
|
1. |
Maintain absolute confidentiality, reserve and strict professional secrecy with respect to information and / or personal data that may become
known on the occasion of the performance of the services provided, not disclosing, publishing, disseminating or making it available to third parties, either directly or indirectly, without the prior written consent of H2B2 Electrolysis
Technologies S.L., not even for the purpose of conservation. |
|
2. |
Observe and adopt the security and privacy measures established by H2B2 Electrolysis Technologies S.L. for information and personal data to
ensure the confidentiality, secrecy, availability and integrity of personal data to which it has access, as well as to observe and implement all security measures required by the legislation to regulate the processing of personal data and
confidential information. |
|
3. |
In the event that, for any reason related to their work, they come into possession of confidential information - regardless of the type of
medium on which it is held - it is understood that this possession is strictly temporary, with an obligation of secrecy and without this conferring any right of possession or ownership or copy of the information. Likewise, all those supports,
or materials must be returned to H2B2 Electrolysis Technologies S.L., or destroyed, immediately after the end of the tasks that have originated the temporary use of the same, and in any case, at the end of the project or the employment
relationship. |
This obligation shall survive the termination of your relationship with
the owner of the information or, where applicable, with H2B2 Electrolysis Technologies S.L.
Failure to comply with these measures could be considered as an
employment offence and lead to disciplinary sanctions.
In addition, the Professional knows that it is forbidden to send
confidential information of the Company to the outside, by means of material supports or by any means of communication, including the simple visualization or access, with the exception
of the express authorization of the File Manager. Likewise, the Professional shall keep, for an indefinite period of time, the utmost confidentiality and shall not disclose or use, either directly or through third parties or companies, personal data,
confidential information, documentation and other information of a personal nature. confidential information, documentation and other information to which he has access during his working relationship with the Company, whether in documentary or
electronic format.
In the event that, for reasons directly related to the job, the
Professional comes into possession of confidential information in any type of support, it shall be understood that this possession is strictly temporary, with the obligation to This circumstance does not grant him any right of possession or ownership
or copy of the aforementioned information.
The Professional will have to return the aforementioned materials to the
Company or destroy them, once the tasks that have given rise to their temporary use have been completed and, in any case, at the end of the employment relationship.
The continued use of the information, in any format or medium, in a
manner different from that agreed and without the knowledge of the Company, shall not, under any circumstances, imply a modification of this clause.
The Professional may not:
|
● |
Create personal data files without the authorization of the Data Controller. |
|
● |
Cross-reference information relating to data from different files or services, without the express authorization of the Data Controller |
|
● |
Carry out any other activity expressly prohibited in this document, the Instructions of the Data Protection Officer or in the regulations on data protection. |
In relation to the temporary files, the Professional and the Company
agree that:
|
● |
They may be created from existing files. |
|
● |
The same security rules as those applied to the original files must be maintained and complied with. |
|
● |
A temporary file will maintain the same purpose for which the original file was defined. |
|
● |
Once the life of the temporary file has ended, it will be deleted. |
In the event that these obligations and rights have to be applied to
files on non-automated media, it is agreed that:
|
● |
Files in paper format have the same status as computer files, and are applied in the same way by Law 15/1999 on the Protection of Personal Data, with the same criteria:
duty of secrecy, correct use, access only by authorized users, etc. |
|
● |
The documentation used by each Professional in the course of his or her work is the property of the Company. |
|
● |
The Professional is responsible for the custody and confidentiality of documentation containing personal data while they are in use. |
|
● |
It is mandatory to ensure that the documents processed are not destroyed or damaged. |
|
● |
The disclosure of the documents without the express authorization of the Company is expressly prohibited. |
Finally, the Company and the Professional agree
that once the legal validity and processing needs have expired, the media containing personal data shall be destroyed in a controlled manner. When the files are automated, the Security Officer shall be notified of their obsolescence and shall apply
the necessary measures to destroy them. In the case of non-automated files, each user shall be responsible for the correct application of the measures to ensure that the information is not recoverable, in accordance with the Company’s instructions.
FOURTEENTH.- TRADE UNION REPRESENTATION
The Company does not have trade union representation at the time of signing this agreement.
FIFTEEN.- OCCUPATIONAL RISK
The Professional has been informed of the risks of
his workplace, of the protection systems and their use, as well as of the actions and evacuation in the event of an emergency.
SIXTEEN.- NULLITY OF THE AGREEMENT
The nullity or total or partial invalidity of any
of the clauses of the Agreement shall not imply the nullity or invalidity of the partially affected clause or of the Agreement as a whole, unless there is a manifest imbalance between the rights and obligations assumed by the parties.
SEVENTEENTH.- AMENDMENTS
The Agreement may not be cancelled, changed,
modified or amended orally, and its cancellation, change, modification or amendment shall not be effective or binding unless made in writing and signed by the parties.
EIGHTEENTH.- COMPETENT JURISDICTION
Any conflict that may arise in interpretation or application of the
agreement must be settled before the Social Courts.
In witness whereof, this Agreement is issued in three counterparts at
the place and on the date indicated below, signed by the interested parties.
In Dos Hermanas, on 2 June 2016.
/s/ Felipe Benjumea Llorente
|
/s/ María Aresti Escrivá de Romaní
|
The Professional |
The Company |
POLICY FOR THE USE AND CONTROL AND CONTROL OF TECHNOLOGICAL RESOURCES AND COMMUNICATION SYSTEMS OF THE COMPANY
|
1 |
Object, purpose and scope of the application |
The Company implements this Policy on the Use and Control of Technology Resources and communication systems for the purpose of:
|
• |
Verify the correct functioning of the technological resources and communication systems under the ownership or license of the Company and made available to the user. |
|
• |
Ensure the security, performance, reliability, privacy and confidentiality of communications and their content. |
|
• |
Preserve user privacy and security and generally ensure effective service delivery compliance. |
The Company and the user are aware of the need for adequate use of technological resources and communication systems in the provision of the
service.
The Company and the user acknowledge that they are aware of this policy and assume the commitments and standards for the proper use of
technological resources and communication systems, taking all appropriate measures for their strict compliance.
For this purpose, the Company may carry out the necessary investigations and controls of the technological resources provided to the user by the
Company.
For the purposes of the policy on the use and control of technological resources and communication systems, the following shall be understood:
Technology Resources: Elements that integrate Information and Communication Technologies, such as electronic devices, software, hardware,
cabling, nodes and access to public or private networks, servers and in general all infrastructure used by communication systems.
Communication Systems: They include landline, mobile, IP telephony, fax, e-mail, instant messaging systems, peer-to-peer networks or any other
electronic means that the Company makes available to the user to communicate within the scope of the provision of services.
Use and Control Policy: The set of provisions that regulate, in this document, the use and control of the Technology Resources and Communication
Systems intended for the fulfillment of the purposes of the Company.
User: Refers to those persons who, within the scope of their provision of services, use the Communication Systems and Technology Resources under
the ownership or license of the Company.
Systems Officer: Responsible for the management and administration of Communication Systems and Technology Resources, as well as for resolving
problems and incidents arising from their use. For these purposes, the Company will communicate to the User the identity of the System Officer.
Security Officer: Responsible for directing the measures and actions for compliance with this Use and Control Policy. For these purposes, the
Company will communicate to the User the identity of the Security Manager.
|
1.2 |
Ownership of Technology Resources and Communication Systems |
All Technology Resources and Communication Systems made available to the User are owned or licensed by the Company and, for this purpose, the use
of the aforementioned resources and systems must be made in accordance with this Use and Control Policy and the prescriptions imposed by the license holder.
|
1.3 |
Access to Technology Resources and Communication Systems |
All access to the Technological Resources and Communication Systems shall be controlled and authorized by the System Officer. It is strictly
forbidden for the User to attempt to access the Communication Systems or Technological Resources to which he does not have express authorization from the Systems Officer.
All authorized Users have access to the Communication Systems by means of a personal and non-transferable user name and password, undertaking to
treat it with the utmost diligence and confidentiality, being solely responsible for its proper use.
The Authorized User shall be solely and directly responsible for everything executed in the system under his user name and password. Likewise,
attempts, by any means, to obtain access to passwords of other users without their consent are strictly forbidden.
It is forbidden to divulge by any means the access codes to any of the services provided to the User, who undertakes to notify the Systems
Officer and/or the Security Officer immediately of any incident or anomaly detected in the accesses to the Communication Systems or in the security of the same.
The User undertakes to respect the rights of third parties in the shared use systems, undertaking not to access the private information of other
Users without prior authorisation. Likewise, the User undertakes not to share files or documents of any kind with other users without implementing the necessary measures to guarantee the security of the information and operating systems. Any identity
theft will be sanctioned in accordance with the applicable legislation in force.
|
(ii) |
Systems Officer and Security Officer Access |
The Systems Officer and Security Officer is obliged to act with absolute diligence, keeping all data, documents and other information to which he
may have access in the performance of his duties completely confidential. By way of example, but not limitation, the following may be included:
|
• |
Access to Technology Resources and Communication Systems to carry out maintenance tasks. |
|
• |
Access to Technology Resources and Communication Systems for security reasons. |
|
• |
Authorize the Users’ access to the Communication Systems that they require for the fulfillment of their tasks. |
|
• |
Access to Technology Resources and Communication Systems due to security incidents. |
In any case, both the Systems Officer and the Security Officer have the duty and obligation to keep absolutely confidential all information to which they have access
for the performance of their activities, and it is strictly forbidden to communicate or provide it, directly or indirectly, to any third party.
|
2 |
Assignment of passwords and password policy |
|
2.1 |
Password assignment procedures |
Each User with authorized access to the Company’s Technology Resources and Communication Systems will have a personalized username for their
identification, as well as a password to access the Communication Systems.
The communication to the User of their username and password will be provided by the Security Officer, who will communicate it personally or by
email, guaranteeing in any case their confidentiality and secrecy, as well as providing the User with the possibility of subsequently modifying only the password.
All incidents in the use of the Company’s Technology Resources, or that by any circumstance, direct or indirect, may compromise the security of
the information, must be notified as soon as possible to the Security Officer. The Security Officer will be responsible for recording, diagnosing and monitoring all incidents reported by Users. In addition, you must keep the incident record up to date,
specifying the type of incident and the resolution thereof, periodically checking that the incidents are resolved, and the security of the communication is guaranteed.
|
2.3 |
Security, Confidentiality and Data Protection |
The Company and the User undertake to keep the communications secret, respect the privacy and confidentiality of all the Company’s data and
information stored in the Company’s Technology Resources and Communication Systems, and not assign to third parties the data and information both those of the Company and those of a personal nature obtained in the fulfillment of its direct activities or any other of the business sphere, in accordance with the Law on the Protection of Personal Data and other applicable regulations.
|
3 |
Use of Technology Resources and Communication Systems |
The User undertakes to respect the integrity and proper use of the Technological Resources and Communication Systems whose ownership or licence
belongs to the Company and to which he has access for the performance of the tasks within the scope of the provision of the service, it being strictly forbidden to carry out or facilitate any third party in the commission of any of the following
events:
|
• |
Alter all or part of the hardware, software and operating system configurations of the computer equipment assigned to the same User or other users, without proper authorization. |
|
• |
Use unauthorized computer applications that saturate networks, servers, or hinder the operation of computer equipment. |
|
• |
Make privilege or permission modifications without authorization from the System Officer. |
|
• |
Cause physical or logical damage, due to misuse or negligence, to computer equipment, applications, computer tools and any technological device or means. |
|
• |
Developing or accidentally or intentionally using malicious programs or access to resources restricted by the Systems Administrator. |
|
• |
Failure to maintain with due diligence any keys, passwords, Usernames or any other identifiers that may be provided to the User for use any of the tools, or to access equipment or systems owned or licensed by the Company. |
|
3.2 |
Use of personal email |
|
• |
The use of personal email accounts based on web access (but not limited to: gmail, hotmail or yahoo), as well as the instant message services authorized by the Company but not limited to: whatsapp, telegram, line...), may only be used in the
scope of the provision of services for the fulfillment thereof, excluding their use for a recreational purpose. |
|
• |
The use of personal email, as well as instant messaging services through the Company’s Technology Resources and Communication Systems for personal and private purposes is strictly prohibited. |
|
• |
The forwarding of your own work documentation to personal email accounts or those outside the scope of the provision of the service within the Company is strictly prohibited. |
|
3.3 |
Use of Corporate Mail |
Corporate email, distribution lists, instant messaging services and other electronic communication services authorized by the Company are tools
whose purpose is the provision of the service by the User. The Company and the User agree that the use of the Technology Resources and Communication Systems and dissemination of the information will be subject to the following conditions:
|
• |
The use of Communication Systems and Technology Resources for activities outside the provision of the service is prohibited. Emailing offensive, threatening, illicit or fraudulent messages is also prohibited. |
|
• |
The use of e-mail for profit or commercial purposes, for recreational use or any other purpose unrelated to the provision of the service is prohibited. |
|
• |
The use of email for the registration of “newsletter”, or the like that are not directly related to the professional activity carried out by the User and that are of full confidence is prohibited. |
|
• |
Mail distribution lists may only be used for the Company’s own purposes, and never for advertising, commercial or personal purposes that are not related to the activities of professional performance. |
|
• |
Unauthorized access to communications that circulate the network, as well as their manipulation, destruction and misappropriation, is prohibited. |
|
4 |
Internet browsing restrictions |
The use of the network to browse Internet sites, including social media, for uses other than those permitted for the performance of its activity
is prohibited.
Internet browsing will use appropriate software to filter access to sitesthat, in the opinion of the System Administrator, are inappropriate for
the Company, or unnecessary for the provision of the service.
Browsing websites, sending messages, registering, registering, filling in forms and any other activity carried out via the Internet shall be the
full responsibility of the User who, in any case, must assume the consequences arising from their actions.
In particular, it is strictly forbidden to access pages with illicit content, pornographic material, racist or sexual content, or any material that violates the
dignity of persons.
|
5 |
Prohibition on the use of P2Ptools and networks |
The installation of any type of P2P program (peer to peer) or any other application for the exchange of files that saturate the bandwidth of the
connection to the internet, preventing access to other users or hindering connections to the network, is strictly prohibited, unless authorized by the Company.
|
6 |
Instant Messaging Software Use and Control Policy and Restrictions |
No telematic service or instant messaging software may be installed without the express authorization of the Company.
It is expressly forbidden to use obscene, aggressive, offensive or discriminatory language in the sending of communications via instant messaging
services is expressly prohibited.
The use of any instant messaging service within the scope of the provision of the service shall be exclusively for the fulfilment of the
activities related to the provision of the service, and the transfer of files, images or any communication not related to the provision of the service is prohibited.
For security reasons, attachments from unknown senders must not be downloaded for any reason whatsoever.
|
7 |
Monitoring and Control Programs and Devices |
The System Officer shall implement automated control tools to analyse and detect improper or illicit use and behavior on the network, and such
control shall not imply any violation of the privacy or intimacy of the Users.
The User and the Company agree that, for security reasons, all information circulating on the network, as well as via e-mail and instant
messaging systems, may be monitored and subject to periodic controls and reports on its use, providing extensive information to the Company (by way of example, this will consist of: user identification, date of access, time of access, bytes
transferred, file storage, access to servers, sites visited, time spent browsing the network).
The control and access to the resources provided by the Company, including the documents generated by the users and the communications
originating therefrom, may be carried out on a preventive, temporary and/or continuous basis, taking into account the nature of said Technological Resources and Communication Systems provided by the Company.
The control of these resources shall be carried out without harming and without infringing the dignity or privacy of the User, in consideration
of the prior knowledge that the User has of the object and existence of the present control and supervision to which the Users are subject.
The generic purposes of this control are as follows:
|
• |
Protection of the Communication System and Technology Resources, in order to protect their integrity. |
|
• |
Ensure the continuity of the work in the event that the User is absent due to illness, vacation or other similar. |
|
• |
Prevention of third-party liability. |
|
• |
Verification of compliance with the User’s obligations in the field of providing services. |
|
• |
Verification of the existence or not of the abusive use of the Technology Resources and Communication Systems provided by the Company for personal and private uses |
Therefore, all stored content, information and files, including temporary information, may be accessed by the Company or by those responsible designated for this
purpose.
|
8 |
Use of Technology Resources outside the Company |
The inputs and outputs of the Technology Resources necessary for the development of the provision of services must be authorized by the Security
Manager. The User is obliged to make the reasoned request in writing, indicating the equipment to be used outside the Company, date of departure and expected date of delivery, the Security Manager being obliged to respond in writing to the request.
The Security Manager shall implement the necessary measures to ensure the integrity and security of the computer equipment outside the Company,
as well as to keep an updated record of the entry and exit thereof.
|
9 |
Use of Software Licenses |
The User is obliged to respect the terms and conditions of use of the licences and industrial and intellectual property rights of the software
installed on the computer equipment, and is responsible for its proper use.
All software protected by industrial and intellectual property rights may not be copied, altered, modified, decompiled, disassembled, translated,
published, nor may any information protected by patents, trademarks or intellectual property rights be made available to the user. any information protected by patents, trademarks or industrial and intellectual property rights may not be made
available.
The User shall be liable for any failure to comply with the obligations set out in this Clause.
|
10 |
Consequences arising from non-compliance with the Use and Control Policy |
The User undertakes to cooperate with the Systems Officer to carry out any investigation aimed at finding possible causes arising from the misuse
of the Technological Resources and Communication Systems.
The User who fails to comply with this Use and Control Policy will be sanctioned with the removal of access to the Technological Resources and
Communication Systems, the application of sanctions for non-compliance with the terms and conditions that, where appropriate, emanate from the User’s contract, without prejudice to the legal sanctions established in the applicable regulations in force.
/s/ María Aresti Escrivá de Romaní
|
|
/s/ Felipe Benjumea Llorente
|
|
|
|
The Company |
|
The User |
ASSIGNMENT OF INTELLECTUAL AND INDUSTRIAL PROPERTY RIGHTS
In Seville, on 1 October 2016
On the one hand, the Professional, under the terms defined in this agreement, and hereinafter the INVENTOR
On the other hand, María Aresti Escrivá de Romaní with Spanish ID number. [***] with address in [***], acting as sole director of H282
Electrolysis Technologies S.L. (formerly Global Aerco S.L.), with Spanish Tax ID number [***], hereinafter THE COMPANY.
Both parties acknowledge their full capacity to enter into this agreement, so in the representations they hold, freely and spontaneously
WHEREAS
1. That the INVENTOR develops, or will develop, within the framework of its functions and deriving from the employment agreement that
binds it to the COMPANY, and in collaboration with others (if applicable) and, in any case, at the request of the COMPANY, certain intellectual and industrial property developments that may be patented or registered, hereinafter referred to as THE
DEVELOPMENTS.
2. That in accordance with the legislation in force, the employment agreement between INVENTOR and the COMPANY, it is understood that all
non-material rights of the DEVELOPMENTS belong to the COMPANY, but that it is nevertheless the intention of INVENTOR and the COMPANY to enter into this agreement to ratify this situation.
IV.- Both parties have reached an agreement to enter into this agreement, which will be subject to the following
CLAUSES
First.- The INVENTOR assigns to the COMPANY all non-material rights of the DEVELOPMENTS, in any form and, in particular, on a
non-exclusive basis, the economic exploitation of the DEVELOPMENTS.
Second.- The INVENTOR may not exploit the DEVELOPMENTS, either on its own or through related persons or companies.
Third.- The rights assigned in this contract are assigned for the duration of the term established by the applicable law in each case.
Four.- This assignment is worldwide.
Fifth. - This assignment shall not lose its effect even if the employment relationship between the INVENTOR and the COMPANY ceases.
Six.- This agreement may be made public by either of the parties, and the costs of
this procedure shall be borne by the party that does so.
Seventh.- This agreement and any disputes that may arise from it are subject to Spanish law. The parties submit, waiving their own
jurisdiction that may correspond to them, to the Courts of the city of Sevilla.
Eighth.- In the event that any of the clauses of this contract should be declared null and void, the contract shall not lose its validity
and both parties shall meet to agree on one that, following the same economic purpose, is in accordance with the law.
Ninth.- This agreement binds both the signatory parties and their successors in title and/or their related parties through any legal
instrument. The change of corporate name and/or change of corporate purpose or any other commercial event of a similar nature of any of the parties shall not affect the content of this contract, as the COMPANY shall continue to maintain its rights
regardless of these variables. At in the event of a merger, spin-off or liquidation or any other commercial event of a similar nature of any of the parties, the COMPANY shall continue to maintain its rights irrespective of these variables.
|
• |
the INVENTOR shall maintain the same obligations conferred by this agreement, regardless of the legal form, company name or event that has affected it |
|
• |
the COMPANY shall maintain the same rights conferred by this agreement, subject always to the specific agreements that have been reached based on the commercial event or the nature thereof. |
Tenth.- The INVENTOR shall at all times have a duty of confidentiality with regard to any information relating to the DEVELOPMENT. The
INVENTOR may not pass on any information relating to the DEVELOPMENT to any person, whether natural or legal, with the exception of other persons with employment or commercial ties to the COMPANY, and provided that such ties have been established,
inter alia, for the purpose of carrying out the DEVELOPMENT. The INVENTOR may only transfer information relating to the DEVELOPMENT to third parties if authorized by the COMPANY and if such authorization is recorded in a document on the transfer and
use of information. The confidentiality obligation for the INVENTOR shall not lose its effect even if the employment relationship between the INVENTOR and the COMPANY ceases. The COMPANY may claim all types of damages from the INVENTOR who breaches
this confidentiality obligation, regardless of the liabilities and indemnities that the COMPANY may request from the third parties involved.
And with the parties being satisfied in all of the foregoing and recorded herein, in which content they affirm, ratify and accept, they sign it
for a single purpose in the place “ut supra”.
/s/ María Aresti Escrivá de Romaní
|
/s/ Felipe Benjumea Llorente
|
|
|
The Company |
The Inventor |
Exhibit 10.18
IN ACCORDANCE WITH ITEM 601(A)(6) OF REGULATION S-K, CERTAIN INFORMATION HAS BEEN OMITTED
FROM THIS EXHIBIT BECAUSE IT CONTAINS PERSONALLY IDENTIFIABLE INFORMATION.
[***] INDICATES THAT INFORMATION HAS BEEN REDACTED.
7 January 2023
SERVICE AGREEMENT
BETWEEN
H2B2 ELECTROLYSIS TECHNOLOGIES, S.L.
AND
MR. FELIPE BENJUMEA LLORENTE
TABLE OF CONTENTS
Clause |
|
Page |
|
|
|
1. |
OBJECT AND NATURE |
2 |
|
|
|
2. |
PROVISION OF THE SERVICES |
3 |
|
|
|
3. |
DURATION |
3 |
|
|
|
4. |
REMUERATION |
3 |
|
|
|
5. |
DATA PROTECTION |
4 |
|
|
|
6. |
INTELLECTUAL AND INDUSTRIAL PROPERTY RIGHTS |
5 |
|
|
|
7. |
CONFIDENTIALITY |
5 |
|
|
|
8. |
TERMINATION |
6 |
|
|
|
9. |
ASSIGNMENT |
6 |
|
|
|
10. |
NOTIFICATIONS |
6 |
|
|
|
11. |
GENERAL |
7 |
|
|
|
12. |
APPLICABLE LAW AND JURISDICTION |
7 |
This service agreement (the “Agreement”) is executed on 7 January 2023.
ENTRE
(1) |
H2B2 ELECTROLYSIS TECHNOLOGIES, S.L., limited liability company with address at [***], registered in the Commercial Registry of [***]
under volume [***], sheet [***] and page [***] and holder of Spanish Tax Identification Number [***], (hereinafter, the “H2B2” or the “Company”) |
H2B2 is duly represented for this act by Mr. Florencio Ferrera Saldaña, of legal
age, of [***] nationality, with address at [***] and holder of D.N.I. number [***], in force, in his capacity as sole director of the Company.
(2) |
Mr. Felipe Benjumea Llorente, of legal age, of [***] nationality, with address at [***] and holder of D.N.I. number [***],
(hereinafter, the “Senior Advisor”). |
Hereinafter, the Company and the Senior Advisor
shall be referred jointly as “Parties” and each of them individually as a “Party”.
WHEREAS
(A) |
H2B2 is an entity whose purpose is the organization and operation of businesses and activities relating to the design, development and
manufacture of hydrogen production equipment and systems based on electrolysis, their marketing, operation and sale of hydrogen produced, and associated engineering and consultancy services, among others. |
(B) |
H2B2 Electrolysis Technologies, Inc., the sole shareholder of the Company, is the head of a group of subsidiaries which are engaged in the
activities set out in paragraph (A) and related activities and which constitute, together with the Company, the H2B2 Group (hereinafter, the “Group” o “H2B2 Group”). |
(C) |
Mr. Felipe Benjumea Llorente is a prestigious and recognized professional in the energy sector, who has spent part of his professional career
at H2B2, where he joined in 2016 under an ordinary employment contract. |
(D) |
In the context of the new stage of growth of the Group, the ordinary employment relationship between Mr. Felipe Benjumea Llorente and H2B2
will be fully terminated as of 31 December 2022. |
(E) |
Taking into account the prestige of Mr. Felipe Benjumea Llorente, his professional career, and his knowledge of the functioning of the sector
in which the Company operates, H2B2 wishes for him to provide services as “senior advisor”, to advise and provide a strategic overview of certain processes, strategic operations, business opportunities, projects and/or decisions that may be
required by the Group at any given time. |
(F) |
Having acknowledged their mutual capacity, it is in the best interest of the Parties to enter into this Agreement, which shall be governed by
the following |
1.1 |
Object. Subject to the terms and conditions of this Agreement, the Senior Advisor undertakes to provide the following services
exclusively to H2B2: |
|
(a) |
advisory and support services to the Group on the following matters: |
|
(i) |
Any strategic transactions of the Group, including in particular mergers and acquisitions, capital market transactions or other financing
transactions; |
|
(ii) |
Any specific projects or transactions or matters in respect of which the management body of the Company or any of the Group entities deems his
advisory role relevant, in particular the President of the Board of H2B2 Electrolysis Technologies, Inc.; |
|
(iii) |
Development and sale of products and services; |
|
(iv) |
Opening of production facilities or new markets; |
|
(v) |
Any other advisory or consultative duties that may be entrusted to him by the Company or the Group, at their sole discretion; |
|
(b) |
as well as any other services required by the Company in connection with the Group and its management. |
1.2 |
Nature. The relationship established between H2B2 and the Senior Advisor under this Agreement is of a commercial nature. The Senior
Advisor will act at all times, in relation to the Services, as an independent contractor, without identification or confusion with the company and assets of H2B2 or its Group. This Agreement shall not be deemed to be an employment, agency,
joint venture, partnership or fiduciary relationship between the Parties. |
2. |
PROVISION OF THE SERVICES |
2.1 |
The Senior Advisor undertakes to provide the Services under this Agreement, with the highest level of professionalism, efficiency, diligence
and service, as well as to carry out all actions necessary for the satisfactory provision of the Services. The Senior Advisor shall provide the Service with full organizational and scheduling freedom and with his own human and material
resources. |
2.2 |
The personnel appointed by the Senior Advisor for the provision of the Services shall depend solely and exclusively on the Senior Advisor who,
consequently, shall act as employer, managing and coordinating all the tasks and activities of such personnel, exercising the corresponding disciplinary, organizational and managerial powers in respect thereof and paying the salaries and any
other type of financial compensation arising from the employment relationship with such personnel. |
2.3 |
Mr. Felipe Benjumea Llorente acknowledges and agrees that at all times during the performance of the Services he will act, on his sole and
exclusive responsibility, in the best interests of H2B2 and the Group and undertakes not to take any action which may damage the business, interests or reputation of the Group. |
3.1 |
Subject to Clause 8.1, this Agreement shall enter into force on 7 January 2023 and shall remain in force for an indefinite term. |
4.1 |
The Senior Advisor shall receive a monthly fee equivalent to EUR 507,600 gross per annum from January to August 2023 (both inclusive) and EUR
230,000 gross per annum from September 2023, payable for the provision of the Services. During the term of the Agreement, these fees shall be revised upwards or downwards by mutual agreement between the Parties based on the volume of services
provided. |
4.2 |
Fees shall be paid upon submission of the corresponding invoice with the corresponding value added tax. |
4.3 |
Invoices shall be paid within five working days of receipt of the invoice to the bank account indicated for this purpose by the Senior
Advisor. |
5.1 |
Definitions. For the purposes of this Clause, capitalized words shall have the following meanings, unless otherwise expressly stated or
solely for spelling reasons: |
|
(a) |
“Personal Data” means any information concerning identified or identifiable natural persons that is considered as such under applicable
law. |
|
(b) |
“GDPR” means the EU Regulation 2016/679 of 27 April 2016 on General Personal Data Protection and related legislation, as amended from
time to time. |
|
(c) |
“Third Party Data Controller” means the controller of the files containing Personal Data for which H2B2 is considered to be the data
processor, as such terms are defined by GDPR. |
5.2 |
General. The entities that comprise the Group process a large amount of Personal Data from their business relationships with their
customers, their relationships with suppliers and with their employees, and compliance with the applicable law in this regard is essential. Unless otherwise provided for in this Agreement, the Senior Advisor undertakes not to access the
Personal Data in any way whatsoever (by communication, consultation, interconnection, transfer, etc.), whatever the medium on which it is held. This prohibition of access includes the performance of all operations and technical procedures,
whether automated or not, allowing the collection, recording, storage, conservation, processing, modification and any other actions or activities on Personal Data. |
5.3 |
Permitted accesses. Exceptionally, for needs inherent to the provision of the Services, H2B2 may authorize the access of the Senior
Advisor to Personal Data by incorporating an annex to this Agreement which will set out the obligations and responsibilities of the Parties with respect to (a) files containing Personal Data for which H2B2 is responsible for the file, and (b)
the files containing Personal Data of a Third Party Data Controller, for which H2B2 is in charge of the processing, to which the Senior Advisor accesses exclusively for the provision of the Services in accordance with the provisions of Article
28 of GDPR. |
5.4 |
Processing of Personal Data of the signatories of the Agreement |
Each of the Parties, as data controllers, hereby informs that (i) the personal
data (identification, contact and signature data, as well as those that may appear in the documentation accrediting representation) of the signatories acting in the name and on behalf of each of the Parties to this Agreement (the “Signatories”) as
well as; (ii) the personal data (identification and contact data) of the persons indicated in this Contract for notification purposes (referred to indistinctly as the “Contact Persons”) or of such others as may be indicated at a later date; shall be
processed by each of the Parties for the purpose of managing the maintenance, compliance, development, control and execution of the provisions of this Contract; as well as, where appropriate, to comply with the regulatory obligations imposed on the
Parties, during the term of this Agreement. Once the term has expired, the data of the Signatories and of the Contact Persons shall be retained for the sole purpose of complying with the required legal obligations and for the formulation, exercise or
defence of claims, during the period of limitation of the actions arising from this Contract.
The Signatories and Contact Persons may exercise their rights of access,
rectification, erasure, objection, restriction of processing and portability, by writing to the addresses given in the heading of this Contract, accompanied by a copy of a document proving their identity.
Furthermore, if the Signatories and Contact Persons consider that their personal
data have not been processed in accordance with the data protection regulations, they may contact the Data Protection Officer of the respective Party, if applicable, at the address given in the heading of this Agreement. They may also lodge a
complaint with the Spanish Data Protection Agency (www.agpd.es).
5.5 |
Responsibilities. Each Party assumes its responsibilities under applicable law regarding the protection of Personal Data. |
6. |
INTELLECTUAL AND INDUSTRIAL PROPERTY RIGHTS |
6.1 |
The Senior Advisor acknowledges full ownership by H2B2 (and the Group entities) of the intellectual and industrial property rights of H2B2
(and the Group entities). The ownership of intellectual and industrial property rights and exploitation rights shall include, but is not limited to, computer systems and data, lists, diagrams, reports, manuals, technical support materials and
other complementary elements of the programs, applications and/or developments. The works and other documents prepared by the Senior Advisor under the terms of this Agreement (and, in general, in the context of the provision of the Services)
will be owned by H2B2 and will be governed by the provisions of this clause 6.
|
6.2 |
This Agreement does not constitute an assignment, grant of license, sublicense or a general right of use to the Senior Advisor on the
trademarks, trade names, know-how or other intellectual or industrial property rights owned by H2B2. The use by the Senior Advisor of the intellectual property rights of H2B2, will be limited to the provision of the Services and to the duration
of this Agreement, whether by ordinary or early termination of this Agreement, and the Senior Advisor must immediately cease the use of such rights and return or destroy at the discretion of H2B2 any material in its possession containing
intellectual property rights of H2B2, at the termination of the Agreement. |
6.3 |
The Senior Advisor will not reproduce or use any of the trademarks or any other intellectual or industrial property rights of H2B2, nor
disseminate the programs/applications/developments or other elements or units subject to this Agreement, except as expressly provided in this Clause, by any means, nor allow their transfer, lease or loan, transformation, modification, etc., in
favor of third parties, due to the fact that H2B2 is the exclusive owner, or licensee, as the case may be, of all intellectual property rights, industrial and exploitation rights over them. |
7.1 |
Confidential information. |
7.1.1 |
The Senior Advisor shall treat any information and documentation to which it may have access as a result of the negotiation, execution and
performance of this Agreement with absolute confidentiality, as well as the terms and conditions of the Agreement (the “Confidential Information”). The Senior Advisor undertakes to use such information solely for the purpose of
performing the obligations set out in this Agreement, subject to an absolute prohibition on disclosure, from which only exceptions shall be permitted: |
|
(a) |
with the express written consent of H2B2; |
|
(b) |
to the extent required by applicable law or in the course of judicial or administrative proceedings; |
|
(c) |
where disclosure is required or ordered by any administrative authority, competent court or regulatory body; or |
|
(d) |
to the extent that such information may be in the public domain. |
7.1.2 |
Confidential Information shall also include any technical or commercial information, trade secrets, studies, programs, knowledge, know-how,
offers from third parties in connection with the management of the Services, information relating to the Group’s business strategy and data of a similar nature belonging to the Group, or relating to its products, services, activities, plans,
strategies, financial situation or any other aspect of its business, which has been received from the other Party and which could not reasonably be considered to be in the public domain. |
7.2.1 |
The confidentiality obligations set out in this Clause will remain in force for as long as the Senior Advisor has any Confidential Information in respect of such
documentation. The Senior Advisor undertakes to deliver to the other all Confidential Information in its possession, or in the hands of its employees or collaborators, or to destroy such information if expressly requested by H2B2 and in the
manner requested by H2B2 at any time during the term of the Agreement or upon its termination. |
8.1 |
Either Party may terminate the Agreement at any time during its term by giving the other Party at least sixty (60) days’ notice of its
decision to terminate the Agreement. |
8.2 |
In the event of serious and material breach of any of the obligations set out in this Agreement by either Party, the other Party may terminate
the Agreement immediately without notice. |
9.1 |
Any assignment, whether in whole or in part, of any of its rights and obligations under this Agreement shall require the prior written consent
of the other Party. |
9.2 |
As an exception, H2B2 may assign all or part of its rights and obligations under this Agreement to any entity of the Group. |
10.1 |
Form. All notifications to be given by the Parties to each other under this Agreement shall be in writing, signed by the relevant
representative and sent by courier (with acknowledgement of receipt), by burofax or by notarial channels to the addresses set out below. |
Notifications sent by e-mail for the purposes of the provision of the Services or
ordinary performance of the Agreement shall also be valid on condition that the addressee sends an acknowledgement of receipt by e-mail (being understood in any case to have been received if he/she responds to the e-mail).
10.2 |
Addresses of the Parties. |
For the purpose of receiving notifications, the Parties provide the following addresses:
Address [***]
To the attention of: Florencio Salvador Saldaña
E-mail: [***]
Address [***]
To the attention of: Mr. Felipe Benjumea Llorente
E-mail: [***]
10.3 |
Change of address. In the event of a change of address, such change shall be notified to the other Party upon reasonable notice and
subject to the conditions set forth in this Clause. |
11.1 |
Independence and severability. The unlawfulness, nullity, invalidity or ineffectiveness of any of the clauses of this Agreement shall
not affect the effectiveness of the rest, provided that the rights and/or obligations of the Parties deriving from the same are not affected in an essential manner. Such clauses shall be replaced or integrated with other clauses which, being in
accordance with the law, correspond to the purpose of the replaced clauses. |
11.2.1 |
No waiver by the Parties of any of their rights under this Agreement or arising from any breach of this Agreement shall be deemed to be a
waiver unless such waiver is expressly made in writing. |
11.2.2 |
If either Party waives any of its rights under this Agreement, or its rights arising from any breach by the other Party in accordance with the
preceding paragraph, such waiver shall not in any way be construed as a waiver of any other rights under this Contract or any breach by the other Party, even if similar. |
11.3 |
Costs, expenses and taxes. Each Party shall be responsible for, and shall pay, its own costs and expenses incurred in the negotiation
and execution of this Agreement. |
12. |
APPLICABLE LAW AND JURISDICTION |
12.1 |
Applicable law. This Agreement shall be governed by and construed in accordance with Spanish common law. |
12.2 |
Jurisdiction. Each of the Parties hereby irrevocably and unconditionally submits to the jurisdiction of the Courts of the city of Madrid in
the event of any dispute in relation to this Agreement, expressly waiving any other jurisdiction to which they may be entitled. |
IN WITNESS WHEREOF, the PARTIES hereby execute and sign this Agreement in duplicate, at the place
and on the date indicated above.
H2B2 ELECTROLYSIS TECHNOLOGIES, S.L. |
|
|
|
/s/ Florencio Salvador Ferrera Saldaña |
|
Mr. Florencio Salvador Ferrera Saldaña
|
|
|
SENIOR ADVISOR |
|
|
|
/s/ Felipe Benjumea Llorente |
|
Mr. Felipe Benjumea Llorente |
8
Exhibit 10.19
IN ACCORDANCE WITH ITEM 601(A)(6) OF REGULATION S-K, CERTAIN INFORMATION HAS BEEN OMITTED
FROM THIS EXHIBIT BECAUSE IT CONTAINS PERSONALLY IDENTIFIABLE INFORMATION.
[***] INDICATES THAT INFORMATION HAS BEEN REDACTED.
INDEFINITE EMPLOYMENT CONTRACT
COMPANY DATA
CIF/NIF/NIE
[***]
|
|
|
Mrs.
ARESTI ESCRIVA DE ROMANI,
|
NIF/NIE
[***]
|
AS (1)
DIRECTOR
|
COMPANY NAME
H2B2 ELECTROLYSIS TECHNOLOGIES, S.L.
|
REGISTERED OFFICE
[***]
|
19 EN
|
COUNTRY |
MUNICIPALITY |
C. POSTAL
[***]
|
|
|
[***] |
|
|
|
|
|
|
|
QUOTE ACCOUNT DATA
REGIMEN |
|
CODE. PROV. |
NUMBER |
DIG. CONTR. |
ECONOMIC ACTIVITY |
[***] |
|
[***] |
[***] |
[***] |
|
[***] |
|
|
|
|
|
|
|
|
|
WORK CENTER DATA
COUNTRY |
MUNICIPALITY |
|
|
[***] |
41038 |
|
|
|
|
EMPLOYEE DATA
D./Ms.
BREY SANCHEZ, JOSE JAVIER
|
NIF/NIE
[***]
|
DATE OF BIRTH
[***]
|
No. OF AFFILIATION S.S.
[***]
|
TRAINING LEVEL |
NATIONALITY |
[***] |
55 |
[***] |
724 |
MUNICIPALITY OF DOMICILE |
DOMICILE COUNTRY |
[***] |
41091 |
|
724 |
|
|
|
|
|
|
|
|
|
|
with the legal assistance, if applicable, of Mr./Ms. ________________ with NIF./NIE.______, in its capacity as (2)________________.
DECLARE
That they meet the requirements for the execution of this contract and, consequently, agree to formalize it in accordance with the following:
CLAUSES
FIRST: The worker will provide his/her services as TELECOM ENGINEERING included in the professional group of PHD ENGINEERING, for the performance of the functions
(4)________________ in accordance with the professional classification system in force in the company.
In the work center located at (street, no. and town) [***]
☐ |
REMOTE WORK, at the address located at |
and town) |
|
SECOND: The contract is concluded to carry out periodic seasonal work nature consisting of (5) ________________ within the intermittent cyclical activity of (6)
________________whose duration will be (7) ________________
The estimated duration of activity will be (8) ________________________. Workers will be called in the order and form determined in the
Collective Bargaining Agreement of ENGINEERING COMPANIES AND OFFICES OF TECHNICAL STUDIES. The estimated day within the activity period will be _____________________________________hours (9) ___and the hourly distribution will be
If the collective bargaining agreement on a sectoral level allows for the use of part-time in discontinuous fixed contracts, indicate whether
is welcome to the same YES ☐ NO ☐ |
|
|
THIRD: The workday will be:
☒ |
Full-time: the workday will be 40 hours per week, provided from Monday to Friday, with breaks established legally or
conventionally |
|
|
☐ |
Part-time: the regular workday will be _______________, hours ☐ per day,☐ per week, ☐
per month, ☐ per year (10)
|
|
This day is less than that of a comparable full-time worker |
The distribution of work time will be (10) in _______________________________accordance with the provisions of the collective agreement.
In the case of part-time work, indicate whether or not there is an agreement on the performance of additional hours (11):
Yes ☐ No ☐
FOURTH: The duration of this contract will be INDEFINITE, with the employment relationship starting on 03/06/16 and a probationary period of (12) N/A is
established.
FIFTH: The worker will receive a total remuneration of €90,000 gross (15) ANNUALLY that will be distributed in the
following salary items (14) CBA SALARY + NOT CONSOLIDABLE IMPROVEMENTS
SIXTH: The duration of the annual vacation will be (15) 23 working days.
SEVEN: In what is not provided for in this contract, the current legislation resulting from the application
will be followed, and in particular, the Workers’ Statute, approved by Royal Legislative Decree 2/2015, of 23 October (BOE of 24 October) and in the Collective Agreement of ENGINEERING COMPANIES AND OFFICES OF TECHNICAL STUDIES.
EIGHTH: This contract is formalized under the modality of the respite contract: YES ☐ NO ☒
Worker:
☐ |
That he/she is unemployed and registered as a plaintiff in the Public Employment Service of |
|
|
☐ |
That it has entered into a contract with the company for a certain duration that was registered with the Public Service of Employment of __________, with the number ______dated |
The Company Representative:
That the company worker, Mr/Mrs.__________________________ born on __________, who
provides her services at the work center located at (street, no. and town) [***], with the profession of , included in the professional group/job/level/category_________________, in
accordance with the professional classification system in force in the company that reduces its ordinary workday and salary by one ___(18), for accessing the partial retirement situation, regulated in Royal Decree-Law 5/2013 of March 15, it has
signed on ___________________and until ______________ the corresponding part-time employment contract registered with the Public Employment Service _____________under number _________and on __________.
NINTH: THIS CONTRACT MAY BE CO-FUNDED BY THE EUROPEAN SOCIAL FUND.
TEN: The content of this contract will be communicated to the Public Employment Service of MADRID, within 10 days of its agreement.
ELEVENTH: DATA PROTECTION.- The data included in this form will be protected by the Organic Law 15/1999, of 13 December (BOE of 14 December).
|
(1) |
Director, Manager, etc. |
|
(2) |
Parent, guardian, or person or institution under his or her care. |
|
(3) |
Indicate the corresponding professional group or professional level, according to the professional classification system in force in the company. |
|
(4) |
Indicate profession. Roles can be all or only some of the roles in the professional group. |
|
(5) |
Indicate the professional activity to be carried out by the worker. |
|
(6) |
Indicate the discontinuous or seasonal fixed activity of the company and its duration. |
|
(7) |
Indicate the duration of the activity to be carried out by the worker. |
|
(8) |
Daily, weekly, monthly or annual. Detail Agreement. |
|
(9) |
Indicate the number of hours according to the collective bargaining agreement for full-time, legal maximum or full-time worker. |
|
(10) |
Indicate the worker’s day. |
|
(11) |
Indicate as appropriate and if so, attach the annex if there are continuation sheets. |
|
(12) |
Respecting the provisions of art. 14.1 of the Consolidated Text of the Workers' Statute Law, approved by Royal Legislative Decree 1/1995, of 24 March (BOE of 29 March).In
the event of applying art. 4 of Law 31/2012, the trial period will be one year. Indicate what is applicable and, if so, attach the annex if there are additional hours. |
|
(13) |
Daily, weekly, monthly or annual. |
|
(14) |
Base salary, salary supplements, bonuses. |
|
(15) |
Minimum: 30 calendar days. |
|
(16) |
A minimum of 25% and a maximum of 75% |
That the INDEFINITE CONTRACT that is entered into (check the corresponding box) is made with
the following specific clauses:
☒ |
INDEFINITE ORDINARY WITH OR WITHOUT QUOTA REDUCTION. |
Pg. 4 |
|
|
|
☐ |
OF PEOPLE BENEFITING FROM THE NATIONAL YOUTH GUARANTEE SYSTEM |
Pg. 5 |
|
|
|
☐ |
OF PEOPLE WITH DISABILITIES. |
Pg. 6 |
|
|
|
☐ |
OF PEOPLE WITH DISABILITIES IN SPECIAL EMPLOYMENT CENTERS. |
Pg. 7 |
|
|
|
☐ |
OF PEOPLE WITH DISABILITIES FROM WORK ENVIRONMENTS. |
Pg. 8 |
|
|
|
☐ |
OF LONG-TERM UNEMPLOYED PEOPLE. |
Pg. 8 |
|
|
|
☐ |
OF WORKERS IN A SITUATION OF SOCIAL EXCLUSION, VICTIMS OF GENDER-BASED VIOLENCE, DOMESTIC, VICTIMS OF TERRORISM, OR VICTIMS
OF HUMAN TRAFFICKING. |
Pg. 9 |
|
|
|
☐ |
OF EXCLUDED IN INSERTION COMPANIES. |
Pg. 10 |
|
|
|
☐ |
OF THE FAMILY MEMBER OF THE SELF-EMPLOYED PERSON. |
Pg. 11 |
|
|
|
☐ |
OVER THE AGE OF 52 BENEFICIARIES OF UNEMPLOYMENT SUBSIDIES. |
Pg. 12 |
|
|
|
☐ |
FROM A CONTRACT FOR ETT TRAINING AND LEARNING. |
Pg. 13 |
|
|
|
☐ |
FROM A CONTRACT IN ETT PRACTICES. |
Pg. 14 |
|
|
|
☐ |
OF FAMILY HOME SERVICE. |
Pg. 15 |
|
|
|
☐ |
OTHER SITUATIONS. |
Pg. 16 |
|
|
|
☐ |
CONVERSION OF TEMPORARY CONTRACT INTO INDEFINITE CONTRACT. |
Pg. 17 |
|
|
|
and meets the requirements of the regulatory standard.
In witness whereof, this contract is executed in three copies at the place and date above
mentioned and signed by the parties hereto.
In DOS HERMANAS on 7 JUNE 2016
/s/ Jose Javier Brey Sanchez
|
/s/ María Aresti Escrivá de Romaní
|
|
|
The Employee |
The Company’s representative |
ADDITIONAL CLAUSES TO THE EMPLOYMENT AGREEMENT
FIRST.-ENTRY INTO FORCE AND TERM OF THE AGREEMENT
The agreement is agreed for an indefinite term, entering into force on 3
June 2016, and is subject to the trial periods established by the Legislation in force. When the Agreement is suspended for any of the reasons provided for in the Legislation in force at any time, such suspension shall automatically entail the
suspension of the trial period. This trial period shall be restarted as soon as the Agreement is resumed, with only the trial period that has elapsed until its suspension being counted.
SECOND.-OBJECT OF THE AGREEMENT
The Professional shall provide his services as an engineer.
In this respect, the Professional shall provide his services to the
Company on an exclusive basis with respect to the direct or indirect competition of the Company. In other words, the Professional shall be free to alternate his services to the Company with other professional services provided that:
|
● |
Comply with the obligations established in this employment agreement |
|
● |
Professional services performed outside the Company are not provided, directly or indirectly, for the direct or indirect competition of the Company. |
This consideration is included in the agreement with respect to the
agreed remuneration. Specifically, 10% of the agreed remuneration is specifically attributed to compensation for this obligation, which is expressly considered appropriate by the Professional.
THIRD.-WORKING DAY
The Professional shall work full time, i.e. forty (40) hours per week,
within the working hours in force in the Company at any given time.
For the purposes of calculating the maximum working day, the obligatory
break in each continuous working day and the periods devoted to voluntary professional training shall not be considered as effective working time.
Likewise, the time spent by the Professional travelling or waiting shall
not be counted for the purposes of the maximum working day, unless during this time they carry out activities specific to their profession or activity for the Company.
Any such travel or waiting time shall be taken into account in
determining their remuneration.
The timetable and distribution of working time shall likewise be that in force in the
Company at each specific moment in time.
In order to allow for an irregular distribution of the agreed working
day according to the pace of activity, the duration of the working day shall be calculated on an annual basis, so that the hours of daily excess can be compensated in equivalent rest time within the agreed annual reference period.
The time devoted to education and vocational training for the
Professional may be concentrated or alternated with that devoted to the provision of services for the Company, according to the phases of the training process to be established.
FOURTH.-WORKPLACE
The Professional will initially provide his services at the center of
[***].
In any case, taking into account the corporate purpose of the Company
and the staff and/or potential clients spread throughout Spain and abroad, the Professional undertakes to travel to the appropriate place to provide services to clients in the best possible conditions, as often and for as long as necessary for this
purpose.
The reimbursement of travel and subsistence expenses arising from the
Professional’s travel shall be made in accordance with the policies and systems in force at any given time in the Company.
Such reimbursements shall not be considered salary and shall only be
subject to tax or withholding when they exceed the limits established by the legislation in force from time to time.
FIFTH.-HOLIDAYS, BREAKS, PUBLIC HOLIDAYS AND LEAVES OF ABSENCE
The Professional shall be entitled to the holiday days, rest days,
holidays and leaves established in the applicable regulations, the agreement and the internal policies of the Company.
In any case, the Professional’s choice of the aforementioned holiday
periods and their approval by the Company shall be based on the matters entrusted to him or the actions to be performed by the Professional.
SIXTH.-REMUNERATION
The Professional shall receive a total remuneration equal to that
established in this same Agreement, which shall be distributed in the salary items that, where appropriate, the Company may provide for in fourteen (14) payments. The aforementioned remuneration includes all legally or, if applicable, conventionally
applicable items, as well as the compensation for exclusivity foreseen in Clause Two above.
Tax withholdings and deductions, Social Security contributions or any
other legally applicable deductions shall be applied to the aforementioned items.
SEVENTH.-SUSPENSION OF THE EMPLOYMENT AGREEMENT
The agreement shall be suspended for the reasons and with the effects
set out in Article 45 et seq. following of the Workers’ Statute.
In the event of voluntary leave of absence, if the Professional
exercises his profession in other companies competing with the Company during the same, without the corresponding prior authorization from the latter, he shall lose the right to reinstatement, and the Agreement shall be terminated for all effects and
purposes.
EIGHTH.- TERMINATION OF THE AGREEMENT
The Professional may terminate the Agreement at his own will with the
obligation to expressly notify the Company of this decision at least fifteen (15) days in advance.
Failure by the Professional to comply with his duty to give notice shall
give rise to his obligation to compensate the Company with an amount equivalent to the remuneration corresponding to the period of notice not given, as well as with the amount of any damages that may have been caused to him.
The Company may terminate the Agreement for the causes established in
current legislation, as well as in the following cases:
|
I. |
When there is a manifest and serious breach of trust between the Professional and the Company arising out of the Professional’s professional conduct or his relationship
with clients. |
|
II. |
When it becomes evident that the Professional does not maintain an adequate professional level and, consequently, cannot exercise the profession with full guarantees for
the interests of his client. |
In the event of null and void dismissal, both parties establish that the
Professional shall not be reinstated, being replaced by the payment of the compensation provided for unfair dismissal, as well as, if applicable, the corresponding processing salaries.
In any case, and regardless of the cause of termination, the
Professional must inform his managers at the Company of the situation of the matters in which he or she has been involved and shall make the corresponding documentation available to the Company so that the matters can be handled and the services
offered by the Company can be continued.
Failure to comply with this obligation shall entitle the Company to take
legal action, in accordance with articles 1.152 and 1.153 of the Civil Code, in order to recover any damages it may have incurred.
NINTH.-CONFIDENTIALITY
During the term of the Agreement, the Professional shall have access to
information belonging to the Company (including its partners, employees and external staff) and to clients, suppliers or third parties related to the Company, and it is therefore agreed that such information, to the fullest extent and regardless of
the medium in which it is found, is absolutely confidential and is expressly subject to the duty of confidentiality. All of the above is independent of the ethical obligations arising from the exercise of the Professional’s profession, which shall in
all cases reinforce the confidentiality and reserve nature of the information.
By virtue of the foregoing, both during the term of the Contract and
upon its termination, the Professional may not, directly or indirectly, use, disclose, divulge, supply or make available for use (except in cases where it is necessary for the proper performance of his obligations) by third parties or for his own
benefit, any information, data, products, procedures, methods, formulas, forms, models, lists of clients or jobs, plans, as well as any other business, internal or organisational information of the Company, its clients, suppliers and other employees,
positions, administrators or external professionals.
Failure to comply with any of the foregoing obligations shall be
considered a breach of contractual good faith and breach of trust in the performance of work, punishable even by disciplinary dismissal. Irrespective of the foregoing, such breach shall give rise to compensation for damages caused to the Company or
its clients.
Upon termination of the employment relationship for any reasons, the
Professional shall return to the Company all goods, equipment or working tools provided for the performance of his work, including computers and magnetic media used, as well as, by way of example, the notes or documents (whatever their medium,
including magnetic and computer media) that may have been made by the Professional, or with his collaboration, or that have come into his possession in any way, and which shall in any case be the property of the Company. The Professional may not
retain or appropriate copies of the above documents, nor allow them to be used by any other person outside the Company.
In addition to the obligation to comply with the computer filing systems
established by the Company during the term of the Contract, the Professional shall, upon termination of the said relationship, have recorded or filed all the professional documents or documents related to his activity in the Company that he has in
his files where indicated by the Company. In the event of failure to do so, the Professional hereby authorizes the Company to access his personal files for the sole purpose of retrieving the documents of a professional nature or relating to his
activity that he has not filed in the manner provided for in this paragraph.
The Professional declares that he/she is aware of and accepts the
“Policy on the use and control of technological resources and communication systems”, on the regulations governing the use of electronic tools, which is attached as an annex to the Contract and of which it forms an integral part.
TENTH.- INTERNAL POLICIES AND ETHICAL STANDARDS
The Professional must comply with all internal and professional policies
and standards indicated by the Company, as well as respect the ethical standards of the profession at all times.
ELEVENTH.- INTELLECTUAL AND INDUSTRIAL PROPERTY
The Professional acknowledges that all services performed by him on
behalf of the Company or its clients, as well as the result thereof, are the property of the Company to the fullest extent and are the cause of the Contract, whatever their content, medium or manifestation.
Therefore, the Professional hereby assigns to the Company, on an
exclusive basis, all creations expressed by any means or medium, tangible or intangible, currently known or to be invented later, contained in the Intellectual Property Law, which have been made by the Professional during the term of the Agreement
within the employment relationship and the services or activity carried out by the Professional for the Company or for the Professional’s clients, or for the Company’s activities in relation to third parties. All of the above has been taken into
account by both parties when setting the Professional’s remuneration, and therefore shall not entail any additional financial compensation.
Likewise, the Professional may not take possession of any rights
deriving from industrial property legislation related to the Company’s usual activity.
By virtue of the foregoing, the Professional shall sign the Assignment of Intellectual and
Industrial Property Rights document, which is attached as an annex to the Agreement and of which it forms an integral part.
TWELFTH.- APPLICABLE LAW
In all matters not provided for in the Agreement, the labour legislation
in force at any given time shall apply.
THIRTEENTH.-DATA PROTECTION
In accordance with the current Law 15/1999, of 13 December, on the
Protection of Personal Data and Royal Decree 1720/2007, of 21 December, the Professional expressly consents and authorizes the Company to:
|
● |
Include the data provided as part of the Agreement, those that may be provided in the future, as well as any other data that may be generated as a result of the employment
relationship, in the employee data file maintained by the Company. |
|
● |
To process such data for the purpose of using them for the management of the employment relationship or of the Company’s commercial or other relationships with other
companies and organizations, as well as to maintain them once the employment relationship has ended, in this case solely for the fulfilment of legal obligations. |
|
● |
To transfer the aforementioned data to the companies and organizations mentioned in the previous paragraph and to other companies that may belong to the same group of
companies as the Company, both in Spain and abroad, including countries that do not provide a level of protection comparable to that offered by Spanish legislation, for the same purposes described in the previous paragraph. |
In accordance with the provisions of the aforementioned Law 15/1999, the
affected party has the rights of opposition, access, rectification and cancellation with respect to the data provided, which may be exercised in accordance with the applicable legislation, by writing to the person in charge who is notified or,
failing that, to the person in charge of human resources. The Professional’s data will be treated by the Company in a confidential manner and with the maintenance of due security conditions that prevent its alteration, loss or unauthorized access by
third parties.
In addition, the Professional accepts:
|
1. |
Maintain absolute confidentiality, reserve and strict professional secrecy with respect to information and / or personal data that may become known on the occasion of the
performance of the services provided, not disclosing, publishing, disseminating or making it available to third parties, either directly or indirectly, without the prior written consent of H2B2 Electrolysis Technologies S.L., not even for the
purpose of conservation. |
|
2. |
Observe and adopt the security and privacy measures established by H2B2 Electrolysis Technologies S.L. for information and personal data to ensure the confidentiality,
secrecy, availability and integrity of personal data to which it has access, as well as to observe and implement all security measures required by the legislation to regulate the processing of personal data and confidential information. |
|
3. |
In the event that, for any reason related to their work, they come into possession of confidential information - regardless of the type of medium on which it is held - it
is understood that this possession is strictly temporary, with an obligation of secrecy and without this conferring any right of possession or ownership or copy of the information. Likewise, all those supports or materials must be returned to
H2B2 Electrolysis Technologies S.L., or destroyed, immediately after the end of the tasks that have originated the temporary use of the same, and in any case, at the end of the project or the employment relationship. |
This obligation shall survive the termination of your relationship with
the owner of the information or, where applicable, with H2B2 Electrolysis Technologies S.L.
Failure to comply with these measures could be considered as an
employment offence and lead to disciplinary sanctions.
In addition, the Professional knows that it is forbidden to send
confidential information of the Company to the outside, by means of material supports or by any means of communication, including the simple visualization or access, with the exception of the express authorization of the File Manager. Likewise, the
Professional shall keep, for an indefinite period of time, the utmost confidentiality and shall not disclose or use, either directly or through third parties or companies, personal data, confidential information, documentation and other information
of a personal nature. confidential information, documentation and other information to which he/she has access during his working relationship with the Company, whether in documentary or electronic format.
In the event that, for reasons directly related to the job, the
Professional comes into possession of confidential information in any type of support, it shall be understood that this possession is strictly temporary, with the obligation to This circumstance does not grant him any right of possession or ownership
or copy of the aforementioned information.
The Professional will have to return the aforementioned materials to the
Company or destroy them, once the tasks that have given rise to their temporary use have been completed and, in any case, at the end of the employment relationship.
The continued use of the information, in any format or medium, in a
manner different from that agreed and without the knowledge of the Company, shall not, under any circumstances, imply a modification of this clause.
The Professional may not.
|
● |
Create personal data files without the authorization of the Data Controller. |
|
● |
Cross-reference information relating to data from different files or services, without the express authorization of the Data Controller |
|
● |
Carry out any other activity expressly prohibited in this document, the Instructions of the Data Protection Officer or in the regulations on data protection. |
In relation to the temporary files, the Professional and the Company
agree that:
|
● |
They may be created from existing files. |
|
● |
The same security rules as those applied to the original files must be maintained and complied with. |
|
● |
A temporary file will maintain the same purpose for which the original file was defined. |
|
● |
Once the life of the temporary file has ended, it will be deleted. |
In the event that these obligations and rights have to be applied to
files on non-automated media, it is agreed that:
|
● |
Files in paper format have the same status as computer files, and are applied in the same way by Law 15/1999 on the Protection of Personal Data, with the same criteria:
duty of secrecy, correct use, access only by authorized users, etc. |
|
● |
The documentation used by each Professional in the course of his work is the property of the Company. |
|
● |
The Professional is responsible for the custody and confidentiality of documentation containing personal data while they are in use. |
|
● |
It is mandatory to ensure that the documents processed are not destroyed or damaged. |
|
● |
The disclosure of the documents without the express authorization of the Company is expressly prohibited. |
Finally, the Company and the Professional agree that once the legal
validity and processing needs have expired, the media containing personal data shall be destroyed in a controlled manner. When the files are automated, the Security Officer shall be notified of their obsolescence and shall apply the necessary
measures to destroy them. In the case of non-automated files, each user shall be responsible for the correct application of the measures to ensure that the information is not recoverable, in accordance with the Company’s instructions.
FOURTEENTH.- TRADE UNION REPRESENTATION
The Company does not have trade union representation at the time of
signing this agreement.
FIFTEEN.- OCCUPATIONAL RISK
The Professional has been informed of the risks of his workplace, of the
protection systems and their use, as well as of the actions and evacuation in the event of an emergency.
SIXTEEN.- NULLITY OF THE AGREEMENT
The nullity or total or partial invalidity of any of the clauses of the
Agreement shall not imply the nullity or invalidity of the partially affected clause or of the Agreement as a whole, unless there is a manifest imbalance between the rights and obligations assumed by the parties.
SEVENTEENTH.- AMENDMENTS
The Agreement may not be cancelled, changed, modified or amended orally,
and its cancellation, change, modification or amendment shall not be effective or binding unless made in writing and signed by the parties.
EIGHTEENTH.- COMPETENT JURISDICTION
Any conflict that may arise in interpretation or application of the
agreement must be settled before the Social Courts.
In witness whereof, this Agreement is issued in three counterparts at
the place and on the date indicated below, signed by the interested parties.
In Dos Hermanas, on 2 June 2016.
/s/ Jose Javier Brey Sanchez
|
/s/ María Aresti Escrivá de Romaní
|
|
|
The Professional |
The Company |
POLICY FOR THE USE AND CONTROL AND CONTROL OF TECHNOLOGICAL RESOURCES
AND COMMUNICATION SYSTEMS OF THE COMPANY
|
1 |
Object, purpose and scope of the application |
The Company implements this Policy on the Use and Control of Technology
Resources and communication systems for the purpose of:
|
● |
Verify the correct functioning of the technological resources and communication systems under the ownership or license of the Company and made available to the user. |
|
● |
Ensure the security, performance, reliability, privacy and confidentiality of communications and their content. |
|
● |
Preserve user privacy and security and generally ensure effective service delivery compliance. |
The Company and the user are aware of the need for adequate use of
technological resources and communication systems in the provision of the service.
The Company and the user acknowledge that they are aware of this policy
and assume the commitments and standards for the proper use of technological resources and communication systems, taking all appropriate measures for their strict compliance.
For this purpose, the Company may carry out the necessary investigations
and controls of the technological resources provided to the user by the Company.
For the purposes of the policy on the use and control of technological
resources and communication systems, the following shall be understood:
Technology Resources: Elements that integrate Information and
Communication Technologies, such as electronic devices, software, hardware, cabling, nodes and access to public or private networks, servers and in general all infrastructure used by communication systems.
Communication Systems: They include landline, mobile, IP telephony, fax,
e-mail, instant messaging systems, peer-to-peer networks or any other electronic means that the Company makes available to the user to communicate within the scope of the provision of services.
Use and Control Policy: The set of provisions that regulate, in this
document, the use and control of the Technology Resources and Communication Systems intended for the fulfillment of the purposes of the Company.
User: Refers to those persons who, within the scope of their provision
of services, use the Communication Systems and Technology Resources under the ownership or license of the Company.
Systems Officer: Responsible for the management and administration of
Communication Systems and Technology Resources, as well as for resolving problems and incidents arising from their use. For these purposes, the Company will communicate to the User the identity of the System Officer.
Security Officer: Responsible for directing the measures and actions for
compliance with this Use and Control Policy. For these purposes, the Company will communicate to the User the identity of the Security Manager.
|
1.2 |
Ownership of Technology Resources and Communication Systems |
All Technology Resources and Communication Systems made available to the
User are owned or licensed by the Company and, for this purpose, the use of the aforementioned resources and systems must be made in accordance with this Use and Control Policy and the prescriptions imposed by the license holder.
|
1.3 |
Access to Technology Resources and Communication Systems |
All access to the Technological Resources and Communication Systems
shall be controlled and authorised by the System Officer. It is strictly forbidden for the User to attempt to access the Communication Systems or Technological Resources to which he/she does not have express authorisation from the Systems Officer.
All authorised Users have access to the Communication Systems by means
of a personal and non-transferable user name and password, undertaking to treat it with the utmost diligence and confidentiality, being solely responsible for its proper use.
The Authorised User shall be solely and directly responsible for
everything executed in the system under his user name and password. Likewise, attempts, by any means, to obtain access to passwords of other users without their consent are strictly forbidden.
It is forbidden to divulge by any means the access codes to any of the
services provided to the User, who undertakes to notify the Systems Officer and/or the Security Officer immediately of any incident or anomaly detected in the accesses to the Communication Systems or in the security of the same.
The User undertakes to respect the rights of third parties in the shared
use systems, undertaking not to access the private information of other Users without prior authorisation. Likewise, the User undertakes not to share files or documents of any kind with other users without implementing the necessary measures to
guarantee the security of the information and operating systems. Any identity theft will be sanctioned in accordance with the applicable legislation in force.
|
(ii) |
Systems Officer and Security Officer Access |
The Systems Officer and Security Officer is obliged to act with absolute diligence, keeping
all data, documents and other information to which he/she may have access in the performance of his duties completely confidential. By way of example, but not limitation, the following may be included:
|
● |
Access to Technology Resources and Communication Systems to carry out maintenance tasks. |
|
● |
Access to Technology Resources and Communication Systems for security reasons. |
|
● |
Authorize the Users’ access to the Communication Systems that they require for the fulfillment of their tasks. |
|
● |
Access to Technology Resources and Communication Systems due to security incidents. |
In any case, both the Systems Officer and the Security Officer have the
duty and obligation to keep absolutely confidential all information to which they have access for the performance of their activities, and it is strictly forbidden to communicate or provide it, directly or indirectly, to any third party.
|
2 |
Assignment of passwords and password policy |
|
2.1 |
Password assignment procedures |
Each User with authorized access to the Company’s Technology Resources
and Communication Systems will have a personalized username for their identification, as well as a password to access the Communication Systems.
The communication to the User of their username and password will be
provided by the Security Officer, who will communicate it personally or by email, guaranteeing in any case their confidentiality and secrecy, as well as providing the User with the possibility of subsequently modifying only the password.
All incidents in the use of the Company’s Technology Resources, or that
by any circumstance, direct or indirect, may compromise the security of the information, must be notified as soon as possible to the Security Officer. The Security Officer will be responsible for recording, diagnosing and monitoring all incidents
reported by Users. In addition, you must keep the incident record up to date, specifying the type of incident and the resolution thereof, periodically checking that the incidents are resolved, and the security of the communication is guaranteed.
|
2.3 |
Security, Confidentiality and Data Protection |
The Company and the User undertake to keep the communications secret,
respect the privacy and confidentiality of all the Company’s data and information stored in the Company’s Technology Resources and Communication Systems, and not assign to third parties the data and information both those of the Company and those of
a personal nature obtained in the fulfillment of its direct activities or any other of the business sphere, in accordance with the Law on the Protection of Personal Data and other applicable regulations.
|
3 |
Use of Technology Resources and Communication Systems |
The User undertakes to respect the integrity and proper use of the
Technological Resources and Communication Systems whose ownership or licence belongs to the Company and to which he/she has access for the performance of the tasks within the scope of the provision of the service, it being strictly forbidden to carry
out or facilitate any third party in the commission of any of the following events:
|
● |
Alter all or part of the hardware, software and operating system configurations of the computer equipment assigned to the same User or other users, without proper
authorization. |
|
● |
Use unauthorized computer applications that saturate networks, servers, or hinder the operation of computer equipment. |
|
● |
Make privilege or permission modifications without authorization from the System Officer. |
|
● |
Cause physical or logical damage, due to misuse or negligence, to computer equipment, applications, computer tools and any technological device or means. |
|
● |
Developing or accidentally or intentionally using malicious programs or access to resources restricted by the Systems Administrator. |
|
● |
Failure to maintain with due diligence any keys, passwords, Usernames or any other identifiers that may be provided to the User for use any of the tools, or to access
equipment or systems owned or licensed by the Company. |
|
3.2 |
Use of personal email |
|
● |
The use of personal email accounts based on web access (but not limited to: gmail, hotmail or yahoo), as well as the instant message services authorized by the Company but
not limited to: whatsapp, telegram, line...), may only be used in the scope of the provision of services for the fulfillment thereof, excluding their use for a recreational purpose. |
|
● |
The use of personal email, as well as instant messaging services through the Company’s Technology Resources and Communication Systems for personal and private purposes is
strictly prohibited. |
|
● |
The forwarding of your own work documentation to personal email accounts or those outside the scope of the provision of the service within the Company is strictly
prohibited. |
|
3.3 |
Use of Corporate Mail |
Corporate email, distribution lists, instant messaging services and
other electronic communication services authorized by the Company are tools whose purpose is the provision of the service by the User. The Company and the User agree that the use of the Technology Resources and Communication Systems and dissemination
of the information will be subject to the following conditions:
|
● |
The use of Communication Systems and Technology Resources for activities outside the provision of the service is prohibited. Emailing offensive, threatening, illicit or
fraudulent messages is also prohibited. |
|
● |
The use of e-mail for profit or commercial purposes, for recreational use or any other purpose unrelated to the provision of the service is prohibited. |
|
● |
The use of email for the registration of “newsletter”, or the like that are not directly related to the professional activity carried out by the User and that are of full
confidence is prohibited. |
|
● |
Mail distribution lists may only be used for the Company’s own purposes, and never for advertising, commercial or personal purposes that are not related to the activities
of professional performance. |
|
● |
Unauthorized access to communications that circulate the network, as well as their manipulation, destruction and misappropriation, is prohibited. |
|
4 |
Internet browsing restrictions |
The use of the network to browse Internet sites, including social media,
for uses other than those permitted for the performance of its activity is prohibited.
Internet browsing will use appropriate software to filter access to
sites that, in the opinion of the System Administrator, are inappropriate for the Company, or unnecessary for the provision of the service.
Browsing websites, sending messages, registering, registering, filling
in forms and any other activity carried out via the Internet shall be the full responsibility of the User who, in any case, must assume the consequences arising from their actions.
In particular, it is strictly forbidden to access pages with illicit
content, pornographic material, racist or sexual content, or any material that violates the dignity of persons.
|
5 |
Prohibition on the use of P2Ptools and networks |
The installation of any type of P2P program (peer to peer) or any other
application for the exchange of files that saturate the bandwidth of the connection to the internet, preventing access to other users or hindering connections to the network, is strictly prohibited, unless authorized by the Company.
|
6 |
Instant Messaging Software Use and Control Policy and Restrictions |
No telematic service or instant messaging software may be installed
without the express authorization of the Company.
It is expressly forbidden to use obscene, aggressive, offensive or
discriminatory language in the sending of communications via instant messaging services is expressly prohibited.
The use of any instant messaging service within the scope of the
provision of the service shall be exclusively for the fulfilment of the activities related to the provision of the service, and the transfer of files, images or any communication not related to the provision of the service is prohibited.
For security reasons, attachments from unknown senders must not be
downloaded for any reason whatsoever.
|
7 |
Monitoring and Control Programs and Devices |
The System Officer shall implement automated control tools to analyse
and detect improper or illicit use and behaviour on the network, and such control shall not imply any violation of the privacy or intimacy of the Users.
The User and the Company agree that, for security reasons, all
information circulating on the network, as well as via e-mail and instant messaging systems, may be monitored and subject to periodic controls and reports on its use, providing extensive information to the Company (by way of example, this will
consist of: user identification, date of access, time of access, bytes transferred, file storage, access to servers, sites visited, time spent browsing the network).
The control and access to the resources provided by the Company,
including the documents generated by the users and the communications originating therefrom, may be carried out on a preventive, temporary and/or continuous basis, taking into account the nature of said Technological Resources and Communication
Systems provided by the Company.
The control of these resources shall be carried out without harming and
without infringing the dignity or privacy of the User, in consideration of the prior knowledge that the User has of the object and existence of the present control and supervision to which the Users are subject.
The generic purposes of this control are as follows:
|
● |
Protection of the Communication System and Technology Resources, in order to protect their integrity. |
|
● |
Ensure the continuity of the work in the event that the User is absent due to illness, vacation or other similar. |
|
● |
Prevention of third-party liability. |
|
● |
Verification of compliance with the User’s obligations in the field of providing services. |
|
● |
Verification of the existence or not of the abusive use of the Technology Resources and Communication Systems provided by the Company for personal and private uses |
Therefore, all stored content, information and files, including
temporary information, may be accessed by the Company or by those responsible designated for this purpose.
|
8 |
Use of Technology Resources outside the Company |
The inputs and outputs of the Technology Resources necessary for the
development of the provision of services must be authorized by the Security Manager. The User is obliged to make the reasoned request in writing, indicating the equipment to be used outside the Company, date of departure and expected date of
delivery, the Security Manager being obliged to respond in writing to the request.
The Security Manager shall implement the necessary measures to ensure the integrity and
security of the computer equipment outside the Company, as well as to keep an updated record of the entry and exit thereof.
9 |
Use of Software Licenses |
The User is obliged to respect the terms and conditions of use of the
licences and industrial and intellectual property rights of the software installed on the computer equipment, and is responsible for its proper use.
All software protected by industrial and intellectual property rights
may not be copied, altered, modified, decompiled, disassembled, translated, published, nor may any information protected by patents, trademarks or intellectual property rights be made available to the user. any information protected by patents,
trademarks or industrial and intellectual property rights may not be made available.
The User shall be liable for any failure to comply with the obligations
set out in this Clause.
|
10 |
Consequences arising from non-compliance with the Use and Control Policy |
The User undertakes to cooperate with the Systems Officer to carry out
any investigation aimed at finding possible causes arising from the misuse of the Technological Resources and Communication Systems.
The User who fails to comply with this Use and Control Policy will be
sanctioned with the removal of access to the Technological Resources and Communication Systems, the application of sanctions for non-compliance with the terms and conditions that, where appropriate, emanate from the User’s contract, without prejudice
to the legal sanctions established in the applicable regulations in force.
/s/ María Aresti Escrivá de Romaní
|
/s/ Jose Javier Brey Sanchez
|
|
|
The Company |
The User |
ASSIGNMENT OF INTELLECTUAL AND INDUSTRIAL PROPERTY RIGHTS
In Seville, on 2 June 2016
On the one hand, the Professional, under the terms defined in this
agreement, and hereinafter the INVENTOR.
On the other hand, María Aresti Escrivá de Romaní with Spanish ID
number. [***] with address in [***], acting as sole director of H282 Electrolysis Technologies S.L. (formerly Global Aerco S.L.), with Spanish Tax ID number [***], hereinafter THE COMPANY.
Both parties acknowledge their full capacity to enter into this
agreement, so in the representations they hold, freely and spontaneously
WHEREAS
1. That the INVENTOR develops, or will develop, within the
framework of its functions and deriving from the employment agreement that binds it to the COMPANY, and in collaboration with others (if applicable) and, in any case, at the request of the COMPANY, certain intellectual and industrial property
developments that may be patented or registered, hereinafter referred to as THE DEVELOPMENTS.
2. That in accordance with the legislation in force, the
employment agreement between INVENTOR and the COMPANY, it is understood that all non-material rights of the DEVELOPMENTS belong to the COMPANY, but that it is nevertheless the intention of INVENTOR and the COMPANY to enter into this agreement to
ratify this situation.
IV.- Both parties have reached an agreement to enter into this
agreement, which will be subject to the following
CLAUSES
First.- The INVENTOR assigns to the COMPANY all non-material
rights of the DEVELOPMENTS, in any form and, in particular, on a non-exclusive basis, the economic exploitation of the DEVELOPMENTS.
Second.- The INVENTOR may not exploit the DEVELOPMENTS, either
on its own or through related persons or companies.
Third.- The rights assigned in this contract are assigned for
the duration of the term established by the applicable law in each case.
Four.- This assignment is worldwide.
Fifth.- This assignment shall not lose its effect even if the
employment relationship between the INVENTOR and the COMPANY ceases.
Six.- This agreement may be made public by either of the
parties, and the costs of this procedure shall be borne by the party that does so.
Seventh.- This agreement and any disputes that may arise from it
are subject to Spanish law. The parties submit, waiving their own jurisdiction that may correspond to them, to the Courts of the city of Sevilla.
Eighth.- In the event that any of the clauses of this contract
should be declared null and void, the contract shall not lose its validity and both parties shall meet to agree on one that, following the same economic purpose, is in accordance with the law.
Ninth.- This agreement binds both the signatory parties and
their successors in title and/or their related parties through any legal instrument. The change of corporate name and/or change of corporate purpose or any other commercial event of a similar nature of any of the parties shall not affect the content
of this contract, as the COMPANY shall continue to maintain its rights regardless of these variables. At in the event of a merger, spin-off or liquidation or any other commercial event of a similar nature of any of the parties, the COMPANY shall
continue to maintain its rights irrespective of these variables.
|
● |
the INVENTOR shall maintain the same obligations conferred by this agreement, regardless of the legal form, company name or event that has affected it |
|
● |
the COMPANY shall maintain the same rights conferred by this agreement, subject always to the specific agreements that have been reached based on the commercial event or
the nature thereof. |
Tenth.- The INVENTOR shall at all times have a duty of
confidentiality with regard to any information relating to the DEVELOPMENT. The INVENTOR may not pass on any information relating to the DEVELOPMENT to any person, whether natural or legal, with the exception of other persons with employment or
commercial ties to the COMPANY, and provided that such ties have been established, inter alia, for the purpose of carrying out the DEVELOPMENT. The INVENTOR may only transfer information relating to the DEVELOPMENT to third parties if authorized by
the COMPANY and if such authorization is recorded in a document on the transfer and use of information. The confidentiality obligation for the INVENTOR shall not lose its effect even if the employment relationship between the INVENTOR and the COMPANY
ceases. The COMPANY may claim all types of damages from the INVENTOR who breaches this confidentiality obligation, regardless of the liabilities and indemnities that the COMPANY may request from the third parties involved.
And with the parties being satisfied in all of the foregoing and
recorded herein, in which content they affirm, ratify and accept, they sign it for a single purpose in the place “ut supra”.
/s/ María Aresti Escrivá de Romaní
|
/s/ Jose Javier Brey Sanchez
|
The Company |
The Inventor |
Exhibit 10.20
IN ACCORDANCE WITH ITEM 601(A)(6) OF REGULATION S-K, CERTAIN INFORMATION HAS BEEN OMITTED
FROM THIS EXHIBIT BECAUSE IT CONTAINS PERSONALLY IDENTIFIABLE INFORMATION.
[***] INDICATES THAT INFORMATION HAS BEEN REDACTED.
H2B2 ELECTROLYSIS TECHNOLOGIES, INC.
COMMON STOCK OPTION AGREEMENT
H2B2 ELECTROLYSIS TECHNOLOGIES, INC.
COMMON STOCK
OPTION AGREEMENT
This Common Stock Option Agreement (this “Agreement”) is
dated as 1st January 2021 and is between H2B2 Electrolysis Technologies, Inc., a Delaware corporation (the “Company”), and Empelia Capital S.L.U. (Tax
Number [***]) of Spain (“Investor”) and/or Jose Javier Brey Sanchez (Tax Number [***]), as manager of Investor or on his behalf.
SECTION 1
1.1 Authorization. The Company will,
prior to the date of this Agreement, authorize the sale and issuance of up to 25,000 shares (the “Shares”) of the Company’s Common Stock, par value $0.00001 per share (the “Common Stock”), having the rights, privileges, preferences and restrictions
set forth in the certificate of incorporation of the Company, (the “Certificate”).
1.2 Sale and Issuance of Shares. Subject
to the terms and conditions of this Agreement, Investor is entitled to purchase, and the Company agrees to sell to Investor should he decide it, up to 25,000 shares, at a global price provided in Section 2.2 (the “Purchase Price”).
SECTION 2
OPTION EXERCISE, EXECUTION AND DELIVERY
2.1 Option exercise and execution.
|
a) |
Upon signature of the Agreement, the Investor is acquiring a free option to purchase the Shares. |
|
b) |
The Option shall be fully exercised and executed between 1st
January 2026 and 31st March 2026, according to the conditions in 2.1.(e). |
|
c) |
The execution of the Option shall be notified to Company at least 15 calendar days before the execution. The notification must include the
specific execution date. |
|
d) |
The execution date shall be understood as the Closing Date. This Option shall be only valid:
|
|
e) |
In case the Company is public and is listed and traded in a stock market by 1st January
2026; and |
|
f)
|
as long as Jose Javier Brey Sanchez maintains until the Closing Date a labor relation with any company of the Company Group. In case of termination of this
labor relation, regardless of the cause of the termination or the party terminating that relation, Investor shall lose all its rights to purchase the Shares according to the Option. |
Despite de aforementioned, in case of (i)
decease or (ii) sudden impossibility to carry out the regular job of Jose Javier Brey Sánchez, all Investor rights provided in this Agreement could be exercised by Investor or by Jose Javier Brey Sánchez or by their heirs.
2.2 Purchase Price. The Purchase Price will be one (1)
USD. This Purchase Price will be the global price of the 25,000 shares.
2.3 Delivery. After the Closing Date, the Company will
deliver to Investor a certificate registered in such Investor’s name representing the number of Shares that such Investor is purchasing against payment of the purchase price as set forth in section 1.2.
2.4 Impossibility. Should the execution
of the Option be impossible (i) because the Company is not public and/or listed and/or traded by 1st January 2026 in a stock exchange market; or (ii) due to the public
market regulations to be applied, this Option shall be terminated on 31st December 2025 and Jose Javier Brey Sánchez shall be entitled to a gross salary bonus of 30% of
its gross annual salary in 2025, to be paid within the first quarter of 2026.
SECTION 3
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY
The Company hereby represents and warrants to the Investors as follows:
3.1. Organization, Good Standing and
Qualification. The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware. The Company has the requisite corporate power and authority to own and operate its properties and
assets, to carry on its business as presently conducted, to execute and deliver this Agreement and the Certificate. The Company is presently qualified could reasonably be expected to have a material adverse effect on the Company’s financial condition
or business as now conducted (a “Material Adverse Effect”).
3.2. Subsidiaries. The Company has
disclosed all entities or companies that it owns or control, directly or indirectly, any interest any corporation, partnership, limited liability company, association or other business entity.
3.3. Capitalization.
(a) The Company has reserved the Shares for issuance
pursuant to this Agreement. The rights, preferences, privileges and restrictions are as stated in the Certificate.
(b) The Shares, when issued and delivered and paid for in
compliance with the provisions of this Agreement, will be validly issued, fully paid and nonassessable. The Shares will be free of any liens or encumbrances, other than any liens or encumbrances created by or imposed upon the Investors; provided,
however, that the Shares could be subject to restrictions on transfer under U.S. state and/or federal securities laws and as set forth herein.
3.4 Authorization. All corporate action
on the part of the Company and its directors, officers and stockholders necessary for the authorization, execution and delivery of this Agreement by the Company, the authorization, sale, issuance and delivery of the Shares, and the performance of all
of the Company’s obligations under this Agreement has been taken or will be taken prior to the date of this Agreement. This Agreement, when executed and delivered by the Company, shall constitute a valid and binding obligation of the Company,
enforceable in accordance with its terms, except (i) as limited by laws of general application relating to bankruptcy, insolvency and the relief of debtors and (ii) as limited by rules of law governing specific performance, injunctive relief or other
equitable remedies and by general principles of equity.
3.5 Offering. Subject to the accuracy
of the Investor’s representations and warranties in Section 4, the offer, sale and issuance of the Shares to be issued in conformity with the terms of this Agreement, could constitute transactions exempt from the registration requirements of Section
5 of the Securities Act of 1933, as amended (the “Securities Act”).
3.6 No “Bad Actor” Disqualification. The
Company has exercised reasonable care, in accordance with SEC rules and guidance, to determine whether any Covered Person (as defined below) is subject to any of the “bad actor” disqualifications described in Rule 506(d)(l)(i) through (viii) under
the Securities Act (“Disqualifications Events”). To the Company’s knowledge, no Covered Person is subject to a Disqualification Event, except for a Disqualification Event covered by Rule 506(d)(2) or (d)(3) under the Securities Act. The Company has
complied, to the extent applicable, with any disclosure obligations under Rule 506(e) under the Securities Act, including the Company; any predecessor or affiliate specified in Rule 506(d)(1) under the Securities Act, including the Company; any
predecessor or affiliate of the Company; any director, executive officer, other officer participating in the offering, general partner or managing member of the Company; any beneficial owner of 20% or more of the Company’s outstanding voting equity
securities, calculated on the basis of voting power; any promoter (as defined in Rule 405 under the Securities Act) connected with the Company in any capacity at the time of the sale of the Shares; and any person that has been or will be paid
(directly or indirectly) remuneration for solicitation of purchasers in connection with the sale of the Shares (a “Solicitor”), any general partner or managing member of any Solicitor, and any director, executive officer or other officer
participating in the offering of any Solicitor or general partner or managing member of any Solicitor.
3.7 Brokers or Finders. The Company has
not incurred, and will not incur, directly or indirectly, as a result of any action taken by the Company, any liability for brokerage or finders’ fees or agents’ commissions or any similar charges in connection with this Agreement or any of the
transactions contemplated hereby.
SECTION 4
REPRESENTATIONS AND WARRANTIES OF THE INVESTOR
Investor hereby represents and warrants to the Company as
follows:
4.1 No Registration. The Investor
understands that the Shares have not been, and will not be, registered under the Securities Act by reason of a specific exemption from the registration provisions of the Securities Act, the availability of which depends upon, among other things, the
bona fide nature of the investment intent and the accuracy of the Investor’s representations as expressed herein or otherwise made pursuant hereto.
4.2 Investment Intent. The Investor is
acquiring the Shares for investment for its own account, not as a nominee or agent. The Investor further represents that it does not have any contract, undertaking, agreement or arrangement with any person or entity to sell, transfer or grant
participation to such person or entity or to any third person or entity with respect to any of the Shares.
4.3 Investment Experience. The Investor
has substantial experience in evaluating and investing in private placement transactions of securities in companies similar to the Company and acknowledges that the Investor can protect its own interests. The Investor has such knowledge and
experience in financial and business matters so that the Investor is capable of evaluating the merits and risks of its investment in the Company.
4.4 Speculative Nature of Investment. The
investor understands and acknowledges that the Company has a limited financial and operating history and that an investment in the Company is highly speculative and involves substantial risks. The Investor can bear the economic risk of the Investor’s
investment and is able, without impairing the Investor’s financial condition, to hold the Shares for an indefinite period of time to suffer a complete loss of the Investor’s investment.
4.5 Access to Data. The Investor has
had an opportunity to ask question of, and receive answer from, the officers of the Company concerning this Agreement, the exhibits and schedules attached hereto and the transactions contemplated by this Agreement, as well as the Company’s business,
management and financial affairs, which questions were answered to its satisfaction. The Investors believes that it has received all the information the Investors considers necessary or appropriate for deciding whether to purchase the Shares. The
Investor understands that such discussions, as well as any information issued by the Company, were intended to describe certain aspects of the Company’s business and prospects, but were not necessarily a thorough or exhaustive description. The
Investor acknowledges that any business plans prepared by the Company have been, and continue to be, subject to change and that any projections included in such business plans or otherwise are necessarily speculative in nature, and it can be expected
that some or all of the assumptions underlying the projections will not materialize or will vary significantly from actual results. The Investor also acknowledges that it is relying solely on its own counsel and not on any statements or
representations of the Company of its agents for legal advice with respect to this investment or the transactions contemplated by this Agreement.
4.6 Accredited loves r. The
representation in this Section 4 only applies to “accredited investors” within the meaning of Regulation D, Rule 501(a), promulgated by the Securities and Exchange Commission under the Securities Act (each an “Accredited Investor”). The Investor is
an Accredited Investor and shall submit to the Company such further assurances of such status as may be reasonably requested by the Company. The Investor has furnished or made available any and all information requested by the Company or otherwise
necessary to satisfy any applicable verification requirements as to their status as an Accredited Investor. Any such information is true, correct, timely and complete.
4.7 Residency. The residency of the
Investor (or, in the case of a partnership or corporation, such entity’s principal place of business) is correctly set forth on the first page of this Contract.
4.8 No Public Market. The Investor
understands and acknowledges that no public market now exists for any of the securities issued by the Company and that the Company has made no assurances that a public market will ever exist for the Company’s securities.
4.9 Authorization.
(a) The Investor has all requisite power
and authority to execute and deliver this Agreement, to purchase the Shares hereunder and to carry out and perform its obligations under the terms of this Agreement. All action on the part of the Investor necessary for the authorization, execution,
delivery and performance of this Agreement, and the performance of all of the Investor’s obligations under this Agreement, lias been taken or will be taken prior to the beginning of the Closing Date..
(b) This Agreement, when executed and
delivered by the Investor, will constitute a valid and legally binding obligation of the Investor, enforceable in accordance with its terms except: (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium and other laws of
general application affecting enforcement of creditors’ rights generally and (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies or by general principles of equity.
(c) No consent, approval, authorization,
or er, filing, registration or qualification of or with any court, governmental authority or third person is required to be obtained by the Investor in connection with the execution and delivery of this Agreement by the Investor or the performance of
the Investor’s obligations hereunder.
4.10 Brokers or Finders. The Investor has
not engaged any brokers, finders or agents, and neither the Company nor any other Investor has, nor will, incur, directly or indirectly, as a result of any action taken by the Investor, any liability for brokerage or finders’ fees or agents’
commissions or any similar charges in connection with this Agreement.
4.11 Tax Advisors. The Investor has
reviewed with its own tax advisors the U.S. federal, state, local and foreign tax consequences of this investment and the transactions contemplated by this Agreement. With respect to such matters, the Investor relies solely on such advisors and not
on any statements or representations of the Company or any of its agents, written or oral. The Investor understands that it (and not the Company) shall be responsible for its own tax liability that may arise as a result of this investment or the
transactions contemplated by this Agreement.
4.12 Legends. The Investor understands
and agrees that the certificates evidencing the Shares, or any other securities issued in respect of the Shares upon any stock split, stock dividend, recapitalization, merger, consolidation or similar event, shall bear the following legend (in
addition to any legend required under applicable state securities laws):
“THE SECURITIES REPRESENTED BY THIS
CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE, AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER SUCH ACT AND/OR APPLICABLE
STATE SECURITIES LAWS, OR UNLESS THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL OR OTHER EVIDENCE, REASONABLY SATISFACTORY TO THE COMPANY AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED.”
4.13 No “Bad Actor” Disqualification Events. Neither
(i) the Investor, (ii) any of its directors, executive officers, other officers that may serve as a director or officer of any company in which it invests, general partners or managing members, nor (iii) any beneficial owner of the Company’s voting
equity securities (in accordance with Rule 506(d) of the Securities Act) held by the Investor is subject to any Disqualification Event (as defined in Section 3.6), except for Disqualification Events covered by Rule 506(d)(2)(ii) or (iii) or (d)(3)
under the Securities Act and disclosed reasonably in advance of the Closing Term in writing in reasonable detail to the Company.
4.14 Taxes. Investor fully understands
and acknowledges the tax consequences of the Option stated herein and declares that no claim will be trough against the Company due to this reason.
SECTION 5
CONDITIONS TO INVESTOR’S
OBLIGATIONS TO CLOSE
Investor’s right to purchase the Shares at the date of
this Agreement is subject to the fulfillment on or before the date of this Agreement of each of the following conditions, unless waived by the applicable Investor purchasing the Shares in such date:
5.1 Representations and Warranties. The
representations and warranties made by the Company in Section 3 shall be true and correct in all material respects as of the date of this Agreement.
5.2 Covenants. The Company shall have
performed or complied with all covenants, agreements and conditions contained in this Agreement to be performed or complied with by the Company on or prior to the date of this Agreement in all material respects.
5.3 Blue Sky. The Company shall have
obtained all necessary Blue Sky law permits and qualifications, or have the availability of exemptions therefrom, required by any state for the offer and sale of the Shares.
5.4 Consents and Waivers. The Company
shall have obtained any and all consents, permits and waivers necessary or appropriate for the performance by the Company of its obligations pursuant to this Agreement.
SECTION 6
CONDITIONS TO COMPANY’S OBLIGATION TO CLOSE
The Company’s obligation to sell and issue the Shares at
the date of this Agreement is subject to the fulfillment on or before the Closing Term of the following conditions, unless waived by the Company:
6.1 Representations and Warranties. The
representations and warranties made by the Investors in the date of this Agreement in Section 4 shall be true and correct in all material respects when made and shall be true and correct in all material respects as of the date of such date.
6.2 Covenants. The Investors shall have
performed or complied with all covenants, agreements and conditions contained in this Agreement to be performed or complied with by the Investors on or prior to the date of this Agreement.
6.3 Compliance with Securities Laws. The
Company shall be satisfied that the offer and sale of the Shares shall be qualified or exempt from registration or qualification under all applicable federal and state securities laws (including receipt by the Company of all necessary blue sky law
permits and qualifications required by any state, if any).
6.4 Consents and Waivers. The Company
and the Investors shall have obtained any and all consents, permits and waivers necessary or appropriate for consummation of the transactions contemplated by this Agreement.
SECTION 7
MISCELLANEOUS
7.1 Amendment. Except as expressly
provided herein, neither this Agreement nor any term hereof may be amended, waived, discharged or terminated other than by a written instrument referencing this Agreement and signed by the Company, Investor and the Investors holding a majority of the
Common Stock issued pursuant to this Agreement (excluding any of such shares that have been sold to the public or pursuant to Rule 144); provided, however, that Investors purchasing shares after the date of this Agreement may become parties to this
Agreement in accordance with Section 2.1 without any amendment of this Agreement pursuant to this paragraph or any consent or approval of any other Investor. Any such amendment, waiver, discharge or termination effected in accordance with this
paragraph shall be binding upon each holder of any securities purchased under this Agreement at the time outstanding (including securities into which such securities have been converted or exchanged or for which such securities have been exercised)
and each future holder of all such securities. Investor acknowledges that by the operation of this paragraph, the holders of a majority of the Common Stock issued pursuant to this Agreement (excluding any of such shares that have been sold to the
public or pursuant to Rule 144) will have to approve any change concerning the rights of such Investor under this Agreement.
7.2 Notices. All notices and other
communications required or permitted hereunder shall be in writing and shall be mailed by registered or certified mail, postage prepaid, sent by facsimile or electronic mail (if to an Investor or any other holder of Company securities) or otherwise
delivered by hand, messenger or courier service addressed:
(a) if to an Investor, to the Investor’s
address, facsimile number or electronic mail address as shown in the Company’s records, as may be updated in accordance with the provisions hereof;
(b) if to any other holder of any Shares,
to such address, facsimile number or electronic mail address as shown in the Company’s records, or, until any such holder so furnishes an address, facsimile number or electronic mail address to the Company, then to the address, facsimile number or
electronic mail address of the last holder of such Shares for which the Company has contact information in its records; or
(c) if to the Company, to the attention of
the Chief Executive Officer at the current address as the Company shall have furnished to the Investors.
Each such notice or other communication shall for all
purposes of this Agreement be treated as effective or having been given (i) if delivered by hand, messenger or courier service, when delivered (or if sent via a nationally-recognized overnight courier service, freight prepaid, specifying
next-business-day delivery, one business day after deposit with the courier), or (ii) if sent via mail, at the earlier of its receipt or five days after the same has been deposited in a regularly-maintained receptable for the deposit of the United
States mail, addressed and mailed as aforesaid, or (iii) if sent via facsimile, upon confirmation of facsimile transfer or, if sent via electronic mail, upon confirmation of delivery when directed to the relevant electronic mail address, if sent
during normal business hours of the recipient, or if not sent during normal business hours of the recipient, then on the recipient’s next business day. In the event of any conflict between the Company’s books and records and this Agreement or any
notice delivered hereunder, the Company’s books and records will control absent fraud or error.
Subject to the limitations set forth in Delaware General
Corporation Law §232(e), Investor or other security holder consents to the delivery of any notice to stockholders given by the Company under the Delaware General Corporation Law or the Company’s certificate of incorporation or bylaw by (i) facsimile
telecommunication (ii) electronic mail (iii) posting on an electronic network together with separate notice to the Investor or other security holder of such specific posting or (iv) any other form of electronic transmission (as defined in the
Delaware General Corporation Law) directed to the Investor or other security holder. This consent may be revoked by an Investor or other security holder by written notice to the Company and may be deemed revoked in the circumstances specified in
Delaware General Corporation Law §232.
7.3 Governing Law. This Agreement shall
be governed in all respects by the internal laws of the State of Delaware as applied to agreements entered into among Delaware residents to be performed entirely within Delaware, without regard to principles of conflicts of law.
7.4 Brokers or Finders. The Company
shall indemnify and hold harmless Investor from any liability for any commission or compensation in the nature of a brokerage or finder’s fee or agent’s commission (and the costs and expenses of defending against such liability or asserted liability)
for which such Investor or any of its constituent partners, members, officers, directors, employees or representatives is responsible to the extent such liability is attributable to any inaccuracy or breach of the representations and warranties
contained in Section 3.7, and Investor agrees to indemnify and hold harmless the Company and each other Investor from any liability for any commission or compensation in the nature of a brokerage or finder’s fee or agent’s commission (and the costs
and expenses of defending against such liability or asserted liability) for which the Company, any other Investor or any of their constituent partners, members, officers, directors, employees or representatives is responsible to the extent such
liability is attributable to any inaccuracy or breach of the representations and warranties contained in Section 4.11.
7.5 Expenses. The Company and the
Investors shall each pay their own expenses in connection with the transactions contemplated by this Agreement.
7.6 Survival. The representations,
warranties, covenants and agreements made in this Agreement shall survive any investigation made by any party hereto and the closing of the transactions contemplated hereby for one year from the date of the date of this Agreement.
7.7 Successors and Assigns. This
Agreement, and any and all rights, duties and obligations hereunder, shall not be assigned, transferred, delegated or sublicensed by any Investor without the prior written consent of the Company, unless otherwise stated in this Agreement. Any attempt
by an Investor without such permission to assign, transfer, delegate or sublicense any rights, duties or obligations that arise under this agreement shall be void. Subject to the foregoing and except as otherwise provided herein, the provisions of
this Agreement shall inure to the benefit of, and be binding upon, the successors, assigns, heirs, executors and administrators of the parties hereto.
7.8 Entire Agreement. This Agreement,
including the exhibits attached hereto, constitutes the full and entire understanding and agreement between the parties with regard to the subjects hereof. No party shall be liable or bound to any other party in any manner with regard to the subjects
hereof by any warranties, representations or covenants except as specifically set forth herein.
7.9 Delays or Omissions. Except as
expressly provided herein, no delay or omission to exercise any right, power or remedy accruing to any party to this Agreement upon any breach or default of any other party under this Agreement shall impar any such right, power or remedy of such
non-defaulting party, nor shall it be construed to be a waiver of any such breach or default, or an acquiescence therein, or of or in any similar breach or default thereafter occurring, nor shall any waiver of any single breach or default be deemed a
waiver of any other breach or default theretofore or thereafter occurring. Any waiver, permit, consent or approval of any kind or character on the part of any party of any breach or default under this Agreement, or any waiver on the part of any party
of any provisions or conditions of this Agreement, must be in writing and shall be effective only to the extent specifically set forth in such writing. All remedies, either under this Agreement or by law or otherwise afforded to any party to this
Agreement, shall be cumulative and not alternative.
7.10 Severability. If any provision of
this Agreement becomes or is declared by a court of competent jurisdiction to be illegal, unenforceable or void, portions of such provision, or such provision in its entirety, to the extent necessary, shall be severed from this Agreement, and such
court will replace such illegal, void or unenforceable provision of this Agreement with a valid and enforceable provision that will achieve, to the extent possible, the same economic, business and other purposes of the illegal, void or unenforceable
provision. The balance of this Agreement shall be enforceable in accordance with its terms.
7.11 Counterparts. This Agreement may be
executed in any number of counterparts, each of which shall be enforceable against the parties actually executing such counterparts, and all of which together shall constitute one instrument.
7.12 Telecopy Execution and Delivery. A
facsimile, telecopy or other reproduction of this Agreement may be executed by one or more parties hereto and delivered by such party by facsimile or any similar electronic transmission device pursuant to which the signature of or on behalf of such
party can be seen. Such execution and delivery shall be considered valid, binding and effective for all purposes. At the request of any party hereto, all parties hereto agree to execute and deliver an original of this Agreement as well as any
facsimile, telecopy or other reproduction hereof.
7.13 Arbitration. The parties shall
attempt to resolve all disputes between the parties arising out of or relating to this Stock Purchase Agreement amicably through good faith discussions upon the written request of any party. In the event that any such dispute cannot be resolved
thereby within a period of thirty (30) days after such notice has been given, such dispute shall be finally resolved by binding arbitration in Delaware, using the English language in accordance with the Arbitration Rules and Procedures of JAMS then
in effect. The Parties agree that they shall attempt to select an Arbiter by Agreement, but should they come to such an agreement, the parties shall select an arbitrator in accordance it the arbitrator selection procedures set forth in the
Arbitration Rules and Procedure of JAMS then in effect. The parties agree that the presiding arbitrator shall have the jurisdiction to resolve any disputes arising out of or relating to this Stock Purchase Agreement. The parties consent to the
exercise of personal jurisdiction over each of them by the era] and state courts within the State of Delaware for the purposes enforcing any arbitration award that may result from arbitration proceedings instituted to resolve any disputes arising out
of or related to this Stock Purchase Agreement, or to prevent any threatened violation of this Stock Purchase Agreement.
7.14 Jury Trial. EACH OF THE PARTIES
HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING (WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATED TO THIS AGREEMENT.
7.15 Attorney’s Fees. In the event that
any suit or action is instituted to enforce any provisions in this Agreement, the prevailing party in such dispute shall be entitled to recover from the losing party all fees, costs and expenses of enforcing any right of such prevailing party under
or with respect to this Agreement, including without limitation, such reasonable and expenses of attorneys and accountants, which shall include, without limitation, all costs and expenses of appeals.
7.16 Further Assurances. Each party
hereto agrees to execute and deliver, by the proper exercise of its corporate, limited liability company, partnership or other powers, all such other and additional instruments and documents and do all such other acts and things as may be necessary
to more fully effectuate this Agreement.
7.17 SPECIAL AMENDMENT BY COMPANY. NOTWITHSTANDING
ANY PROVISION IN THIS AGREEMENT TO THE CONTRARY, THE COMPANY MAY UNILATERALLY AMEND IN GOOD FAITH THIS AGREEMENT, WITHOUT THE CONSENT OF INVESTOR TO MAKE A CHANGE THAT IS NECESSARY OR DESIRABLE TO CURE ANY AMBIGUITY OR INCONSISTENCY AND TO MAKE
CHANGES TO SATISFY ANY REQUIREMENTS, CONDITIONS OR GUIDELINES CONTAINED IN ANY OPINION, DIRECTIVE, ORDER, RULING, REGULATION OR STATUTE OF ANY GOVERNMENTAL BODY THAT WILL NOT BE INCONSISTENT WITH THIS AGREEMENT, AND IN ANY CASE SUBJECT TO THE
REQUIREMENT THAT THE INVESTOR NOT BE MATERIALLY AND ADVERSELY AFFECTED. SHOULD THIS HAPPEN, THE COMPANY SHALL PROMPTLY NOTIFY THE INVESTOR WITHIN (10) BUSINESS DAYS.
(signature page follows)
IN WITNESS WHEREOF, the Company has caused this
Agreement to be executed by its duly authorized representative and Investor has executed this Agreement, as of the Effective Date.
H2B2 ELECTROLYSIS TECHNOLOGIES, INC.
/s/ José Javier Brey Sánchez |
|
By: José Javier Brey Sánchez
José Javier Brey Sánchez
/s/ José Javier Brey Sánchez |
|
[handwritten signature]
|
|
On his behalf and on behalf of Empelia Capital SLU
Exhibit 10.21
Execution version
H2B2 Electrolysis Technologies Inc.
December 15, 2022
Mr. Antonio Vázquez Romero
Re: Service as Non-Executive Chairman of the Board
Dear Mr. Antonio Vázquez Romero:
This letter agreement (the “Agreement”) sets forth certain terms and conditions of your service as a member (“Director”)
of the Board of Directors (the “Board”) of H2B2 Electrolysis Technologies Inc. (the “Company”) and appointment as Non-Executive Chairman of the Board (“Chairman”), effective as of December 21, 2022 (the “Effective Date”).
1. Term; Responsibilities. Your service as a Director and Chairman under the terms of this Agreement will commence on the Effective Date and continue through such time as you or the
Company (or its successor) terminates such service, as applicable. During the term of your service, you shall devote your time, energy, skill and attention to fulfill your duties and responsibilities to the Company as Chairman to the best of your
abilities and shall at all times, in such capacity, promote and protect the interests of the Company. In particular, as Chairman, you will be expected to work closely with the other Directors and the Chief Executive Officer and management team to,
among other things, direct the strategy and operations of the Company. As a Director, you will be expected to, among other things, (a) attend all Board meetings (including, without limitation, in-person meetings, as appropriate), (b) serve on
committees of the Board, as appropriate, and (c) fulfill such other duties and responsibilities as are customarily associated with your position as a Director and/or Chairman.
2. Cash Fees. In consideration of your service as Chairman, the Company will pay you an annual cash fee equal to $100,000 (the “Annual Fee”),
prorated for any partial year of service. The Annual Fee shall be payable in equal monthly instalments of $8,333.33 at the end of each calendar month. To the extent you no longer serve as Chairman, you shall no longer be entitled to the Annual Fee
(other than a prorated payment until the date on which you stopped serving as Chairman).
3. Equity Compensation. In addition, subject to the determination by the Board of the final number of Shares underlying the Option as set forth below and Section 3(j), you will be
granted a non-transferrable option to purchase shares of common stock of the Company (the “Shares”), par value 0.00001 per share (the “Option”), according to the
following terms:
a. The number of Shares underlying the Option (subject to the provisions laid out in Section 7) shall be calculated as follows:
(i) if the Company closes the private placement transaction in which Barclays Capital is currently advising (the “Private Placement”):
dividing $750,000 by the subscription or purchase price per share at which the Private Placement is closed; or
(ii) if the Company goes public through a de-SPACing combination (the “de-SPACing”): dividing $750,000 by the exchange price of the
Company’s shares in the de-SPACing combination;
provided that, if both a Private Placement and a de-SPACing combination are consummated, the number of Shares underlying the Option shall be the one resulting from paragraph (i)
above.
In the event that neither the Private Placement nor the de-SPACing take place, the number of Shares underlying the Option (subject to the provisions laid out in Section 7) will be
18,7501.
b. Additionally, should any change be made to the common stock of the Company by reason of any stock split, stock dividend, recapitalization, combination of shares, exchange
of shares, spin-off transaction, or other change affecting the outstanding common stock or should there occur any merger, consolidation or other reorganization, then proportional adjustments shall be made, to the extent necessary, by the Board to the
total number of Shares subject to this Option. The adjustments shall be made in a commercially reasonable manner by the Board in order to reflect such change.
c. The exercise price in respect of all the Shares underlying the Option (i.e. assuming that all the Shares are vested) will be $1 in total. The exercise price
corresponding to each individual Share will be calculated by the Board once the final number of Shares underlying the Option is determined in accordance with paragraph a of this Section 3 and shall be subject to the adjustment foreseen in paragraph b
of this Section 3.
d. The Option shall vest in annual installments over the five-year period following the Effective Date (i.e. 20% upon each complete year of service from the Effective
Date), subject to your continued service through the applicable vesting dates. For illustration purposes, if the Chairman provides services during 4.5 years, the Option will be exercisable over up to 80% of the Shares underlying the Option.
As an exception, the vesting of the Option shall accelerate (and therefore, the Option shall vest in full and will be exercisable in respect of all the Shares) in the following events:
(1) upon termination of service: (a) by the Company without Cause (as defined below); (b) by the Company due to permanent ill health or if you become physically or
mentally incapacitated such that you are unable for a period of six (6) months to perform your duties as Chairman (such incapacity is hereinafter referred to as “Disability”) as confirmed by a qualified
independent physician mutually acceptable to you and the Board. If you and the Board cannot agree as to a qualified independent physician, each shall appoint a physician and those two physicians shall select a third physician who shall make such
determination in writing. The determination of Disability made in writing to the Company and you shall be final and conclusive for all purposes of this Agreement; (c) due to death, or (d) due to any force majeure event accepted by the Board (acting
in good faith). In the event of death or, where applicable, Disability, the heirs and representatives of the Chairman will be entitled to exercise the Option; or
(2) in the event that any person (or group of persons acting in concert), including any of the current stockholders, holds or owns after the Effective Date, directly or indirectly, more than
50% of the ordinary common stock of the Company, other than as a result of a de-SPACing combination (or any similar transaction with the purpose of listing the Shares of the Company);
(jointly, the “Option Acceleration Events”)
1
|
That is, $750,000 divided by $40.
|
e. In the event that the Shares of the Company do not become publicly traded (and therefore, the Company remains as a private Company), the Option will only be
exercisable once by the Chairman (or, if applicable, his heirs or representatives) within the six month period beginning on the earlier of (a) the fifth anniversary of the Effective Date or (b) the occurrence of an Option Acceleration Event2.
f. Once and if the Shares have become publicly traded, the Option will be exercisable by the Chairman (in one or more instances) in respect of all or part of the vested
Shares, from time to time, until the earlier of (a) the six month following the termination of service or resignation of your role as Chairman (including as a result of an Option Acceleration Event) and (b) the sixth anniversary of the Effective
Date.
g. In the event of an IPO or de-SPACing combination, the Chairman will comply with the terms of any market standoff agreement (or any similar agreement that prevents
insiders of a company from selling their shares in the market for a specified number of days after an initial public offering) that is agreed by the rest of the stockholders of the Company or that is requested by the underwritters in accordance with
customary market practice.
h. In the event that the Option is exercised before the Shares have become publicly traded (that is, while the Company is still a private, non-listed, entity), the
Chairman will accede and become a party to any shareholders’ agreement in relation to the Company (and/or any similar arrangement) that is applicable to the majority of the shareholders of the Company.
i. The Chairman shall not have any stockholder rights with respect to the Shares until he has exercised the option, paid the exercise price and become a holder of the
Shares.
j. Notwithstanding anything to the contrary in this Section 3, to the extent the Option could reasonably be expected to be subject to Section 409A of the Code (as
determined the Company in good faith), then the Company and the Chairman shall discuss in good faith the possibility of amending the Option or granting the Chairman a comparable equity-based award in lieu of the Option.
4. Expenses. The Company will reimburse you for reasonable travel and other out-of-pocket expenses incurred in connection with your service on the Board, to the extent consistent with
(and subject to the terms of) the applicable Company policies.
5. Termination. Either party hereto may elect to terminate this Agreement effective at any ordinary Board meeting of the Company by giving written notice to the other party at least
three months prior to the termination becoming effective3, provided that the Company shall not be entitled to give written notice of termination to the Chairman until
after the second anniversary of the Effective Date. As an exception to the above, the termination of your service as Director and Chairman (i) by the Company for Cause or (ii) by you due to material breach of this Agreement by the Company, will be
effected immediately upon the terminating party mailing or transmitting notice of such termination.
2
|
In both cases, this implies a full vesting of the Shares underlying the Option.
|
3
|
For illustration purposes if an ordinary Board is scheduled for 30 June, the termination notice shall be submitted not later than 31 March in order for the termination to become effective from such ordinary
Board taking place on 30 June.
|
The Company may terminate this Agreement for “Cause” if you:
a. commit an act of fraud, dishonesty, embezzlement or misappropriation involving the Company;
b. commit any act that results in or could reasonably be expected to result in indictment for, conviction of, or entry of a plea of guilty or no contest to, any crime
involving moral turpitude or dishonesty or any felony;
c. commit an act, or fails to commit an act, involving the Company which amounts to a material breach of this Agreement;
d. engage in repeated and intemperate use of alcohol or illegal drugs which adversely affects the performance of your duties for the Company; or
e. fail to use your reasonable best efforts to perform your material duties and responsibilities to the Company (other than as a result of Disability).
6. Independent Contractor Status. During your tenure as a Director and Chairman, you shall at all times and for all purposes be acting as an independent contractor and not as an
employee of the Company. Accordingly, you shall not be eligible to participate in employee benefit plans provided by the Company to its employees.
7. Taxes. Any taxes imposed on you due to activities you perform pursuant to this Agreement will be solely your responsibility. You shall be and remain solely liable for all taxes
imposed on compensation paid to you in respect of your service as a Director and/or Chairman and you agree to indemnify the Company for, and hold it harmless from, any liability for income tax, withholding tax and any other employment related taxes
or employee’s social security contributions (“Taxes”), imposed by any jurisdiction to which the Company (or a Relevant Affiliate, as the case may be) may be required to pay or withhold Taxes on your behalf (the
“Tax Liability”). A “Relevant Affiliate” is a Spanish-resident entity deemed to be a related party to the Company (within the meaning of Spanish transfer pricing rules).
The Company (or any Relevant Affiliate, as appropriate) shall have the authority and the right to deduct or withhold (as applicable) an amount sufficient to satisfy any Tax Liability required by law
to be withheld including, without limitation, the authority to deduct such amounts from other compensations payable to you by the Company (or any Relevant Affiliate, as appropriate).
In particular, whenever the Option referred to in Section 3 of this Agreement is exercised, the Company or the Relevant Affiliate will comply with all applicable withholding tax laws and will be
entitled to take any action necessary to effectuate such compliance. You hereby agree that the Company or the Relevant Affiliate may withhold Shares otherwise issuable upon the exercise of the Option, or a portion thereof, sufficient for the Company
or the Relevant Affiliate to cover any amount required by law to be withheld or otherwise arising with respect to any taxable event arising as a result of any Option with respect to any Tax Liability attributable to you. The number of Shares which
may be so withheld shall be limited to the number of Shares which have a fair market value equivalent to the aggregate amount of the relevant Tax Liabilities in respect of such taxable income.
8. Confidentiality; No Conflicts. Without limiting your fiduciary duties to the Company as a Director and Chairman and any other obligations to the Company under applicable law
(which you acknowledge and agree to comply with in all circumstances):
a. In consideration of the grant of the Equity Compensation hereunder and the Annual Fes, and as a further material inducement for the Company to enter into this Agreement
with you, you hereby acknowledge and agree to be bound by the confidentiality and proprietary information provisions set forth on Exhibit A attached hereto, which are hereby incorporated as if fully set forth herein. Notwithstanding anything
in this Agreement to the contrary, the provisions set forth on Exhibit A hereto shall survive the termination of this Agreement; and
b. You acknowledge and agree that, during the term of your service hereunder, you must make all decisions objectively in the best interests of the Company and, as such,
you shall not perform any services for or otherwise participate directly or indirectly in any business or entity that is competitive with the Company or any of its material affiliates. You must immediately disclose to the Board in writing any
interest you have from time to time in any trade or business whatsoever that is in any way competitive with any of those in which the Company or any of its material affiliates is involved. You represent that nothing in this Agreement conflicts with
obligations you have to any current or former employer or other service recipient or prevents or could in the future prevent you from performing your obligations under this Agreement.
9. Directors’ and Officers’ Liability Insurance. During your service as a Director and Chairman, you will be entitled to coverage under the Company’s directors’ and officers’ liability
insurance policy to the same extent as such coverage is provided to other members of the Board generally.
10. Section 409A. It is the intention of the Company and you that the payments, benefits and rights to which you could be entitled pursuant to this Agreement comply with, or are exempt
from, Section 409A of the Internal Revenue Code of 1986, as amended, the Treasury regulations and other guidance promulgated or issued thereunder (“Section 409A”), to the extent that the requirements of Section
409A are applicable thereto, and after application of all available exemptions and the provisions of this Agreement shall be construed in a manner consistent with that intention. Notwithstanding the foregoing, the Company shall not have any liability
to you with respect to tax obligations that result under any tax law and makes no representation with respect to the tax treatment of the payments and/or benefits provided under this Agreement.
a. Due to the personal nature of your services to be rendered hereunder, neither of the parties may assign its rights and obligations under this Agreement, in whole or in
part, without the prior written consent of the other party. Subject to the foregoing, this Agreement will inure to the benefit of and be binding upon each of the heirs, assigns and successors of the respective parties.
b. This Agreement shall be governed in all respects by the laws of the laws of the State of Delaware without reference to rules of conflicts of law thereof or of any
other jurisdiction.
c. This Agreement constitutes the entire agreement between the parties and supersedes any and all prior agreements and understandings (whether written or oral) between the
parties with respect to the subject matter hereof. You acknowledge and agree that neither the Company nor anyone acting on its behalf has made, and is not making, and in executing this Agreement, you have not relied upon, any representations,
promises or inducements except those expressly set forth in this Agreement.
* * * * *
Please indicate your acknowledgement and acceptance of the terms of this Agreement by signing in the space provided below and returning it to us at your earliest convenience. Please feel free to
contact me should you wish to discuss any aspect of your service on the Board. We look forward to working together!
|
Sincerely,
|
|
|
|
/s/ Felipe Benjumea
|
|
|
Name: Felipe Benjumea
|
|
|
|
Title: CEO
|
Signature Page to Letter Agreement - Chairman
Accepted and agreed as of the first date set forth above:
/s/ Antonio Vázquez Romero
|
|
Antonio Vázquez Romero
|
|
Signature Page to Letter Agreement - Chairman
EXHIBIT A
Restrictive covenants
In consideration of the Annual Fee and grant of the Equity Compensation hereunder, and for other good and valuable consideration, which I hereby acknowledge and agree is valid and sufficient
consideration to make the covenants set forth in this Exhibit A, and further as a material inducement for the Company to enter into the letter agreement to which this Exhibit is attached (the “Agreement”) with me and to grant me the Equity Compensation, I hereby acknowledge and agree to be bound by the restrictive covenants and other terms and conditions set forth in this Exhibit A. For purposes of this Exhibit
A, (i) all references to “I”, “me”, “my”, “myself” and other words of similar import shall refer to “you”, as such term is used and defined in the Agreement to which this Exhibit A
is attached; and (ii) notwithstanding anything to the contrary in the Agreement, all references to the “Company” herein shall refer to H2B2 Electrolysis Technologies Inc., a Delaware limited
liability company, together with its parents, subsidiaries, affiliates and their respective successors or assigns.
I. |
PROPRIETARY INFORMATION
|
A. Recognition of Company’s Rights. I recognize that the Company is engaged in a continuous program of
research and development respecting its business, present and future, including fields generally related to its business and that the Company possesses and will continue to possess confidential information that has been created, discovered, developed
or otherwise become known to the Company (including, without limitation, information created, discovered or developed by, or made known to, me during the period of or arising out of my service with the Company (“Service”)) and/or in which property rights have been assigned, licensed or otherwise conveyed to the Company, which information has commercial value in the business in which the Company is engaged.
B. Nondisclosure. At all times during and after my Service with the Company, I will hold in strictest
confidence and will not, directly or indirectly, disclose, use, distribute or publish any Proprietary Information (as defined below) that I may produce or otherwise acquire or have access to during the course of my Service, except as expressly
provided herein. I further agree not to reproduce or in any way allow any Proprietary Information to be delivered to or used by any third party without specific written direction or written consent of a duly authorized representative of the Company.
I hereby assign to the Company (or, if my engagement transfers to an affiliate, successor or assign of the Company, such affiliate, successor or assign) any rights I may have or acquire in the Proprietary Information and recognize that all
Proprietary Information shall be the sole and exclusive property of the Company, or if applicable, its affiliate, successor or assign.
C. Proprietary Information. The term “Proprietary
Information” shall mean any and all confidential and/or proprietary knowledge, data or information of the Company, including, without limitation, the information described in the first paragraph of Section I(A) above. By way of
illustration but not limitation, “Proprietary Information” includes (i) trade secrets, inventions, products, devices, mask works, ideas, processes, procedures, methods, formulas, source and object codes, design, data, algorithms, programs, network
and system architecture, trading methods, models and programs, trademarks, service marks, trade names, copyrights, other works of authorship, know-how, improvements, discoveries, developments, designs, techniques, composition or process, unique or
novel device, or the like, in each case related to the business of the Company and whether or not patentable or copyrightable (hereinafter collectively referred to as “Inventions”); (ii)
information regarding plans for research, development, products, trading, investing, marketing and selling business plans, budgets and unpublished financial statements, licenses, prices and costs, suppliers and customers; and (iii) information
regarding the skills, functions and compensation of other employees, in each case, of the Company. The term “Proprietary Information” does not include any knowledge, data or information which: (a) is generally known by the public, generally known by
persons with training and experience comparable to my own or common knowledge in the industry in which the Company operates, in each case, other than as a result of disclosure by me or others who owe a duty of confidentiality to the Company or any
third party; or (b) is or becomes rightfully known by me (other than as a result of, or in connection with, my Service with, or work for, the Company, or disclosure by others who owe a duty of confidentiality to the Company or any third party).
D. Third Party Information. I understand that the Company has received (and, in the future, will receive)
from third parties confidential or proprietary information (“Third Party Information”), subject to the Company’s duty to maintain the confidentiality of such information and to use it only
for certain limited purposes. During the term of my Service and at all times thereafter, I will hold all Third Party Information in the strictest confidence and will not disclose to anyone (other than Company personnel or agents who need to know such
information in connection with their work for the Company or as may be required by applicable law or civil process) or use, except in connection with my work for the Company, any Third Party Information unless expressly authorized by duly authorized
representative of the Company in writing.
E. No Improper Use of Information of Prior Employers and Others. During my Service with the Company, I will
not improperly use or disclose any Proprietary Information or other confidential information or trade secrets, if any, of any former employer or any other person to whom I have an obligation of confidentiality, and I will not bring onto the premises
of the Company any unpublished documents or any property belonging to any former employer or any other person to whom I have an obligation of confidentiality unless consented to in writing by that former employer or person. I will use in the
performance of my duties only information which is generally known and used by persons with training and experience comparable to my own, which is common knowledge in the industry or otherwise legally in the public domain, or which is otherwise
provided or developed by the Company. I am aware and understand that theft, misappropriation and improper use of trade secrets of a former employer or any other person is a serious matter, and in fact, is a federal criminal offense under the U.S.
Economic Espionage Act of 1996.
II. |
ASSIGNMENT OF INVENTIONS
|
A. Definitions. The term “Proprietary Rights”
shall mean all trade secret, patent, copyright, trademark, trade name, service mark, mask work and other intellectual property rights throughout the world.
B. Assignment of Inventions. Subject to Sections II(D) and II(F) below, I hereby assign
worldwide and for the maximum period of time allowed by law, and agree to confirm such assignment in the future (when any such Inventions or Proprietary Rights are first reduced to practice or first fixed in a tangible medium, as applicable), to the
Company (or its designee) all my right, title and interest in and to any and all Inventions (and all Proprietary Rights with respect thereto) whether or not patentable or registrable under copyright or similar statutes, invented, authored, created,
made or conceived or reduced to practice or learned by me, either alone or jointly with others, during the period of my Service with the Company. Inventions assigned to the Company, or to a third party as directed by the Company pursuant to this Section
II, are hereinafter referred to as “Company Inventions.” I also hereby waive, and agree to waive, any moral rights I may have in any copyrightable work I create or have created on
behalf of the Company.
C. Obligation to Keep Company Informed. During the period of my Service and for twelve (12) months
thereafter, I will promptly and fully disclose to the Company, in writing, all Inventions invented, authored, created, made, conceived or reduced to practice by me, either alone or jointly with others, which would qualify as Company Inventions
hereunder or as inventions that could be assumed by the Company under applicable law. In addition, I will promptly disclose to the Company all patent applications or applications for copyright registration filed by me (or on my behalf), if any,
during the twelve (12) months following the termination of my Service with respect to Inventions that would constitute Company Inventions hereunder. At the time of any such disclosure, I will advise the Company, in writing, of any Company Inventions
that I believe fully qualify for protection under the provisions of the United States patent laws, copyright laws, or under any analogous laws in a foreign jurisdiction; and I will at that time provide to the Company (or its designee), in writing,
all evidence necessary to substantiate that belief.
D. Government or Third Party. I also agree to assign all my right, title and interest in and to any
particular Company Invention to a third party, including, without limitation, the United States, as directed by the Company.
E. Works for Hire. I acknowledge that all original works of authorship which are made by me (either alone or
jointly with others) within the scope of my Service, which would be considered Company Inventions, and which are protectable by copyright are “works made for hire,” pursuant to the United States Copyright Act (17 U.S.C. Section 101).
F. Enforcement of Proprietary Rights. I will assist the Company or designees in every proper way to obtain,
and from time to time enforce, United States and foreign Proprietary Rights relating to Company Inventions in any and all countries. To that end I will execute, verify and deliver such documents and perform such other acts (including appearances as a
witness) at the Company’s expense and as the Company may reasonably request for use in applying for, obtaining, perfecting, evidencing, sustaining and enforcing such Proprietary Rights and the assignment thereof. In addition, I will execute, verify
and deliver assignments or waivers of such Proprietary Rights to the Company (or its designee). My obligation to assist the Company with respect to Proprietary Rights relating to such Company Inventions in any and all countries shall continue beyond
the termination of my Service, but the Company shall compensate me at a reasonable rate after my termination for the time actually spent by me at the request of the Company on such assistance. In the event the Company (or its designee) is unable for
any reason, after reasonable effort, to secure my signature on any document needed in connection with the actions specified in the preceding paragraph, I hereby irrevocably designate and appoint the Company and its duly authorized officers and agents
as my agent and attorney in fact, which appointment is coupled with an interest, to act for and in my behalf to execute, verify and file any such documents and to do all other lawfully permitted acts to further the purposes of the preceding paragraph
with the same legal force and effect as if executed by me. I hereby waive and quitclaim to the Company (or its designee) any and all claims, of any nature whatsoever, which I now or may hereafter have for infringement of any Proprietary Rights
assigned hereunder to the Company (or its designee).
III. RECORDS. I agree to keep and maintain adequate and current records (in the form of notes, sketches, drawings and in any
other form that may be required by the Company) of all Proprietary Information developed by me and all Company Inventions made by me during the period of my Service at the Company, which records shall be available to and remain the sole and exclusive
property of the Company at all times.
IV. |
NON-SOLICITATION AND NON-COMPETITION
|
A. Non-Solicitation of Personnel. During the term of my Service with the Company and for a period of two (2)
years immediately following the termination of my Service for any reason, I agree to not, directly or indirectly, for my own benefit or the benefit of anyone else:
1. solicit, or attempt to solicit, the employment or engagement (whether as an employee or independent contractor, or other service provider) of any person who is, or
within six
(6) months prior to such solicitation or attempted solicitation was, an employee or independent contractor of the Company;
2. encourage or induce, or attempt to encourage or induce, any person who is an employee or independent contractor of the Company to cease his or her employment or
relationship with the Company or otherwise harm or interfere with the Company’s relationship with such persons; or
3. coordinate with another employee of the Company to leave the employ of the Company.
For the avoidance of doubt, a general job advertisement that does not target the Company or any of their respective employees or independent contractors does not violate the restrictions set forth in
this Section IV(A).
B. Non-Solicitation of Business Relationships. During the term of my Service with the Company and for a period
of two (2) years immediately following the termination of my Service for any reason, I agree to not, directly or indirectly, for my own benefit or the benefit of anyone else (except on behalf of or with the prior written consent of the Company):
1. solicit, divert, or appropriate to, or accept on behalf of, or attempt to solicit, divert, appropriate to or accept on behalf of, any Competing Business, (a) any
business from any customer or actively sought prospective customer of the Company with whom I have dealt, whose dealings with the Company have been supervised by me or about whom I have acquired Proprietary Information in the course of my Service
with the Company or (b) any investment, funding or financing whatsoever, directly or indirectly, from any Company Investor (as defined below); or
2. encourage or induce, or attempt to encourage or induce, any customers, clients, suppliers, vendors, licensees, licensors, distributors or other business relations of
the Company to reduce, terminate, or refuse to continue business with the Company or otherwise harm or interfere with the Company’s relationship with such customers, clients, suppliers, vendors, licensees, licensors, distributors or other business
relations.
C. Non-Competition. During the term of my Service with the Company, I agree to not, directly or indirectly,
for my own benefit or the benefit of anyone else (except with the prior written consent of the Company):
1. engage in, conduct, or operate, or prepare to engage in, conduct, or operate, a Competing Business, or any portion thereof, in the Geographic Area (as defined below); or
2. whether as a shareholder, bondholder, lender, officer, director, employee, consultant or otherwise, perform services for, invest in, aid or abet or give information or
financial assistance to any person or entity engaged in a Competing Business, or any portion thereof, in the Geographic Area, or any portion thereof; provided, however, that nothing in this Section
IV(C)(2) shall be deemed to prohibit me from (a) owning as an investment, directly or indirectly, up to one percent (1%) of the securities of any publicly-traded company, or any portion thereof; or (b) rendering services to any person or entity
not engaged in a Competing Business (or any portion thereof) to the extent that such services (i) do not relate and are not similar to any services I performed for the Company during the last two (2) years of my Service with the Company, and (ii)
could not reasonably be expected to involve the use or disclosure of Proprietary Information.
I acknowledge and agree that the restrictions set forth in this Section IV are reasonable and necessary to protect the legitimate business interests of the Company, including their trade
secrets and other Proprietary Information, business relations and goodwill.
D. Certain Defined Terms. As used herein:
1. “Company Investor” means (i) any person or entity that has invested in or otherwise provided financing to
the Company, (ii) any person or entity with whom the Company have had discussions with regarding a potential investment in the Company or that has received confidential materials regarding any investment in the Company, and (iii) any affiliate of a
person or entity described in clauses (i) or (ii) above.
2 “Competing Business” means any business of promotion, development, financing, design, integration, build,
operation or maintenance of hydrogen production systems based on water electrolysis, generation, compression, storage, commercialization, refiling stations and all other uses of green hydrogen. A Competing Business includes any business, or part
thereof, whose efforts involve any research and development, products, services or activities in competition with products, services or activities which are, at any time during the last two (2) years of my Service with the Company, either (x)
produced, marketed or otherwise commercially exploited by the Company or
(y) in actual or demonstrably anticipated research or development by the Company.
3. “Geographic Area” means any city, state, region, and country in which the Company at any time during the
last year of my Service or at the end of my Service is then- operating or has firm plans to operate, provided I have knowledge of such plans.
V. NON-DISPARAGEMENT. At all times during my Service with the Company and for the longest period thereafter permitted under
applicable law, I will not, directly or indirectly, make (or cause to be made) to any person or entity any false or disparaging statements about the Company (including, without limitation, any of its products, services, employees, agents, officers,
members, managers, partners or directors), and I will not make any statement that may impair or otherwise adversely affect the goodwill or reputation of the Company; provided, however, nothing herein shall
prohibit me from (i) reporting any good faith allegation of unlawful conduct to federal, state or local officials for investigation; (ii) filing a charge with or participating in a proceeding conducted by any governmental agency; (iii) making any
truthful statements or disclosures required by law, regulation or legal process; (iv) requesting or receiving confidential legal advice; or (v) engaging in concerted activity protected by Section 7 of the U.S. National Labor Relations Act or other
protected conduct which by applicable law cannot be subject to a non-disparagement agreement.
A. Judicial Modification; Severability. In the event that a court finds that any covenants set forth herein (including any time, territory or other provision of this Exhibit
A) is unenforceable or invalid as an unreasonable restriction, the Company and I agree that such court will have the power, and the parties expressly desire that the court exercise such power, to revise this Exhibit A such that
such restriction is to be interpreted and enforced to the maximum extent which such court deems reasonable and/or to make any other modifications that the court deems necessary to render such restriction reasonable, valid and enforceable under
applicable law, and the court shall enforce such restriction as so judicially modified. Without limiting the foregoing, to the extent one or more of the provisions contained herein shall, for any reason, be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect the other provisions of the Agreement (including this Exhibit A), and the Agreement (including this Exhibit A) shall be
construed as if such invalid, illegal or unenforceable provision had never been contained herein.
B. Effect of Termination. The termination of my Service from or with the Company will not release me from
any of my non-solicitation of personnel, non-solicitation of business relationships, and non-disparagement covenants hereunder, which shall continue pursuant to their terms in full force and effect.
C. Remedies. I acknowledge that the rights of the Company under this Exhibit A are of a specialized
and unique nature and irreparable harm will result to the Company if I violate any of my obligations hereunder and that such harm may be difficult to measure in monetary damages. Accordingly, in the event that I violate any of my obligations
hereunder, the Company may obtain an immediate injunction or other equitable relief restraining me from violating any of the covenants contained herein, without the need to post a bond or other security and without the necessity of showing any actual
damages or that money damages would not afford an adequate remedy. I acknowledge that each and every entity constituting the Company (as defined herein) is an intended third-party beneficiary of the covenants and other terms and conditions contained
herein having full rights to enforce this Exhibit A as if such entity was a signatory hereto.
D. Tolling. If I violate any of the restrictions set forth in Section IV, the applicable
post-termination restricted period shall be extended by one (1) day for each day that I am in violation of this Exhibit A, up to a maximum extension equal to the length of the applicable post-termination restricted period, so as to give the
Company the full benefit of the bargained-for length of forbearance. This tolling provision shall be in addition to and not in place of any available legal or equitable remedies.
E. Choice of Law. The terms and conditions of this Exhibit A are governed by and are to be
interpreted under the laws of the State of Delaware without reference to rules of conflicts of law thereof or of any other jurisdiction.
Exhibit B
TAX CONSEQUENCES ARISING IN CONNECTION WITH THE STOCK OPTIONS
GRANTED TO THE CHAIRMAN
This Exhibit B summarizes the material Spanish tax consequences and US federal income tax consequences that may be triggered for the Chairman in connection with the granting and exercise of the Options, and the
subsequent sale of the Shares.
However, this is provided only for general information. Tax laws are complex and subject to change and may vary depending on individual circumstances and thus this may not apply to your particular situation. This
summary does not take into account any tax treaty involving the United States, Spain or any other country that may be applicable to you
The Company makes no representation or warranty as to the particular tax treatment applicable to you of your receipt or exercise of the Option or upon your sale or other disposition of the Shares (including, without
limitation, whether you are subject to Spanish and/or US taxation). Accordingly, you are advised to seek appropriate professional advice as to how the relevant laws may apply to your situation.
1. |
SPANISH TAX CONSEQUENCES
|
|
● |
Granting of the Option . You will generally
not recognize a taxable income on the date in which the option is granted (i.e. the Agreement date) to the extent that the Option is non-transferrable.
|
|
● |
Exercise of the Option. You will recognize
taxable income on the date you exercise an Option in an amount equal to the difference between the fair market value of the Shares on the date of exercise and the exercise price paid for the Shares (which, according to the information
provided is EUR 1 in total in respect of all the Shares underlying the Option).
|
|
|
Income arising in connection with the receipt of the Shares will qualify as employment income for Spanish tax purposes and will be subject to withholding on account of the Spanish taxes attributable, subject
to our comments below.
|
|
In particular, under Spanish Personal Income Tax (“PIT”) regulations, director’s fees are deemed as employment income subject to a flat rate of 35% provided that the
net turnover of the paying entity (i.e. the Company) in the immediately previous tax year is, at least, of EUR 100,000. Otherwise, if the net turnover is less than EUR 100,000, a reduced 19% rate will apply.
|
|
In any event, you may be able to exempt 30% of up to EUR 300,000 of the taxable amount at exercise if (i) the vesting period is more than two (2) years from the date in which the Options were granted and (ii)
you have not applied the 30% exemption in the previous five (5) years. In any event, you are advised to consult with your personal tax advisors as to the availability of this exemption.
|
|
● |
Subsequent sale of Shares. Upon your
subsequent sale of the Shares acquired as a consequence of the exercise of the Options, you will recognize a capital gain to the extent that the sale proceeds exceed the cost basis in the Shares. Your basis in the Shares received upon
exercise, for the purposes of determining your gain (or loss) in subsequent dispositions of the Shares, generally will be the fair market value of the Shares on the date of exercise.
|
Based on the above general considerations:
|
(a) |
Upon the exercise of the Option, you will recognize a taxable employment income for an amount equal to the difference between the fair market value of the Shares at the exercise date and the exercise price (i.e. EUR 1 in total for the
Shares underlying the Option).
|
|
(b) |
Generally, any such taxable employment income may be subject to withholding on account of your PIT. For these purposes, the withholding agent may be (a) the Company, if it is engaged in any revenue-generating business in Spain; or (b) any
Spanish Relevant Affiliate to which you provide services, if applicable.
|
To the extent you are subject to US federal income taxation:
|
● |
Granting of the Option. The Option shall
constitute a non-qualified stock option for US federal income tax purposes. You will generally not recognize taxable income on the date in which the Option is granted (i.e. the Agreement date) for US federal income tax purposes.
|
|
● |
Exercise of the Option. You will generally
recognize ordinary income on the date you exercise an Option in an amount up to the difference between the fair market value of the Shares on the date of exercise and the exercise price paid for the Shares.
|
|
Subject to your individual circumstances, income arising in connection with the receipt of the Shares may be subject to withholding for US federal income tax purposes.
|
|
● |
Subsequent sale of Shares. Upon your
subsequent sale of the Shares acquired as a consequence of the exercise of the Options, you may, subject to your individual circumstances, be obligated to recognize a capital gain for US federal income tax purposes to the extent that the
sale proceeds exceed the cost basis in the Shares. Your basis in the Shares received upon exercise, for the purposes of determining any such gain (or loss) in subsequent dispositions of the Shares, generally will be the fair market value of
the Shares on the date of exercise.
|
15
Exhibit 10.22
CERTAIN INFORMATION HAS BEEN OMITTED FROM THIS EXHIBIT PURSUANT TO REGULATION S-K, ITEM
601(B)(10) BECAUSE IT IS
BOTH NOT MATERIAL AND WOULD LIKELY CAUSE COMPETITIVE HARM TO THE REGISTRANT IF PUBLICLY
DISCLOSED.
IN ADDITION, CERTAIN PERSONALLY IDENTIFIABLE INFORMATION HAS BEEN OMITTED
FROM THIS EXHIBIT PURSUANT TO ITEM 601(A)(6) OF REGULATION S-K.
[***] INDICATES THAT INFORMATION HAS BEEN REDACTED
NON-RESIDENTIAL LEASE AGREEMENT
VGP PARK SEVILLA DOS HERMANAS, S.L.U.
as Landlord
and
H2B2 ELECTROLYSIS TECHNOLOGIES, S.L.
as Tenant
DATE:
TABLE OF CONTENTS
1. |
DEFINITIONS |
5 |
2. |
PURPOSE OF THE LEASE |
9 |
3. |
PREVIOUS ACCESS AND CONDITIONING WORKS |
10 |
4. |
LANDLORD’S WORKS |
11 |
5. |
RIGHT OF ACCESS, PARKING SPACES |
12 |
6. |
DELIVERY OF THE PROPERTY |
12 |
7. |
LEASE TERM |
13 |
8. |
RENT |
15 |
9. |
LEASE CHARGES |
16 |
10. |
PAYMENT |
18 |
11. |
VALUE ADDED TAX (VAT) |
19 |
12. |
WORKS, MAINTENANCE AND REPAIRS |
19 |
13. |
GUARANTEES |
20 |
14. |
INSURANCE |
21 |
15. |
OTHER RIGHTS AND OBLIGATIONS OF THE TENANT |
21 |
16. |
OTHER RIGHTS AND OBLIGATIONS OF THE LANDLORD |
23 |
17. |
INFORMATION AND DISTINCTIVE SIGNS |
24 |
18. |
TERMINATION AND EXTINCTION |
24 |
19. |
RETURN OF THE PROPERTY AT THE END OF THE LEASE |
26 |
20. |
APPLICABLE LAW AND JURISDICTION |
27 |
21. |
FINAL PROVISIONS |
27 |
ANNEX 1 |
|
LAND REGISTRY EXCERPT |
|
ANNEX 2 |
|
TECHNICAL SPECIFICATIONS |
|
ANNEX 3 |
|
ILLUSTRATIVE PLANS OF THE PROPERTY |
|
ANNEX 4 |
|
TABLE OF LEASE CHARGES |
|
ANNEX 5 |
|
CHANGE ORDER PRO-FORMA |
|
ANNEX 6 |
|
TAX CERTIFICATES AND SEPA MANDATE |
|
ANNEX 7 |
|
PROOF OF PAYMENT OF THE LEGAL DEPOSIT |
|
ANNEX 8 |
|
DETAILS OF THE TENANT FOR THE LEASE STUDY |
|
THIS LEASE IS ENTERED INTO BETWEEN:
ON THE ONE HAND, Mr. Jan Van Geet [***]
Acting in the name and on behalf of the company VGP PARK DOS HERMANAS, S.L. [***]
He is acting in his capacity as sole director of the Company.
Hereinafter “VGP” or the “Landlord”.
AND, ON THE OTHER HAND, Mr. FLORENCIO-SALVADOR FERRERA
SALDAÑA, [***]
Acting in the name and on behalf of the company H2B2
ELECTROLYSIS TECHNOLOGIES, S.L. [***].
He is acting as sole director of the company by virtue of a public deed granted on July 8, 2021 before the Notary of Seville, Mr. Rafael
José Díaz Escudero, under number 1,181 of his public records.
Hereinafter, “H2B2” or the “Tenant”, and, together with the Landlord, the “Parties”.
The Parties mutually and expressly acknowledge the legal capacity necessary to sign this non-dwelling
lease agreement and, for this purpose:
EXHIBIT:
|
(A) |
That the Landlord owns the following property (the “Plot”): |
Registry Description: According to the Land Registry excerpts attached as ANNEX 1.
Enrollment: According to the registry information notes attached as ANNEX 1.
Cadastral References: 550100800000000001AQ .
Attached as ANNEX 1 Land Registry Excerpt.
|
(B) |
The Landlord is developing a logistics park consisting of several buildings on the Plot (the “Logistics Park”), including building B (the “Building”), the technical
specifications of which are attached as ANNEX 2 as shown in the plan attached as ANNEX 3, and which is configured as a type B industrial building in a multi-tenant regime suitable to house an activity of average risk 5. |
|
(C) |
That the Landlord is interested in leasing a module within the Building (the “Property”) with a storage area of 3,189.20 m2 (the “Warehouse”)
and an office area of 620.01 m2 (the “Offices”) and the Tenant is interested in taking said Property under lease in the state in which it is, therefore, both Parties agree to enter into this non-residential lease agreement (the
“Agreement” or the “Lease”), which shall be governed in accordance with and subject to the following |
CLAUSES
|
1.1 |
The terms defined below or in general in this Agreement, when written in capital letters and unless otherwise deduced from the context in which they are used, shall have the meaning set
forth below in this Agreement: |
“Previous Access” shall have the meaning set forth in Clause 3.1.
“Amounts Assimilated to the Rent” means the Lease Charges, as referred to in Clause 9.1 and any amount to be paid by
the Tenant in accordance with Clauses 9.8 and 12.1 (repair costs carried out by the Landlord instead of the Tenant).
“Lease Charges” shall have the meaning set forth in Clause 9.2.
“Civil Code” means the Spanish Civil Code.
“Agreement” means this Agreement, including all the annexes that form part of it.
“Landlord’s Account” means the bank account opened in the name of the Landlord at Banco Sabadell with IBAN [***] and BIC [***], designated for the payment of the Legal Deposit, or any other account designated for
the payment of the invoices sent by the Landlord to the Tenant.
“Tenant’s Account” means the bank account opened in the name of the Tenant at Banco Bilbao Vizcaya
Argentaria with IBAN [***], designated for the direct debit of the payment of the Rent and Operating Expenses by means of a SEPA command attached in ANNEX 6.
“Major Defects” means any defect in the Property that prevents the Tenant from properly occupying the Property in
accordance with the provisions of this Agreement.
“Minor Defects” means any defect other than a Major Defect.
“Right of Access” means the right that corresponds to the managers, employees, shareholders, customers or visitors of
the Tenant to access the Building through the Plot, only through the designated areas and in the stipulated manner.
“Business Day” means any calendar day other than Saturday, Sunday or public holiday in Spain.
“Building” shall have the meaning set forth in Exhibit (B).
“Technical Specifications” means the technical specifications of the Offices attached as ANNEX 2.
“Independent Expert” means an internationally well-known
expert of recognized prestige duly qualified to provide consulting services in technical, constructive or other matters, to be appointed by the Parties by mutual agreement.
“Delivery Date” means November 29, 2022, date on which the Warehouse area must be delivered to the Tenant.
“Alternative Delivery Date” means the alternative date agreed by the Parties for the delivery of the Property and, in
the absence of agreement between the Parties, the date set by the Landlord for the delivery of the Property, which must be notified to the Tenant at least five (5) Business Days in advance.
“Landlord’s Works Completion Date” shall have the meaning set forth in Clause 4.3.
“Start Date” means the date on which the Lease Term will begin in accordance with the provisions of Clause 7.1.
“Legal Deposit” means the deposit of two (2) monthly Rents required by Article 36 of the Urban Leases Act.
“Force Majeure” means those events beyond the will of the relevant Party that are unavoidable and that such Party
cannot remedy, and that prevent the said Party from fulfilling the obligations under this Agreement, including in relation to the construction of the Building and/or the execution of the Landlord’s Works, the appearance of reservoirs or other
findings belonging to archaeological heritage, the delay in the granting of the corresponding work licenses by the relevant public administration, the interference of the Tenant’s Conditioning Works in the Construction of the Building and/or the
execution of the Landlord’s Works, government restrictions or controls, strikes in the construction sector (general or local) or in any other related sector that negatively affect the execution of the construction works of the Building and/or the
execution of the Landlord’s Works, the suspension or judicial or administrative stoppage of the construction works of the Building and/or the execution of Landlord’s Works (unless such suspension or stoppage is a result of a breach by the Landlord of
its legal obligations or of the emanating from this Agreement), hostile acts, enemy attacks, citizen disturbances, fires, natural disasters and earthquakes, as well as the following adverse weather conditions: wind exceeding 40 km/h, temperatures
below -1º C in the morning, snow and/or precipitation exceeding 10mm/h during the day.
“Bank Guarantee” shall have the meaning set forth in Clause 13.
“Operating Expenses” shall have the meaning set forth in Clause 9.1.
“Incentive” means the incentive granted by the Landlord to the Tenant in accordance with Clause 8.4.
“Update Index” means the Consumer Price Index for the national set published by the National Institute of Statistics
(INE). In the event that it is no longer published by the INE or by the bodies that have replaced it, the index that has officially replaced it shall apply and, failing that, any other official publication or data indicating the variation experienced
by the cost of living; and, ultimately, it will be determined by an independent expert appointed for this purpose by both Parties.
“Property” means the property described in ANNEX 2 and indicated in red and yellow in ANNEX 3.
“Urban Leases Act” means Law 29/1994, of 24 November, on Urban Leases.
“Activity License” means all
licenses, permits and other administrative authorizations that are necessary in accordance with the regulations applicable to the Property for the Permitted Use that the Tenant will make of the Property, as well as for the operation of the
facilities and services that serve exclusively the Tenant (such as, but not limited to, environmental, start-up and opening licenses).
“License or Communication of Occupation” means the license or communication required by the applicable regulations
for the first occupation of the Building.
“Work Modifications” shall have the meaning set forth in Clause 2.9.
“Guaranteed Obligations” means any pecuniary obligation or any amount that the Tenant owes at any time in accordance
with or in relation to this Agreement, including the Rent, the Amounts Assimilated to the Rent and any compensation, delay interest, payments, contractual penalties and/or claims for unfair enrichment.
“Conditioning Works” means the works carried out by the Tenant in the Property in relation to the construction or
installation of equipment, which have been approved by the Landlord and which are necessary for the development of the Tenant’s activities in the Property.
“Landlord’s Works” shall have the meaning set forth in Clause 4.
“Change Order” means the document signed by the authorized representatives of both Parties in accordance with the
pro-forma attached as ANNEX 5, in which the Work Modifications must be documented.
“Plot” shall have the meaning set forth in Exhibit (A).
“Logistics Park” shall have the meaning set forth in Exhibit (B).
“Fixed Part of the Rent” means the part of the Rent that is stipulated as fixed in Clause 8.1.
“Supplementary Part of the Rent” shall have the meaning set forth in Clause 8.4.
“Parking Spaces” means the total number of 20 private car parking spaces, marked in blue in ANNEX 3.
“Lease Term” shall have the meaning set forth in Clause 7.2.
“Delivery Protocol” shall have the meaning set forth in Clause 6.1.
“Rent” shall have the meaning set forth in Clause 8.1.
“Major Repairs” means repairs that affect (i) walls and load structures, beams, stairwells or any other main
structural elements of the Building, (ii) Building Decks; (iii) Building Floor, (iv) Parking Spaces and rolled accesses; (v) central distribution networks (electricity, gas, water and drainage); and (vi) heating, ventilation and air conditioning.
Repairs of any element and/or device mentioned in this definition that is found in the Property as a result of Work Modifications, the Additional Requirements or because it has been installed and/or left in the Property at the request of the Tenant
shall not be considered Major Repairs.
“Minor Repairs” means any repair other than a Major Repair, such as, including, but not limited to: (i) replacement
and repair of broken glass and mirrors; (ii) replacement and repair of window and door closure systems, hinges, anchors, locks and plumbing (iii) repairs of internal paint and new paint in the event that the quality of the previous one has been
substantially spoilt, (iv) ordinary cleaning of windows (both inside and outside), (v) repairs of any items and/or devices installed under the Work Modifications or Additional Requirements, (vi) repair of any element and/or device installed and/or
left in the Building by the Tenant or at the request of the Tenant.
“Additional Requirements” means (i) any obligation imposed by the public administration on the Landlord or any
condition for the occupancy of the Property (such as, for example, provide the Property with special equipment) coming from the Work Modifications, special requests of the Tenant or of the Tenant’s own activity; and/or (ii) any action required for
the occupancy of the Property that exceeds the obtaining of the first license of occupation or, if applicable, of making the first communication of occupation.
“Landlord’s Insurance” shall have the meaning set forth in Clause 14.1.
“Distinctive Sign” shall have the meaning set forth in Clause 17.1.
“Guaranteed Amount” shall have the meaning set forth in Clause 13.3.
“Permitted Use” means the use of design, calculation and engineering of hydrogen production systems based on
electrolysis processes, as well as the assembly and testing of such hydrogen production equipment prior to distribution to the end customer.
|
1.2 |
Where this Agreement refers to: |
|
(a) |
Legal entities, it shall be understood that it also includes the legal successors of said legal entities; |
|
(b) |
A public administration or authority and any competence or activity thereof, shall be understood to also comprise the public administration or authority to which such competition or
activity is transferred; |
|
(c) |
A price index shall be understood to also comprise the price index that would formally replace it or, in the absence of formal substitution, the one whose purpose is the closest; |
|
(d) |
Daily Operating Expenses or Rent, one month is considered to have thirty (30) days; |
|
(e) |
Monthly or daily Rent (either the Fixed Part of the Rent or the Supplementary Part of the Rent) or monthly or daily Operating Expenses as a basis for the calculation of any amount, shall
always mean the amount of Rent or Operating Expenses applicable on the day on which the assumption giving rise to such calculation takes place, although, to that end, only the amounts reflected in this Agreement shall be taken into account,
without taking into account any partial or provisional modifications or adjustments to the Rent. |
|
(f) |
Lease, it shall be understood that it refers to this Lease. |
|
1.3 |
Except as expressly provided otherwise, any reference to Clauses, paragraphs and Annexes made in this Agreement shall be understood to refer to the Clauses, paragraph and Annexes of this
Agreement. |
|
1.4 |
All Annexes to this Agreement are part of this Agreement. |
|
2.1 |
The Landlord hereby leases the Property to the Tenant, who accepts it, so that the Tenant can carry out in the Property the Permitted Use and the corresponding administrative tasks after
the completion of the Conditioning Works by the Tenant and obtaining the relevant authorizations. |
For the avoidance of doubt:
|
(a) |
The access areas indicated in color in the draft attached in Annex 3 are part of the Building. |
|
(b) |
The Property is leased to the Tenant with the connections to the general supplies and equipment of the Building and without prejudice to the Tenant’s power to install the equipment and
machinery that are necessary for the development of its activities, whose installation will correspond to the Tenant itself (and that will be owned by the Tenant) under the terms stipulated in this Agreement. |
|
2.2 |
The Tenant may only use the Property for the Permitted Use and always subject to the License of Occupation and the Activity License. |
|
2.3 |
The Tenant may only develop the Permitted Use in the Property. Any change in whole or in part to the Permitted Use may only be made by novation in writing of this Agreement. |
|
2.4 |
This Agreement is valid and comes into force as of today’s date and the Parties expressly declare that there is no need for any further ratification after the delivery of the Property to
the Tenant. Consequently, all rights, obligations and waivers included in this Agreement become final as of today, without prejudice to the fact that the effectiveness of certain clauses is deferred to a later time (delivery, agreements on Rent
payments, start of the Lease Term, etc.). |
|
2.5 |
It is expressly stated for the record that the purpose of this Agreement constitutes the Property in its entirety, considered as an indivisible whole, comprising the Warehouse and the
Offices referred to in Exhibit (B). The Tenant may not reduce the purpose of the Lease in any way during the term of the Agreement and is obliged to pay the full Rent in accordance with the provisions of this Agreement. |
However, the Landlord expressly reserves the option to exclude from the Lease the use of the Cover Surface Area, in the
event that the Landlord wishes to exploit it directly or assign its use by the title it deems appropriate to any third parties of its free choice (such as investors, agents or operators in the renewable energy market) for the facility, maintenance
and exploitation of solar thermal or photovoltaic energy capture systems, with or without connection to the electrical grid (such as thermal panels and/or photovoltaic plates) or for the production of electrical energy on a special basis, which the
Tenant accepts and consents to for all purposes.
|
2.6 |
The Tenant expressly accepts the classification, rating and urban planning situation of the Building (in particular, for the purposes of the uses permitted to be implemented under this
Agreement), assumes the regulatory provisions and limitations that may derive from the classification, rating and urban planning situation for the development of the Permitted Use and undertakes to comply with said regulatory provisions and
limitations during the term of this Agreement. |
|
2.7 |
In the event that one or more Additional Requirements are imposed, the Tenant undertakes from now on to bear the costs that may derive from the execution or implementation of said
Additional Requirements and undertakes to pay them within fifteen (15) Business Days of receipt of the corresponding payment request from the Landlord. The Completion Date of the Landlord’s Works will be postponed for the period necessary to
comply with the Additional Requirements. |
|
2.8 |
The Tenant agrees to collaborate with the Landlord to the extent that such collaboration is necessary for the completion of the Landlord’s Works and the processing of the License of
Occupation. The Tenant agrees to make available to the Landlord all plans and specifications of the Conditioning Works that the Landlord may require. |
|
2.9 |
During the execution of the Landlord’s Works, the Tenant may request the Landlord to make constructive modifications to the Property (the “Work Modifications”). The Landlord may
refuse to make such Work Modifications if they differ materially from the conditions and limits established in the Technical Specifications. The Landlord shall inform the Tenant of both the price and term of execution of the Work Modifications
and the impact that the Work Modifications may have on the Landlord’s Works Completion Date. If the Parties reach an agreement on the price, term and scope of the Work Modifications, they must confirm said agreement in writing by formalizing a
Change Order. If the execution of the Work Modifications affects the Completion Date, the Parties shall establish the new Landlord’s Works Completion Date in the Change Order. The Landlord shall not be obliged to initiate the Work Modifications
until the corresponding Change Order has been formalized between the Parties. |
|
2.10 |
The Landlord shall execute the Work Modifications at its own expense for the price agreed in the Change Order (the “Work Modification Costs”). Unless otherwise agreed by the
Parties, the Work Modification Costs shall be taken into account in the calculation of the Supplementary Part of the Rent in accordance with Clause 8.5. |
|
2.11 |
If any of the causes of termination of this Agreement in accordance with Clauses 18.2 or 18.4 occurs before the Start Date, the Landlord shall have the right to demand from the Tenant,
who agrees, a conventional penalty equal to 150% of the Work Modification Costs and of the costs motivated by the Additional Requirements referred to in Clause 2.7. |
|
3. |
PREVIOUS ACCESS AND CONDITIONING WORKS |
|
3.1 |
Provided that the Tenant so requests in writing to the Landlord and has delivered the guarantee provided for in Clauses 13.1 and 13.2, the Landlord shall provide the Tenant, as soon as
practicable and prior to the Delivery Date, with access to the Building and the Property in order for the Tenant to carry out the Conditioning Works necessary for the start of its activity (the “Previous Access”). |
|
3.2 |
Previous Access will be conducted on the following terms: |
|
3.2.1 |
Previous Access shall determine the application of Clauses 12.1, 12.2 and 14.2 to such situation and concordant provisions. |
|
3.2.2 |
The Parties will sign a certificate in order to record the state in which the Property is and it will have the effects of the certificate of delivery, in particular for the purposes of
the state in which the Building must be restored in the event of termination of the Lease or in the event of breach by the Tenant of its obligation to take it in possession on the Delivery Date. |
|
3.2.3 |
Access shall be limited to the Warehouse part and the tasks necessary for the execution of the Conditioning Works and shall not in any way lead to the taking of possession. |
|
3.2.4 |
Previous Access will always be carried out by the Tenant in accordance with the applicable regulations and subject to the determinations made by the delegated promoter of the Building,
as well as the construction management and the health and safety coordinator. The provisional supplies required by the Tenant shall be at its own expense in any case. |
|
3.3 |
The Tenant shall carry out the Conditioning Works in the following terms: |
|
3.3.1 |
The Tenant shall carry out the Conditioning Works in a professional manner and without hindering or impeding the work related to the Landlord’s Works. If the Landlord’s Works are
affected by the Conditioning Works, the Landlord’s Works Completion Date shall be extended for a period equal to the period for which the Landlord’s Works are affected by the Conditioning Works. |
|
3.3.2 |
In its capacity as promoter of the Conditioning Works, the Tenant shall be solely and exclusively responsible for (i) complying with the regulations governing their execution, in
particular in administrative matters and the prevention of risks in the workplace, with total indemnity of the Landlord and (ii) paying any cost, expense or consumption resulting from the Conditioning Works. If necessary, a safety and health
coordinator will be appointed whose cost will be borne by the Tenant. |
|
3.3.3 |
Each of the Parties must appoint a representative and contact in order to maintain adequate coordination between the execution of the Landlord’s Works and the execution of the
Conditioning Works. In the event of a discrepancy in relation to the coordination, the final decision shall rest with the Landlord. |
|
3.3.4 |
The Tenant must provide the Landlord, prior to the Previous Access, with the plans and documentation related to the Conditioning Works (the “Conditioning Project”), so that they
can be reviewed by the Landlord. The Conditioning Project must comply with the Technical Specifications. The Tenant shall accept any reasonable observation that the Landlord may make about the Conditioning Project and may not carry out any
Conditioning Work rejected by the Landlord. |
|
4.1 |
The Parties expressly agree that the Landlord shall execute at its own cost the construction work of the Offices of the Property, which shall form an integral part of the Property and
shall be the property of the Landlord (the “Landlord’s Works”). |
|
4.2 |
During the Landlord’s Works, the Landlord undertakes to: |
|
(a) |
Comply with the Technical Specifications attached as Annex 2; |
|
(b) |
Act professionally and in accordance with usual practice in the construction sector; |
|
(c) |
Proceed in accordance with the applicable regulations and the permits granted for the Landlord’s Works. |
|
4.3 |
The Landlord shall make its best efforts to complete the Landlord’s Works within four (4) months from today's date (the “Landlord’s Works Completion Date”). Once the Landlord’s
Works have been completed, the Landlord shall notify the Tenant without delay. |
If the Landlord's Works are delayed due to Force Majeure, the Landlord shall notify the Tenant of such circumstance,
indicating the delay provided for on the Landlord's Works Completion Date. In the event of disagreement by the Tenant, each of the Parties shall be entitled to submit the discrepancy to the Independent Expert.
The Landlord states that it has made its best efforts to take into account the COVID-19 pandemic and its known consequences
as of the date of signature in the planning of the Landlord’s Works and in the estimation of the Landlord’s Works Completion Date. However, the Parties acknowledge and agree that it is not possible to fully anticipate the actual impact that the
COVID-19 pandemic and that the measures to be taken to counter it will have in the process of executing the Landlord's Works. So, the Parties agree that despite being aware of the existence of the pandemic and the corresponding measures taken prior
to the date of signing this Agreement, any event that results from COVID-19 infection and/or countermeasures that could not be fully predicted or anticipated prior to the signing of the Agreement (such as prolonged inactivity by competent
authorities, work quarantines, etc.) will be considered a Force Majeure event:
|
(a) |
for which Landlord shall not be liable; |
|
(b) |
for which all actions and claims for damages of the Tenant against the Landlord are hereby excluded; and |
|
(c) |
for which the Landlord's Works Completion Date will be extended for a reasonable period of time according to the period of time in which the execution of the Landlord's Works has been
affected, without the Tenant being able to terminate or withdraw from the Agreement for this reason. |
|
5. |
RIGHT OF ACCESS, PARKING SPACES |
|
5.1 |
The Landlord hereby grants the Tenant the Right of Access for the purposes of this Lease and during its term. In the exercise of the Right of Access, the Tenant: |
|
(a) |
shall avoid causing any kind of disturbance and damage to the Landlord and third parties who may enjoy the same right; |
|
(b) |
ensure that those persons to whom the Right of Access is also granted proceed equally. |
|
5.2 |
The Tenant undertakes to compensate the Landlord for any type of damage and/or harm suffered as a result of the actions or omissions that any person (other than the Tenant and its
employees) may cause to the Landlord when exercising the Right of Access under this Agreement. To this end, the Landlord shall assign to the Tenant all actions arising from the damages caused by said person. |
|
5.3 |
The Tenant may only park vehicles, for the purposes of this Lease and during its term, in the Parking Spaces. The Parking Spaces are an accessory part of the Property. |
|
6. |
DELIVERY OF THE PROPERTY |
|
6.1 |
The Landlord must deliver the Property (without the surface area of Offices) to the Tenant on the Delivery Date. The Parties shall prepare a Delivery Protocol on the occasion of the
delivery of the Property (“Delivery Protocol”). |
|
6.2 |
If the Tenant does not attend to the delivery of the Property on the Delivery Date, the Property will be considered to have been accepted by the Tenant without reservation. In this case,
the Landlord will formalize the Delivery Protocol unilaterally, and must record the Tenant’s absence in the Delivery Protocol itself. |
|
6.3 |
The Tenant shall be obliged to accept the Property unless it presents Major Defects. It shall be the responsibility of the Landlord to remedy any Minor Defects that have been included in
the Delivery Protocol within a maximum period of fifteen (15) Business Days from the execution of the Delivery Protocol, unless the Parties agree otherwise in this regard. It shall be the responsibility of the Landlord to eliminate any Major
Defects within a period appropriate to the nature of the Major Defect, but not more than thirty (30) Business Days from the time the Major Defect has been notified by the Tenant. By signing the Delivery Protocol, it will be understood that the
Parties confirm that the Property has been delivered free of any defects other than those that the Parties have collected in the Delivery Protocol. |
|
6.4 |
Any dispute that may arise between the Parties in relation to the nature of the defects will be submitted to the Independent Expert, who will resolve on the nature of each defect. The
Parties shall bear the Independent Expert’s fees equally. The Party whose position was confirmed by the Independent Expert may, within five Business Days following the decision of the Independent Expert, claim from the other Party the
reimbursement of its participation in the Independent Expert’s fees within a period not exceeding ten (10) Business Days following the request of the Party whose position had been estimated. |
|
6.5 |
If the delivery of the Property does not take place on the Delivery Date for the reason provided for in Clauses 6.3 and 6.4, the delivery of the Property will take place on the
Alternative Delivery Date. Clauses 6.1 to 6.4 shall also apply to the delivery of the Property on the Alternative Delivery Date. |
|
6.6 |
The Tenant assumes full responsibility for obtaining the Activity License and will compensate the Landlord for any type of cost, harm, damage and/or loss arising from lack of obtaining
or delay in obtaining it. In the event of failure to obtain or loss of efficacy of the Activity License, the Tenant may not terminate this Agreement or stop paying the Rent or request the modification of the agreed contractual conditions,
except in the event that the lack of Activity License or its subsequent cancellation or revocation is attributable to the Landlord. The Tenant shall provide the Landlord with a copy of its Activity License and any documentation related to the
Activity License. |
The Tenant knows and accepts that obtaining the Activity License requires the Tenant to obtain a favorable resolution issued
by the competent administration upon the request for exceptionality to the application to the Property of Royal Decree 2267/2004, of December 3rd, approving the Fire Safety Regulations in Industrial Establishments (“RSCIEI”), by submitting to
the competent authorities a services study that justifies equivalent security in terms of the Tenant’s activity as provided for in the RSCIEI itself (the “Services Study”). For these purposes, the Landlord has agreed to (i) draft a Services
Study within sixty (60) days from the date on which the Tenant provides the Landlord with the detail of the Tenant’s activity on the points detailed in ANNEX 8 and (ii) to submit said Services Study to the competent administration in instrumental
form, for the mere purposes of its administrative processing, at the expense and risk and at the cost of the Tenant itself. The Tenant, for its part, undertakes to comply, at its own expense, with any and all requirements that the competent
administration may make in relation to the request for exceptionality and its favorable resolution mentioned above.
|
7.1 |
The Lease Term begins on the date that has been recorded for this purpose in the Delivery Protocol of the Warehouse part of the Property, in the event that its delivery is carried out on
a date other than the Offices part of the Property (the “Start Date”). |
|
7.2 |
The Lease Term is set within the determined period of five (5) years from the Start Date. |
|
7.3 |
The Lease Term shall be automatically extended for successive periods of three (3) years each until the Lease reaches a maximum duration of eleven (11) years, unless the Tenant notifies
the Landlord in writing, at least six (6) months prior to the end of the term of each of the extensions, of its decision not to extend it. |
|
7.4 |
For the avoidance of doubt, in the event that the Landlord does not receive the notification referred to in the previous Clause, it shall be understood that the Tenant has granted its
agreement to the extension of the Agreement in the indicated terms. The duration of each extension shall be mandatory. |
|
7.5 |
This Lease may only be terminated prior to the end of the Lease Term for the reasons provided for in Clause 18. This Lease may only be automatically extended in the event and in the
terms established in Clause 7.3, without the tacit renewal provided for in Article 1566 of the Civil Code being applicable. |
|
7.6 |
The Lease Term and the term of any of the extensions that are applicable in accordance with Clause 7.3 are mandatory for both parties, so that the Tenant may not terminate the Lease
prior to the end of the Lease Term or any of the extensions that are in progress. The Tenant expressly accepts that the mandatory nature of the initial Lease Term and, if applicable, of any of its extensions constitutes an essential element of
this agreement, determining the Landlord’s willingness to proceed with the execution of this Lease. Consequently, any waivers, unilateral or early termination of this Agreement by the Tenant that takes place prior to the end of the Lease Term
or any of its ongoing extensions - regardless of whether it occurs under applicable law (e.g. insolvency proceedings)- shall be considered a serious breach of this Agreement and shall entitle the Landlord to demand from the Tenant a
conventional penalty consisting of an amount equal to the amount of the Rent corresponding to the Lease Term or the ongoing extension remaining to be fulfilled (plus the one that is applicable, where appropriate, pursuant to Clause 2.11 and/or
18.6). This conventional penalty has been freely agreed by the Parties and constitutes the amount in which both quantify the damages caused to the Landlord for the breach of this essential obligation to remain for the entire Lease Term and,
where applicable, the extensions. The Tenant expressly accepts the proportionality of this penalty in consideration of the essential nature of the Lease Term or any of its extensions and expressly waives the right to exercise any actions aimed
at the judicial moderation of the penalty or to delay or avoid its fulfillment and execution. |
|
7.7 |
Notwithstanding the provisions of Clause 7.5, the Parties expressly agree that the Tenant shall have the power to withdraw from the Lease, which
may only be exercised with effect on the date on which three (3) years of the Lease Term are reached, by notifying the Landlord with a prior notice of twelve (12) months, that is, on the date on which two (2) years of the Lease Term is reached
(the “Withdrawal Faculty”). |
In the event of the exercise of the Withdrawal Faculty by the Tenant, the Landlord
shall be entitled to an economic compensation for an amount equal to eight months of the Fixed Part of the Rent in force on the effective date of said withdrawal, plus the total unpaid amount of the Supplementary Rent Part pending payment (the “Withdrawal
Compensation”), plus the corresponding Value Added Tax.
For the valid exercise of the Withdrawal Faculty, the payment of the Withdrawal
Compensation by the Tenant to the Landlord shall be indispensable simultaneously with the notification of the exercise of the Withdrawal Faculty.
|
8.1 |
The Tenant undertakes to pay the Rent for the lease of the Property from the Start Date. The Rent consists of the Fixed Part of the Rent and the Supplementary Part of the Rent. The form
of calculation of the amounts corresponding to the Fixed Part of the Rent is established in the following table: |
Use of the Property and Purpose |
Color in Plan |
Total Area (m2) |
Price per unit
(EUR/m2/month)
|
Fixed Part of Monthly Rent (EUR) |
Warehouse |
yellow |
3,189.20 |
[***] |
[***] |
Offices |
red |
620.01 |
[***] |
[***] |
Fixed Part of Total Monthly
Rent: |
[***] |
|
x 12 |
Fixed Part of Annual Rent: |
[***] |
|
8.2 |
The Fixed Part of the Rent will be adjusted to adapt to the real gross surface of the Property, which will be verified at the completion of the Landlord’s Works. The gross surface will
be measured in accordance with DIN 277 (BGF). In the event that the Parties do not carry out the verification of the actual gross surface, the Fixed Part of the Rent shall be determined according to the surfaces reflected in the previous table. |
|
8.3 |
The Landlord shall apply the Value Added Tax (“VAT”) to the amounts referred to above, calculated in accordance with the regulations applicable to the Rent. |
|
8.4 |
The Landlord hereby grants the Tenant an incentive in the amount of four (4) months of Fixed Part of the Rent for the Warehouse and four (4) months of Fixed Part of the Rent for the
Offices, that is, the total amount of fifty-one thousand five hundred and fifty nine (63,249) EUR (the “Incentive”). |
The Incentive shall be gradually allocated each month to the payment of the Rent until the amount of the Incentive is
depleted, operating as a lack of the Rent corresponding to each part of the Property; and
|
8.5 |
In the event that there are Work Modifications Costs and the Parties have not agreed otherwise, the Tenant shall be obliged to pay the Supplementary Part of the Rent referred to in
Clause 8.1. The amount of the Supplementary Part of the Rent will be calculated according to the following formula: |
Supplementary Part of the Rent = |
WMC x C |
T |
|
WMC |
- Work Modifications Costs |
|
C |
- Capitalization factor of 1.27 |
|
T |
- Number of months of the Lease Term excluding extensions (60) |
|
8.6 |
The Rent will be updated annually upwards in accordance with the variation experienced by the Update Index. The Rent update will take place on January 1 of each calendar year from
January 1, 2024 (date on which the first Rent update will take place) by applying the percentage variation experienced by the Update Index during the immediately preceding calendar year. The Landlord shall inform the tenant of the increase in
the Rent by sending an invoice with the updated Rent and, at the same time, an invoice for the amounts not paid for the Rent in what had been increased from January 1 of the year in question to the date of the invoice. The Rent increases
resulting from the update system stipulated in this Clause will be applied cumulatively throughout the term of the Lease. |
|
8.7 |
The Rent update stipulated in the previous Clause will not take place when the variation experienced by the Update Index during the calendar year is negative (deflation) or equal to
zero. |
|
8.8 |
The Rent update constitutes an essential element of this agreement, determining the Landlord’s willingness to proceed with the execution of this Lease. Consequently, the Parties
expressly state that they consider the Rent update appropriate and that it will take place throughout the term of the Agreement. The Rent resulting from the update will be automatically mandatory for both Parties, without the need for
notification or request by the Landlord. |
|
9.1 |
During the term of the Lease, the Tenant shall pay the Landlord on a pro rata basis the amount of the Lease Charges, comprising (i) expenses incurred for the provision of use-related
services, ownership, administration, repair and maintenance of the Building, as further explained in ANNEX 4, the costs of the Landlord’s Insurance and the Conservation Entity (the “Operating Expenses”), and (ii) the Real Estate Tax
(IBI) that the Landlord must pay with respect to the Building (the “Property Taxes”). The services that are part of the Operating Expenses to be provided by third parties will be passed on without any additional charge and will be
allocated to the Property on a proportional basis. |
|
9.2 |
From the start of the Agreement, the Tenant must pay the Lease Charges, which are budgeted for the ongoing calendar year at €0.50, excluding VAT, for each m2 of the Property for each calendar month. |
|
9.3 |
In the event that any of the Operating Expenses correspond to services shared by the Tenant with other users of the Building or the Logistics Park, only the proportional part of the
actual cost of such Operating Expenses shall be passed on to the Tenant, calculated based on the proportion that the surface of the Property saves with the total leased surface in (i) the Building or (ii) the Logistics Park or, if applicable,
(iii) in other buildings participating in such shared services. |
|
9.4 |
Within the maximum period of one hundred and twenty (120) days following the end of each calendar year, the budgeted Operating Expenses will be reconciled with those actually incurred in
said period, for which purpose the Landlord will send the Tenant, before March 31 of the following year, a comparison of the amounts budgeted for each item and those actually incurred. |
The Tenant may, within thirty (30) days following the date on which it receives the comparison, access the accounting
documents that support the Operating Expenses, at the written request of the Tenant sent for this purpose at least five Business Days in advance.
In this regard,
|
9.4.1 |
If the total payments made by the Tenant on account of Operating Expenses on the basis of the annual budget are lower than those actually incurred, the Tenant shall be obliged to pay the
difference within ten (10) Business Days from the receipt of the corresponding liquidation invoice and the budget of the Lease Charges for the year in which said liquidation is made shall be adjusted with effects of January 1 to the amount
resulting from the reconciliation |
|
9.4.2 |
If, on the contrary, the total payments made by the Tenant on account of Operating Expenses on the basis of the annual budget are greater than those actually incurred, the Landlord will
retain said excess to apply it to the next payments on account of Operating Expenses on the basis of the annual budget for the current year, to the extent they reach |
|
9.5 |
The Tenant shall be responsible for the services necessary for the proper functioning of the Property that are not part of the services included in ANNEX 4 and shall bear the cost
thereof. The Tenant, in particular, shall be responsible for entering into the following individual agreements with the suppliers: |
|
(b) |
gas supply, if applicable; |
|
(e) |
telecommunication services. |
Given that the electricity connection and the transformation center are common to the entire logistics park in which the
Building is located, the electricity supply agreement will be formalized by the Landlord in an instrumental manner, with divisional electricity meters installed for each user, and their cost and consumption will be passed on to the Tenant, on expiry,
as part and in the same way intended for the Operating Expenses. However, it is stated that the contracting of the electricity supply by the Landlord is merely instrumental and does not seek in any way to assume the responsibilities of a power supply
company or to give guarantee to the Tenant of said electricity supply.
It is hereby stated for the record that the Landlord is hereby expressly authorized to interrupt the derivation of said
electricity supply to the Tenant in the event of non-payment by the Tenant of any cost or consumption of electricity supply, upon notification to the Tenant five (5) Business Days in advance, without the Tenant having any claims or demands to make in
this respect.
In the event of an interruption in the electricity supply in the Building, the Landlord hereby assigns to the Tenant the
actions against the company that provides electricity to which the Landlord is entitled to claim the damages that may correspond for that reason and the Tenant accepts them and undertakes to hold the Landlord fully harmless from any liability, cost,
damage or harm that may arise from the exercise of such actions by the Tenant.
|
9.6 |
Landlord in no way guarantees that the supplies, services or means indicated in this Clause 9 will be provided without interruption and, consequently, will not be liable for the
interruption or cessation of such supplies, services or means, unless the interruption or cessation were due to the gross negligence of Landlord. In the event that the Landlord is responsible in accordance with the provisions of this Clause,
its liability to the Tenant shall be limited to the same that the provider of the supplies, services or means would have to the Landlord in accordance with the applicable regulations or the corresponding agreement relating to the supply,
services or means. Consequently, the Tenant shall not have the right to claim from the Landlord more extensive compensation than those compensations that the Landlord has the right to claim from the corresponding providers of supplies, services
or means in accordance with the applicable provisions. The Tenant shall notify the Landlord of any damage without undue delay, otherwise its right to claim compensation from the Landlord for such damage shall be extinguished. |
|
9.7 |
The Landlord shall have the right to charge the Tenant, as part of the Monthly Operating Expenses, a management and administration fee for a total amount equivalent to three percent (3%)
of the Monthly Rent. |
|
9.8 |
The Tenant is obliged to pay any and all taxes and/or obligations arising from the exercise of the Permitted Use (and any waste collection fees, vehicle access fees, etc.). In the event
that the State, the Autonomous Community, the Province, or the Municipality create new taxes or apply additional levies, or increase the current levies with respect to the Logistics Park, the Building or the Property, the Tenant is obliged to
pay the amount of said new tax or additional levy or increase, which will be considered Amounts Assimilated to the Rent. |
|
10.1 |
The Tenant is obliged to pay the Rent and the Lease Charges (including applicable taxes) to the Landlord for anticipated monthly payments within the first ten (10) days of the ongoing
calendar month. The Landlord shall issue and send the Tenant the corresponding invoice for the Rent and the Lease Charges. |
|
10.2 |
The Rent and Lease Charges will be paid by the Tenant by direct debit to the Tenant’s Account and will be considered paid on the date on which they are effectively deposited in the
Landlord’s Account. |
|
10.3 |
If the Start Date does not coincide with the start of a calendar month or if the Lease ends on a date other than the last day of a calendar month, the Tenant shall pay the Rent and the
Lease Charges in proportion to the number of days of duration of the Lease in said calendar month. |
|
10.4 |
Any delay in the payment of the Rent or any other amount whose payment corresponds to the Tenant under this Agreement shall accrue a default interest of 0.04% of the amount due for each
day of late payment, counted from the day following the day on which the breach occurred, without the need for prior notice or demand for payment by the Landlord and without prejudice to the remaining rights and actions that correspond to the
Landlord. |
|
10.5 |
The Tenant is obliged to pay the Rent and the Lease Charges without any kind of compensation, deduction, withholding or reduction on amounts due, even (i) in the event of a breach of the
obligations arising from this Agreement by the Landlord or (ii) in the event that the Landlord owes any amount to the Tenant, all of this except in the event that such deduction or withholding is applicable by law, it has been agreed in writing
with the Landlord or is derived from the execution of an executive judicial resolution. The Tenant hereby acknowledges receipt of a copy of a certification issued by the Tax Agency confirming that it is exempt from withholding in the payment of
the Rent and the Lease Charges, a copy of which is attached as ANNEX 6. In the event that the Landlord ceases to be exempt from having the Tenant make withholdings on the payment of the Rent or the Lease Charges, the Landlord must immediately
notify the Tenant so that it can practice, in a timely manner, the withholds applicable under the relevant regulations, in order for the Tenant to make as many payments as necessary to the Tax Authorities and to prove to the Landlord that these
payments have been made in a timely manner. |
|
10.6 |
The Parties expressly agree that the obligation to pay the Amounts Assimilated to the Rent by the Tenant is an essential element of this agreement and its non-payment by the Tenant will
entitle the Landlord to exercise the same actions that would correspond in the event of non-payment of the Rent, in particular the provision set out in Article 27.2 a) of the Urban Leases Act. |
|
11. |
VALUE ADDED TAX (VAT) |
|
11.1 |
The Lease and the Lease Charges are considered as provision of services for VAT purposes taxed in their entirety and not subject to pro rata, and will be considered to have been occurred
on the date of issuance of the corresponding invoice. The Landlord shall pass on to the Tenant the applicable VAT to the Rent and the Lease Charges. |
|
11.2 |
In the event that either Party ceases to have the status of taxable entity for VAT purposes, it must inform the other Party about this circumstance within five (5) Business Days from the
date on which such circumstance took place. |
|
12. |
WORKS, MAINTENANCE AND REPAIRS |
|
12.1 |
The Tenant is obliged to keep the Property and its equipment in good condition of use and to carry out Minor Repairs at its own cost. The Landlord may require the Tenant to execute and
complete the Minor Repairs within a period of fifteen (15) Business Days from said request. In the event that the Tenant fails to comply with its obligation to execute the Minor Repairs, the Landlord shall have the right to access the Property
to execute the Minor Repairs by itself or through a third party, at the cost of the Tenant. |
|
12.2 |
The obligation of the Tenant to execute the Minor Repairs: |
|
(a) |
shall not apply to those defects in respect of which the warranty period granted to the Landlord by the supplier of the relevant goods or services applies; |
|
(b) |
in the event that the Minor Repairs were covered by the Landlord’s Insurance and had been managed as a claim with a favorable response, the Tenant’s obligation shall be limited to
satisfying the amount that exceeds the amounts of the insurance paid by the insurance company to the Landlord. |
|
12.3 |
The Landlord shall be entitled to carry out the Major Repairs at its discretion. The Tenant is obliged to allow any construction and/or technical modification that the Landlord deems
necessary to improve the Building or the Property or to keep it in compliance with the Technical Specifications. Any other maintenance or improvement work will be carried out by the Landlord only in the manner and conditions agreed with the
Tenant. |
|
12.4 |
The Tenant is obliged to inform the Landlord without delay of the need to execute any Major Repairs, especially if there is a threat of damage to the Property or the Building. The Tenant
shall not in any case execute the Major Repairs on its own behalf or through third parties without the prior written consent of the Landlord. |
|
12.5 |
During the execution of the Major Repairs or of the constructions and/or technical modifications provided for in Clause 12.3, the Landlord shall make its best efforts so that the use of
the Property by the Tenant is harmed as little as possible and, if possible, will inform the Tenant in advance of the need to execute any Major Repair, construction or technical modification that could restrict the use of the Property by the
Tenant. The Tenant shall cooperate to the extent possible with the Landlord in the execution of Major Repairs, constructions or technical modifications. |
|
12.6 |
In the event that the Tenant cannot use the Property for the Permitted Use for reasons not attributable to the Tenant, the Tenant must inform the Landlord within two (2) weeks following
the date on which the use of the Property has been affected. Otherwise, any right of the Tenant to demand any correction and/or any compensation for damages will be extinguished. |
|
13.1 |
In accordance with the provisions of Article 36.1 of the Urban Leases Act, the Tenant hereby delivers to the Landlord proof of bank transfer of the Legal Deposit to the Landlord's
Account, who receives it to its full satisfaction for deposit with the competent public entity and who will serve as a guarantee of the Guaranteed Obligations. A copy of the corresponding transfer receipt is attached as ANNEX 7. The Legal
Deposit must be updated on the Start Date and at the beginning of each third year of the Lease to make it equal to two monthly payments of the Rent then in force. The Legal Deposit shall be returned by the Landlord to the Tenant within ten (10)
Business Days following the date on which the competent public entity delivers the amount of the Legal Deposit to the Landlord, prior to its application to satisfy the responsibilities pending to be addressed by the Tenant |
|
13.2 |
In addition to the Legal Deposit, the Tenant is obliged to deliver to the Landlord, prior to the deadline of November 25, 2022, an additional guarantee in assurance of the Guaranteed
Obligations in the form of (i) bank guarantee issued in favour of the Landlord by a credit institution of recognized solvency and that enables the Landlord to assign or pledge all credit rights in favor of the Landlord’s funders (the “Bank
Guarantee”), or (ii) security deposit to be paid by bank transfer to the Landlord’s Account (the “Security Deposit”). Failure to comply with this obligation will entitle the Landlord to require the Tenant to pay a conventional
penalty consisting of an amount equal to 0.1% of the amount of the Guaranteed Amount that the Tenant has not guaranteed for each day of non-compliance by the Tenant. |
|
13.3 |
The Bank Guarantee and the Security Deposit must guarantee the Guaranteed Obligations up to a minimum amount of six (6) months of Rent and Lease Charges together with the applicable VAT
(the “Guaranteed Amount”). |
|
13.4 |
The Tenant is obliged to keep the Bank Guarantee valid, in force and for an amount equal to or greater than the Guaranteed Amount, until three (3) months have elapsed from the end of the
Lease Term or, where appropriate, the extension of the Lease Term that would proceed in accordance with Clause 7.3. |
|
13.5 |
The Tenant shall be obliged to supplement or replace the Bank Guarantee at least four (4) months before its expiration with another one issued under identical terms and conditions. In
the event that (i) the Tenant fails to comply during the Lease Term with any of its payment obligations under this Agreement or (ii) the Tenant has not proceeded to replace or supplement the Bank Guarantee in the terms established at least
thirty (30) days prior to its expiration, the Landlord shall be freely entitled to execute the Bank Guarantee up to the total maximum guaranteed amount and withhold said amounts as Security Deposit for its application to the fulfillment of the
Tenant’s obligations in the same manner intended in the Bank Guarantee, with express waiver by the Tenant of any right or power conferred by Article 1775 of the Civil Code. |
|
13.6 |
In the event that the Landlord exercises the Bank Guarantee and the amount that is guaranteed becomes less than the Guaranteed Amount, the Tenant must provide the Landlord with a new
Bank Guarantee within five (5) Business Days from the request made by the Landlord for this purpose, so that the total sum guaranteed for all the Bank Guarantees granted by the Tenant is equal to or greater than the Guaranteed Amount. |
|
13.7 |
The Security Deposit will guarantee the proper compliance by the Tenant with the Guaranteed Obligations and the Landlord may apply the Security Deposit or any part thereof to the payment
of the debts that the Tenant maintains with the Landlord in the event that the Tenant does not comply with its obligation to satisfy the Guaranteed Obligations in a timely manner. In the event that the Landlord uses the power to apply the
Security Deposit to the payment of the defaulted Guaranteed Obligations, the Landlord shall inform the Tenant of the reasons and scope of the application of the Security Deposit and, at the same time, shall require the Tenant to replace the
Security Deposit up to at least an amount equal to the Guaranteed Amount. The Tenant must replace the Security Deposit within five (5) Business Days of receipt of the request sent by the Landlord for this purpose. The Tenant shall not be
entitled to receive interest on the Security Deposit. |
|
13.8 |
Within three (3) months following the extinction or termination of this Agreement and once all the Tenant’s obligations have been fulfilled in accordance with this Agreement, the
Landlord must return to the Tenant the balance of the Security Deposit that has not been applied to the fulfillment of the Guaranteed Obligations. |
|
13.9 |
For the avoidance of doubt, it is expressly stated for the record that the Guaranteed Amount does not operate as a limit of liability of the Tenant for the fulfillment of its obligations
under this Agreement. The total or partial execution of a Bank Guarantee does not exclude the exercise of any other action that the Landlord deems appropriate to exercise for the protection of its interests, including those actions aimed at
terminating the Lease and evicting the Tenant. |
|
14.1 |
The Landlord shall take out and maintain in force a building insurance policy on the Building against natural risks and civil liability insurance against third parties, including
insurance against risks arising from the interruption of activity (“Landlord’s Insurance”). |
|
14.2 |
After the execution of this Agreement, the Tenant must subscribe and maintain at all times in force, at its cost, an insurance policy for the Building contents and for the works carried
out by the Tenant, as well as civil liability insurance against third parties for the risks derived from the activities carried out by the Tenant in the Property or the Building, including the Permitted Use. The Landlord must give its approval
for both the content of the corresponding policies and the respective insurance companies. |
|
14.3 |
At the request of either Party, the other Party must prove that the insurance policies referred to in this Clause 14 have been correctly subscribed and are in force, and that it is up to
date in the payment of the corresponding premiums. |
|
15. |
OTHER RIGHTS AND OBLIGATIONS OF THE Tenant |
|
15.1 |
The Tenant shall be obliged to use the Property within the framework and for the purpose stipulated in this Agreement, and subject to the License of Occupation, in such a way that the
wear and tear due to use does not exceed the usual wear and tear due to ordinary use under standard conditions. |
|
15.2 |
Additionally and in particular, the Tenant: |
|
(a) |
is obliged to use the Property without undermining the rights of the Landlord or other users of the Building or the Logistics Park, avoid any damage, immediately notify the Landlord of
any threat of damage or damage actually caused and, in particular, refrain from introducing animals or dangerous objects, or combustibles or any other harmful, explosive or flammable substance susceptible to causing damage or the destruction or
deterioration of the Building; |
|
(b) |
is obliged to comply with the requirements and limitations imposed by the regulations applicable to the Building (including environmental regulations) and the Technical Specifications,
conform to the rules of the interior regime of the Building as soon as these rules have been prepared and/or modified by the Landlord and the Landlord has informed the Tenant of their existence, content and/or modifications, and ensure that the
rules of the internal regime are observed by its employees, shareholders, customers, visitors, etc. |
|
(c) |
Unless the Tenant obtains the prior written consent of the Landlord, the Tenant must refrain from making modifications to building work, improvements, additional internal structures or
technical equipment installations affecting structural elements of the Building and interfering with service networks, sewer, heating and any other equipment, including any equipment that is under warranty and whose interference could impair
the ability to exercise such warranty; |
|
(d) |
shall reasonably ventilate the Property according to its characteristics and keep it clean and protected against frost and shall keep the surroundings of the Property and the Parking
Spaces clean and well-maintained; |
|
(e) |
must be censored as a VAT taxpayer before the competent tax administrations; |
|
(f) |
undertakes to inform the Landlord of any change of control of the Tenant (as “control” is defined in Article 42 of the Commercial Code); of any transformation of the Tenant (in this case
the information must be provided at least 30 days prior to the request for registration of the transformation in the Commercial Registry), of the Tenant's dissolution, of any capital reduction subscribed by the Tenant, of the sale of any branch
of the Tenant’s activity and of any threat or risk of the Tenant entering into bankruptcy proceedings (regardless of whether the bankruptcy proceedings are requested or in the case of problems due to over-indebtedness); |
|
(g) |
undertakes to comply with all the obligations derived from the fire prevention regulations applicable to the Property and all the activities that the Tenant carries out in the Property; |
|
(h) |
must comply with the regulations applicable to the use of the Property and with any limitations imposed by this regulation, in particular, the regulations applicable on safety and health
protection in the work environment, the hygiene regulations and the technical and construction regulations; |
|
(i) |
undertakes to inform the Landlord immediately of any damage suffered by the Property or of any claim that takes place in the Property. |
|
15.3 |
The Tenant may not assign the Agreement or sublease the Property in whole or in part to any third party without the prior written consent of the Landlord. The Parties hereby expressly
waive the application of Article 32 of the Urban Leases Act. By exception to the foregoing, the Landlord hereby authorizes the partial (and not total) sublease of the Property by the Tenant to a company belonging to its group (as “group” is
defined in Article 42 of the Commercial Code), provided that: |
|
(a) |
The Tenant is up to date in the payment of the Rent and any other amount due under this Agreement; |
|
(b) |
The Tenant notifies the Landlord in writing of the partial sublease at least thirty (30) days in advance of the sublease, identifying and providing detailed information of the subtenant; |
|
(c) |
The partial sublease does not cause the Landlord harmful effects of a tax nature in accordance with the regulations applicable to the sublease at the time it takes place; and |
|
(d) |
The Tenant assumes full responsibility for the use of the Property by the subtenant and the guarantees granted by the Tenant under this Agreement remain unchanged. |
|
15.4 |
The Tenant is aware of and accepts that it is the Landlord’s will to reach a high standard of sustainability and environmental protection in the operation of the Building and, to this
end, the Tenant undertakes to provide the Landlord with the information that the Landlord may require from the Tenant about: |
|
(a) |
Electricity, gas and water consumption in the Property, as well as waste generation -in particular, the information sent by the respective supply and service providers - and, to the
extent technically possible, differentiating between heating, air conditioning and lighting consumption. |
|
(b) |
Measures implemented in the Property in order to improve sustainability and environmental protection. |
The Tenant must provide such information and documents always (i) before April 30 of each calendar year in relation to the
consumption of the immediately preceding calendar year and (ii) within thirty (30) days following the request for information made by the Landlord on the consumption of the time period specified in the Landlord’s request.
|
15.5 |
The Landlord and the Tenant shall meet at least annually to discuss the use of energy in the Property - based on the information provided by the Tenant - and to study reasonable
initiatives that may help reduce energy consumption, carbon emissions, water expenditure and the generation of waste in the Property. |
|
15.6 |
The Parties expressly submit any and all works carried out in the Property to the provisions of this Agreement and, consequently, expressly waive the provisions of Article 30 of the
Urban Leases Act and, by referral, to the provisions of Articles 21, 22, 23 and 26 to the applicable extent. |
|
16. |
OTHER RIGHTS AND OBLIGATIONS OF THE Landlord |
|
16.1 |
The Landlord shall provide the Tenant with the occupancy of the Property without disturbances, with the understanding that the Landlord shall not be in any way responsible for the
disturbances caused by third parties in the occupancy of the Property. In the event of disturbances by third parties, the Landlord shall make its best efforts to end such disturbance from the moment it is aware of it, taking into account the
interests of the Tenant. |
|
16.2 |
The Landlord (or any third party authorized by it) may access the Property at any time during business hours upon notification to the Tenant specifying the reasons for such access,
including the following (but not limited to): |
|
(a) |
the preparation and/or execution of urgent structural and technical modifications and/or repairs, which the Tenant is obliged to allow at all times; |
|
(b) |
the maintenance of the technical equipment of the Building; |
|
(c) |
inspection of the Property and the manner in which it is used by the Tenant; |
|
(d) |
show the Property to prospective tenants; or |
|
(e) |
any other relevant reason. |
|
16.3 |
In the event of a threat of damage to health or serious damage to property (in particular, in case of fire), the Landlord and any third party authorized by the Landlord may access the
Property without the need for prior notification to the Tenant. In this case, the Landlord must inform the Tenant without delay. |
|
17. |
INFORMATION AND DISTINCTIVE SIGNS |
|
17.1 |
The Tenant may place an identifying sign with its logo (the “Distinctive Sign”) with prior written consent granted by the Landlord, who will not unreasonably deny it, provided
that approval has previously been obtained from the competent public administration, if necessary under applicable regulations. The cost of the placement of the Distinctive Sign shall be borne by the Tenant with full exemption of the Landlord. |
|
17.2 |
The Tenant shall be obliged to remove the Distinctive Sign and return its location to its original state on the date on which the Lease Term ends or, if applicable, within five (5)
Business Days following the termination of the Lease. In the event that the Tenant fails to comply with the obligations established in this Clause 17, the Landlord will remove the Distinctive Sign at the Tenant’s expense. |
|
18. |
TERMINATION AND EXTINCTION |
|
18.1 |
This agreement may only be terminated and render ineffective by all and/or any of the following causes, with repeal and exclusion of the causes of termination established in the Urban
Leases Act: |
|
(a) |
End of the Lease Term and its extensions; |
|
(b) |
Termination of the Agreement for serious breach of obligations in accordance with the provisions of Clauses 18.2 and 18.3 or for the cause referred to in Clause 18.2(c); |
|
(c) |
Notice of termination of the Agreement for breach of the material obligations set out in Clauses 18.4 and 18.5; or |
|
(d) |
Mutual agreement between the Parties. |
Prior to the start of the Lease Term, this Agreement may only be terminated for the reasons referred to in Clauses 18.1(b)
and 18.1(c).
|
18.2 |
The Landlord shall have the right to terminate this Agreement by giving two (2) months’ prior notice to the Tenant, with the understanding that the termination shall be effective once
the term of one (1) month has elapsed from the first day of the calendar month following the day in which the notice had been sent to the Tenant. The notice provided for in this Clause may be made solely and exclusively for the following
reasons: |
|
(a) |
That the Tenant fails to comply with its obligation to allocate the Property for the Permitted Use; |
|
(b) |
That the Tenant or the third parties that use the Property in accordance with this Agreement disrupt peaceful use and/or public order even after having been required to cease in this
behavior during the last 12 months. The notice of termination provided for in this Clause shall not be necessary when the aforementioned disturbance exceeds the reasonableness of the circumstances; |
|
(c) |
That it is decreed the obligation to demolish the Building or the obligation to modify it in such a way as to prevent the use of the Property by judicial or administrative resolution of
an executive nature; |
|
(d) |
That the Tenant has carried out any action that requires the prior consent of the Landlord without having previously obtained said consent; or |
|
(e) |
That the Tenant permanently and/or repeatedly fails to comply with its obligations even after having been requested in writing by the Landlord on two (2) occasions within the last twelve
(12) months to cease its breach, provided that fifteen (15) Business Days have elapsed between both requirements and the Tenant has not ceased its breach within fifteen (15) Business Days following the second requirement of the Landlord. |
|
18.3 |
The Tenant shall have the right to terminate this Agreement by giving one (1) month’s prior notice to the Landlord, with the understanding that the termination shall be effective once
the term of one (1) month has elapsed from the first day of the calendar month following the day in which the notice had been sent to the Landlord. The notice provided for in this Clause may be made solely and exclusively for the following
reasons: |
|
(a) |
That the Property cannot be occupied for a period of three (3) months for a cause attributable to the Landlord; or |
|
(b) |
That the Landlord permanently and/or repeatedly fails to comply with its obligations even after having been requested in writing by the Tenant on two (2) occasions within the last twelve
(12) months to cease the breach, provided that fifteen (15) Business Days have elapsed between both requirements and the Landlord has not ceased its breach within fifteen (15) Business Days following the second request of the Tenant. |
|
18.4 |
The Landlord shall have the right to terminate this Agreement without prior notice and without further requirement than sending a notification to the Tenant for the following reasons,
with the understanding that the termination will take effect from the time the notification sent to the Tenant is considered received: |
|
(a) |
That the Tenant fails to comply with the obligation to pay the Rent, the Lease Charges or any other Amount Assimilated to the Rent for more than ten (10) Business Days; |
|
(b) |
That the Tenant fails to comply with the obligation to deliver or replace in a timely manner the Security Deposit or the obligation to deliver in a timely manner the Bank Guarantee
and/or the obligation to maintain the amount of the Security Deposit or the sum guaranteed by Bank Guarantee in an amount equal to or greater than the Guaranteed Amount; |
|
(c) |
That the Tenant loses its status as a taxable entity for VAT purposes; or |
|
18.5 |
The Tenant shall have the right to terminate this Agreement without prior notice and without greater requirement than the sending a notification to the Landlord (with the understanding
that the termination shall be effective from the time the notification sent to the Landlord is received) in the event that the Delivery Protocol has not been signed within two (2) months following the Delivery Date due to the exclusive fault of
the Landlord; or |
|
18.6 |
The Landlord shall have the right to demand from the Tenant a conventional penalty consisting of an amount equal to six (6) months of Rent, plus the total unpaid amount of the
Supplementary Part of the Rent, when any of the grounds entitling it to terminate the Agreement occurs in accordance with Clauses 18.2 (except for Clause 18.2(c)) and 18.4, regardless of whether or not the Landlord exercises its power to
terminate the Agreement for any of these reasons. |
|
18.7 |
In the event of termination of this agreement, the stipulations of this Agreement relating to the Legal Deposit, Bank Guarantee and Security Deposit; Clauses 17.2 and 19; and any other
stipulation that by law is not affected by the termination of the Agreement will remain in force. |
|
19. |
RETURN OF THE PROPERTY AT THE END OF THE LEASE |
|
19.1 |
Upon termination of this agreement pursuant to Clause 18, the Tenant shall be obliged to vacate the Property immediately and to return it to the Landlord free and vacant, in good
cleaning conditions, and in the same conditions as it was delivered by the Landlord, with the exception of wear and tear arising from the good ordinary use that the Tenant has made of the Property and the repairs that have been necessary to
carry out in accordance with a diligent and careful use of the Property. The Tenant shall return to the Landlord all keys and access mechanisms to the Property (such as access codes, cards, etc.). |
|
19.2 |
Unless otherwise agreed between the Parties or unless the Landlord exercises its legal right of retention, the Tenant must leave the Property free and vacant, removing all personal
property and equipment, as well as all modifications and works carried out by the Tenant and repairing all damages that may be caused by their removal. The Landlord may require the Tenant to leave on the Property, for the benefit of the
Landlord and without consideration, all the Work Modifications and all the additional structures and improvements executed or incorporated by the Tenant that cannot be removed without damaging the Property. |
|
19.3 |
If the Tenant fails to comply with the obligations set out in Clauses 19.1 and 19.2, so that the Property cannot be considered free and vacant or returned to the Landlord in due time and
form, the Landlord shall have the right to require the Tenant to pay a conventional penalty consisting of an amount equal to double (x2) of the daily Rent in force at the time of the termination of the Lease for each day of breach of these
obligations. |
|
19.4 |
If the objects and/or elements referred to in Clause 19.2 have not been removed within ten (10) Business Days following the termination of this Lease, the Landlord may remove the
outstanding objects and/or elements and deposit them at the Tenant’s expense in any place authorized for this purpose. In this case, the Landlord shall inform the Tenant in writing of the removal and deposit of these objects and/or elements. |
|
19.5 |
If the Tenant has registered its registered office at the Property, it must proceed to transfer the registered office within a period of no more than twenty (20) Business Days from the
termination of this Lease. |
|
19.6 |
The provisions of this Clause 19 shall also apply (and to the same extent) to the event that the Tenant has had prior access to the Property and the Agreement is terminated before the
Start Date. |
|
19.7 |
The Parties expressly exclude the application to the Agreement of any legal or conventional regulations that determine an extension of this Lease other than that stipulated in this
Agreement and, in particular, expressly exclude the tacit renewal established by Article 1,566 of the Civil Code, without the need for a request or notification of any kind by the Landlord. Consequently, the Tenant's stay in the enjoyment of
the Property for more than fifteen (15) days after the termination of the Agreement, with the Landlord's acquiescence, shall not in any case constitute tacit re-engagement of this Lease. |
|
20. |
APPLICABLE LAW AND JURISDICTION |
|
20.1 |
Pursuant to Article 4.3 of the Urban Leases Act, this non-residential lease Agreement shall be governed by the will of the Parties expressed in this Agreement and, only in the event that
the provisions of this Agreement are insufficient, by the provisions of Title III of the Urban Leases Act and, subsidiarily, by the provisions of the Spanish Civil Code and the civil legislation that is applicable at the location of the
Property. |
|
20.2 |
Pursuant to Article 4.4 of the Urban Leases Act, the Parties expressly exclude the application of Articles 21, 22, 23, 25, 26, 31, 32, 33, 34 and 35 of the Urban Leases Act, and the
Tenant, herewith, expressly waives any of the rights provided for by these articles to the tenants, in particular, expressly waives any type of pre-emptive acquisition right to which it may be entitled upon the total or partial transfer of the
Property, the Building or the Logistics Park. |
|
20.3 |
The Parties submit any and all discrepancies that may arise between them in relation to the interpretation, application or execution of this Agreement to the courts and tribunals of the
judicial party corresponding to the locality in which the Property is located, expressly waiving any other jurisdiction that may correspond to them. |
|
21.1 |
This Agreement, with its annexes, constitutes the entire agreement between the Parties, and may only be modified or novated in writing with the signature of both Parties, except for the
change of address for notices purposes in accordance with Clause 21.2. |
|
21.2 |
All notices to be given pursuant to this Agreement shall be in writing only and shall be delivered in person, by an official mailing service which records its contents and receipt or by
a recognized mailing service which records its contents and receipt, or by burofax, to the addresses set out below or to such other address as either Party may notify to the other pursuant to this Clause. In addition, notifications will be sent
at the same time via e-mail. Notifications will be sent to the following addresses: |
[***]
[***]
All notifications made hereunder, as well as their annexes, if any, must be made in English or accompanied by an English
translation.
Each Party is obliged to notify the other, exclusively in writing and by the aforementioned means, of any change of address
for notices. Such notification shall take effect once at least ten (10) Business Days have elapsed since the notification is considered received by the receiving Party.
Any notification, communication or statement for the purposes of this Agreement that is sent to the contacts stated above or
to the new contacts notified in accordance with the previous paragraph of this Clause 21.2 shall be deemed to have been made on the date on which it must be considered received such notification, communication or statement by any of the
aforementioned contacts.
|
21.3 |
Except as otherwise provided in this Agreement, no conventional penalty applicable under this Agreement shall be a substitute for the recovery of damages or affect the right
corresponding to the relevant Party to demand compensation for damages whose amount exceeds the amount of the conventional penalty. Unless an imperative regulation states otherwise: (i) a global and high liability limit is established for the
Landlord of FIVE MILLION EUROS (5.000.EUR 000) for any liability that may arise for the Landlord under this Agreement or in relation to this Agreement; (ii) the Landlord shall not incur liability if it is not due to willful misconduct or gross
negligence in its actions; and (iii) the Parties shall not be entitled to compensation for lost profits or consequential damages. |
|
21.4 |
The information that each Party has received from the other Party in connection with this Agreement is considered confidential and the Parties undertake to maintain the confidentiality
of such information. |
|
21.5 |
The Tenant may not assign this Agreement in whole or in part to a third party, or any of its rights under the Agreement, without the prior written consent of the Landlord. The Tenant
hereby expressly waives the right granted to it in this regard by Article 32 of the Urban Leases Act. |
|
21.6 |
If any provision of this Agreement is declared, in whole or in part, void or ineffective, the remaining provisions shall survive and shall not be affected. Void or ineffective
stipulations shall be replaced by new ones that, to the greatest extent possible, adequately reflect the intent or purposes of the Parties expressed in this Agreement. |
|
21.7 |
This Agreement is executed in duplicate and each Party receives one of them. |
CERTAIN IDENTIFIED SCHEDULES HAVE BEEN EXCLUDED FROM THE EXHIBIT PURSUANT TO
REGULATION S-K, ITEM 601(A)(5) BECAUSE THEY DO NOT CONTAIN INFORMATION MATERIAL
TO AN INVESTMENT OR VOTING DECISION AND THAT INFORMATION IS NOT OTHERWISE
DISCLOSED IN THE EXHIBIT OR THE DISCLOSURE DOCUMENT
ANNEX 1
LAND REGISTRY EXCERPT
[OMITTED]
|
CERTAIN IDENTIFIED SCHEDULES HAVE BEEN EXCLUDED FROM THE EXHIBIT PURSUANT TO
REGULATION S-K, ITEM 601(A)(5) BECAUSE THEY DO NOT CONTAIN INFORMATION MATERIAL
TO AN INVESTMENT OR VOTING DECISION AND THAT INFORMATION IS NOT OTHERWISE
DISCLOSED IN THE EXHIBIT OR THE DISCLOSURE DOCUMENT
ANNEX 2
TECHNICAL SPECIFICATIONS
[OMITTED]
|
CERTAIN IDENTIFIED SCHEDULES HAVE BEEN EXCLUDED FROM THE EXHIBIT PURSUANT TO
REGULATION S-K, ITEM 601(A)(5) BECAUSE THEY DO NOT CONTAIN INFORMATION MATERIAL
TO AN INVESTMENT OR VOTING DECISION AND THAT INFORMATION IS NOT OTHERWISE
DISCLOSED IN THE EXHIBIT OR THE DISCLOSURE DOCUMENT
ANNEX 3
ILLUSTRATIVE PLANS OF THE PROPERTY
[OMITTED]
|
CERTAIN IDENTIFIED SCHEDULES HAVE BEEN EXCLUDED FROM THE EXHIBIT PURSUANT TO
REGULATION S-K, ITEM 601(A)(5) BECAUSE THEY DO NOT CONTAIN INFORMATION MATERIAL
TO AN INVESTMENT OR VOTING DECISION AND THAT INFORMATION IS NOT OTHERWISE
DISCLOSED IN THE EXHIBIT OR THE DISCLOSURE DOCUMENT
ANNEX 4
TABLE OF LEASE CHARGES
[OMITTED]
|
CERTAIN IDENTIFIED SCHEDULES HAVE BEEN EXCLUDED FROM THE EXHIBIT PURSUANT TO
REGULATION S-K, ITEM 601(A)(5) BECAUSE THEY DO NOT CONTAIN INFORMATION MATERIAL
TO AN INVESTMENT OR VOTING DECISION AND THAT INFORMATION IS NOT OTHERWISE
DISCLOSED IN THE EXHIBIT OR THE DISCLOSURE DOCUMENT
ANNEX 5
CHANGE ORDER PRO-FORMA
[OMITTED]
|
CERTAIN IDENTIFIED SCHEDULES HAVE BEEN EXCLUDED FROM THE EXHIBIT PURSUANT TO
REGULATION S-K, ITEM 601(A)(5) BECAUSE THEY DO NOT CONTAIN INFORMATION MATERIAL
TO AN INVESTMENT OR VOTING DECISION AND THAT INFORMATION IS NOT OTHERWISE
DISCLOSED IN THE EXHIBIT OR THE DISCLOSURE DOCUMENT
ANNEX 6
TAX CERTIFICATES AND SEPA MANDATE
[OMITTED]
|
CERTAIN IDENTIFIED SCHEDULES HAVE BEEN EXCLUDED FROM THE EXHIBIT PURSUANT TO
REGULATION S-K, ITEM 601(A)(5) BECAUSE THEY DO NOT CONTAIN INFORMATION MATERIAL
TO AN INVESTMENT OR VOTING DECISION AND THAT INFORMATION IS NOT OTHERWISE
DISCLOSED IN THE EXHIBIT OR THE DISCLOSURE DOCUMENT
ANNEX 7
PROOF OF PAYMENT OF THE LEGAL DEPOSIT
[OMITTED]
|
CERTAIN IDENTIFIED SCHEDULES HAVE BEEN EXCLUDED FROM THE EXHIBIT PURSUANT TO
REGULATION S-K, ITEM 601(A)(5) BECAUSE THEY DO NOT CONTAIN INFORMATION MATERIAL
TO AN INVESTMENT OR VOTING DECISION AND THAT INFORMATION IS NOT OTHERWISE
DISCLOSED IN THE EXHIBIT OR THE DISCLOSURE DOCUMENT
ANNEX 8
DETAILS OF THE TENANT FOR THE LEASE STUDY
[OMITTED]
|
SIGNATURES PAGE OF THE AGREEMENT
In __________ on 07-11-2022
|
In __________ on 04-11-2022 |
|
|
VGP PARK DOS HERMANAS, S.L.U. |
H2B2 ELECTROLYSIS TECHNOLOGIES, S.L. |
|
/s/ Jan Van Geet
|
|
/s/ Florencio-Salvador Ferrera Saldaña
|
|
|
Jan Van Geet
Sole Director
|
|
Florencio-Salvador Ferrera Saldaña
Sole Director
|
|
Exhibit 10.23
CERTAIN INFORMATION HAS BEEN OMITTED FROM THIS EXHIBIT PURSUANT TO REGULATION S-K, ITEM 601(B)(10) BECAUSE IT IS
BOTH NOT MATERIAL AND WOULD LIKELY CAUSE COMPETITIVE HARM TO THE REGISTRANT IF PUBLICLY DISCLOSED.
IN ADDITION, CERTAIN PERSONALLY IDENTIFIABLE INFORMATION HAS BEEN OMITTED
FROM THIS EXHIBIT PURSUANT TO ITEM 601(A)(6) OF REGULATION S-K.
[***] INDICATES THAT INFORMATION HAS BEEN REDACTED
SUBLEASE AGREEMENT
(Hydrogen Plant)
DATE: |
July 10, 2020 (“Effective Date”) |
PARTIES: |
(1) |
BAR 20 DAIRY, LLC, a California limited liability company (“Landlord”); and |
|
(2) |
H2B2 USA, LLC, a California limited liability company (“Tenant”). |
RECITALS:
A. |
Landlord leases approximately 320 acres of land adjacent to its main dairy facility for use in connection with its dairy, which leased land is
situated in the County of Fresno, State of California commonly identified as Fresno County Assessor Parcel Number 015-100-20s (the “Property”). |
B. |
Tenant proposes to develop, build, own and operate a hydrogen generation plant (the “Project”). |
C. |
Tenant desires to sublease an area approximately 1.5 acres in size within the Property (the “Premises”) on which it will situate its
hydrogen generation plant and for the installation of roads, electric transmission lines, poles, transformers, and other equipment necessary to produce, sell and deliver the hydrogen generated from its plant. |
D. |
The Premises are highlighted in yellow on the aerial photograph attached hereto as Exhibit “A”. |
LEASE AND AGREEMENT:
NOW, THEREFORE, in consideration of the mutual promises and agreements set
forth herein, and for other valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:
1. Lease of Premises. Landlord hereby demises and
subleases to Tenant, and Tenant hereby takes and hires from Landlord, the Premises, for and in consideration of the rents, covenants and agreements, and upon the terms and conditions set forth herein. This Sublease is made subject to all existing
easements, servitudes, licenses and rights of way for canals, ditches, levees, roads, highways, telegraph, telephone and electric power lines, railroads, pipelines and others purposes, whether recorded or not.
2. Investigations and Permitting.
(a) Due Diligence. Tenant shall have One Hundred Twenty
(120) days from the Effective Date (the “First Contingency Period”) to conduct, at Tenant’s sole cost and expense, any reasonable studies, investigations and examinations of the Premises, including, without limitation, verification that the
Premises has access to an interconnection point with PG&E transmission lines and capacity to provide 3 MW, the performance of geotechnical testing and environmental testing (including the performance of Phase I testing and Phase II testing [as
and if applicable]), to determine the suitability of the Premises for Tenant’s intended use, and Landlord will permit Tenant at any time during the Contingency Period to enter upon the Premises to make such inspections and perform such tests. Tenant
shall conduct all such investigations and studies in a manner to cause the least possible interruption to Landlord’s current use of the Premises. If Tenant determines, in its sole and absolute discretion, that the Premises are not suitable for the
Project, Tenant may terminate this Sublease by delivery to Landlord of written notice thereof (a “Termination Notice”) on or before the expiration of the First Contingency Period.
(b) Permits. Tenant shall have until January 31, 2021
(the “Second Contingency Period”) to obtain, at Tenant’s sole cost and expense, any and all necessary permits, licenses and authorizations from any and all applicable governmental authority, including, without limitation, an interconnect
agreement with PG&E, allowing Tenant to construct and operate the Project on the Premises in accordance with the terms and conditions of this Sublease (collectively, the “Permits”). During the First Contingency Period and thereafter if not
already received, Tenant covenants and agrees to apply for and to diligently pursue the issuance of the Permits from all governmental authorities. If the Permits have not issued before the expiration of the Second Contingency Period through no fault
of Tenant, then Tenant may terminate this Sublease by delivery to Landlord of a Termination Notice within one (1) business day of the expiration of the Second Contingency Period.
(c) Waiver. In the event Tenant does not timely deliver
a Termination Notice to Landlord, this Sublease shall automatically continue in full force and effect and Tenant shall be deemed to have waived its right to terminate pursuant to Section 2(a) and 2(b) above. If Tenant does timely deliver a
Termination Notice, this Sublease shall terminate effective as of the date Landlord receives such notice, and neither party hereto shall have any further rights, obligations or liabilities hereunder, provided that any monetary obligations of Tenant
that have accrued prior to such date of termination shall not be affected, nor shall any other provisions which expressly survive the termination of this Sublease be affected in any way. If Tenant elects to terminate this Sublease as provided herein,
Tenant shall repair and restore any areas of the Premises disturbed by such tests and investigations to the same condition, to the greatest extent possible, as existed prior to such tests and investigations, and shall defend, indemnify and hold
Landlord and its agents harmless from any damage, injury, loss, liability, costs, claims, demands, damages, actions, causes of action, and suits arising out of or in any manner related to any actions related thereto by Tenant or its agents,
employees, or contractors with respect to the Premises, except for (i) those damages, injuries, losses, liabilities, costs, claims, demands, damages, actions, causes of action and suits arising in whole or in part from the negligence or willful
misconduct of Landlord or its agents, contractors or employees, for which Landlord shall be liable and/or (ii) any costs incurred by Landlord as a result of Tenant complying with applicable law with respect to any information obtained in its due
diligence of the Premises.
3. Delivery. The “Commencement Date” shall mean
February 1, 2021 or, if earlier, the date that Landlord, upon Tenant’s request, delivers possession of the Premises so Tenant may commence development of the Project. Tenant acknowledges that Landlord is actively farming the Premises and if Tenant
demands delivery of the Premises prior to February 1, 2021, Landlord may have a crop planted thereon. If Landlord has a crop planted on the Premises on the date that Tenant demands delivery of the Premises, Tenant shall reimburse Landlord for all
cultural costs incurred through the date of such delivery.
4. Term.
(a) Initial Term. The initial term of this
Sublease commences on the Commencement Date and will continue, unless sooner terminated in accordance with the provisions of this Sublease, until the last day of the 264th
month thereafter (the “Initial Term”).
(b) Renewal. Provided that Tenant is not in
default of any monetary or material nonmonetary provision of this Sublease, at the conclusion of the Initial Term, this Sublease shall automatically renew for successive one-year terms unless either party shall provide written notice to the other
party of its intent to terminate the Lease at the end of the then current lease year. To be effective, such notice must be received by the other party not less than 180 days prior to the expiration of the then applicable lease year. The Initial Term
and all extensions described in this Paragraph 2(b) are referred as the “Term.”
5. Rent.
(a) Base Rent. Subject to adjustment as herein
provided, Tenant shall pay and deliver to Landlord annual base rent (“Base Rent”) of [***] payable in twelve (12) monthly installments of [***] on or before the Commencement Date and on or before the 1st day of each month thereafter during the Term. If the Commencement Date is other than the first day of a calendar month, such installment of base rent shall be prorated in proportion to the number of
days during the Term that occurs in said first month.
(b) Base Rent Adjustment. On each anniversary
of the Commencement Date (each, an “Adjustment Date”) Base Rent shall increase to an amount determined by multiplying the Base Rent in effect immediately preceding the applicable Adjustment Date by 1 plus the “Escalator”, which shall be
the greater of (a) three percent (3%) or (b) the difference between (i) the first published monthly Consumer Price Index (“CPI”) for the month containing the Adjustment Date and (ii) the CPI for the month which precedes the Adjustment Date by
twelve months, expressed as a percentage. As used herein, CPI shall mean the “United States Bureau of Labor Statistics, Consumer Price Index for All Urban Consumers”, for San Francisco-Oakland-San Jose, CA, All Items (1982-84=100), as such
index may be revised from time to time (or a reasonably comparable index in the event such index is discontinued).”
(c) Additional Rent. Tenant shall also pay
without notice, except as may otherwise be required in this Agreement, and without abatement, deduction or set-off, Additional Rent, including all sums, impositions, costs, expenses and other payments which Tenant assumes or agrees to pay in any of
the provisions of this Agreement with respect to any period during the Lease Term.
(d) Interest and Late Charge. If any
installment of Rent is not paid within five (5) days after the due date, such amount shall bear interest (the “Interest Rate”) at the lesser of ten percent per annum (10%) or maximum rate permitted by law from the date on which said payment
shall be due until the date on which Landlord shall receive said payment regardless of whether or not a notice of default or notice of termination has been given by Landlord. In addition, if the Rent is not paid within five (5) days after the due
date, Tenant shall pay Landlord a late charge of ten percent (10%) of the amount delinquent. Landlord and Tenant recognize that the damage which Landlord shall suffer as a result of Tenant’s failure to pay Rent is difficult to ascertain, said late
charge being the best estimate of the damage which Landlord shall suffer in the event of Tenant’s late payment. The late charge shall be deemed Additional Rent and the right to require it shall be in addition to all of Landlord’s other rights and
remedies hereunder or at law and shall not be construed limiting Landlord’s remedies in any manner. Should Tenant pay said late charge but fail to pay contemporaneously therewith all unpaid amounts of Base Rent and Additional Rent, Landlord’s
acceptance of this late charge shall not constitute a waiver of Tenant’s default with respect to Tenant’s non-payment nor prevent Landlord from exercising all other rights and remedies available to Landlord under this Sublease or under law.
(e) Rent Payments. All payments of Base Rent and
Additional Rent (collectively “Rent”) required to be made to Landlord shall be in lawful money of the United States of America and shall be paid to Landlord at Landlord’s address for notices set forth in Paragraph 16(l) below or at such other
place as Landlord may designate by notice in writing from time to time and may be made by check, draft or electronic transfer payable to the order of Landlord, which must be paid in full when presented. All payments of Rent shall be made without
deduction or setoff and without notice. Subject to recapture in the event of default, as an inducement to Tenant, Landlord agrees that Base Rent for the first 36 months of the Term shall be paid as follows:
Months |
Payment Due |
1 |
[***] |
2 |
Base Rent Waived |
3 |
Base Rent Waived |
4 |
Base Rent Waived |
[***] |
[***] |
[***] |
[***] |
(f) Force Majeure. If, by order of applicable
government authority, Tenant is required to cease operations for any reason beyond the control of Tenant (an “Ordered Shutdown”), then Tenant’s obligation to pay Base Rent shall be delayed for the period of the Ordered Shutdown, but Tenant
shall be required to otherwise fully and timely perform all other obligations under this Sublease, including the payment of all items of Additional Rent. At the expiration of the Ordered Shutdown, Tenant’s obligation to pay Base Rent shall resume and
all Base Rent owed with respect to the period of the Ordered Shutdown shall be amortized and paid in monthly installments over the balance of the then current Term; provided, however, the then current Term shall be extended by the same number of days
as the period of the Ordered Shutdown. For purposes of this Sublease, the foregoing shall be the sole force majeure event excusing the timely payment of Base Rent. No event of force majeure shall excuse the timely payment of Additional Rent or the
timely performance of any other obligation of Tenant hereunder. If the period of the Ordered Shutdown extends beyond 180 calendar days, then Landlord, at its option, may elect to terminate this Sublease by providing written notice of such election to
Tenant. If Landlord provides such notice to Tenant, Tenant’s obligation to repay deferred Base Rent during the period of the Ordered Shutdown shall be extinguished and Tenant shall have 60 calendar days from the date of Landlord’s notice to comply
with the provisions of Section 6(b) below. Notwithstanding the foregoing, Tenant may avoid termination of this Sublease by resuming the payment of Base Rent within 30 calendar days of Landlord’s notice, in which case Tenant shall not be allowed to
defer Base Rent for the remaining duration of the Ordered Shutdown – the Base Rent deferred prior thereto shall nevertheless be amortized and paid over the remaining Term, as provided above.
6. Use of the Premises.
(a) Permitted Uses. Tenant shall use the
Premises solely as a hydrogen generation plant and shall not use or permit the Premises to be used for any other purpose or purposes whatsoever. Tenant shall not do anything or suffer anything to be done in or about the Premises which will in any way
conflict with any law, statute, ordinance or other governmental rule, regulation or requirement now in force or which may hereafter be enacted or promulgated. At its sole cost and expense, Tenant shall promptly comply with all such governmental
measures, that are applicable due to Tenant’s particular use of the Premises or triggered by Tenant’s improvements or alterations on the Premises. Should any standard or regulation now or hereafter be imposed on Landlord or Tenant by a state, federal
or local governmental body charged with the establishment, regulation and enforcement of occupational, health or safety standards for employers, employees, landlords or tenants, then Tenant agrees, at its sole cost and expense, to comply promptly
with such standards or regulations with respect to its use of the Premises. The judgment of any court of competent jurisdiction, regardless of whether Landlord is a party thereto, that Tenant has violated any of said governmental measures, shall be
conclusive of that fact as between Landlord and Tenant. Tenant shall comply with any recorded covenants, conditions, and restrictions now or hereafter affecting the Property and any amendments thereto. At Tenant’s sole expense, Tenant shall procure,
maintain and hold available for Landlord’s inspection any governmental license or permit required for the proper and lawful conduct of Tenant’s business.
(b) Improvements. Tenant may, at its sole cost and
expense, develop its hydrogen generation plant on the Premises without prior written consent of Landlord. All improvements constructed or located upon the Premises by Tenant, including, without limitation, the hydrogen plant and all related
equipment, shall be the sole property of Tenant. Tenant, at its sole cost and expense, shall remove all such improvements and equipment at the termination or earlier expiration of this Sublease and return the Premises to Landlord in the same
condition it was in at the commencement of the Term. Tenant shall be allowed nonexclusive access to and from the Premises and for utilities from Whitesbridge Road along the route identified on Exhibit “A” hereto. Tenant, at its cost and expense,
shall improve such access to such levels as may be required as a condition of permitting Tenant’s use of the Premises, and shall bear all costs of any required off-site improvements. Unless required as a condition of any permits or interconnection
agreements required for Tenant’s use of the Premises, road improvements shall not be removed at the expiration of the Term but shall be abandoned in place and shall thereafter become the property of Landlord.
(c) Utilities. Tenant shall procure and
Landlord shall not be obligated to provide, water, telephone, electric, gas, sewer, and other utility services deemed necessary or convenient for Tenant’s use of the Premises, which shall be in Tenant’s own name and for Tenant’s own account, and
Tenant shall pay or cause to be paid before delinquency all charges, claims, or liens for water, gas, electricity, sewer, telephone service and any other utility services furnished to or for the Premises, or any part thereof, during the Term of this
Sublease, whether or not bills reflecting the same are actually received by Tenant prior to the expiration hereof. Notwithstanding the generality of the foregoing, Landlord will provide up to 4,000 gallons of non-potable water to the Premises for
Tenant’s use at the rate of $0.002 per gallon. In this regard, Landlord shall install a pipeline for such water and terminate same at the property line of the Premises. Landlord shall install, at Tenant’s expense, a meter at said termination point.
Tenant shall reimburse Landlord for such work on demand therefor. Tenant shall be responsible for connecting to said meter and installing such pipelines as may be necessary or convenient for Tenant’s use within the Premises. Under no circumstances
shall the interruption of water service be grounds to terminate this Sublease or to abate Rent.
(d) Permitting and Development. Landlord shall, at no
cost or expense to Landlord, reasonably cooperate with Tenant on project site development activities in support of Tenant’s hydrogen production plant installation, commissioning, operations and maintenance, as well as with Tenant’s permitting,
approvals and PG&E interconnection agreement.
(e) Waste. Tenant shall not commit waste or a nuisance
on the Premises.
(f) Hazardous Materials. Tenant shall not permit
hazardous materials to be stored on the Premises; nor shall Tenant permit hazardous materials to escape onto, under or about the Premises and the groundwater under the Premises. Hazardous materials shall include, but are not limited to, substances
defined as “hazardous substances,” hazardous materials,” or “toxic substances” in The Comprehensive Environmental Response Compensation and Liability Act of 1980, As Amended (42 U.S.C.§§ 9601 et seq); The Hazardous Materials Transportation Act (49
U.S.C. §§ 1801 et seq); The Resource Conservation and Recovery Act (42 U.S.C. §§ 6901 et seq); and those substances defined as “hazardous wastes” in Section 25117 of the California Health and Safety Code, and the regulations adopted in publications
promulgated subject to said laws, and any successor laws as may be promulgated from time to time. Tenant hereby represents that hydrogen is not considered a hazardous material.
(g) Poisons. No poison, herbicide, pesticide,
or other foreign chemical or substance shall be applied to the Premises except in strict compliance with all applicable laws or regulations, and with the instructions contained on the label or furnished by the manufacturer thereof, and with any other
legal requirements. No pesticides that will have a residual effect beyond the Term, and no experimental poisons, herbicides, pesticides, or other foreign chemicals or substances, shall be applied to the Premises, without the prior written consent of
the Landlord. All poisons, herbicides, pesticides, or other foreign chemicals or substances which Tenant may apply to the Premises shall be used and applied at Tenant’s sole cost, risk, and liability, and Tenant does hereby agree to indemnify, hold
and save Landlord free, clear, and harmless of, from, and against any and all claims, demands, damages, or liabilities of whatever kind, character, or nature which in any manner arise out of or result from any use or implication of any of the
aforesaid substances.
(h) Labor and Materials. Tenant, at its own
risk and expense, shall provide and promptly pay for all labor, equipment, tools, feed, fuel, electrical energy and demand charges, and other materials and services of whatever kind or nature that may be used for the operation of its plant on the
Premises and with respect to any building or other improvement on the Premises and the performance of Tenant’s other obligations under this Sublease, and Landlord shall not be liable for any part thereof. Tenant shall keep the Premises free from any
liens arising out of any work performed, material furnished, or obligations incurred by Tenant.
7. Taxes. Tenant shall pay before delinquency all
Taxes. “Taxes” shall mean all real estate taxes, and other general and special assessments of every kind against the Premises, including, but not limited to, assessments for public and other improvements and general and special state, county
and city taxes, all water district assessments and all charges attributable to the supply of water to the Premises which at any time or times during the term of this Sublease, or at any time or times thereafter but with respect to a period or periods
or event or events occurring in whole or in part during the Lease term, may or shall become a lien on or be assessed, levied, confirmed, imposed upon or become due or payable on or with respect to the Premises. Tenant shall also pay before
delinquency all taxes, assessments, excises, levies, license and permit fees and other governmental charges and costs of every kind and nature whatsoever assessed against or imposed upon the personal property of Tenant. The term “Taxes” does
not include federal, state or local income or franchise taxes or transfer taxes assessed against Landlord. If Tenant fails to pay any such amount before delinquency, then Landlord may pay such amount, and, in such event, Tenant shall immediately
reimburse Landlord for such payment, including any penalty, interest, or other additional costs arising out of Tenant’s delinquency in payment as Additional Rent hereunder. Because the Premises are not a separate tax parcel from the Property, the
Taxes assessed on the land shall be apportioned among Landlord and Tenant based on the acreage of the Premises as a proportion of the acreage of the Property. Taxes on all improvements, fixtures, and personal property shall be paid by Tenant.
8. Repairs and Maintenance. Tenant acknowledges
that the Premises are currently unimproved farmland and that any buildings or other improvements installed thereon by Tenant, will be Tenant’s property. Therefore, Tenant, at its own cost and expense, shall keep and maintain the Premises and every
part thereof in reasonably good, orderly, clean, safe and sanitary repair and condition, and shall perform all commercially reasonable repairs and replacements necessary to accomplish the same, whether foreseen or unforeseen, structural or
non-structural. Tenant shall be responsible at its sole cost and expense, to maintain, repair and replace as necessary, all portions of the Premises and all buildings and improvements thereon including, but not limited to, the interior and exterior
walls, ceilings, and roof of such buildings, all systems and equipment, heating, ventilating and air conditioning, electrical and plumbing systems serving the Premises, in good order, condition and repair. If any portion of the Premises, or any
system or equipment in the Premises or serving the Premises that Tenant shall be obligated to repair cannot be fully repaired or restored, Tenant shall replace such portion of the Premises, or system or equipment. Landlord shall have the right, but
not the obligation, upon written notice to Tenant, to undertake the responsibility for maintenance of the aforementioned equipment and systems at Tenant’s expense. Tenant shall fulfill all of Tenant’s obligations under this paragraph at Tenant’s sole
cost and expense. Landlord shall have no obligation to make any repairs, replacements, restorations, alterations, additions or improvements whatsoever on, to, under or about the Premises or any part thereof, or to restore the same or any part of the
same in the event of its loss, destruction or damage, except as otherwise provided herein. Tenant hereby waives any right it may have to make repairs at the expense of Landlord, or to abate rent, which may be provided for by any applicable present or
future law, and any right to terminate this Agreement for failure to repair any damage or for destruction of the Premises, or any portion thereof, including, without limitation, the provisions of California Civil Code §§ 1931, 1932, 1933, 1941 and
1942.
9. Damage and Destruction. Landlord shall have
no any obligation whatsoever to repair, replace, restore, rebuild or alter, or to pay any of the costs or expenses of any damage or destruction to the Premise or to any improvements or equipment now or hereafter situated thereon, unless such casualty
is the result of Landlord’s gross negligence or willful misconduct, and then only to the extent Tenant was carrying the insurance required hereunder and the resulting casualty insurance proceeds are insufficient to pay for the necessary repairs, in
which case Landlord shall pay the difference between the cost of such repairs and the insurance proceeds. This Sublease shall not terminate by reason of any such damage or destruction nor shall Rent be abated during any period when, by reason of such
damage or destruction, there is substantial interference with Tenant’s use of the Premises. Tenant waives all rights to terminate this Sublease pursuant to rights otherwise presently or hereafter accorded by law to tenants, including, but not limited
to, California Civil Code Sections 1932(2) and 1933(4) or any successor laws of similar nature.
10. Liens. Tenant shall keep all of the Property
free and clear of any and all mechanics’, materialman’s and other liens for or arising out of or in connection with work or labor done, services performed or materials or appliances used or furnished for or in connection with any operations of
Tenant, its agents, subsidiaries or assigns, or any alteration, improvements or repairs or additions which Tenant may make or permit or cause to be made or any work or construction by, for or permitted by Tenant on or about the Premises, or any
obligations of any kind incurred by Tenant. At all times, Tenant shall promptly and fully pay and discharge any and all obligations and all claims on which such lien may or could be based and shall indemnify, defend and hold Landlord, its successors
and assigns and all of the Property harmless from and against any and all such liens, claims or suits pertaining thereto. In the event Tenant desires to contest the amount of such liens or claims, Tenant may do so, so long as such contest does not
present imminent danger of foreclosure of the Property. If at any time the Property or any part thereof shall then be subject to forfeiture, or if Landlord shall be subject to any liability arising out of the nonpayment of any such liens or claims,
Tenant shall, notwithstanding any pending contest or review, either pay such liens or claims or post such bonds as may be required to prevent such forfeiture or liability, at least thirty (30) days prior to such forfeiture. If Tenant fails to do so,
Landlord, in its discretion, may immediately take all action necessary to release and remove such lien, without any duty to investigate the validity thereof, and all sums, costs and expenses, including reasonable attorneys’ fees and costs, actually
incurred by Landlord in connection with such lien shall be deemed additional rent under this Sublease and shall be due and payable by Tenant within fifteen (15) days following written demand from Landlord (which demand shall include reasonable
supporting documentation substantiating the cost of the same).
11. Indemnity. Tenant shall indemnify, protect,
defend and save and hold Landlord and Landlord’s trustees, officers, employees and agents harmless from and against any and all losses, costs, liabilities, claims, judgments, liens, damages (including consequential damages) and expenses, including,
without limitation, reasonable attorneys’ fees and costs, and reasonable investigation costs, incurred in connection with or arising from: (a) any default by Tenant in the observance or performance of any of the terms, covenants or conditions of this
Sublease, (b) any personal injury or physical damage to property occurring on the Premises during the Term, (c) the use or occupancy or manner of use or occupancy of the Premises by Tenant, (d) any occurrence on the Premises during the Term arising
from any cause whatsoever, except to the extent caused by the gross negligence or willful misconduct of Landlord, and (e) any acts or omissions or negligence of Tenant or of Tenant’s agents or contractors in, on or about the Property. In case any
action or proceeding be brought, made or initiated against Landlord relating to any matter covered by Tenant’s indemnification obligations under this section, Tenant, upon notice from Landlord, shall at its sole cost and expense, resist or defend
such claim, action or proceeding by counsel approved by Landlord. Tenant’s obligations under this section shall survive the expiration or earlier termination of this Sublease.
12. Insurance. Tenant shall carry the following
types and minimum coverages of insurance with insurance companies acceptable to Landlord:
(a) Workers’ Compensation Insurance, in compliance
with the laws of the State of California; Employers’ Liability Insurance with a limit of not less than $1,000,000.00; and where applicable, insurance in compliance with any other statutory obligations pertaining to the compensation of injured
employees.
(b) Comprehensive General Liability Insurance with
respect to Tenant’s use and occupancy of the Premises and all operations incidental thereto, with a minimum combined single limit liability of not less than $5,000,000.00. Landlord shall be named as an additional insured under Tenant’s Comprehensive
General Liability Insurance.
(c) Automobile Liability Insurance on all owned,
non-owned, hired, or leased automotive equipment used in connection with Tenant’s operations in amounts not less than $1,000,000.00 single limit liability.
All policies of insurance required of Tenant shall be issued by insurance companies
with general policyholders’ rating of not less than A, as rated in the most current available “Best’s Insurance Reports,” and not prohibited from doing business in the State of California, and shall, with the exception of Workers Compensation
Insurance, include as additional insureds Landlord, its trustees, officers, agents, students, employees, representatives, volunteers, and such other persons or entities as Landlord specifies from time to time. Such policies, with the exception of
Worker’s Compensation Insurance, shall be for the mutual and joint benefit and protection of Landlord, Tenant and others specified by Landlord. Executed copies of Tenant’s policies of insurance or certificates thereof shall be delivered to Landlord
within ten (10) days prior to the delivery of possession of the Property to Tenant and thereafter within thirty (30) days prior to the expiration of the term of each such policy. All commercial general liability and property damage policies shall
contain a provision that Landlord and any other additional insured, although named as additional insureds, shall nevertheless be entitled to recover under said policies for a covered loss occasioned by it, its servants, agents and employees, by
reason of Tenant’s negligence. As often as any policy shall expire or terminate, renewal or additional policies shall be procured and maintained by Tenant in like manner and to like extent. All such policies of insurance shall provide that the
company writing said policy will give to Landlord thirty (30) days’ notice in writing in advance of any cancellation or lapse or of the effective date of any reduction in the amounts of insurance. All commercial general liability, property damage and
other casualty policies shall be written on an occurrence basis. Landlord’s coverage, if any, shall not be contributory. No policy shall have a deductible in excess of $10,000 for any one occurrence.
13. Remedies of Landlord on Default of Tenant.
Should Tenant default in the payment of any rent, or in the due observance or performance of any of Tenant’s covenants or agreements herein, and should such default continue after ten (10) days from the receipt of written notice thereof from Landlord
to Tenant requiring payment, in the case of default in the payment of rent, or after thirty (30) days from the receipt of written notice thereof by Landlord to Tenant requiring performance in the case of such other defaults, Landlord may, at
Landlord’s sole election, terminate this Sublease, and re-enter and take possession of the Premises in the manner then provided by the unlawful detainer laws of the State of California. Tenant shall have the right to cure any default within the
period of notice thereof as specified hereinabove, and if the default, other than in the matter of payment of rent, is of such a nature that it cannot be cured within the thirty (30) day period specified in the notice thereof, it shall be sufficient
if Tenant shall in good faith commence during said period to cure such defect if so accomplished within a reasonable time thereafter. Landlord shall also be entitled to exercise each and every right and remedy available at law or in equity, and the
exercise of any such right or remedy shall not be deemed a waiver of any other right or remedy. Any agreement by Landlord for free or abated rent or other charges applicable to the Premises, or for the giving or paying by Landlord to or for Tenant of
any leasehold improvements, cash or other bonus, inducement or consideration for Tenant’s entering into this Lease, and brokerage commissions, all of which concessions are hereinafter referred to as “Inducement Provisions,” shall be deemed
conditioned upon Tenant’s full and faithful performance of all of the terms, covenants and conditions of this Lease to be performed or observed by Tenant during the Term hereof as the same may be extended. Upon the occurrence of an event of default,
any such Inducement Provision shall automatically be deemed deleted from this Lease and of no further force or effect, and any Rent, other charge, bonus, inducement or consideration theretofore abated, given or paid by Landlord under such an
Inducement Provision and the unamortized portion of any leasehold improvement costs or brokerage commissions paid (or to be paid) by Landlord shall be immediately due and payable by Tenant to Landlord, and recoverable by Landlord as Additional Rent
due under this Lease, notwithstanding any subsequent cure of said Event of Default by Tenant. The acceptance by Landlord of Rent or the cure of the Event of Default which initiated the operation of this paragraph shall not be deemed a waiver by
Landlord of the provisions of this paragraph unless specifically so stated in writing by Landlord at the time of such acceptance. Amortization of such tenant improvement costs and/or brokerage commissions shall be based on the Initial Term only.
14. Waiver. The waiver by Landlord of a breach of
any term, covenant, or condition contained in this Sublease shall not be treated as a continuing waiver of such term, covenant, or condition, or as a waiver of a future breach of the same or any other term, covenant, or condition contained in this
Sublease. The acceptance of rent by Landlord shall not be treated as a waiver of a previous breach by Tenant of any term, covenant, or condition of this Sublease, other than the failure of Tenant to pay the particular rental so accepted, regardless
of Landlord’s knowledge of a previous breach at the time of acceptance of rent.
15. Quiet Enjoyment. Landlord hereby covenants
and agrees that if Tenant pays the rental as herein provided and faithfully performs the terms and conditions on Tenant’s part to be kept, observed and performed, Tenant shall have the peaceful enjoyment of the Premises during the term hereof,
without hindrance or interference from Landlord.
16. Assignment or Subletting. Tenant shall have
no right to assign or sublease all or any portion of the Premises or Tenant’s rights under this Sublease without the prior written consent of Landlord, and any such assignment or subleasing without such written consent of Landlord shall be void. The
foregoing notwithstanding, Tenant may assign this Sublease to a wholly-owned subsidiary of Tenant, with proper written advice to Landlord, but such assignment shall not release Tenant from liability hereunder. Landlord shall have the right transfer
its interest in the Premises, or any portion thereof, or any of Landlord’s rights under this Sublease, with or without consideration, at any time without Tenant’s consent or approval; provided, however, that any such transfer (a) will not affect
Tenant’s rights under the Lease; and (b) will not be to a direct competitor of Tenant without Tenant’s written approval.
17. Holding Over. Should Tenant or any assignee
or sublessee of Tenant hold over within the Premises or any part thereof after the expiration of the Term, then, unless otherwise agreed in writing, such holdover shall constitute and be construed as a tenancy from month-to-month only and Base Rent
shall be one hundred fifty percent (150%) of the Base Rent payable for the month preceding expiration or earlier termination of this Sublease, but otherwise upon the same terms and conditions of this Sublease.
18. Miscellaneous
Provisions.
(a) Governing Law. This Sublease shall be
governed by and construed in accordance with the laws of the State of California.
(b) No Partnership. Nothing contained in this
Sublease shall create a partnership, joint venture or employment relationship between Landlord and Tenant. Neither Landlord nor Tenant shall be liable, except as otherwise provided for in this Sublease, for any obligations or liabilities incurred by
the other.
(c) Entire Agreement. This Sublease sets forth
the entire agreement between Landlord and Tenant respecting the Property, and the leasing of the Premises to Tenant. Any agreements or representations respecting the Property or the Premises, the leasing by Landlord to Tenant of the Premises or any
other matter discussed in this Sublease not expressly set forth in this instrument are null and void. Any amendments, extensions or renewals of this Sublease shall be effective only when set forth in writing and executed by the parties hereto.
(d) Surrender of Premises. Except as provided
in Paragraph 4(b) above, at the expiration of the Term of this Sublease or any prior termination thereof, Tenant agrees to surrender possession of the Premises to Landlord in as good condition as Tenant shall have received it, reasonable wear and
tear excepted, and with the land in a neat and clean condition.
(e) Indemnification. To the maximum extent
permitted by law, Tenant shall at all times during the Term indemnify, save and hold Landlord harmless from all damages, injuries or claims arising in or about the Property or in connection with the conduct by Tenant of any activities thereon, except
to the extent such damages, injuries or claims are due to Landlord’s fraud, willful injury by Landlord to the person or property of another, or Landlord’s willful or negligent violation of law. In no event shall Landlord be liable to Tenant for any
consequential, special or punitive damages suffered by Tenant as a result of a default by, or any other act of, Landlord.
(f) Entry and Inspection. Landlord shall have
the right to enter the Premises at all reasonable times during the Lease Term, either in person or by nominee, for the purpose of exercising his rights hereunder and for the purposes of inspecting the Premises, posting notices of non-responsibility,
and ascertaining that the promises and covenants of Tenant herein contained are being kept, observed and performed. Except in emergencies, Landlord shall provide Tenant with reasonable notice of Landlord’s proposed entry upon the Premises. The
foregoing notwithstanding, Landlord’s entry shall not jeopardize or interfere with normal and safe operation of the hydrogen plant.
(g) Attorneys’ Fees. If either party commences
any action or proceeding against the other for the specific performance of this Sublease, for damages for the breach hereof or otherwise for enforcement of any remedy hereunder, the parties hereto agree to and hereby do waive any right to a trial by
jury and, in the event of any such commencement of any action or proceeding, the prevailing party shall be entitled to recover from the other party such costs and reasonable attorneys’ fees as may have been incurred, including, without limitation,
any such fees, costs or disbursements incurred on any appeal from such action or proceeding.
(h) Multiple Counterparts. This Sublease may be
executed in any number of counterparts (whether facsimile, portable data format (PDF) or original), each of which shall be deemed to be an original as against any party whose signature appears thereon, and all of which shall together constitute one
and the same instrument.
(i) Submission of Lease. Submission of this
instrument for examination or signature by Tenant does not constitute a reservation of or an option for lease, and it is not effective as a lease or otherwise until execution and delivery by both Landlord and Tenant.
(j) Brokers. Landlord and Tenant hereby
warrant to each other that they have had no dealings with any real estate broker or agent in connection with the negotiation of this Sublease, and that they know of no other real estate broker or agent who is entitled to a commission in connection
with this Sublease. Each party agrees to indemnify and defend the other party against and hold the other party harmless from any and all claims, demands, losses, liabilities, lawsuits, judgments, and costs and expenses (including without limitation
reasonable attorneys’ fees) with respect to any leasing commission or equivalent compensation alleged to be owing on account of any dealings with any real estate broker or agent, occurring by, through, or under the indemnifying party.
(k) Independent Covenants. This Sublease shall
be construed as though the covenants herein between Landlord and Tenant are independent and not dependent and Tenant hereby expressly waives the benefit of any statute to the contrary.
(l) Notices. Any notice or demand to be given
to Landlord or Tenant pursuant to the terms of this Sublease, or by law, shall be deemed to be fully given or made when written and sent by registered mail, return receipt requested, postage prepaid, and addressed to Landlord or Tenant at the address
set forth below:
To Landlord |
Bar 20 Dairy, LLC
[***]
|
To Tenant |
H2B2 USA, LLC
[***]
|
Either party may change its address for purposes of this section by giving notice to the other party in
the manner provided in this section.
(m) Titles of Paragraphs. The titles of the
Paragraphs of this Sublease are for the convenience of the reader only and no presumption or implication of the intent of the parties as to the construction of this Sublease shall be drawn therefrom.
(n) Time and Benefit. Time is hereby expressly
declared to be of the essence of this Sublease and of each and every provision hereof, and each such provision is hereby made and declared to be a material, necessary and essential part of this Sublease. This Sublease shall be binding upon and inure
to the benefit of the heirs, executors, administrators, trustees, successors and assigns of the parties hereto.
[Signatures commence on the following page.]
IN WITNESS WHEREOF, Landlord and Tenant have made and executed this
Sublease Agreement effective on the date first above written.
LANDLORD |
|
TENANT |
|
|
|
BAR 20 DAIRY, LLC, a California limited liability company
|
|
H2B2 USA, LLC, a California limited liability company
|
|
|
|
By: |
/s/ John L. Shehadey |
|
By: |
/s/ James M. Corboy |
|
John L. Shehadey, Manager |
|
|
James M. Corboy, CEO |
|
|
|
By: |
/s/ Richard A. Shehadey |
|
|
|
Richard A. Shehadey, Manager |
|
|
CONSENT
The undersigned hereby consents to the sublease of those portions of the
leased premises as are situated upon the property leased to BAR 20 DAIRY, LLC pursuant to that certain Farm Lease dated November 1, 2008, as amended January 1, 2012.
OWNER |
|
|
|
|
BAR 20 NO. 4, L.P., a California limited partnership
|
|
|
By: |
/s/ John L. Shehadey |
|
|
John L. Shehadey, Trustee of the John L. Shehadey Living Trust dated January 14, 2005, General Partner |
|
|
|
|
By: |
/s/ Richard A. Shehadey |
|
Richard A. Shehadey, Trustee of the Richard A. Shehadey Living Trust
dated May 9, 2002, General Partner
|
CERTAIN IDENTIFIED SCHEDULES HAVE BEEN EXCLUDED FROM THE EXHIBIT PURSUANT TO REGULATION S-K, ITEM 601(A)(5) BECAUSE THEY DO NOT CONTAIN INFORMATION MATERIAL TO AN
INVESTMENT OR VOTING DECISION AND THAT INFORMATION IS NOT OTHERWISE DISCLOSED IN THE EXHIBIT OR THE DISCLOSURE DOCUMENT
Exhibit “A”
Depiction of the Premises
[Omitted.]
Exhibit 10.24
CERTAIN INFORMATION HAS BEEN OMITTED FROM THIS EXHIBIT PURSUANT TO REGULATION S-K, ITEM 601(B)(10) BECAUSE IT IS
BOTH NOT MATERIAL AND WOULD LIKELY CAUSE COMPETITIVE HARM TO THE REGISTRANT IF PUBLICLY DISCLOSED.
IN ADDITION, CERTAIN PERSONALLY IDENTIFIABLE INFORMATION HAS BEEN OMITTED
FROM THIS EXHIBIT PURSUANT TO ITEM 601(A)(6) OF REGULATION S-K.
[***] INDICATES THAT INFORMATION HAS BEEN REDACTED
SOLAR ENERGY SYSTEM SUBLEASE
THIS SOLAR ENERGY SYSTEM SUBLEASE (this “Agreement”) is dated as of June 23,2022
(the “Effective Date”), and made by and among BAR 20 DAIRY, LLC, a California limited liability company (“Landlord”), and H282 USA, LLC, a California limited liability company, or its designee ( ‘Tenant ). Each of
Landlord and Tenant is sometimes referred to as a “Party” and collectively as the “Parties.”
RECITALS
|
A. |
Landlord leases approximately 320 acres of land adjacent to its main dairy facility for use in connection with its dairy, which leased land is
situated in the County of Fresno, State of California commonly identified as Fresno County Assessor Parcel Number 015-100-20s (the “Property”). |
|
B. |
Tenant proposes to develop, build own and operate a Solar System (the “Project”) to generate energy for use at its hydrogen
generation plant, which is or will be located on approximately 1.5 acres of the Property that Tenant currently subleases from Landlord. |
|
C. |
Tenant desires to lease 40 acre, of the Property, on which it will devel0p, construct, operate, maintain, repair, and use the Project, the
location of Which is depicted on Exhibit “A” hereto (the “Premises”). |
NOW, THEREFORE, in consideration of these promises and for other g0od and
valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Landlord and Tenant agree as follows:
AGREEMENT
|
1. |
Lease. Landlord does hereby grant to Tenant, and Tenant doe hereby accept, a lease for exclusive use oy Tenant of the Premises (the “Lease”),
on the terms and conditions hereinafter set forth. |
|
(a) |
Initial Term. The initial period of this Agreement shall commence on the Effective Date and shall continue for twenty (20) years,
unless sooner terminated in accordance with the provisions hereof (“Initial Term’). Each one (1) year period commencing on the Effective Date and on each anniversary of the Effective Date during the Term shall be referred to herein as
a “Lease Year”. |
|
(b) |
Options to Extend Term. Provided that Tenant is not in default of any monetary or material non-monetary provision of this Agreement
beyond any applicable notice and cure periods, Tenant will have two (2) options to extend for five (5) years each and one (1) additional option to extend for three (3) years and eleven (11) months (each an “Extension Term”). To
be effective Tenant must provide notice to Landlord of its election to exercise an Extension Term not less than 180 days prior to the expiration of the then applicable Lease Year. The Initial Term and all exercised Extension Terms described in
this Paragraph 2(6) are referred as the “Term.” |
|
(c) |
Operations Date. As used herein, “Operations Date” means the first of the following to occur: (i) the date of commencement of
Operations as measured by the date the Project is interconnected to the electric utility grid at its fully rated capacity and transmits energy to the grid for commercial sale (not including test energy), or (ii) the date that is three (3) year
anniversary of the Effective Date. |
|
(d) |
Early Termination. In any Case, Tenant will be entitled to freely, and without any specific cause, terminate this Agreement before the
Operations Date. Should that happen, Tenant will pay to Landlord, on the termination date, the whole Base Rent calculated from the Effective Date until the termination date plus one full year of Rent. This termination will be communicated to
Landlord according to the terms of this Agreement and in any case with a prior notice of 30 calendar days. |
|
3. |
Use of Premises by Tenant. |
|
(a) |
Permitted Uses. The Lease is for use of the Premises for the location and operations of solar energy collection, conversion, generation
and transmission of electric power and all related and incidental purposes, activities, and related facilities thereon (“Solar Operations” or “Operations”), in accordance with all of the terms of this Agreement, with Tenant
deriving all profit therefrom, and including, without limitation: |
|
(i) |
conducting studies of solar radiation, solar energy, soils, and other meteorological and geotechnical data; |
|
(ii) |
constructing reconstructing, erecting, installing improving, replacing, relocating and removing from time to time and maintaining, using
monitoring and operating, existing; additional r new (i) individual units or arrays of solar energy collection cells panel, mirrors, lenses and related facilities necessary to harness the solar resource for photovoltaic electric energy
generation, including without limitation, existing and/or future technologies used or useful in connection-with photovoltaic energy conversion and generation of electricity from the solar resource, and associated support structure braces,
wiring, plumbing, and related equipment (“Solar Energy Facilities”) (ii) electrical transmission and distribution facilities including without limitation overhead and underground transmission, distribution or collector lines, circuit
breakers, meters, conduit, footings, towers, poles, cross-arms, guy lines anchors, cabling and wires, (iii) overhead and underground control, communications and radio relay Systems (iv) interconnection and/or switching facilities and electric
transformers and transformer pads, (v) energy storage facilities, (vi) meteorological towers and solar energy measurement equipment (vii) control buildings, control boxes and computer monitoring hardware (viii) utility installation (ix) safety
protection facilities (x) maintenance yards (xi) roads and erosion control facilities, (xii) signs and fences, and (xiii) other improvements fixtures, facilities, machinery and equipment associated or connected with the generation conversion,
storage, switching, metering, step-up, step-down, transmission, distribution, conducting wheeling, sale or other use or conveyance of electricity generated on the Premises or on adjacent property (all of the foregoing, including the Solar
Energy Facilities and the Tran mission Facilities, collectively a “Solar Energy System” or “Improvements”); |
|
(iii) |
removing, trimming, pruning, topping or otherwise controlling the growth of any tree, shrub, plant or other vegetation; dismantling,
demolishing, and removing any improvement structure, embankment, impediment, berm, wall, fence or other object on or that intrudes (or upon maturity could intrude) into the Premises or is located on the Property within one hundred (100) feet of
the boundary of the Premises that could obstruct, interfere with or impair the Solar energy System or the use of the Premises intended by Tenant hereunder; and excavating, grading, leveling and otherwise modifying the land; and undertaking any
other lawful activities, whether accomplished by Tenant or a third party authorized by Tenant, that are necessary, helpful, appropriate or convenient in connection with incidental to or to accomplish any of the foregoing purposes, together with
such uses as may be permitted by law. |
|
(b) |
Additional Uses. The Parties acknowledge and agree to the following |
|
(i) |
Solar Energy technologies are improving at rapid rate and that it is probable that Tenant may (although Tenant shall not be required to)
replace from time-to-time existing Solar Energy Facilities Transmission Facilities on the Premises, entirely or in part, with newer model or design Solar Energy Facilities or Transmission Facilities in Tenants sole discretion. |
|
(ii) |
The Lease includes a grant of the right of ingress to and egress from the Solar Energy Facilities over under, and along the Premises by means
of any existing roads and lanes thereon, and by such other route or routes as Tenant may construct on the Premises from time to time, for the benefit of and for purposes incidental to Operations on the Premises and to the Improvements. |
|
(iii) |
Except as specifically provided in this Section 3(b)(iii), the Lease excludes the grant to Tenant of any surface or subsurface water rights
pertaining to the Premises. Landlord shall retain all water rights, and the right to the use of any wells, if any, located on or in connection with the Premises (“Water Rights”). Notwithstanding Landlord’s reservation of Water Rights,
Tenant shall have the right to use any such Water Rights practically and legally available at or upon the Premises for purposes of construction of the Project at the outset (in a quantity not to exceed l acre-feet), and for operation of the
Operations going forward as may be required by Tenant and/or for the Project, provided that, such use shall be limited to construction, cleaning operation and maintenance purposes for the Project and/or the Operations and be limited to 1
acre-foot per year. The Parties will act in good faith to quantify and accommodate Tenant’s water requirements from Landlord’s water supply in accordance herewith; and Tenant shall pay to Landlord the greater of the fair market value for any
water used by Tenant based upon similar sales of similar water in the immediate vicinity of the Property or any published indices or other public information with respect to same or Landlord’s actual cost thereof, all based on an “out the
meter” price. Landlord shall be responsible for the payment of the annual water availability fee to the local water or irrigation district or any other governmental authority for the maintenance and any costs associated with the water delivery
systems on the Premises, and for compliance with all applicable laws rules and regulations applicable or pertaining to the Water Rights. Notwithstanding anything in this section to the contrary, Landlord assumes no responsibility for and does
not warrant the availability quality, quantity, or cost of water supplied to the Premises. Landlord shall not be liable for any injury or damage sustained by Tenant, or by others acting under it on account of the unavailability of water to the
Premises, the seepage of water into or overflow of water upon the Premises from neighboring lands any canal, ditch, stream or other watercourse or reservoir, or from any other source whether caused in whole or in pa11 by irrigation by the
construction, maintenance, operation or failure of canals, dams, embankments, levees, spillways or other irrigation water storage or flood control works, or in any other manner. |
|
(c) |
Control of Operations. The manner of operation of the Improvements, including, but not limited to, decisions on when to
conduct maintenance, is within the sole discretion of Tenant. Notwithstanding the foregoing, Tenant at all times and at its sole cost and expense shall ensure that the Premises and the Improvements are maintained and operated in accordance with
prudent industry practices in place from time to time and in compliance with applicable law governmental authorities insurance underwriters, mortgages, deeds of trust, and covenants, conditions, and restrictions pertaining to the Premises and
the Improvements. |
|
(d) |
Compliance with Law. Tenant may be responsible for obtaining at its sole cost and expense from any governmental agency or any other
person or entity any environmental impact review perm.it entitlement, approval at1thorization or other rights that are necessary in connection with the Project or the Operations; and Landlord shall upon Tenant’s request execute, and, if
appropriate cause to be acknowledged and recorded any application, document or instrument (including any variance, encroachment agreement or setback waiver) that is reasonably requested by Tenant in connection therewith.. Such documents shall
be in the form required by state or local government(s). Landlord shall cooperate with Tenant as necessary to obtain any governmental approvals related to use of Premises and/or the Easement Area, as applicable, at no cost or expense Landlord.
Tenant shall pay for Landlord and hold Landlord harmless from all reasonable out-of-pocket expenses actually incurred by Landlord in connection with such cooperation within ten (10) days after Tenant’s receipt of a request for such payment. |
|
(e) |
Waste. Tenant shall not commit waste or a nuisance on the Premises. |
|
(f) |
Labor and Materials. Tenant, at its own risk and expense, shall provide and promptly pay for all labor equipment, tools feed fuel,
electrical energy a:nd demand charges, and other materials and services of whatever kind or nature that may be used for the Operations, the Project, or otherwise on the Premises, including, without limitation, the cost to purchase and install
the Improvements (and all components thereof) and the performance of Tenant’s other obligations under this Lease, and Landlord shall not be liable for any part thereof. |
|
(g) |
Hazardous Materials. Tenant shall not permit hazardous materials to be stored on the Premises; nor shall Tenant permit hazardous
materials to escape onto under or about the Property and the groundwater under the Property. Hazardous materials shall include, but are not limited to, substances defined as “hazardous substances,” hazardous materials ‘or ‘toxic substances” in
The Comprehensive Environmental Response Compensation and Liability Act of 1980, As Amended (42 U.S.C.§§ 9601 et seq); The Hazardous Materials Transportation Act (49 U.S.C. §§ 1801 et seq); The Resource Conservation and Recovery Act (42 U.S.C.
§§ 6901 et seq); and those substances defined as “hazardous wastes” in Section 25117 of the California Health and Safety Code, and the regulations adopted in publications promulgated subject to said laws and any successor laws as may be
promulgated from time to time. Tenant shall not violate, and shall indemnify Landlord against any claims, costs, damages, fees or penalties arising from a violation by Tenant or Tenant’s Agents of, any federal, state or local law, ordinance,
order, or regulation relating to the generation, manufacture, production, use, storage, release or threatened release, discharge, disposal, transportation or presence of any hazardous substance on or under the Premises. |
|
(h) |
Poisons. No poison, herbicide, pesticide, or other foreign chemical or substance, other than those approved by the United States
Department of Agriculture and by the California Department of Agriculture shall be applied to the Premises. Any and all such materials and substances shall be applied in strict compliance with any applicable laws or regulations, and with the
instructions contained on the label or furnished by the manufacturer thereof, and with any other legal requirements. No pesticides that will have a significant residual effect beyond the Term, and no experimental poisons, herbicides,
pesticides, or other foreign chemicals or substances, shall be applied to the Premises, without the prior written consent of the Landlord. All poisons, herbicides, pesticides, or other foreign chemicals or substances which Tenant may apply to
the Premises shall be used and applied at Tenant’s sole cost risk and liability and Tenant does hereby agree to indemnify hold and save Landlord free clear, and harmless of, from, and again t any and all claims, demands, damages, or Liabilities
of whatever kind, character, or nature which in any manner arise out of or result from any use or implication of any of the aforesaid substances. |
|
4. |
Ownership of the Improvements. Title to the improvements has been and is reserved to Tenant and remains the sole property of Tenant.
Tenant may add or remove all or any portion of the Improvements at any time during the Term irrespective of the manner or method of attachment of the same to the Premises and/, provided same is accomplished in accordance with
Applicable Laws. Landlord shall have no ownership or other interest in any component of the Improvements or any environmental attributes produced therefrom, including, without limitation, any and all credits (including tax credits, carbon
credits, renewable energy credits), rebates incentives benefits, emissions reductions, entitlements, offsets and allowances of any kind howsoever entitles, attributable to the Improvements or the electric energy capacity or other
generator-based product ,produced therefrom, whether in effect as of the Effective Date or as may come into effect in the future (collectively, “Environmental Attributes”). For the avoidance of doubt Tenant’s right to benefit from any
such tax credit, existing or in the future, shall always be superior to Landlord’s. |
|
5. |
Option to Lease the Expansion Area. Landlord grants to Tenant an option (the “Option”), which may be exercised at any time
during the Option Term to lease the Expansion Area for the purpose of expanding the Project. If exercised, the Expansion Area shall be added to and become part of the Premises. Tenant may exercise the Option on the entire Expansion Area or on
one-half (20 acres) of the Expansion Area. If Tenant elects to only exercise the Option as to one-half (20 acres) of the Expansion Area then the Option will remain in full force and effect for the other one-half (20 acres) of the Expansion Area
for the remainder the Option Term and Tenant may exercise the Option on the remaining Expansion Area at any time during the remainder of the Option Term. |
|
(a) |
Exercise of Option. Tenant may exercise the Option by delivering to Landlord written notice of exercise of the Option in the form set
forth in Exhibit “C” hereto (“Notice of Exercise’) which may be delivered at any time during the Option Term. Such Notice of Exercise shall include (a) the date when the Expansion Area shall be added to the Premises, which shall be no
later than sixty (60) days following the date of the Notice of Exercise. If applicable, the Notice of Exercise will describe the 20 acres of the Expansion Area for which Tenant is exercising the Option. |
|
(b) |
Lapse of Option. If Tenant does not deliver a Notice of Exercise to Landlord during the Option Term then Tenant shall have no right to
add the Expansion Area, or the remainder of the Expansion Area as applicable, to the Premises. |
|
(c) |
Term. The Option Term commences on the Effective-Date and will expire on the first to occur of the (i) termination of this Agreement or
(ii) five.(5) years after the Effective Date (“Option Term”). |
|
(d) |
Landlord Use During Option Term. Landlord shall have the right to farm the Expansion Area during the Option Term prior to its receipt
of the Notice of Exercise and retain any income derived therefrom. Tenant shall be responsible for any damage to, or destruction of, Landlord’s crops or equipment directly caused by Tenant’s activities on the Premises or Expansion Area during
the Option Term. If the Option is exercised, Tenant shall either (i) allow Landlord to harvest the crops growing thereon on the Expansion Area, or (ii) reimburse Landlord for all actual costs incurred with respect to such crops through the date
the Option is exercised, in which case Tenant shall be entitled to dispose of the crops without further liability to Landlord therefor. If the Option is exercised more than 60-calendar days before harvest is anticipated, the decision to allow
Landlord to harvest its crops or reimburse actual costs shall rest with Tenant. But if the Option is exercised within 60-calendar days of the anticipated harvest, then the decision shall rest with Landlord. Notwithstanding the foregoing,
Landlord shall not plant any vineyards or orchards on the Expansion Area during the Option Term. If the party entitled to make such decision elects to have Landlord harvest the crops, then the Expansion Area shall become part of the Premises
and Rent shall begin to accrue thereon on the date that Landlord notifies Tenant that the harvest is complete. If the party entitled to make such decision does not elect to have Landlord harvest the crops, then the Expansion Area shall become
part of the Premises and Rent shall begin to accrue thereon on the date that such decision is communicated to the other party. |
|
(a) |
Base Rent. In addition, Tenant shall pay to Landlord monthly base rent (“Base Rent”) for the Premises. Base Rent shall be paid
in advance, on or before the first ( 1st) day of each calendar month daring the Term, commencing the first calendar month following the Operations Date (the “Rent Commencement Date”). Base Rent for the first twelve months after the Rent
Commencement Date shall be [***] per acre of the Premises per month. On each anniversary of the Rent Commencement Date, monthly Base Rent shall increase to an amount determined by multiplying by the monthly Base Rent for the previous 12-month
period by 1.03. |
|
(b) |
Additional Rent. Tenant shall also pay without notice, except as may otherwise be required in this Agreement, and without abatement,
deduction or set-off, as “Additional Rent”, all sums, impositions, costs, expenses, and other payments which Tenant assumes or agrees to pay in any of the provisions of this Agreement with respect to any period during the Term. |
|
(c) |
Rent Payments. All payments of Base Rent and Additional Rent (collectively “Rent’) required to be made to
Landlord shall be in lawful money of the United States of America and shall be paid to Landlord at Landlord’s address for notices set forth in Section 18 or at such other place as Landlord may designate by notice in writing from time to time
and may be made by check or draft payable t0 the order 0f Landlord, which check or draft must be paid in full when presented. All payments of Rent shall be made without deduction or setoff and without notice. |
|
(d) |
Interest and Late Charge. If any installment of Rent is not paid within ten (10) days after the due date, such amount shall bear
interest (the “Interest Rate”) at the lesser of ten percent per annum (10%) or maximum rate permitted by.. law from the date on which said payment shall be due until the date on which Landlord shall receive said payment regardless of
whether or not a notice of default or notice of termination has been given by Landlord. In addition if the Rent is not paid within ten (10) days after the due date Tenant shall pay Landlord a late charge of five percent (5%) of the amount
delinquent. Landlord and Tenant recognize that the damage which Landlord shall suffer as a result of Tenant’s failure to pay Rent is difficult to ascertain said late charge being the best estimate of the damage which Landlord shall suffer in
the event of Tenants late payment. The late charge shall be deemed Additional Rent and the right to require it shall be in addition to all of Landlord s other rights and remedies hereunder or at law and shall not be construed limiting
Landlord’s remedies in any manner. Should Tenant pay said late charge but fail to pay contemporaneons.ly therewith all unpaid amounts of Base Rent and Additional Rent, Landlord’s acceptance of this late charge shall not constitute a waiver of
Tenant’s default with respect to Tenant’s non-payment nor prevent Landlord from exercising all other rights and remedies available to Landlord under this Agreement or under law. |
|
7. |
Payment of Taxes. Tenant shall pay (a) any personal property taxes on the improvements and/or any such taxes that are directly
attributable to the Operations and any solar energy conversion equipment or Transmission Facilities installed by Tenant on the Premises or Easement Area, and (b) all real property taxes or assessments levied against the Premises and Easement
Area, as applicable from and after the Effective Date until the end of the Term hereof including such taxes and assessments being imposed as of the Effective Date and any increase in such taxes and assessments that is imposed against the
Property because of (i) this Agreement; the addition of the Improvements to the Premises and/or Easement Area, as applicable; or the Operations thereon (“ Tenant’s Taxes”’). Tenant shall have the right at its sole expense, to appeal or
contest any such tax it could be responsible to pay under this Agreement and to compromise and settle the same and Landlord shall execute such petitions and agreements and otherwise cooperate with Tenant to the extent reasonably necessary for
Landlord to do so. |
Landlord shall deliver to Tenant copies of all real property tax bills within
thirty (30) days after receipt of the bill by Landlord from the taxing authority and Tenant shall pay Tenants Taxes on or before the date payment is due. Landlord shall pay real property taxes other than the Tenant’s Taxes. The Parties acknowledge
that the Premises are not a separate Tax Parcel. The Parties agree to request that the Fresno County Asses or create a separate Tax Parcel for the Premises and to diligently pursue such request, but unless and until such request is granted, Landlord
shall pay all taxes and assessments against the Premises and shall invoice Tenant for the share thereof that are Tenant’s Taxes. Tenant shall reimburse Landlord for the payment of Tenant’s Taxes within ten (10) calendar days of such invoice as
Additional Rent. All such taxes shall be prorated for the first and last Lease Year.
|
8. |
Utilities. Tenant shall be solely responsible for obtaining and paying for all utilities Deeded or used by Tenant on the Premises
and/or Easement Area, as applicable, including any costs associated with establishing utility. service including any tie-in or interconnection fees. Landlord will not be liable for damages by abatement of Rent or otherwise, for any interruption
in the availability of any utility or service, unless such interruption or unavailability is caused by the gross negligence or intentional misconduct of Landlord. Such unavailability will not constitute an eviction or a disturbance of Tenant’s
use and possession of the Premises and Easement Area or relieve Tenant from paying Rent or performing any of Tenant’s obligations under this Agreement. Landlord shall use commercially reasonable efforts to cooperate with Tenant, as Tenant shall
request, in Tenant s effo1ts to obtain utility service to and from the Premises and/or Easement Area, as applicable· provided that Tenant shall pay, and shall hold Landlord harmless from, any Cost or expense incurred by Landlord due to such
cooperation. |
|
9. |
Liens. Landlord and Tenant shall keep the other’s interest in the Property, the Premises, and the Easement Area free and clear ·of all
liens and claims of liens for labor and services performed on, and materials, supplies and equipment furnished in connection with Landlord or Tenants (as applicable· ownership or use of the Property, the Premises and the Easement Area, subject
to Landlord’s and Tenant (as applicable) right to contest such liens and claims. If Landlord or Tenant (as applicable) wishes to contest any such liens or claims such Party shall within ninety (90) days after it receives notice of such lien or
claim, provide a bond or other security as the other Party may reasonably request, or remove any such liens from the Premises and/or Easement Area as applicable, pursuant to applicable law. |
|
10. |
Maintenance of Premise and Easement Area. |
|
(a) |
Maintenance: Throughout the Term, Tenant shall, at Tenant’s sole cost and expense, maintain the improvements, the Premises, and the
Easement Area in good and clean condition and in accordance with all applicable laws, rules, ordinances, orders and regulations of all governmental agencies. Tenant shall not unreasonably clutter the Premises or Easement Area. Tenant shall not
undertake any acfr1ities that materially interfere with any farming activities or activities authorized by Landlord, conducted on the Easement Area or on any property owned by Landlord or its affiliates adjacent to the Premises or Easement
Area. Tenant shall: (a) make and keep the Premises free and clear of all rubbish, debris and all growths including weeds, generally considered to be foul, noxious or objectionable to good farming· (b) make and keep all levees on or abutting the
Premises free and clear of all growths of any kind whatsoever; and (c) make and keep the Premises reasonably free and clear of all rats, gophers, squirrels, and other pests. |
|
(b) |
Failure to Comply. If Tenant fails to comply with any obligation of Tenant under this Section 10, after Landlord has given Tenant at
least thirty (30) days prior written notice of such failure (except in event of emergency need for immediate action), Landlord shall have the right but not the obligation to take such measures to correct the noticed failure as Landlord deems
necessary, in its reasonable discretion, and charge the reasonable cost and expense thereof to Tenant as Additional Rent. Tenant shall pay to Landlord any such cost or expense within thirty (30) days after tenant’s receipt of a statement
therefor from Landlord. |
|
11. |
Security; Landlord s Access. All security measures reasonably necessary to protect against damage or destruction of Tenant’s
Improvements, or injury or damage to persons or prope1ty on the Premises and/or Easement Area, or the Operations, shall be provided by Tenant, at Tenant’s sole cost on the Premises and/or Easement Area, as applicable, including, if reasonably
necessary, warning signs fencing closed and locked gates, and other measures appropriate and reasonable· provided, however, that Tenant shall not be permitted to place any fencing upon or within the Easement Area. Landlord shall not be
responsible for loss or damage to the Improvements resulting from Tenant’s failure to provide security, measures. Landlord may access any part of the Premises and-Easement Area that is within Tenants secured areas for the purpose of inspection
of activities” thereon upon twenty-four (24) hours’ notice to Tenant except in case of emergency, when no advance n0tice shall be required provided that such access shall comply with Tenant’s safety. requirements, and shall not in any manner
interfere with Tenant’s Operations nor violate applicable laws or governmental regulations. |
|
12. |
Insurance; Indemnity. Tenant shall maintain in full force and effect, at its sole cost and expense, policies of insurance as follows: |
|
(a) |
Liability Insurance. Comprehensive general liability insurance for the mutual benefit of Landlord and Tenant, against any and all
claims for personal injury death or property damage occurring in or about the Premises or the Easement Area, or arising out of Tenant’s or Tenant’s agents, employees, servants, invitees, contractors, and representatives use of the Premises, the
Project, or the Operations. Such insurance shall have a combined single limit of not less than Five Million Dollars ($5,000,000) per occurrence and Five Million Dollars ($5 000 000) aggregate. Such insurance shall contain a cross liability
(severability of interests) clause and an extended (“broad form”) liability endorsement including blanket contractual coverage. The minimum limits specified above are the minimum amounts required and may be revised by Landlord from time to time
to meet changed circumstances including without limitation to reflect (i) changes in the purchasing power of the dollar (ii) changes indicated by the amount of plaintiffs’ verdicts in personal injury actions in the State of California or (iii)
changes consistent with the standards required by other landowners in Fresno County in which the Premises are located. Such liability insurance shall be primary and not contributing to any insurance available to Landlord, and Landlord’s
insurance (if any) shall be in excess thereto. |
Such insurance shall specifically insure Tenant’s performance of the indemnity,
defense and hold harmless agreements contained in Section 12(e) below, although Tenant’s obligations pursuant to Section l2(e) shall not be Limited to the amount of any insurance required of or carried by Tenant under this Section 12(a). Tenant shall
be responsible for ensuring that the amount of insurance maintained by Tenant is sufficient for Tenant’s purposes.
|
(b) |
Other. Such other insurance as required by law, including, without limitation, workers’ compensation insurance. |
|
(c) |
Form of the Policies. The policies required to be maintained by Tenant pursuant to Sections 12(a) and 12(b) above shall be with
companies on forms with deductible amounts (if any), and loss payable clauses reasonably satisfactory to Land1ord; shall include Landlord and the beneficiary or mortgagee of any deed of trust or mortgage encumbering the Premises as additional
insured · and shall provide that such patties may although additional insureds recover for any loss suffered by Tenant s negligence. Certified copies of policies or certificates of insurance shall be delivered to Landlord upon execution of that
certain this Agreement; a new policy or certificate shall be delivered to Landlord at least ten (10) business days prior to the expiration date of the old policy. Tenant shall have the right to provide insurance coverage which it is obligated
to carry pursuant to the terms- hereof in a blanket policy, provided such blanket policy expressly affords coverage to the Premises and to Tenant as required by this Agreement. Tenant shall obtain a written obligation on the part of Tenant s
insurer(s) to notify Landlord and a y beneficiary or mortgagee of a deed of trust or mortgage encumbering the Premises in writing of any delinquency in premium Payments and at least thirty (30) days prior to any cancellation or modification of
any policy. Tenant’s policies shall provide coverage on an occurrence basis and not on a claims-made basis. In no event shall the limits of any policies maintained by Tenant be considered as limiting the liability of Tenant under this
Agreement. |
|
(d) |
Failure by Tenant to Obtain Insurance. If Tenant does not take out the insurance required pursuant to this Section 12 or keep the same
in full force and effect Landlord may but shall not be obligated tb take out the necessary insurance and pay the premium therefor and Tenant shall repay to Landlord, as Additional Rent the amount so paid promptly upon demand. In addition,
Landlord. may recover from Tenant and Tenant agrees to pay, as Additional Rent, any and all reasonable expenses (including reasonable attorneys’ fees); and damages which Landlord may sustain by reason of the failure of Tenant to obtain and
maintain such insurance it being expressly declared that the expenses and damages of Landlord shall not be limited to the amount of the premiums thereon. |
|
(e) |
Indemnification by Tenant. Tenant shall indemnify, hold harmless, and defend Landlord with competent counsel reasonably satisfactory to
Landlord against all claims losses damages expenses or liabilities for injury or death to any person or for damage to or loss of use of any property arising out of any occurrence in on or about the Premises except if and to the extent caused by
Landlord’s willful misconduct or gross negligence, or that of its agents employees servant invitees contractors, and representatives. Tenants’ indemnification defense and hold harmless obligations under the Agreement shall include and apply to
reasonable attorney’s fees, investigation costs, and other costs actually incurred by Landlord. Tenant shall further indemnify, defend, and hold harmless Landlord from and against any and all claims, losses damages liabilities or expenses
arising from any breach or default in the performance of any obligation on Ten2nt’s part to be performed under the terms of this Agreement. The provisions of this Section I 2(e1 shall survive the expiration or earlier termination of this
Agreement with respect to any damage injury death, breach or default occurring prior to such expiration or termination. Except as set forth in Sections 12(e) and 12(f) this Agreement is made on the express condition that Landlord shall not be
liable for, or suffer loss by reason of, injury to person or property, from whatever cause, in any way connected with the condition, use, occupational safety or occupancy of the Premises specifically including, without limitation, any liability
for injury to the person or property of Tenant or Tenant’s agents, employees, servants, invitees, contractors, and representatives. |
|
(f) |
Indemnification by Landlord. Landlord shall indemnify, hold harmless, and defend Tenant with competent counsel reasonably satisfactory
to Tenant against all claims, losses, damages, expenses or liabilities for injury or death to any person or for damage to or loss of use of any property arising out of any occurrence in, on or about the Premises caused by Landlord’s willful
misconduct or gross negligence, or that of its agents, employees, servants, invitees, contractors, and representatives. The indemnity set forth herein shall be without regard to whether Landlord may also have a claim against a third party for
any of the losses. The provisions of this Section 12(f) shall survive the expiration or earlier termination of this Agreement with respect to any damage, injury, death, breach, of default occurring prior to such expiration or termination. |
|
13. |
Assignment; Right to Mortgage and Assign. |
|
(a) |
As used in this Agreement, (a) the term “Sublessee” means any person that receives an interest from Tenant of less than all of the
right, title, or interest under this Agreement and (b) the term “Sublease” means the grant or assignment of such rights from Tenant to a Sublessee. Tenant or a Sublessee may, upon notice to Landlord, but without Landlord’s consent, mortgage,
collaterally assign, or otherwise encumber and grant security interests in all or any part of its interest in this Agreement, the leasehold estate created by this Agreement (the “Leasehold Estate”), the Easement, any Sublease, and the Project
(collectively, the “Solar Assets”) in connection with the financing of all or any portion of the Project, which security interests (including any deeds of trusts) in all or a part of the Solar Assets are collectively referred to in this
Agreement as “Mortgages” and the holders of the Mortgages, their designees and assigns, or any other finance party with a security interest in any portion of the Solar Assets, are each referred to in this Agreement as a “Mortgagee”. With the
prior written consent of Landlord, which consent shall not be unreasonably withheld, conditioned or delayed, Tenant and each Sublessee shall also have the right to sell, convey, lease, or assign its interest in this Agreement or Sublease, as
the case may be, or any portion thereof, and all or any portion of the Solar Assets on either an exclusive or non-exclusive basis, or to apportion, grant sub-easements, co-easements, separate easements, leases, subleases, co-leases, co-tenancy
rights, licenses or similar rights, however denominated (collectively, “Assignments”); provided, however that Landlord’s consent shall not be required for Assignments to: (i) any affiliate (as defined below), (ii) an entity which purchases all
or substantially all of the equity interests in Tenant or a Sublessee, as applicable, or (iii) a Financially Viable Entity (as defined below). For purposes hereof, “affiliate” means any entity which, directly or indirectly, controls Tenant or a
Sublessee, as applicable; “control” (including, with its correlative meanings, “controlled by” and “under common control with”) means possession, directly or indirectly, of the power to direct or cause the direction of management or policies
(whether through Ownership of securities or partnership or other Ownership interests, by contract or otherwise); and “Financially Viable Entity” means an entity (or its affiliate or sponsor, as applicable) possessing a financial profile which
reasonably demonstrates the financial ability of such entity to assume and perform Tenant’s obligations under this Agreement, and which entity or its affiliate shall possesses a net worth of at least Fifteen Million Dollars ($15,000,000.00).
Upon the effective date of any Assignment under which all of the interest of Tenant or any Sublessee (or the interest of their respective successors or assigns) in the Solar Assets is assigned, Tenant or Sublessee, as the case may be, shall be
released from any liability under this Agreement or Sublease, as applicable, accruing on or after the effective date of the Assignment, provided that the assignee assumes in writing the obligations of the assigning party. Notwithstanding the
foregoing, in the event of any Assignment under which less than all of the interest of Tenant or any Sublessee (or the interest of their respective successors or assigns) in the Solar Assets is assigned, Tenant or Sublessee, as the case may be,
shall not be relieved of its obligations under the Agreement or Sublease, as applicable, and Tenant or Sublessee shall continue to be primarily liable to the same extent as though no Assignment has been made. Under no circumstances shall any
Mortgagee or Sublessee have any greater rights of Ownership or use of the Leasehold Estate or the Easement than the rights granted to Tenant in this Agreement. Any member of Tenant or a Sublessee shall have the right from time to time without
Landlord’s consent to transfer any partnership, membership or other Ownership interest in Tenant or a Sublessee to one or more persons or entities. |
|
(b) |
Landlord agrees to cooperate with Tenant in connection with any financing arrangements undertaken by Tenant, whether secured by the Solar
Assets or any portion thereof, or any tax equity financing, and hereby waives any lien, security interest, or claim of any nature that Landlord may have by statute, rule, regulation, common law, agreement or otherwise, in and to the Solar
Assets and other property that is or may be from time to time hereafter located on the Premises and to which Tenant at any time has granted or will grant a security interest to a Mortgagee (all such property and the records relating thereto
shall be hereafter called the “Collateral”) to the lien of such Mortgagee. Landlord recognizes and acknowledges that any claims that Mortgagee has or may have against such Collateral by virtue of any lien or security interest are superior to
any lien, security interest, or claim of any nature that Landlord now has or may hereafter have to such Collateral by statute, rule, regulation, common law, agreement or otherwise. The waiver provided for herein shall be effective until the
discharge of any claims thereto. The foregoing waiver of Landlord’s lien rights shall be binding upon the executors, administrators, successors, and transferees of Landlord, and shall inure to the benefit of the successors and assigns of a
Mortgagee. Landlord agrees to execute such documents as may be required by a Mortgagee to evidence the foregoing subordination. |
|
(c) |
Landlord consents to a Mortgagee’s security interest in the Collateral and waives all claims and demands of every kind against the Collateral,
such waiver to continue so long as any sum remains owing to the Mortgagee. |
|
(d) |
Landlord may assign this Agreement without Tenant’s prior written consent and without notice; provided, that any such assignee shall assume
all of Landlord’s obligations under this Agreement. Landlord may mortgage its fee interest, provided however, that prior to executing any mortgage, Landlord shall deliver to Tenant a Subordination and Non-Disturbance Agreement from each party
that holds or will hold a lien on any portion of the Premises, or has or will have other rights, that might interfere with Tenant’s rights under this Agreement. All subordination and non-disturbance agreements obtained by Landlord hereunder
shall be in a form and substance reasonably acceptable to Tenant or any finance party of Tenant and shall be in a form that may be recorded following its execution. Such agreement at a minimum shall (i) subordinate the lien to Tenant’s interest
under this Agreement, (ii) agree not to disturb Tenant’s possession or rights under this Agreement so long as Tenant is not in default under this Agreement, and (iii) provide notice to Tenant and any finance party of Tenant of defaults under
the lien documents. |
|
(a) |
Definition. An “Event of Default” or “Default” under this Agreement shall be deemed to exist with respect to a Party upon the
occurrence of any one or more of the following events: |
|
(i) |
Failure by a Party hereunder to make payment of any amount within ten (10) days after receipt of written notice from Landlord; |
|
(ii) |
Failure by a Party hereunder to perform fully any other material obligation under this Agreement, if such Party does not cure such failure
within thirty (30) days of the date of receipt of written notice from the other Party demanding such cure (or within such longer period of time, as is reasonably necessary to accomplish such cure, if it cannot be reasonably accomplished within
such thirty (30) day period and such Party diligently commences such cure in such period and continues such cure to completion); |
|
(iii) |
If by order of a court of competent jurisdiction, a receiver or liquidator or trustee of a Party or of any of the property of a Party shall be
appointed, and such receiver or liquidator or trustee shall not have been discharged within a period of ninety (90) days; or if by decree of such a court, a Party shall be adjudicated bankrupt or insolvent or any substantial part of the
property of such Party shall have been sequestered, and such decree shall have continued undischarged and unstayed for a period of ninety (90) days after the entry thereof; of if a petition to declare bankruptcy or to reorganize a Party
pursuant to any of the provisions of the Bankruptcy Code, as it now exists or as it may hereafter be amended, or pursuant to any other similar state statute applicable to such Party, as now or hereafter in effect, shall be filed against such
Party and shall not be dismissed within ninety (90) days after such filing; or |
|
(iv) |
If a Party shall file a voluntary petition in bankruptcy under any provision of any federal or state bankruptcy law or shall consent to the
filing of any bankruptcy or reorganization petition against it under any similar law; or, without limitation of the generality of the foregoing, if a Party shall file a petition or answer or consent seeking relief or assisting in seeking relief
in a proceeding under any of the provisions of the Bankruptcy Code, as it now exists or as it may hereafter be amended, or pursuant to any other similar state statute applicable to such Party, as now or hereafter in effect, or an answer
admitting the material allegations of a petition filed against it in such a proceeding; or if a Party shall make an assignment for the benefit of its creditors; or if a Party shall admit in writing its inability to pay its debts generally as
they become due; or if a Party shall consent to the appointment of a receiver or receivers, or trustee or trustees, or liquidator or liquidators of it or of all or any part of its property. |
|
(b) |
Landlord’s Remedies. In the event of an Event of Default by Tenant under this Agreement: |
|
(i) |
Landlord may continue this Agreement in effect by not terminating Tenant’s right to possession of the Property, in which event Landlord shall
be entitled to enforce all Landlord’s rights and remedies under this Agreement, including the right to recover the Rent specified in this Agreement as it becomes due under this Agreement. |
|
(ii) |
Landlord may terminate this Agreement and: |
|
(1) |
Bring an action to recover from Tenant: |
|
a) |
The worth at the time of award of the unpaid Rent that had been earned at the time of termination of this Agreement; |
|
b) |
The worth at the time of award of the amount by which the unpaid Rent that would have been earned after termination of this Agreement until
the time of award exceeds the amount of rental loss that Tenant proves could have been reasonably avoided; |
|
c) |
The worth at the time of award of the amount by which the unpaid Rent for the balance of the term after the time of award exceeds the amount
of rental loss that Tenant proves could be reasonably avoided; and |
|
d) |
Any other amount necessary to compensate Landlord for all detriment proximately caused by Tenant’s failure to perform Tenant’s obligations
under this Agreement. |
|
(2) |
Bring an action, in addition to or in lieu of the action described above, to reenter and regain possession of the Property in the manner
provided by the laws of unlawful detainer of the State of California then in effect. |
|
(3) |
Seek an injunction or injunctions to prevent breaches and to seek specific performance of the covenants, agreements, rights and options
contained in this Agreement. |
|
(c) |
Tenants Remedies. In the event of an Event of Default by Landlord hereunder, Tenant shall have the right to exercise any one or more of
the rights available to a Tenant of non-residential real property under the laws of the State of California, consecutively or concurrently, including, without limitation, the right to seek an injunction or injunctions to prevent breaches and to
seek specific performance of the covenants, agreements, rights and options contained in this Agreement, in addition to the right to pursue any remedy under this Agreement, or now or hereafter existing under applicable law or in equity. |
|
(d) |
Remedies Not Exclusive. The rights and remedies herein provided in case of an Event of Default shall not be exclusive, each of the
Parties shall have the right to exercise any one or more of the rights or remedies available to such Party under the laws of the State of California, executed consecutively or concurrently, and in addition to all other rights and remedies
permitted for such Event of Default in this Section 14. No delay or omission of a Party to exercise any right or remedy accruing upon any Event of Default shall impair any such right or remedy or constitute a waiver of such default or an
acquiescence therein. Every right and remedy given by this Agreement or by law to a Party may be exercised from time to time, and as often as may be deemed expedient, by such Party. |
|
(e) |
No Consequential Damages. The Parties agree that it is the intent that notwithstanding anything to the contrary contained herein,
neither Landlord nor Tenant, nor their respective officers, directors, partners, members, trustees, beneficiaries, shareholders, agents, employees, contractors or affiliates, shall be liable to the other Party or to its affiliates, officers,
directors, shareholders, partners, members, trustees, beneficiaries, agents, employees, contractors, successors or assigns, for claims for incidental, special, indirect, punitive or consequential damages of any nature connected with or
resulting from performance or non-performance of this Agreement, including claims in the nature of lost revenue, income or profits, losses, damages or liabilities under any financing, lending, construction or other contracts, agreements or
arrangements to which either may be a party irrespective of whether such claims are based upon negligence, strict liability, contract, operation of law or otherwise. The foregoing waiver of consequential damages shall not apply with respect to
any release of hazardous materials or poisons on or about the Property by Tenant or any of Tenant’s agents, employees, servants, invitees, contractors, or representatives. |
|
15. |
Surrender and Restoration. |
|
(a) |
Restoration. Within twelve (12) months after any termination, surrender, or expiration of this Agreement (the “Decommissioning
Period”), Tenant at its sole cost and expense, shall decommission the Solar Energy Facilities, which shall include the removal of all above-grade facilities to not less than three (3) feet below grade or as otherwise required by any
governmental authority with jurisdiction. Tenant shall restore the surface of the Premises to the condition similar to that as it existed at the inception of this Agreement (reasonable wear and tear, tree clearing, condemnation, casualty damage
and acts of God excepted) and shall repair any damage to the Premises as a result of any removal of Tenant’s Improvements under this Section 15(a) (“Restoration”). Tenant may leave all roads and grading in their condition existing at the time
this Agreement terminates. For purposes of clarification, no Rent shall be due during the Decommissioning Period. |
|
(b) |
Surrender. Upon expiration of the Decommission Period, or at any earlier date on which the Restoration is complete, Tenant shall
peaceably deliver up to Landlord possession of the Premises, and other rights granted by this Agreement, and shall execute, at Landlord’s request, any and all documents needed to record or evidence such termination with the appropriate
governmental agency. |
|
(a) |
Complete Taking. If, at any time, any authority having the power of eminent domain shall condemn all or substantially all of the
Premises or the Improvements thereon, for any public use or otherwise, then the interests and obligations of Tenant under this Agreement in or affecting the Premises shall cease anc. terminate upon the earlier of (i) the date that the
condemning authority takes physical possession of the Premises or the Project thereon (ii) (ii) the date that Tenant determines it is no longer able or permitted to operate the Project on the Premises in a commercially viable manner, or (iii)
the date of the condemnation judgment. Tenant shall continue to pay all amounts payable hereunder to Landlord until the earlier of such dates, at which time this Agreement shall terminate, and Landlord and Tenant shall be relieved of any and
all further obligations and conditions to each other under this Agreement. |
|
(b) |
Partial Taking. If, at any time during the Term, any authority having the power of eminent domain shall condemn any portion, less than
substantially all, of the Premises, then the interest and obligations of Tenant under this Agreement as to those Improvements or the Premises so taken shall cease and terminate upon the earlier of (i) the date that the condemning authority
takes physical possession of the portion of the Premises taken, (ii) the date that Tenant determines it is no longer able or permitted to operate the portion of the Project so taken on the Premises in a commercially viable manner, or (iii) the
date of the condemnation judgment, and, unless this Agreement is terminated as herein provided, this Agreement shall continue in full force and effect as to the remainder of the Premises and the Base Rent shall be adjusted to account for any
reduction in the Premises; provided, however, that if Tenant, in its sole discretion, determines that such partial taking would cause the continued operation of the entire Project not to be commercially viable, Tenant shall have the right to
terminate this Agreement. |
|
(c) |
Condemnation Award. In the event of a complete or partial taking of the Premises, Tenant shall be entitled to receive all compensation
and damages paid by the condemning authority arising from such taking and payable on account of Tenants’ Improvements, loss of this Agreement, loss of revenue, relocation costs, inability to relocate and any other property of Tenant, and
Landlord shall be entitled to all compensation and damages paid by the condemning authority for any portion of the real property containing the Premises that is taken and all other amounts of the award not paid to Tenant. |
|
17. |
Certain Protective Covenants. |
|
(a) |
Noninterference. During the Term, Landlord covenants and at it will not (i) materially interfere with or prohibit the free and complete
use and enjoyment by Tenant of its rights granted by this Agreement; (ii) take any action or permit any condition to exist on the Property which will materially interfere with the availability or accessibility of the solar resource on or to the
Premises; (iii) take any action which will in any way materially interfere with the transmission of electric, electromagnetic or other forms of energy upon, to or from the Premises; or (iv) take any action which will materially impair Tenant’s
access to the Premises for the purposes specified in this Agreement, materially obstruct access to the solar resource on, over or across the Premises or materially impair Tenant’s access to any or all of the Improvements. Notwithstanding the
foregoing, Landlord shall have no obligation under Agreement to provide, obtain or maintain any easement for the solar resource on, over or above any real property not owned or controlled by Landlord. Tenant acknowledges and agrees that
Landlord actively farms the Property and other real property in the area and that dust is created as a normal part of farming operations. Under no circumstances shall any dust created by normal farming operations be considered to violate the
first sentence of this Section 17(a). |
|
(b) |
Quiet Enjoyment. Provided Tenant observes the terms and conditions of this Agreement, Landlord warrants that Tenant shall peaceably
hold and enjoy the Premises, and any and all other rights granted by this Agreement for its entire Term without hindrance or interruption by Landlord or any other person or persons lawfully or equitably claiming by, through or under Landlord
except as expressly provided in this Agreement. |
|
(c) |
Mortgagee Protection. Any Mortgagee, upon delivery to Landlord of notice of its name and address, for so long as its Mortgage is in
existence shall be entitled to the following protections which shall be in addition to those granted elsewhere in this Agreement or a Sublease as the case may be: |
|
(i) |
Right to Cure_Deflmlts/Notice of Defaults. To prevent termination of this Agreement or any partial interest in this Agreement, each
Mortgagee shall have the right, but not the obligation, at any time prior to termination of this Agreement, to perform any act necessary to cure any Default by Tenant and to prevent the termination of this Agreement or any partial interest in
this Agreement. As a precondition to exercising any rights or remedies as a result of any alleged Default by Tenant, Landlord shall give written notice of such Default to each Mortgagee that has delivered to Landlord notice of its name and
address concurrently with delivery of such notice to Tenant, specifying in detail the alleged Default and the required remedy. Each such Mortgagee shall have the same amount of time to cure the Default as is given to Tenant. The cure period for
each Mortgagee shall begin to run at the end of the cure period given to Tenant in this Agreement. |
|
(ii) |
Extended Cure Period. If any Default by Tenant under this Agreement cannot be cured without the Mortgagee obtaining possession of all
or part of the Premises, and/or all or part of the Improvements and/or all or part of Tenant’s interest in this Agreement, then any such Default shall be deemed remedied if: (i) Mortgagee or its assignee cures any outstanding monetary Default
within thirty (30) calendar days of Notice of the Event of Default; (ii) within the cure period granted to Mortgagee in Section 14(a) above, either Mortgagee or its assignee shall have acquired possession of all or part of the Premises and/or
all or part of the Improvements and/or all or part of such interest in this Agreement, or shall have commenced appropriate judicial or non-judicial proceedings to obtain the same; (iii) the Mortgagee or its assignee, as the case may be, shall
be in the process of diligently prosecuting any such proceedings to completion; and (iv) after gaining possession of all or part of the Premises and/or all or part of the Improvements and/or all or part of such interest in this Agreement, the
Mortgagee or its assignee cures all Defaults under the Agreement, and performs all other obligations as and when the same are due in accordance with the terms of this Agreement. If a Mortgagee or its assignee is prohibited by any process or
injunction issued by any court or by reason of any action by any court having jurisdiction over any bankruptcy or insolvency proceeding involving Tenant or any defaulting assignee, as the case may be, from commencing or prosecuting the
proceedings described above, the period specified above for commencing such proceeding shall be extended for the period of such prohibition. |
|
(iii) |
Acquisition of Title. Following acquisition of all or a portion of the Solar Assets by the Mortgagee, its assignee or designee as a
result of either foreclosure or acceptance of an assignment in lieu of foreclosure, or by a purchaser at a foreclosure sale, this Agreement or a Sublease, as the case may be, shall continue in full force and effect, and the party acquiring
title to the Solar Assets shall (a) continue to timely pay any rent then due and payable; and (b) as promptly as reasonably possible, commence the cure of all other Defaults under this Agreement or a Sublease, as the case may be, and thereafter
diligently process such cure to completion, whereupon Landlord’s right to terminate this Agreement based upon such Defaults shall be deemed waived; provided, however, that the Mortgagee or such party acquiring title to the Solar Assets shall
not be required to cure those Defaults which are not reasonably susceptible of being cured or performed by such party (“Non-Curable Defaults”). Non-Curable Defaults shall be deemed waived by Landlord upon completion of foreclosure proceedings
or acquisition of Tenant’s interest in this Agreement or a Sublessee’s interest in the Solar Assets by the Mortgagee or party acquiring title; provided, however, in the event any Default shall be continuing following completion of foreclosure
proceedings or acquisition of Tenants’ interest in this Agreement or a Sublessee’s interest in the Solar Assets, the acquiring party shall be obligated to then cure any such Default. |
|
(iv) |
Mortgage’s Right to Possession, Right to Acquire and Right to Assign. A Mortgagee shall have the absolute right (i) to assign
its Mortgage; (ii) to enforce its lien and acquire title to all or any portion of the Solar Assets by any lawful means; (iii) to take possession of and operate all or any portion of the Solar Assets and to perform all obligations to be
performed by Tenant or a Sublessee under this Agreement or a Sublease as the case may be, or to cause a receiver to be appointed to do so; and (iv) to acquire all or any portion of the Solar Assets by foreclosure or by an assignment in lieu of
foreclosure and thereafter without Landlord’s consent to assign or transfer all or any portion of the Solar Assets to a third-party so long as such assignee or transferee is a Financially Viable Entity, and Landlord’s consent, which shall not
be unreasonably withheld, conditioned or delayed, shall be required for any other assignment or transfer. Upon acquisition of the interests of all or any portion of the Solar Assets by a Mortgagee or any other third-party which acquires the
interests, from or on behalf of the Mortgagee, in accordance with the terms of this Agreement, Landlord shall recognize the Mortgagee or such other party (as the case may be) as Tenant’s or a Sublessee’s proper successor, and this Agreement and
any such Sublease shall remain in full force and effect. |
|
(v) |
Liability. Any Mortgagee that does not directly hold an interest in the Solar Assets, or whose interest is held solely for security
purposes, shall have no obligation or liability under this Agreement or a Sublease as the case may be prior to the time the Mortgagee directly holds an interest in the Solar Assets, or succeeds to absolute title to Tenant’s or a Sublessee’s
interest therein. A Mortgagee shall be liable to perform Tenant’s or a Sublessee’s obligations under this Agreement or a Sublease as the case may be only for and during the period it directly holds such interest or title. Furthermore, if
Mortgagee elects to (i) perform Tenant’s or a Sublessee’s obligations under this Agreement or the Sublease as the case may be, (ii) continue Operations on the Premises, (iii) acquire any portion of Tenant’s or a Sublessee’s right, title or
interest in all or any of the Solar Assets or (iv) enter into a new lease and easement agreement or a Sublease as the case may be as provided in Section 17(c)(vii), then the Mortgagee shall not have any personal liability to Landlord, and
Landlord’s sole recourse against Mortgagee shall be to execute against the Mortgagee’s interest in the Solar Assets. Moreover, any Mortgagee or other party which acquires the Solar Assets by foreclosure or an assignment in lieu of foreclosure
shall not be liable to perform any obligations under this Agreement or a Sublease, as the case may be, to the extent the obligations are incurred or accrue after that Mortgagee or other party no longer has Ownership of the Solar Assets and
possession of the Premises. |
|
(vi) |
Termination. Neither the bankruptcy nor the insolvency of Tenant or a Sublessee shall be grounds for terminating this Agreement or a
Sublease so long as all payments and all other monetary charges payable by Tenant or Sublessee under this Agreement or a Sublease, as the case may be, are paid by the Mortgagee in accordance with the terms of this Agreement or a Sublease, as
the case may be. |
|
(vii) |
New Lease. If this Agreement or a Sublease, as the case may be, terminates for any reason, including, without limitation, because of
Tenant’s or a Sublessee’s uncured Default or because it is rejected or disaffirmed under bankruptcy law or any other law affecting creditors’ rights, then, so long as a Mortgagee has cured any monetary and/or insurance Default prior to
expiration of the Mortgagee any cure period identified in Section 14(a) and Section 17(c)(ii) and is making commercially reasonable efforts to cure any non-monetary Default, Landlord will, immediately upon written request from the Mortgagee
received within ninety (90) days after the termination, rejection, or disaffirmance, without demanding additional consideration therefor, enter into a new lease and easement agreement or a new Sublease as the case may be in favor of the
Mortgagee, which new lease and easement agreement or new Sublease shall (i) contain the same covenants, agreements, terms, provisions and limitations as this Agreement or the Sublease, as the case may be (except for any requirements that have
been fulfilled by Tenant or a Sublessee prior to the termination, rejection, or disaffirmance), (ii) be for a term commencing on the date of the termination, rejection, or disaffirmance and continuing for the remaining Term or the term of the
Sublease, as the case may be, before giving effect to the termination, rejection, or disaffirmance, (iii) contain a lease or sublease as the case may be on, over, under, upon along and across the Premises or such portion thereof as to which the
Mortgagee held a lien on the date of the termination, rejection, or disaffirmance, (iv) contain a grant to the Mortgagee of access, transmission, communications, utility, and other easements covering such portion or portions of the Premises as
Tenant held under this Agreement prior to its termination and (v) enjoy the same priority as this Agreement or a replaced Sublease, as the case may be, has over any lien, encumbrance or other interest created by Landlord, and, until such time
as the new lease and easement agreement or Sublease as the case may be is executed and delivered, the Mortgagee may enter, use and enjoy the Premises, and conduct Operations on the Premises as if this Agreement or the Sublease, as the case may
be, were still in effect at the option of the Mortgagee, the new lease and easement agreement or Sublease, as the case may be, may be executed by a designee of the Mortgagee, with the Mortgagee assuming the burdens and obligations of Tenant or
a Sublessee thereunder. If more than one Mortgagee makes a written request for a new lease and easement agreement or Sublease, as the case may be, under this Section 17(c)(vii), then the new lease and easement agreement or Sublease shall be
delivered to the Mortgagee whose lien is senior in priority. |
|
18. |
Mortgage Consent. Landlord shall not agree to any material amendment, mutual termination or modification or accept any surrender of
this Agreement, nor shall any such amendment, termination, modification, or surrender be effective, without the written consent of the Mortgagee. |
|
(i) |
Amendments . Landlord and Tenant shall cooperate in amending this Agreement from time to time to include any provision that may
reasonably be requested by any Mortgagee for the purpose of preserving the Mortgagee’s interest in the Premises, provided that neither Landlord’s rights nor Tenant’s obligations under this Agreement are diminished thereby. |
|
(ii) |
Estoppel Certificates and Cooperation. Landlord will, within ten (10) business days following receipt of written request, execute
estoppel certificates (certifying as to truthful matters, including that no default then exists under this Agreement or a Sublease, if such be the case), consents to assignment, and non-disturbance agreements provided for in this Agreement as
Tenant, a Sublessee or any Mortgagee may reasonably request at any time and from time to time. Landlord, Tenant and Sublessee (if applicable) will cooperate in (a) amending this Agreement or a Sublease, as the case may be, from time to time to
include any provision that may be reasonably requested by Tenant or a Sublessee or any Mortgagee to implement the provisions contained in this Agreement or a Sublease as the case may be, or to preserve a Mortgagee’s security interest, and does
not materially prejudice Landlord’s rights under, or interest in, this Agreement, and (b) execute any documents that may reasonably be required by Tenant, a Sublessee, or a Mortgagee to implement the provisions of this Section 17(c). Landlord
will request any of Landlord’s lenders to execute an agreement of non-disturbance furnished by any Mortgagee with respect to Tenant’s or a Sublessee’s interest in the Agreement. |
|
(iii) |
No Merger. There shall be no merger of this Agreement with the fee estate in the Premises by reason of the fact that this Agreement or
any interest in the may be held, directly or indirectly, by or for the account of any person or persons who shall own the fee estate or any interest therein, and no such merger shall occur unless and until all persons at the time having an
interest in the fee estate in the Premises, and all persons (including each Mortgagee) having an interest in this Agreement or in the estate of Landlord and Tenant, shall join in a written instrument effecting such merger and shall duly record
the same. |
|
(iv) |
Damage/Condemnation. The disposition of any condemnation award and/or casualty insurance proceeds otherwise payable to Tenant shall be
governed by the terms of any first priority Mortgage encumbering Tenant’s interest in the Solar Assets. |
|
(i) |
Writing. All notices given or permitted to be given hereunder shall be in writing; provided, however, that no writing other than the
check or other instrument representing the Rent payment itself need accompany the payment of Rent. |
|
(ii) |
Delivery. Notice is considered given either (a) when delivered in person to the recipient named below, or by electronic mail, if no
later than 5 p.m. (PT) of a given business day, (b) when delivered by courier service which certifies in writing the date of delivery, or three (3) business days after deposit in the United States mail, in a sealed envelope or container,
postage and postal charges prepaid, addressed by name and addressed to the Party or person intended as follows: |
If to Landlord:
[***]
If to Tenant:
[***]
|
(iii) |
Change of Recipient or Address. Either Party may, by notice given at any time or from time to time require-subsequent notices to be
given to another individual person, whether a Party or an officer or representative, or to a different address, or both. Notices given before actual receipt of notice of change shall not be invalidated by the change. |
|
(b) |
Governing Law: Attorney’s Fees. This Agreement and any disputes arising out of this Agreement shall be governed by and construed under
the laws of the State of California, without regard to principles of conflicts of law. Venue for any action to enforce or interpret this Agreement shall be Fresno County, California. In the event of any action or proceeding to enforce a term or
condition of this Agreement, any alleged disputes, breaches, defaults, or misrepresentations in connection with any provision of this Agreement or any action or proceeding in any way arising from this Agreement, the prevailing party in such
action, or the non-dismissing party when the dismissal occurs other than by a settlement, shall be entitled to recover its reasonable costs and expenses, including without limitation reasonable attorneys’ fees and costs of defense paid or
incurred in good faith. The “prevailing party,” for purposes of this Agreement, shall be deemed to be the party who obtains substantially the result sought, whether by settlement, dismissal, or judgment. |
|
(c) |
Further Assurances. The Parties hereto shall at all times hereafter execute any documents and do any further acts which may be
necessary or desirable to carry out the purposes of this Agreement and to give full force and effect to each and all of the provisions thereof. |
|
(d) |
Amendments. This Agreement shall not be amended or modified in any way except by an instrument signed by Landlord and Tenant. |
|
(e) |
Severability. If any term or provision of this Agreement, or the application thereof to any person or circumstance shall, to any
extent, be determined by judicial order or decision to be invalid or unenforceable, the remainder of this Agreement or the application of such term or provision to persons or circumstances other than those as to which it is held to be invalid
or unenforceable shall not be affected thereby. |
|
(f) |
Headings. The Section headings are inserted only for convenience of reference and shall in no way define, limit, or describe the scope
or intent of a provision of this Agreement. |
|
(g) |
Entire Agreement. This Agreement shall constitute the entire agreement between the Parties with respect to the subject matter of this
Agreement and supersedes all other prior writings, negotiations, and understandings. That certain Solar Energy System Ground Lease by and between Larry Shehadey Farms, LLC, a California limited liability company and Tenant dated October 21,
2021 is hereby terminated. |
|
(h) |
Effect of Termination. Any termination of this Agreement pursuant to the terms hereof shall not relieve either Party from any
liabilities, obligations or indemnities arising prior to the effective date of such termination. |
|
(i) |
Time of Essence. Time is of the essence regarding each provision of this Agreement. |
|
(j) |
No Waiver. No waiver by either Party of any provision of this Agreement shall be deemed to be a waiver of any other provision hereof or
of any subsequent breach by the other Party. |
|
(k) |
Counterparts. This Agreement may be executed in counterparts. |
|
(l) |
Recording of Memorardum. Concurrent with the execution of this Agreement, the Parties shall execute, acknowledge, and record in the
Official Records a memorandum of this Agreement in the form attached as Exhibit “D”, hereto. |
|
(m) |
No Partnership. Nothing contained in this Agreement shall be deemed or construed by the Parties or by any third person to create the
relationship of principal and agent, partnership, or any other association between Landlord and Tenant, other than the relationship of lessor and lessee. |
|
(n) |
Brokerage Commissions. Landlord and Tenant each represent that such Party has not incurred, directly or indirectly, any liability on
behalf of the other Party for the payment by the other Party of any real estate brokerage commission or finder’s fee in connection with this Agreement. Landlord and Tenant shall indemnify, defend, and hold the other Party harmless from and
against any claim for any brokerage commissions or finder’s fees claimed to be due and owing by reason of the indemnifying Party’s activities. |
|
(o) |
Transfer Taxes on Agreement. If any governmental authority levies, assesses, and/or imposes a transfer tax as a result of this
Agreement, Tenant shall timely pay such tax. |
|
(p) |
Easements. Landlord hereby reserves the right and authority to grant easements on the Premises and dedicate for public use portions of
the Premises without Tenant’s consent; provided that no such grant or dedication shall materially interfere with Tenant’s use of the Premises. Upon Landlord’s demand, Tenant shall execute, acknowledge and deliver to Landlord documents,
instruments, maps and plans necessary to effectuate Landlord’s reservation hereunder. |
[Signatures commence on the following page.]
IN WITNESS WHEREOF, the Parties have executed this Agreement to be effective as of the
Effective Date.
LANDLORD: |
TENANT: |
|
|
/s/ Stephen J. Shehadey |
/s/ Florencio Ferrera |
|
|
BAR 20 DAIRY, LLC, |
H2B2 USA, LLC, a California limited liability company |
|
|
a California limited liability company |
|
CONSENT
LARRY SHEHADEY FARMS, LLC hereby consents to the termination of the Solar Energy System
Ground Lease dated October 21, 2021 entered into by and between it and H2B2 USA, LLC, a California limited liability company, as provided in Section 19(g) above.
Dated: 6/23/2022
LARRY SHEHADEY FARMS,
LLC, a California limited liability company |
|
/s/ Stephen J. Shehadey
CERTAIN IDENTIFIED SCHEDULES HAVE BEEN EXCLUDED FROM THE EXHIBIT PURSUANT TO
REGULATION S-K, ITEM 601(A)(5) BECAUSE THEY DO NOT CONTAIN INFORMATION MATERIAL
TO AN INVESTMENT OR VOTING DECISION AND THAT INFORMATION IS NOT OTHERWISE
DISCLOSED IN THE EXHIBIT OR THE DISCLOSURE DOCUMENT
EXHIBIT “B’
TO SUBLEASE FOR SOLAR ENERGY SYSTEM
FORM OF MEMORANDLM OF LEASE
[Omitted.]
CERTAIN IDENTIFIED SCHEDULES HAVE BEEN EXCLUDED FROM THE EXHIBIT PURSUANT TO
REGULATION S-K, ITEM 601(A)(5) BECAUSE THEY DO NOT CONTAIN INFORMATION MATERIAL
TO AN INVESTMENT OR VOTING DECISION AND THAT INFORMATION IS NOT OTHERWISE
DISCLOSED IN THE EXHIBIT OR THE DISCLOSURE DOCUMENT
EXHIBIT A TO MEMORANDUM OF LEASE
DESCRIPTION OF PREMISES
[Omitted.]
Exhibit 10.25
SUPPLY AGREEMENT
This Supply Agreement (the "Agreement") is entered into this 19th day of June, 2020 (the "Effective Date") by and among Giner ELX, Inc., a Delaware corporation ("Giner")
and H2B2 Electrolysis Technologies, Inc., a Delaware corporation ("H2B2")(Giner and H282 may each be referred to as a "party" and collectively as the "parties"
Background: Giner manufactures and sells a range of electrolyzer stacks for the
power to gas and mobility markets (collectively, "Stacks") and H2B2-desires to purchase Stacks that it will resell as integrated with its balance of plant
systems ("BoP").
For good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows:
Giner will provide the Stacks and related materials and services (collectively, the "scope of supply") described in one or more purchase orders mutually agreed upon by
the parties. Each purchase order will be in a form reasonably acceptable to Giner and will include a description of the equipment, materials or services covered by the purchase order, the price for the listed materials and services, delivery
date(s), final place of use, and such other information as the parties mutually agree upon.
Giner agrees to reserve a minimum of 2.5 MW of its Stack manufacturing capacity for H282 for the 2021 calendar year. Reservation of capacity in excess of 2.5MW in the
2021 calendar year requires mutual agreement of both parties. For subsequent years, Giner agrees to reserve at least 150% of the prior years' purchase by H282. H2B2 will confirm a specific amount of capacity requested by September 30th of the
calendar year prior to the calendar year of purchase. This confirmation of reserved capacity will include a forecast of stack model types, quantities, projected shipping dates and a mutually agreed upon price schedule. H282 agrees to place
noncancelable firm purchase orders associated with this reserved capacity at or in advance of standard lead-timeln the event H2B2 does not make purchases in excess of $250,000 for two consecutive calendar years (with the first two-year examination
period starting in 2021), Giner shall have no further obligations to reserve capacity for H2B2. Further, Commencing in 2025, if H2B2 does not make purchases in an amount that is greater than 2.5% of Giner Stack revenues from third parties for two
consecutive calendar years, Giner shall have no further obligations to reserve capacity for H282. This right shall not be terminated upon any capital raise by or sale (or merger, or similar transaction) of H282, provided that such entity providing
capital to H2B2 or purchaser may not be a direct competitor of Giner, or have equity participation by a China-based or Chinese-controlled fund or company.
If requested by H2B2, GINER may supply spare parts at such prices as the parties mutually agree upon.
To the extent provided in a purchase order, Giner may provide additional technical consulting or engineering services on a per hour basis related to BoP implementation,
commissioning and testing at site, third party inspections and related matters. All additional services must be agreed upon in advance in an accepted purchase order. H2B2 shall only resell Stacks as implemented in a BoP and not on a standalone or
separate basis unless agreed upon in writing by Giner. All uses and implementations of the Stacks shall be in strict compliance with Giner operating documentation or requirements.
The supply of Stacks pursuant to this Agreement is on a non-exclusive basis and Giner may supply Stacks to other parties without restriction. During the
term of this Agreement H2B2 shall not manufacture stacks that are similar to or would otherwise compete with the Stacks. H2B2's violation of this provision shall be grounds fer immediate termination of this Agreement by Giner.
The Stacks and related materials and equipment are to be delivered FOB Giner's manufacturing facility. Title to and risk of loss or damage for the products shall pass to
H2B2 upon release of the products by Giner to carriers or shippers transporting the products from its facility. The delivery dates for the scope of supply listed in each purchase order will be as set forth in the purchase order.
The price and payment schedule for the scope of supply listed will be as set forth in the relevant purchase order. Any pricing or payment terms offered by Giner to H282 with respect to the sale of Stacks will be at least as favorable as the pricing and payment terms offered by Giner on commensurate sales
of Stacks to third party; provided, however that this will only apply to individual sales in excess of $150,000.
The price for additional technical consulting and engineering services will be GINER's then current rates, and a rate schedule will be provided on request. Ancillary
expenses for travelling will be compensated by H282 according to the actually accrued cost.
Payment for additional services will be made against invoice, signed time reports and travel receipts. All payments are due within 30 days of invoice unless otherwise
provided in the purchaser order.
4.
|
Terms of Purchase; Liability Limitations
|
Giner's Terms and Conditions of sale (the "Terms and Conditions") in effect at the time the parties execute a purchase order shall apply to the scope of supply
thereunder. In the event of a conflict between this Supply Agreement and the Terms and Conditions, this Agreement shall control. A copy of Giner's current Terms and Conditions is attached as Appendix A.
As H2B2's exclusive remedy for any material failure of the Stacks to perform as warranted in the Terms and Conditions, and except as otherwise set forth in the Terms and
Conditions, Giner shall use commercially reasonable efforts to correct such material failure. Giner shall not be obligated to correct or otherwise remedy any such failure if H2B2 has made any unauthorized changes whatsoever to the Stack or has
misused or damaged the Stack in any respect or if H2B2 has not reported to Giner the specific existence and nature of such failure promptly in writing upon discovery thereof.
EXCEPT AS SET FORTH IN THE TERMS AND CONDITIONS, GINER MAKES NO WARRANTY OR REPRESENTATION WITH RESPECT TO THE STACKS, SCOPE OF SUPPLY OR ANY OTHER RELATED PRODUCTS OR
SERVICES AND DISCLAIMS AND EXCLUDES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL IMPLIED WARRANTIES INCLUDING, WITHOUT LIMITATION, THE IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND NONINFRINGEMENT.
IN NO EVENT SHALL GINER BE LIABLE FOR ANY INDIRECT, SPECIAL, CONSEQUENTIAL, OR INCIDENTAL DAMAGES, HOWEVER CAUSED, INCLUDING, WITHOUT LIMITATION, ANY DAMAGES ARISING OUT OF THE USE OR OPERATION OF THE SCOPE OF SUPPLY (INCLUDING ALL STACKS AND ALL
RELATED PRODUCTS AND SERVICES), DELAYS IN DELIVERY OR REPAIR, LOSS OF USE OF THE STACKS, OR LOSS OF USE OR DAMAGE TO ANY BOP OR OTHER FACILITIES OR EQUIPMENT OF H2B2 OR ITS CUSTOMERS, REGARDLESS OF WHETHER SUCH DAMAGES WERE FORESEEABLE OR WHETHER
GINER HAD BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. GINER'S MAXIMUM AGGREGATE LIABILITY FOR ALL DIRECT DAMAGES OR OTHER AMOUNTS ARISIGING UNDER A PURCHASE ORDER WILL BE LIMITED TO THE PAYMENTS ACTUALLY RECEIVED BY GINER FOR PRODUCTS ANO/OR
SERVICES UNDER SUCH PURCHASE ORDER.
H282 shall comply with all applicable laws and regulations relating to the implementation, sale and installation of all Stacks and all related BoPs. H2B2 certifies that
no Stacks will be exported to any country in violation of U.S. law.
The parties agree that certain information, including but not limited to intellectual property, pricing, and account information supplied by each to the other during the
course of this Agreement is proprietary, secret or confidential. All such information shall be held in confidence by the receiving party, shall be used only for the purposes of this Agreement and shall not be disclosed to any third party.
Information shall not be subject to the provisions of this Section if it is: (i) in the public domain at the time of disclosure or thereafter, without action by recipient; (ii) known to the receiving party at the time of disclosure; (iii) disclosed
to the receiving party without an obligation of confidentiality by a third party; or (iv) developed independently by the receiving party, by personnel without access to the confidential information. The receiving party may disclose information to
the extent requested or required by a governmental or judicial entity, provided such disclosure is limited to the extent permitted, and sufficient notice is provided to the other party.
The initial term of this Agreement shall commence on the date first set forth above and shall continue for a period of 5 years. At the end of the initial
term and each renewal term thereafter, this Agreement shall automatically renew for an additional 1 year tenn unless terminated by either party by providing written notice to the other at least 30 days prior to the expiration of the then current term.
Either party will have the right to terminate this Agreement immediately by delivery of written notice to the other party if the other party is in material
breach of any warranty, term, condition or covenant of this Agreement, a'ld the breaching party has failed to cure that breach within 30 calendar days after receiving written notice of that breach anq
of the non-breaching party's intention to terminate.
Any termination hereunder shall not be deemed a cancellation of any purchase order mutually agreed upon by the
parties before the effective date of such termination. Notwithstanding any termination of this Agreement, all Sections regarding ownership, payment, limitations on warranties and damages, indemnification
and confidentiality shall survive and remain in effect in accordance with their terms.
H282 will defend and indemnify Giner against third party claims, actions, judgments, direct damages, fines, costs and other expenses (including reasonable legal costs) (collectively the "Claims") arising out of H2B2's failure to comply with the requirements of this Agreement. In relation to any
Claim: (i) Giner shall promptly notify H2B2 of such Claim; (ii) H282 shall have sole control of the defense and/or settlement thereof; (iii) Giner shall furnish to H282 on request all Information in Giner's possession or control for such defense; and (iv) Giner shall cooperate with H2B2 in the defense of such Claims as requested by H2B2 and in
such case, H282 will reimburse Giner's reasonable and necessary costs.
This Agreement shall be governed by and construed in accordance with the
internal laws of the Commonwealth of Massachusetts. The parties submit to the exclusive jurisdiction of the federal and state courts located in Boston, Massachusetts over any claim or dispute arising out of this Agreement. This Agreement constitutes the entire agreement between the parties with respect to the
matters set forth herein and shall not be amended, altered or changed except by a written agreement signed by both parties. Any terms and conditions in any purchase order or other instrument issued by H282 or its customers which are not accepted in writing by Giner shall not be binding. If any provision of this Agreement shall for any reason be held illegal or
unenforceable, such provision shall be deemed separable from the remaining provisions of this Agreement and shall in no way affect or impair the validity or enforceability of the remaining provisions of this Agreement. All notices shall be in
writing and delivered to the other party's last known business address, and will be deemed duly given upon receipt. Neither party will be in breach of this Agreement by reason of any failure or delay in its performance hereunder (including a
breach of the limited warranty granted hereunder) if such failure is due to causes beyond its reasonable control, including, but not limited to, acts of nature, delays in transportation, inability beyond its reasonable control to obtain necessary
labor or materials, or events such as fires, floods, earthquakes, storms, war, act of public enemy, civil commotion, pandemic and the like or by any raw, rule, regulation, order or other action by any public authority. To the extent failure to
perform is caused by such an event, such party shall be excused from performance hereunder so long as such event continues to prevent such performance. H282 may not assign, subcontract or delegate this Agreement or any of its rights and
obligations under this Agreement without the prior written consent of Giner and providing H2B2 remains liable for its obligations under this Agreement. Any attempted assignment, delegation, or
subcontracting by H2B2 in contravention of this provision shall be void and ineffective.
GINER ELX, INC
|
H2B2 Electrolysis Technologies, Inc
|
|
|
By: /s/ Andrew Belt
|
By: /s/ Javier Brey
|
Name: Andrew Belt |
Name: Javier Brey |
Title: CEO |
Title: CEO |
APPENDIX A
GINER STANDARD TERMS AND CONDITIONS OF SALE [ATTACHED]
Commercial Terms & Conditions
In the context of these conditions:
The term "Buyer" shall mean the company ordering the goods specified in the quotation. The term "Supplier" shall mean Giner, ELX,
Inc. The term "Quotation• shall mean the quotation to which this Appendix is attached. The term "Purchase Order" shall mean the Buyer's purchase order. The word "Products" means the article or things specified in the Purchase Order (including
packing materials, containers and accompanying pallets) and the word “services” means the described in, or attached lo, the Purchase Order. The word "Contract• shall mean the contract between the Buyer and the Supplier consisting of the Purchase
Order, the Quotation, these conditions and any other document specified in the Purchase Order. Should there be any inconsistency between the documents comprising the Contract they shall have precedence in the order listed below:
The Purchase Order, save and except for Buyer's standard terms and conditions that may attach to such Purchase Order; The Quotation;
These Conditions; Any other documents specified in the Purchase Order.
2.
|
Warranties by Supplier
|
Supplier shall be responsible for the material and workmanship of all Products supplied hereunder, and shall warrant that such Product(s) shall be free from defects in
material and workmanship.
The Supplier's obligation under this warranty is limited to repairing or replacing, at the Supplier's discretion, any Product which the Supplier, upon examination,
determines to be defective.
This warranty shall only apply to defects due to defective material and/or poor workmanship. This warranty shall not apply to defects that may arise from:
|
(i)
|
normal wear and tear;
|
|
(ii)
|
improper operation or handling, negligence, improper use, and improper maintenance; and
|
|
(iii)
|
any unauthorized modification of the Product(s) or any part thereof.
|
In order to submit a warranty claim, the Buyer must provide a complete record of historical data requested by the Supplier
from the stack records for analysis. This data must include: water purity, pressure, stack current and voltage, temperature, H2 production values, and all other data recorded by the system PLC.
If the Buyer cannot provide this real-time data for the lifetime of the stack for any reason, a warranty claim will not be accepted by the Supplier.
While processing a warranty claim, the Supplier will analyze historical system data, and will inspect stack(s)/system to confirm proper operation, handling and safety.
It is the responsibility of the Buyer to pay close attention to important guidance in the stack / system manual relating to safe and acceptable operation of the equipment. As an illustration, If the stack / system has been operated at higher
operating temperatures or with lower quality water than specified in the manual a warranty claim will not be accepted by the Supplier.
The stack I system manual is the only official source of approved operating instructions for the stack / system. You should
always follow the instructions and procedures in the manual. If you receive any instruction from a service engineer or a company official that varies from the instructions in the manual, this must be documented in writing and approved by Giner ELX
engineering management before you implement.
All shipment costs incurred in connection with the delivery of a Product to the Supplier pursuant to this warranty shall be for the account of the Buyer. All shipment
costs incurred in connection with the delivery of a returned Product or a replacement thereof to the Buyer pursuant to this warranty shall be for the account of the Supplier.
In the event that the Supplier furnishes separate equipment to the Buyer which is not of its manufacture, the limit of the Supplier's liability shall not extend beyond
assisting the Buyer in obtaining warranty service from the manufacturer of such equipment.
Supplier expressly disclaims all other warranties, express or Implied by law, custom or trade, including implied warranties of condition, merchantability or fitness for
purpose.
3.
|
Limitation of Liability
|
The Supplier shall not be liable for any direct, indirect, special, incidental, penal, consequential or other damages or losses
of any nature whatsoever resulting from the misuse or malfunction of any Product(s) supplied hereunder. No obligations other than those expressly set out herein are expressed or implied and under no circumstances shall the Supplier be liable for an
amount which is in excess of the purchase price of the Product(s) in question.
4.
|
Warranty and Technical Assistance
|
The Supplier will provide warranty services and technical assistance in connection with its Product(s) and the operation thereof. Under no circumstances shall the
Supplier be liable for any damages or losses arising out of the furnishing of such services or assistance, nor shall it be liable with regard to any omission in relation thereto.
Unless otherwise stipulated In the Purchase Order, Product(s) will be delivered Ex Works, Supplier's European facility. The
title and risk in the Product(s) shall remain with the Supplier until delivery has been completed at the point specified in the Purchase Order, or if the terms of such Purchase Order are Ex Works then at
the point in time when such Products(s) are loaded onto the Buyer's or the Buyer's carriers' vehicle, when the title and risk in the Product(s) shall pass to the Buyer absolutely.
The Supplier shall not be liable for any delays or defaults in the manufacture or delivery of any Product(s) supplied hereunder and shall not be liable for any failure
to provide notice of any such delays or defaults to the Buyer. Without limiting the generality of the foregoing, the Supplier shall not be liable for any delays or defaults resulting from the actions of any subcontractor.
All Products shall be properly classified, described, packaged, marked and labeled by the Supplier for shipment, and shall be in proper condition for transportation in
accordance with any applicable local states or Federal laws or regulations of USA. However, the Buyer acknowledges and agrees that the Supplier shall not be liable for any damage or claims arising from shipment packaging or loss or damage in
transit. Unless otherwise specified all shipping costs, freight forwarding and insurance shall be for the account of the Buyer.
In the event that the Buyer contracts to receive the Product(s) supplied via express or air express shipments, the Buyer may direct that the Product(s) be so shipped,
and the cost of such shipment shall be for the account of the Buyer, unless otherwise expressly stipulated.
The Buyer may make changes to the specifications or drawings relating to the Product(s) supplied hereunder only with the prior written consent of the Supplier, and in
any such circumstances the Supplier may make a reasonable adjustment to the total price to compensate for any additional costs thereby incurred by the Supplier.
The Supplier reserves the right to make changes in detail of design, construction, arrangement or equipment as shall, in its judgment, result in improved performance of
the Product(s) supplied hereunder, and no such change shall give rise to any right of cancellation or return on the part of the Buyer.
The Supplier retains the right to unilaterally subcontract any aspect of the manufacture or delivery of the Product(s) supplied hereunder to any third party(s) and
nothing herein shall be construed so as to limit such right.
8.
|
Modification and Amendment
|
These terms and conditions may be modified or amended by mutual agreement of the Seller and the Buyer and a facsimile signature or electronic confirmation shall be
confirmed at such modification or amendment.
9.
|
Cancellations and Returns
|
No order may be cancelled and no Product(s) may be returned for credit, repair or replacement without the prior written consent of the Supplier. In the event that any
unauthorized return shipment is made to the Supplier, the Supplier reserves the right to refuse such shipment. Unless otherwise specified herein, all return shipments shall be for the account of the Buyer.
Neither the Supplier nor the Buyer shall be responsible for delays or defaults in respect of any Product(s) supplied hereunder that result from war (whether or not
declared), riot, terrorism, fire, flood or other acts of God, but the party claiming relief under this provision shall notify the other party forthwith as soon as such delay or default is anticipated.
11.
|
Intellectual Property
|
The Buyer acknowledges and agrees that all aspects of the Product{s) supplied pursuant to a Purchase Order, including but not limited to all mechanical components,
electrical components, electronic hardware, software, trade secrets, design principles, specifications, algorithms, source codes, documentation, operating principles, methodologies and all upgrades, changes, modifications or alterations thereto,
whether affected In consultation with the Supplier or by the Supplier alone (the “Intellectual Property'') shall remain the exclusive property of the Supplier.
Upon acceptance of a Purchase Order; the Supplier shall grant a royalty-free, non-exclusive, non-assignable license to the Buyer to use the Intellectual Property as
necessary for the use and operation of the Product(s) within the specified operating parameters. Any software supplied with the Product(s) is licensed only for use with the Product(s) in connection with which it is supplied, in its supplied form.
The Buyer agrees that it shall not disassemble, analyze or reverse-engineer any Product(s) supplied to it by the Supplier.
12.
|
Warranties by Supplier
|
Supplier shall be responsible for the material and workmanship of all Products supplied hereunder, and shall warrant that such Product(s) shall be free from defects in
material and workmanship.
The Supplier's obligation under this warranty Is limited to repairing or replacing, at the Supplier's discretion, any Product which the Supplier, upon examination,
determines to be defective.
This warranty shall only apply to defects due to defective material and/or poor workmanship. This warranty shall not apply to defects that may arise from:
|
(i)
|
normal wear and tear;
|
|
(ii)
|
improper operation or handling, negligence, improper use, and improper maintenance; and
|
|
(iii)
|
any unauthorized modification of the Product(s) or any part thereof.
|
All shipment costs incurred in connection with the delivery of a Product to the Supplier pursuant to this warranty shall be for the account of the Buyer. All shipment
costs incurred in connection with the delivery of a returned Product or a replacement thereof to the Buyer pursuant to this warranty shall be for the account of the Supplier.
In the event that the Supplier furnishes separate equipment to the Buyer which is not of its manufacture, the limit of the
Supplier's liability shall not extend beyond assisting the Buyer in obtaining warranty service from the manufacturer of such equipment.
Supplier expressly disclaims au other warranties, express or implied by law, custom or trade, including implied warranties of condition, merchantability or fitness for
purpose.
13.
|
Limitation of Liability
|
The Supplier shall not be liable for any direct, indirect, special, Incidental, penal, consequential or other damages or losses of any nature whatsoever resulting from
the misuse or malfunction of any Product(s) supplied hereunder. No obligations other than those expressly set out herein are expressed or implied and under no circumstances shall the Supplier be liable for an amount which is in excess of the
purchase price of the Product(s) in question.
14.
|
Warranty and Technical Assistance
|
The Supplier will provide warranty services and technical assistance in connection wi.th its Product(s) and the operation thereof. Under no circumstances shall the
Supplier be liable for any damages or losses arising out of the furnishing of such services or assistance, nor shall it be liable with regard to any omission in relation thereto.
The Contract constitutes the entire agreement between the Buyer and the Supplier with regard to the Product{s) to be supplied hereunder and supersedes all prior
agreements, understandings, negotiations and discussions, whether oral or written, of the Buyer and the Supplier. There are no warranties, representations or other agreements between the Buyer and the Supplier in connection with the Product(s) to
be supplied hereunder except as specifically set forth on the Purchase Order or specified herein. No supplement, modification, waiver or termination of the Contract shall be binding unless executed in writing by the Buyer and the Supplier.
The constriction, validity and performance of the Contract shall be governed by laws of the Commonwealth of Massachusetts. All disputes arising in connection with the
Contract shall be finally settled under the Rules of Conciliation and Arbitration of the International Chamber of Commerce by a single arbitrator appointed in accordance with such rules, and the place of arbitration shall be Boston, Massachusetts.
No failure or delay by either Party in exercising any right, power or privilege under the Contract operate as a waiver thereof, nor will any single or partial exercise
preclude any other or further exercise of any right, power or privilege under the Contract.
The Supplier reserves the right to publish the fact that it has contracted to furnish the Buyer with the Products or services ordered here
Exhibit 10.26
IN ACCORDANCE WITH ITEM 601(A)(6) OF REGULATION S-K, CERTAIN INFORMATION HAS BEEN OMITTED
FROM THIS EXHIBIT BECAUSE IT CONTAINS PERSONALLY IDENTIFIABLE INFORMATION.
[***] INDICATES THAT INFORMATION HAS BEEN REDACTED.
****SIMPLE COPY**** |
|
|
|
ÍÑIGO CASLA URIARTE
Notary
Paseo de la Castellana, No. 139 - 6°- Derecha
Tel. 91 579 00 84
Fax. 91 570 47 50
28046 MADRID
|
PUBLIC DEED OF SALE AND PURCHASE OF SHARES OF
THE COMPANY “H2B2 ELECTROLYSIS TECHNOLOGIES, INC.” -----------------------
NUMBER ONE THOUSAND FOUR HUNDRED AND SEVENTY-FOUR(1,474)
-------------------------------------------------------------------------------------------------------------------------------------------------------
In Madrid, on the thirtieth day of May two thousand and twenty-three
----------------------------------------------------------------------
Before me, IÑIGO CASLA URIARTE, Notary Public of Madrid and of its
Illustrious College with residence in this Capital,
----------------------------- APPEARING -----------------------------
On the one hand:
-----------------------------------------------------
MR PABLO VILA FLORENSA, [***].
And on the other hand:
-----------------------------------------------
MR. ANSELMO ANDRADE FERNÁNDEZ DE MESA, [***] .
The personal circumstances of the appearing
parties are recorded in their respective statements. ----------------
From the identification document/s submitted by
the appearing parties, by which I have identified them, I keep a copy on computer media obtained by me, in a file other than the notarial protocol, in accordance with Article 4 of ORDER EHA/114/2008, of 29 January.
---------------- TAKING PART HEREIN AS
FOLLLOWS= -
A) MR PABLO VILA FLORENSA, in the name and
on behalf of, as an individual representative, the company “ARRAUT Y SALA REIXACHS, S.L.P.”, a company duly incorporated under the laws of Spain, registered with the Commercial Registry of Barcelona under Volume 43.445, Page 112, Sheet
B-430001, whose registered office is located at Vía Augusta 48,1°,08006, Barcelona, with Tax Identification Number B-65891343 (the “Bankruptcy Administration”).
The Bankruptcy Administration acts in its
capacity as bankruptcy administrator of the entity called ARDACHON, S.L.”, a company duly incorporated under the laws of Spain, registered with the Commercial Registry of Madrid under Volume 21,498, Page 131, Sheet M-382400, whose registered
office is located at Calle Fortuny, 19, Entresuelo Derecha, 28010, Madrid, with Tax Identification Number B84516723 (the “Seller”). -------------------------
****IS A SIMPLE COPY**** |
|
|
|
|
Through the SIGNO platform I have consulted if
this Tax Identification Number is revoked, with a negative result that I incorporate herein. -----------------
The Bankruptcy Administration acts by virtue of
the appointment agreed by the Commercial Court number 5 of Madrid, in Order dated May 21, 2020, of the declaration of bankruptcy of ARDACHON, S.L., issued in ordinary bankruptcy proceeding 193/2020. -------------------
Having examined the aforementioned Order, with
its relevant Secure Verification Code, as well as the Bankruptcy Administration Credential issued by the Attorney of the Administration of Justice of the Commercial Court number 5 of Madrid, I, the Notary, assert under my responsibility that, in my
opinion, the representative powers alleged by the intervening party are sufficient for this granting, resulting from that Order that he has sufficient powers for the act, business or sale and purchase of shares agreement that is specifically written
in this instrument. -------------------------
BENEFICIAL OWNER.- I hereby state for the
record that I, the Notary, having complied with the obligation to identify the beneficial owner imposed by Law 10/2010, of April 28, for which purpose: (a) I have consulted the Beneficial Owner Database (BDTR) created by the General Council of the
Notary of 24 March 2012 (BOE 28 April 2012), and (b) I have collected from the company’s representative the relevant representation about such beneficial ownership, resulting in concordance between the information recorded in the BDTR and that
provided by the company’s representative, reaffirming its validity. ----------
B) AND MR. ANSELMO ANDRADE FERNÁNDEZ
DE MESA, in the name and on behalf of, as Chief Executive Officer of the commercial entity called “H2B2 ELECTROLYSIS TECHNOLOGIES, INC.”, a company duly incorporated under the laws of Delaware, registered with the registry of the State
of Delaware, whose registered office is located at 300 Delaware Ave Ste 210-A, Wilmington, DE 19801, United States of America, with Spanish Tax Identification Number N4008308A (the “Buyer”). --
****IS A SIMPLE COPY**** |
|
|
|
|
Through the SIGNO platform I have consulted if
this Tax Identification Number is revoked, with a negative result that I incorporate herein. ------------------------
He acts in his capacity as Chief Executive
Officer, a position he asserts in force, for which he was appointed, and accepted, at the meeting of the Board of the company dated December 30, 2022. He shows me a copy of the minutes containing the aforementioned meeting, I verify it and return it,
written in English, language that I know enough, and translated into the Spanish language, duly apostilled, judging myself, the Notary, his powers as sufficient for the granting of this deed, since he holds the organic representation of the Company,
having by virtue of his position the full power of representation of the Company. ------
Having examined the authorized copy outlined, I,
the Notary, declare under my responsibility to be, in my opinion, sufficient for this granting, the representative powers alleged by the intervening attorney, resulting from the fact that said attorney has sufficient powers of attorney for the act,
business or sale and purchase of shares agreement that is specifically written in this instrument.
I also record that I have complied with the
obligation to identify the “beneficial owner” imposed by Law 10/2010, of April 28, on prevention of money laundering and financing of terrorism, in the terms of Article 4 of the aforementioned Law - that is, individual who ultimately owns or
controls, directly or indirectly, a percentage greater than 25% of the capital or voting rights of the granting legal entity, or that by other means exercises control, direct or indirect, of its management-, the result of which is recorded in the
minutes authorized before the Notary of Seville, Mr. Rafael José Diaz Escudero, today, under number 953 of his public records, stating the representation of the Company, the content of which has not been modified.---------------
Hereinafter, the Seller and the Buyer shall be
collectively referred to as the “Parties” and individually as the “Party”.--------------------------
I identify the appearing parties by the ID cards that they show me and
have, in my opinion, the legal capacity necessary to grant this deed of SALE AND PURCHASE OF SHARES OF THE COMPANY “H2B2 ELECTROLYSIS TECNOLOGIES, INC.”, for which purpose, ------------
****IS A SIMPLE COPY**** |
|
|
|
|
------------------------------- EXPRESS:
-------------------------------
I .- H2B2 ELECTROLYSIS TECHNOLOGIES,
INC.” is a company incorporated in the State of Delaware, domiciled at 300 Delaware Ave Ste 210-A , Wilmington, DE 19801, United States of America, with [Tax Identification Number N4008308A ] (hereinafter, the “Company”). -----
The share capital of the Company is fully
subscribed and paid up, divided into 10,346,314 shares of 0.00001 DOLLARS of par value each. ------------------------
II .- The Seller is the full owner, with
all their rights and free of charges, encumbrances and any other rights in favor of third parties, of 266,667 shares of the Company, (the “Shares”).
III .- The Seller is a company that was declared bankrupt by virtue of order of the Commercial Court number 5 of Madrid, on May 21, 2020.
The Seller is currently in the liquidation phase within the insolvency proceedings, opened by virtue of the order of the Commercial Court number 5 of Madrid, on December 15, 2021.
IV .- It is the will of the Parties to proceed with the sale and purchase of the Shares. ------------------------ ----------
V .- The Seller declares that, for the transfer that by this Deed is formalized, all the legal and statutory requirements have been met.
------------------------------------------ ----------
VI .- By virtue of the foregoing, based on the veracity of the foregoing recitals, both Parties agree to enter into this agreement for the
sale and purchase of the Shares (the “Agreement”) that shall be governed by the following ----- ----------
------------- CLAUSES: -------------------------
1. SALE AND PURCHASE ---------------------------
1.1 Object -------------------------------------
The purpose of this Agreement is the transfer, through the sale and purchase, of the Shares representing a 2.57% of the Company’s share capital
(the “Sale and Purchase”). The Sale and Purchase shall be struc-tured as follows: (i) the transfer by the Seller of 193,333 Shares representing 1.87% of the Company’s share capital shall be subject to compliance with the condition precedent
provided for in Clause 1.2 (the “First Sale and Purchase”); and (ii) the transfer by the Seller of 73,334 Shares of the Company representing 0.70% of the Company’s share capital shall be subject to compliance with the condition precedent
provided for in Clause 1.3 (the “Second Sale and Purchase”). ------------------------------------------
****IS A SIMPLE
COPY**** |
|
|
|
|
1.2 . First Sale and Purchase ------------------
By virtue of this Deed, the Seller undertakes to transfer to the Buyer, who undertakes to acquire, once the First Sale and Purchase Price is
received (as defined in Clause 3) within a maximum period of 48 hours from the granting of this deed, in the terms provided for in Clause 3, 193,333 Shares of the Company, in full ownership, with all their rights and, as the Seller states, free of
encumbrances and restrictions on their transferability (except those contained in the bylaws). ---------------------------------------------
In the same act as the receipt of the First Sale and Purchase Price, the Seller shall inform the Notary of such circumstance and the transfer of
193,333 Shares of the Company to the Buyer will occur under the terms set out in Clause 4.
1.2. Second Sale and Purchase ------------------
By virtue of this Deed, the Seller undertakes to transfer to the Buyer, once the Second Condition (as defined below) is fulfilled, 73,334 Shares
of the Company, in full ownership, with all their rights and, as stated by the Seller, free of encumbrances and restrictions on their transferability (except those contained in the bylaws). ---------------------
For the purposes of this deed, “Second Condition” means the payment by the Buyer of the price of the Second Sale and Purchase (i.e., the
amount of 5,500,000 Euros), prior to July 31, 2023.-----------------------------------------------
****IS A SIMPLE
COPY**** |
|
|
|
|
In the same act as the fulfillment of the Second Condition, the Buyer and the Seller shall formalize the Second Sale and Purchase and the
consequent transfer to the Buyer of 73,334 Shares of the Company. -
2. - ADDITIONAL ACTIONS IN RELATION TO THE FIRST SALE AND PURCHASE ----------------------------------
Once the Seller receives the First Sale and Purchase Price (as defined below), since the Company is a company incorporated under the laws of the
State of Delaware, the Parties shall carry out any additional actions that are necessary or convenient for the sale and purchase of the Shares subject to the First Sale and Purchase to be effective with respect to any third party.
--------------------------------------------
Seller hereby grants a power of attorney in favor of Buyer to execute, on its behalf and in its right, (even if it incurs self-contracting or
multi-representation) any public or private documents needed for the transfer to be fully valid with respect to any third party in accordance with the laws of the State of Delaware.
3. FIRST SALE AND PURCHASE PRICE ----------------
The price agreed by the parties is FOURTEEN MILLION FIVE HUNDRED THOUSAND EUROS (€ 14,500,000.00) in consideration for the Shares subject
to the First Sale and Purchase (the “First Sale and Purchase Price”), transfer of which will be executed by the Buyer from the account opened in the entity [***], with IBAN [***]in favor of the Seller in the account opened in the entity [***],
with IBAN [***]. ------------------------------
The Parties shall record the receipt of the First Sale and Purchase Price, in accordance with the provisions of Clause 4.
----------------------------------------------------
It is hereby stated that, once the Seller has received the First Sale and Purchase Price, the First sale and Purchase formalized by virtue of
this deed by the Seller shall constitute the divestment of a Spanish company abroad, which must be communicated telephonically to the Foreign Investments Registry, by means of the form D-5B, in accordance with the provisions of the Resolution of 27
July 2016, of the General Directorate of International Trade and Investments of the Ministry of Economy and Competitiveness, of which the representative of the Seller states to be aware. --------------------------------------------
****IS A SIMPLE
COPY**** |
|
|
|
|
4. RECEIPT OF FIRST SALE AND PURCHASE PRICE
The receipt of the First Sale and Purchase Price shall be recorded by sending an email with the text set out below from the Seller to the Notary
Public from one of the following addresses: [***] and its receipt by the Notary authorizing this Deed at the following address [***], including in copy the following recipients: [***]: -----------
“I hereby inform you of the receipt of the First Sale and Purchase Price in the following Seller account opened at [***]: [***]”.
The Parties agree that, alternatively, the receipt of the First Sale and Purchase Price may also be acknowledged by means of notarial attestation
(diligencia notarial) to this deed signed by the Seller and the Buyer before the authorizing Notary, confirming the receipt by the Seller of the First Sale and Purchase Price. ---------------------------------------------
The Parties require me, the Notary, to: ---------
(i) if the receipt by the Seller of the First Sale and Purchase Price has been acknowledged to me in due time and form, I, the Notary, shall
record this fact in this Deed by means of a notarial attestation indicating that the First Sale and Purchase shall be fully legally effective in accordance with its own terms and conditions;
(ii) if, at 11:59 p.m. in Madrid on June 2, 2023, the Seller’s receipt of the First Sale and Purchase Price has not been acknowledged, I, the
Notary, shall record this fact by means of notarial attestation in this Deed; and --------------
****IS A SIMPLE
COPY**** |
|
|
|
|
(iii) not to issue a copy, simple or authorized, of this deed, until the notarial attestation acknowledging receipt by the Seller of the First
Sale and Purchase Price has been issued in the terms provided for in Clause 4 -------------------------------------------
I, the Notary, accept the request. ------------
5. EXPENSES AND TAXES -------------------------
All expenses and taxes arising from this deed shall be paid by the Buyer. --
6. NOTICES ------------------------------------
6.1 Requirements ------------------------------
Any communication between the Parties relating to the Contract must be made in writing, either by mail or fax sent to the addresses at the following
section. ------------------------------------------
6.2 Address -----------------------------------
For purposes of communications, the parties designate the following addresses: ---------------------
- Seller --------------------------------------
1. Address: [***].
2. Recipient: [***] ------------------------
3. Email: [***]
- Buyer -----------------------------------------
4. Address:[***],
-----------------------------------------------
5. Recipient: [***]
6. Email: [***]
7. JURISDICTION --------------------------------
The parties, expressly waiving any other jurisdiction that may correspond, submit to the Courts and Tribunals of the city of Madrid, the
resolution of any disagreements that may arise from this Agreement. -------------------------------
8. APPLICABLE LAW ------------------------------
This Agreement shall be governed by Spanish Common Law.
8.1 The appearing parties declare that this transfer is exempt from the Tax on Property Transfers and Documented Legal Acts and Value
Added Tax, under the provisions of Article 108 of Law 24/1988, of July 28, on the Securities Market, because it is not included in any of the exceptions set out in such legal provision. ------------------
****IS A SIMPLE
COPY**** |
|
|
|
|
------- GRANTING AND AUTHORIZATION -------------
I make the legal reservations and warnings and, in particular, for tax purposes, those related to the tax obligations and responsibilities that
the parties are responsible for in their material, formal and sanctioning aspects and the consequences of any kind that would arise from the inaccuracy of their statements. As well as the obligation to submit this deed to liquidation of the
corresponding tax within a period of thirty business days as from today, being sanctioned in the manner established in the laws in cases of non-submission or late submission and its condition to the payment of said tax.
DATA PROTECTION: --------------------
The appearing party/s are informed of the following:
----------------------------------------
Their personal data will be processed in this Notary Office, which is necessary for the compliance with the legal obligations of the exercise
of the public notary function, in accordance with the provisions of the regulations provided for in the notary legislation, on the prevention of money laundering, tax and, if applicable, substantive legislation that applies to the documented legal
act or business. The communication of personal data is a legal requirement, with the grantor being obliged to provide the personal data, and being informed that the consequence of not providing such data is that it would not be possible to authorize
or intervene this public document. Their data will be kept confidential. -----
The purpose of the data processing is to comply with the regulations to authorize/intervene this document, its invoicing, subsequent
monitoring and the mandatory functions of the notarial activity, from which the existence of automated decisions may be derived, authorized by Law, adopted by the Public Administrations and assignee entities authorized by Law, may arise, including
the preparation of accurate profiles for prevention and investigation by the competent money laundering and terrorism financing authorities.
****IS A SIMPLE
COPY**** |
|
|
|
|
----------------------------------------------------
The notary will submit such data that is mandatory to the Public Administrations, to the entities and subjects stipulated by Law and, if applicable, to the Notary
that succeeds or replaces the current one in this notary office. -
The data provided will be kept for the years necessary to comply with the legal obligations of the Notary or whoever replaces him or her or
succeeds him or her.
You may exercise your rights of access, rectification, deletion, limitation, portability and opposition to processing by mail before the
authorizing Notary, located at Madrid-C.P.-28020, CALLE POETA JOAN MARAGALL, No. 38, 6°D. You also have the right to lodge a complaint with a supervisory authority.
----------------------------------------------------
The data will be processed and protected according to the Notary Act, Organic Law 3/2018, of 5 December, on the Protection of Personal
Data and guarantee of digital rights (or the replacing Act)and its implementing regulations, and Regulation (UE) 2016/679 of the European Parliament and of the Council of 27 April 2016 on the protection of natural persons with regard to the
processing of personal data and on the free movement of such data and repealing Directive 95/46/EC.
Being read this deed by the appearing party, and by me, that I explain it as appropriate, and being aware of its content, as stated, it is in
agreement, ratified and signed with me, the Notary, that: If it has been identified by what results from its documentation shown at the appearance of this deed, as established by the Organic Law of Notary Public, as a supplementary means, that its
consent has been freely given, that this granting is in accordance with the current legality and its duly informed will; and, in general, ------------------------------------------------------
I ATTEST to everything contained in this public instrument, issued on ten pages of stamped paper exclusively for notarial documents, this
and the ten previous correlative documents. ------------------------------------------------------
****IS A SIMPLE
COPY**** |
|
|
|
|
The signatures of the appearing parties follow.
Signed:
Iñigo Casla Uriarte. Signed. There is the stamp of the
*FOLLOWS ATTACHED DOCUMENTATION*
****IS A SIMPLE
COPY**** |
|
|
|
|
[A negative certificate of revocation of the Tax Identification Number of Ardachon, S.L. is attached]
CERTAIN IDENTIFIED SCHEDULES HAVE BEEN EXCLUDED FROM THE EXHIBIT PURSUANT TO
REGULATION S-K, ITEM 601(A)(5) BECAUSE THEY DO NOT CONTAIN INFORMATION MATERIAL
TO AN INVESTMENT OR VOTING DECISION AND THAT INFORMATION IS NOT OTHERWISE
DISCLOSED IN THE EXHIBIT OR THE DISCLOSURE DOCUMENT
****IS A SIMPLE
COPY**** |
|
|
|
|
Annex A
[Ommitted.]
****IS A SIMPLE
COPY**** |
|
|
|
|
Notarial attestation: (Referring to deed number 1,474, dated May thirty two thousand and twenty-three). I, IÑIGO CASLA URIARTE, authorizing Notary of this deed, hereby state that I have received, on May 30, 2023, at my address, an email issued by “ARDACHON SL Bankruptcy Administration” [***]", notifying me of the receipt of the price of the First Sale and Purchase in the Seller's account opened at the entity [***] number [***], which I print
and incorporate herein. Consequently, the First Sale and Purchase acquires full legal effect in accordance with its own terms and conditions. - - - - - - - - - -
With nothing further to be stated, I hereby terminate this notarial
attestation, and attest to what it is contained therein, as appropriate, as well as that it is extended, on a sheet of paper for exclusive notary use, serial HE, number 5062190, in Madrid on May thirty, two thousand and twenty-three. I ATTEST.
- - - - - - - - - -
****IS A SIMPLE
COPY**** |
|
|
|
|
Signed: Iñigo Casia Uriarte. Signed. There is
the stamp of the Notary.
* FOLLOWS ATTACHED DOCUMENTATION*
CERTAIN IDENTIFIED SCHEDULES HAVE BEEN EXCLUDED FROM THE EXHIBIT PURSUANT TO
REGULATION S-K, ITEM 601(A)(5) BECAUSE THEY DO NOT CONTAIN INFORMATION MATERIAL
TO AN INVESTMENT OR VOTING DECISION AND THAT INFORMATION IS NOT OTHERWISE
DISCLOSED IN THE EXHIBIT OR THE DISCLOSURE DOCUMENT
****IS A SIMPLE
COPY**** |
|
|
|
|
Annex B
[Ommitted.]
26
Exhibit 10.27
IN ACCORDANCE WITH ITEM 601(A)(6) OF REGULATION S-K, CERTAIN INFORMATION HAS BEEN OMITTED
FROM THIS EXHIBIT BECAUSE IT CONTAINS PERSONALLY IDENTIFIABLE INFORMATION.
[***] INDICATES THAT INFORMATION HAS BEEN REDACTED.
DEED RAISING TO PUBLIC STATUS THE “LOAN AGREEMENT” -----------------
NUMBER ONE THOUSAND FOUR HUNDRED AND EIGHTY-THREE (1,483)
In Madrid, on May thirtieth, two thousand and twenty-three. ---------------------------------------------
Before me, IÑIGO CASLA URIARTE, Notary Public of Madrid and of his Illustrious College residing in this Capital,
--------------------------------------------
----------------- APPEARING-------------------
On the one hand, as lender: ---------------------
MS. ROSA MARIA QUEIPO DE LLANO ARGOTE, [***]. ----------------------------------
On the other hand, as borrower: -----------------
MR ANSELMO ANDRADE FERNÁNDEZ DE MESA,
[***] . -----
The personal circumstances of the appearing parties are recorded in their respective statements.
From the identification document/s submitted by the appearing parties, I keep a copy on computer media obtained by me, in a
file other than the notarial protocol, in accordance with Article 4 of ORDER EHA/114/2008, of 29 January. ------------------------
-----------TAKING PART HEREIN AS FOLLOWS-----------
A).- DOÑA ROSA MARIA QUEIPO DE TRONO ARGOTE, in the name and on behalf of, as a verbal representative, the
company “APENET, S.L.”, (the “Lender”), with Tax Identification Number B-82732074, domiciled in Madrid, 28.006, Plaza del Marqués de Salamanca, number 2; incorporated indefinitely, by public deed dated July twenty-first, two thousand,
authorized by the notary of Madrid, Mr. Antonio Crespo Monerri, under number 2.775 of his public records; registered with the Madrid Commercial Registry under volume 15.521, Page 148, Sheet M-261073.
Its corporate purpose is to carry out investments in commercial companies and to provide economic advisory services thereof
(CNAE 6420). -----------------------
I, the Notary, warn the appearing party that
the legal effectiveness of this granting is subject to the subsequent ratification thereof by the represented company, despite which, the appearing party insists on the granting of this deed, relieving me, the Notary, of all liability.
-----------------------------------
BENEFICIAL OWNER: I, the Notary, hereby state for the record that the obligation of identification of the Beneficial
owner imposed by Spanish Law 10/2010, of 28 April, has been complied with, the result of which is recorded in the deed authorized by the Notary of Madrid, Mr Ignacio Manrique Plaza, on June twenty-fifth of two thousand and fifteen, under number 1,801
of his public records, his representative hereby stating that the content thereof has not been modified. -----
Pursuant to the provisions of Spanish Law 11/2021, of 9 July, on measures to prevent and fight tax fraud, transposing
Council Directive (EU) 2016/1164, of July 12, 2016, which amends Article 23 of the Notary Act, I, the Notary, consulted the Database of revoked Tax Identification Numbers with respect to the legal entities involved herein, having not obtained any
result. ------------------------------
For the purposes of Article 98 of Law 24/2001, and in accordance with the Resolution of the General Directorate of
Registries and Notaries of April 12, 2002, I hereby state that in my opinion, due to the position held, the representative powers accredited to request this deed to qualified at the beginning are sufficient, in the terms indicated below. -------
B) AND MR. ANSELMO ANDRADE FERNÁNDEZ DE MESA, for and on behalf of, as a Chief Executive Officer, the
commercial entity called “H2B2 ELECTROLYSIS TECHNOLOGIES, INC.”, a company duly incorporated under the laws of Delaware, registered with the Registry of the State of Delaware, domiciled at 300 Delaware Ave Ste 210-A, Wilmington, DE 19801,
United States of America, with Spanish Tax Identification Number N4008308A (the “Borrower”).
In accordance with the provisions of Law 11/2021, of 9 July, on measures to prevent and fight tax fraud, transposition of
Council Directive (EU)2016/1164, of 12 July 2016, which amends Article 23 of the Notary Act, I, the Notary, have consulted the Database of revoked Tax Identification Numbers with respect to the legal entities involved herein, having not obtained any
result. ----
Acting in his capacity as Chief Executive Officer, a position he asserts in force, for which he was appointed, and accepted
at the meeting of the Board of the company dated December 30, 2022. A copy of the minutes contained in the aforementioned meeting is shown to me, I verify it and return it, written in English, that I know enough, and translated into Spanish, duly
apostilled, judging myself, the Notary, his powers as sufficient ------------------------------------------ for the granting of this deed, since he holds the organic
representation of the Company, having by reason of his position the full power of representation of the Company. -------------------------------------
Having examined the authorized copy mentioned, I, Notary declare under my responsibility that, in my opinion, the
representative powers alleged by the intervening attorney-in-fact are sufficient for this granting, resulting from the fact that said attorney-in-fact has sufficient powers for the act, business or contract for the purchase and sale of shares that is
specifically written in this instrument. ------
I also record that I have complied with the obligation to identify the “beneficial owner” imposed by Law 10/2010, of April 28,
prevention of money laundering and terrorist financing, under the terms of Article 4 of the aforementioned Law –i.e. individual who ultimately owns or controls, directly or indirectly, a percentage greater than 25% of the capital or voting rights of
the granting legal entity, or that by other means exercises direct or indirect control of its management-, the result of which is recorded in the deed authorized before the Notary of Seville, Mr. Rafael José Diaz Escudero, today, under number 953 of
his public records, stating the representation of the Company that the content thereof has not been modified. ------------------------------
I identify the appearing parties by their identity documents that are shown to me and they have in my opinion, as they
intervene, the necessary legal capacity to grant this deed referred to above, for which purpose, -----------------------
-------------------GRANT ------------------
FIRST.- That the appearing parties, as they intervene in this act, and in my presence, seek to raise to public
status by means of this granting, a loan agreement, dated May 30, 2023, which is signed by the appearing parties, as they intervene, whose signatures are legitimate because they have been recognized as theirs in my presence. ---------------------------
TWO.- The appearing parties hereby deliver to me for their notarization, such loan agreement, issued on six
pages of common paper, including its annex, written on both sides, with the exception of the last one that is written on only one of their sides, being attached to this matrix. -------------------------------------
THIRD.- That in accordance with the stated above, the appearing parties formalize this deed, ratifying what
was agreed in the aforementioned loan agreement, and raise it to public status---------------------
FOURTH.- The appearing parties, as they intervene, accept this deed and its legal effects in the manner in
which it has been drafted. -----------
FIFTH.- The content of the aforementioned loan agreement, gains the status of executive title for all purposes
provided for in Articles 517.2.4 and in accordance with Spanish Law 1/2000, of January 7th, of Civil Procedure and, in addition, will display the effects provided for in Articles 1.216, 1.924.3 and 1.929 of the Spanish Civil Code and in the other
applicable legal provisions, and notwithstanding that the parties, appearing here, can get as many copies as they request of the current document, even partial.
SIXTH.- LIQUIDITY AGREEMENT------------------
1.- Determination of liquid debt. For the purposes of the provisions of Articles 572, 573 and related articles
of the Civil Procedure Law, the Lender shall keep in its books a special account in the name of the Borrower in which it shall owe the principal amounts, ordinary interests, commissions, indemnity interest, costs and other sums owed by the Borrower
under the loan agreement which is raised to public status by means of this deed and shall pay the sums received by the Borrower, such that the balance of such account at each time reflects the amount owed by the Borrower under the loan agreement. The
parties expressly agree that the amount due in the event of execution will be the result of the liquidation made by the Lender, in accordance with the terms of this deed and the loan agreement hereby raised to public status, and will be reflected by
the issuance of the corresponding certificate (which will be considered valid by the competent judge or court and which will produce full legal effects) detailing the total amount due on the date of issuance thereof, being such an amount considered
liquid, expired and enforceable. -----------------------
2.- Quantity for the purposes of the
execution dispatch. As established in Article 575 of the Civil Procedure Law, for the purposes of the execution dispatch, the amount claimed from the enforcement action pursuant to Grant 6.1, may be provisionally increased by up to thirty
percent (30,00%) (or in the maximum amount that corresponds in accordance with the legislation in force at the relevant time) for the interest that may accrue during the execution and the costs thereof, unless, at the time the execution is
dispatched, the performer justifies that, taking into account the foreseeable duration of the execution and the applicable interest rate, the interests that may accrue during the execution plus the costs thereof may exceed the aforementioned limit of
thirty percent (30%), in which case the amount due resulting from the settlement will be increased, for the purposes of the execution dispatch, in the percentage indicated by the performer. ----------------------------------------- This is said and
granted by the appearing parties.-----------
The pertinent legal reservations and warnings, especially those of a fiscal nature, are hereby made, regarding the
provisions of Spanish Organic Law 3/2018, of 5 December, on the Protection of Personal Data and guarantee of digital rights. I, the Notary Public, warn of the tax obligations and responsibilities that the parties are responsible for in their formal,
material and sanctioning aspects and of the consequences of any kind that would arise from the inaccuracy of their statements. -----------------
DATA PROTECTION: ------------------------------
The appearing party/s are informed of the following: ------------------------------------------
Your personal data will be processed in this Notary Office, which are necessary for the fulfillment of the legal
obligations of the exercise of the notarial public function, in accordance with the provisions of the regulations provided for in the notarial, anti-money laundering, tax and, where appropriate, substantive legislation applicable to the act or
documented legal business. Communication of personal data is a legal requirement, the grantor being obliged to provide the personal data, and being informed that the consequence of not providing such data is that it would not be possible to authorize
or intervene in this public document. The data will be with confidential character. ----------
The purpose of the data processing is to comply with the regulations for authorizing/intervening this document, its
invoicing, subsequent follow-up and the functions inherent to the mandatory notarial activity, from which may derive the existence of automated decisions, authorized by law, adopted by the Public Administrations and assignee entities authorized by
law, including the elaboration of accurate profiles necessary for the prevention and investigation by the competent authorities of money laundering and financing of terrorism. -------------
The Notary Public shall transfer such data when
mandatory to the Public Administrations, to the entities and subjects stipulated by Law and, if applicable, to the Notary Public who succeeds or replaces the current Notary Public in this notary's office.
--------------------------------------------
The data provided will be kept for the years necessary to comply with the legal obligations of the Notary or whoever
replaces or succeeds him. --------
You may exercise your rights of access, rectification, erasure, limitation, portability and opposition to processing by
mail before the authorizing Notary, located at Madrid-C.P.-28020, CALLE POETA JOAN MARAGALL, No. 38, 6oD. You also have the right to lodge a complaint with a supervisory authority. -----
The data will be processed and protected according to the Notarial Legislation, Spanish Organic Law 3/2018, of 5
December, on the Protection of Personal Data and guarantee of digital rights (or the Law that replaces it) and its implementing regulations, and Regulation (EU) 2016/679 of the European Parliament and of the Council of 27 April 2016
on the protection of natural persons with regard to the processing of personal data and on the free movement of such data and repealing the Directive 95/46/EC. -------------------------------------------
Having read this deed by the appearing party, and by me, that I explain it as appropriate, and being aware of its content,
as stated, it is found to be in agreement, it is ratified and signed with me, the Notary, that: If it has been identified by what results from its documentation exhibited in the appearance of this deed, as established by the Spanish Organic Law of
Notary Public, as a supplementary means, that its consent has been freely provided, that this granting is in accordance with the current legality and its duly informed will; and, in general, ----------------
From all that is contained in this public instrument, issued on seven pages of stamped paper exclusively for notarial
documents, this and the six previous correlative documents, I ATTEST. ----------
The signatures of the appearing parties follow. Signed: Iñigo Casla Uriarte. Signed. There is the stamp of the Notary
Office. ------------------------------
*FOLLOWS ATTACHED DOCUMENTATION*
[A negative certificate of revocation of the Tax Identification Number of Apenet, S.L. is attached]
[A negative certificate of revocation of the Tax Identification Number of H2B2 Electrolysis Technologies, Inc. is attached]
LOAN AGREEMENT
BETWEEN
APENET, S.L.U.
As Lender
And
H2B2 ELECTROLYSIS TECHNOLOGIES, INC.
As Borrower
Madrid, 30 May 2023
INDEX
PARTIES |
18 |
WHEREAS |
18 |
CLAUSES |
19 |
1. |
GRANTING OF THE LOAN |
19 |
2. |
DISBURSEMENT OF THE LOAN |
19 |
3. |
USE OF THE LOAN |
19 |
4. |
LOAN TERM AND MATURITY |
19 |
5. |
LOAN REPAYMENT |
19 |
6. |
early REPAYMENT FEE |
20 |
7. |
INTERESTS |
21 |
8. |
DEFAULT INTERESTS |
21 |
9. |
opening FEE |
21 |
10. |
payments |
21 |
11. |
information obligations |
21 |
12. |
early TERMINATION EVENT |
22 |
13. |
ASSIGNMENT |
22 |
14. |
EXPENSES AND TAXES |
22 |
15. |
AMENDMENTS |
22 |
16. |
NOTICES |
23 |
17. |
NULLITY OR ILLEGALITY |
23 |
18. |
NOTARIZATION |
23 |
19. |
APPLICABLE LAW |
23 |
20. |
JURISDICTION |
24 |
LOAN AGREEMENT
In Madrid, on 30 May 2023.
PARTIES
On the one hand,
Apenet, S.L.U., a company duly
incorporated under the laws of the Kingdom of Spain, with corporate address at Plaza del Marqués de Salamanca, 2, Madrid, registered with the Commercial Registry of Madrid, under Volume 15,521, Page 148, Sheet M-261073, and holder of tax
identification number (N.I.F) B-82732074 (the “Lender”).
The Lender is duly represented in this act by Ms. Rosa
Queipo de Llano, acting in her capacity as verbal representative of the Lender.
And on the other hand,
H2B2 Electrolysis Technologies, Inc., a company duly incorporated under the laws of Delaware, registered with the Commercial Registry of the State of Delaware, with its corporate address at 300 Delaware Ave Ste 210-A, Wilmington, DE 19801, United States of America (the “Borrower” or “H2B2”).
The Borrower is duly represented
in this act by Mr. Anselmo Andrade Fernández de Mesa, [***], who acts in his capacity as Managing Director of the Borrower.
Hereinafter, the Lender and the Borrower may be referred to jointly as the “Parties” and individually and indistinctly as a “Party”.
WHEREAS
|
I. |
On the date of signing of this agreement, the Lender makes available to the Borrower the amount of FOURTEEN MILLION FIVE HUNDRED THOUSAND EUROS (€ 14,500,000) as a loan (the “Loan”). |
|
II. |
Immediately following the signing of this agreement, Ardachon, S.L. (“Ardachon”), as seller, and H2B2, as purchaser, will grant a sale and purchase deed of certain shares representative of the share capital of
H2B2 owned by Ardachon. H2B2 shall use the amount of the Loan for the payment of the price of 191,333 H2B2 shares representing 1.87% of the share capital of said company, at a price per share of SEVENTY-FIVE EUROS (€ 75) (the “Purchase”). |
|
III. |
The Parties, mutually recognizing the necessary legal capacity, wish to regulate the terms and conditions under which the Borrower must pay back the Loan to the Lender together with the Interest and fees provided for
therein, agreeing to sign this loan agreement (the “Agreement”), in accordance with the following: |
CLAUSES
The Lender grants the Borrower, and the Borrower
accepts the Loan, to which the terms and conditions provided for in this Agreement shall apply.
|
2. |
DISBURSEMENT OF THE LOAN |
|
2.1 |
The Lender shall make available to the Borrower the Loan by wire transfer made in favor of the Borrower to the account number [***] opened in the Borrower’s name at [***] (the “Transfer”). |
A copy of the Transfer is attached as Annex 2.1 to this Agreement.
|
2.2 |
The Borrower hereby receives and accepts the Transfer and grants the most effective payment letter in favor of the Lender. |
|
3.1 |
The Loan shall be used solely and exclusively for the payment of the purchase of 191,333 shares representing 1.87% of the share capital of H2B2 (the “Shares”) at a price of SEVENTY-FIVE EUROS (€ 75) per share, without any obligation of the Lender to verify the destination of the funds made available by virtue of the Loan. |
|
4. |
LOAN TERM AND MATURITY |
|
4.1 |
The Loan shall be valid for a period of three (3) years from the date of signing this Agreement, this is, until 30 May 2026 (the “Maturity Date”), the date on which the Lender shall fully repay the entire Loan in accordance with the provisions of Clause 5.1
below. |
The Borrower shall repay to the Lender all amounts due by virtue of this Agreement, including principal and Interest (as such term is
defined in Section 6), expenses, fees, costs or any other item on the Maturity Date.
|
5.2 |
Voluntary Early Repayment |
The Borrower may voluntarily repay all or part of the
amounts due pursuant to this Agreement, including the principal and capitalized Interest (as such term is defined in Clause 7) in accordance with the provisions of Clause 7 (Interest) below, expenses, fees, costs or any other item, at any time
by notifying the Lender at least ten (10) business days in advance.
The Borrower may not re-dispose of the repaid amounts of the Loan.
|
5.3 |
Mandatory Early Repayment |
|
5.3.1 |
In the event that the Borrower obtains funds from third parties through one or more placements or sales of H2B2 shares (the “Private Placement”) for an aggregate amount greater than FORTY MILLION EUROS
(€ 40,000,000) (the “Private Placement Threshold”), the Borrower shall allocate to the early repayment of the Loan all amounts exceeding the Private Placement Threshold, after deducting reasonable taxes and expenses incurred by the
Borrower in connection with the Private Placement. |
The Borrower shall proceed to early repay the Loan within five 5 business days from receipt of the funds derived from the corresponding Private Placement.
|
5.3.2 |
In the event that the Borrower’s free cash exceeds the amount of TEN MILLION EUROS (€ 10,000,000) (the “Minimum Free Cash”), the Borrower must allocate all amounts exceeding the Minimum Free Cash to the early
repayment of the Loan. |
For clarification purposes, the Lender and the Borrower expressly state that the amounts obtained by the Borrower in the context of a
Private Placement will not be taken into account for the purposes of calculating the Minimum Free Cash. Consequently, the amounts obtained by the Borrower in the Private Placement shall not, under any circumstances, entail a mandatory early repayment
of the Loan in accordance with the provisions of this Clause 5.3.2.
|
5.3.3 |
For the purposes of determining the free cash of H2B2, the Chief Executive Officer of H2B2 shall issue a certificate, within five (5) days following the end of each quarter, stating the amount of cash available from
the Lender, as well as the amount that, in accordance with the provisions of this Clause, must be allocated to the early repayment of the Loan. |
When the early repayment event provided for in this Clause 5.3.2 has occurred, the Borrower shall proceed to early repay the Loan within three (3) calendar
days following the end of the corresponding quarter.
|
5.3.4 |
The Parties, by signing this Agreement, undertake to negotiate in good faith, downwards, the amounts of the Private Placement Threshold and the Minimum Free Cash, depending on the valuation obtained from the Private
Placement and the Borrower’s compliance with the business plan. |
In the event that the Borrower makes any repayment of the Loan, either voluntary or mandatory, in accordance with the provisions of Clauses 5.2 and 5.3,
respectively, by 30 May 2024, the Borrower shall pay the Lender, on the date of the corresponding repayment, in addition to the amounts required by virtue of this Agreement in relation to the relevant repayment, the Interest that would have accrued,
and therefore capitalized, until 30 May 2024 inclusive.
The Loan will accrue 10% annual interest (the “Interest”).
The time elapsed between the date of signing of this Agreement and the Maturity Date will be divided into annual interest periods, the last of which will end on the Maturity
Date (individually, the “Interest Period” and, jointly, the “Interest Periods”).
Interest will accrue on a day-to-day basis and will be calculated based on a 360-day year and based on the number of days actually elapsed, on the amount of the Loan (which will
include, for clarification purposes, the capitalization of the Opening Fee provided for in Clause 9 (Opening Fee) below) with respect to each Interest Period.
The Parties agree that the accrued Interest shall be capitalized on the end date of each Interest Period and shall be paid on the Maturity Date as part of the principal of the
Loan due.
If the Borrower does not pay on the corresponding date
any of the amounts that it must pay in accordance with the provisions of this Agreement, the unpaid amount will accrue interest from the date due until the date on which the payment is made effectively at an annual interest rate of 13%.
The default interest referred to in this Clause will also be considered as the procedural default interest for the purposes of the
provisions of Article 576 of Spanish Law 1/2000, of 7 January, on Civil Procedure (the “Civil Procedure Law”).
|
9.1 |
The Borrower shall pay the Lender within five (5) business days following the date of this Agreement an opening fee equivalent to 3% of the amount of the Loan,
i.e., € 435,000 (the “Opening Fee”). |
On each date on which the Borrower is required to make a payment pursuant to this Agreement, the Borrower shall make available to the Lender the amounts corresponding to the
value of the date on which such payment is to be made in the following bank account number [***] held by the Lender at [***].
|
11. |
information obligations |
Subject to the Lender’s compliance with market abuse and insider trading regulations, including, without limitation, Regulation (EU) No. 596/2014 of the European Parliament and
of the Council, of 16 April 2014, on market abuse (“MAR”), as well as any American market abuse regulations, the Borrower shall provide the Lender with any financial information, company or of any other nature that is required to report to the
market once its shares begin to trade on any regulated market. The delivery of said information will be carried out on the same day, or if not possible, the day after said reporting.
Likewise, subject to compliance by the Lender with the provisions of the market abuse and insider trading regulations, including, without limitation, the MAR, as well as any
American regulations on market abuse, the Borrower shall be obliged to provide the Lender with any information that the Borrower makes available to its shareholders or creditors.
The Borrower must include in the information it provides to its potential investors the existence of this Loan, as well as its willingness to early repay the Loan prior to the
Maturity Date. Likewise, the Borrower must reflect in the business plan relating to each of the fiscal years during which the Loan is ongoing, the existence of the Loan, as well as its willingness to early repay the Loan prior to the Maturity Date.
|
12. |
early TERMINATION EVENT |
In the event that:
|
(a) |
The Borrower ceases to comply with its payment obligations relating to the principal amount, Interest or of the Opening Fee pursuant to the terms set forth in this Agreement; or |
|
(b) |
The Borrower fails to comply with any of its payment obligations, other than those provided for in this Agreement, at their respective maturities, or at the end of the applicable grace period, |
the Lender may, by notice to the Borrower, declare the early maturity of the amounts due as principal, Interest, default interest, fees,
expenses and taxes provided for in this Agreement, that, from then on, will be considered liquid, due and enforceable.
|
13.1 |
This Agreement and the rights and obligations hereunder may not be assigned, delegated or otherwise transferred by either Party without the prior written
consent of the other Party. Any attempted assignment in violation of this clause shall be void. |
|
14.1 |
The Borrower shall pay the Lender all expenses and costs (including, but not limited to, the expenses of the Lender’s legal advisors) incurred in the
negotiation, execution, signing and, where appropriate, early termination and claim of the amounts owed in accordance with the provisions of this Agreement, within three (3) days of the Lender’s proof of such expenses and costs. |
|
14.2 |
Likewise, the notary expenses derived from notarization, in accordance with the provisions of Clause 18 (Notarization) of this Agreement, shall be borne
by the Borrower. |
This Agreement may not be modified, altered or
supplemented if it is not by means of a document duly signed by both Parties, and any costs and expenses that may be incurred as a result of the modification of this Agreement shall be borne by the Borrower.
|
16.1 |
Any notice, communication or requirement related to this Agreement must be made in writing and by a person authorized for these purposes. |
|
16.2 |
The Parties designate the following addresses for the purposes of notices or communications in relation to this Agreement: |
For the Lender:
For the Borrower:
|
16.3 |
All notifications must be made to the addresses indicated in Clause 16.2 above, unless one of the Parties notifies the other Party in writing of the change of
address, with a minimum notice of five (5) calendar days. |
|
17. |
NULLITY OR ILLEGALITY |
If any of the provisions of this Agreement is or becomes void, illegal or ineffective, the validity, legality and effectiveness of the remaining provisions shall in no event be
affected or impaired. In such case, the Parties shall negotiate in good faith the new terms of the void, illegal or ineffective provision in such a way that its effects are as similar as possible to those of the original void, illegal or ineffective
provisions.
The Parties undertake to raise to public status this Agreement today before the notary appointed for such purposes by the Borrower, so that the Agreement acquires the status of
an enforceable title for the purposes of Article 571 et seq. of the Civil Procedure Law.
The Parties agree that this Agreement shall be governed by the laws of the Kingdom of Spain.
The Parties agree to submit any dispute that may arise in relation to the signing, interpretation, execution, termination or rescission of this Agreement to the exclusive
jurisdiction of the courts and tribunals of the City of Madrid.
AND IN WITNESS WHEREOF, the Parties sign this Agreement with its Annexes, which form an integral part hereof, in two (2) copies, at the place and on the date indicated in the
heading.
THE LENDER |
|
THE BORROWER |
|
|
|
[DULY SIGNED] |
|
[DULY SIGNED] |
|
|
|
|
|
|
/s/ Rosa Queipo de Llano |
|
/s/ Anselmo Andrade Fernández de Mesa
|
APENET, S.L.U.
represented by Ms. Rosa Queipo de Llano |
|
H2B2 ELECTROLYSIS TECHNOLOGIES, INC.
represented by Mr. Anselmo Andrade Fernández de Mesa |
Annex 2.1
SWIFT justifying of the Transfer
RATIFICATION PROTOCOL (diligencia de ratificación). (Referring to deed number 1,483 dated May thirty, two
thousand and twenty-three of the public records of Mr. Iñigo Casla Uriarte). -----------
On the thirty-first of May of two thousand and twenty-three, before me, IÑIGO CASLA URIARTE, Notary Public of Madrid and of
the Illustrious College with residence in this Capital, ---------------------------------------
--------------------APPEARING ---------------------
MR JOSÉ MARÍA PACHECO GUARDIOLA, [***]
-
His personal circumstances are reflected through his statements. -----------------------------------------
----------TAKING PART HEREIN AS FOLLOW-----------
In the name and on behalf of, as Joint and Several Director of the company “APENET, S.L.”, (“the Lender”),
with Tax Identification Number B-82732074, with address for these purposes in Madrid, 28.006, Plaza del Marqués de Salamanca, number 2; incorporated for an indefinite period, by public deed dated July twenty-first, two thousand, authorized by the
notary of Madrid, Mr Antonio Crespo Monerri, under number 2,775 of his public records; registered with the Commercial Registry of Madrid under volume 15,521, page 148, sheet M-261073. ---------------------------------------------
Its corporate purpose is to carry out investments in commercial companies and to provide economic advisory services thereof
(CNAE 6420). -- He was appointed to his position, a position he asserts in force, indefinitely, under the agreements of the General Meeting of Shareholders, dated November eighteen, two thousand and sixteen, raised to public status by means of a deed
granted on the November twenty-second of two thousand and sixteen, before the Notary Public of Madrid Mr Andrés Domínguez Nafría, under number 3.808 of his public records, of which I have had a copy authorized and registered (registration 4 of the
company sheet). His powers are derived from his position. In my opinion, his representative powers for this sale and purchase of shares are sufficient. ---------------------
The appearing party states that the identification details of the company that it represents, especially the corporate
purpose and domicile, have not changed with respect to those stated in the reliable document submitted. ------------------------
BENEFICIAL OWNER: I, the Notary, expressly state for the record that the obligation of identification of the
beneficial owner imposed by Spanish Law 10/2010, of 28 April, the result of which is recorded in the minutes authorized by the Notary of Madrid, Mr Ignacio Manrique Plaza, on June twenty-fifth of two thousand and fifteen, under number 1,801 of his
public records, and the representative hereby states that the content thereof has not been modified. ------------------------------
Pursuant to the provisions of Spanish Law 11/2021, of 9 July, on measures to prevent and fight tax fraud, on the
transposition of Council Directive (EU) 2016/1164, of 12 July 2016, which amends Article 23 of the Notary Act, I, the Notary, have consulted the Database of revoked Tax Identification Numbers with respect to the legal entities involved herein, having
not obtained any results. -------------------------------
For the purposes provided for in Article 98 of Law 24/2001, and in accordance with the Resolution of the General Directorate
of Records and Notaries of April 12, 2002, I hereby state that in my opinion, due to the position held, the representative powers to urge this deed to the qualified principle are sufficient, in the terms indicated below. -------
I identify him by means of his identity document on file and judge, as he is in good standing, and legitimacy necessary to
grant this ratification protocol, and for this purpose, --------------------
------------------ EXHIBIT ----------------------
That as he intervenes, having been informed of the full contents of the foregoing DEED, together with the notarized
loan agreement, he declares that he knows, accepts and ratifies in full and expressly in all its terms and extremes and without any reservation, consenting to all the terms and conditions resulting from said instrument, confirming the
actions of Mrs. Rosa María Queipo de Llano Argote, who acted as verbal representative of the company hereunder represented.
This is what he says and grants. --------------
The corresponding legal reservations and warnings have been made. -------------------------------------
In accordance with the provisions of Spanish Organic Law 15/1999, of Personal Data Protection, the appearing parties are
informed of and accept the incorporation of their data into the automated files existing in the Notary Office, which will be kept confidential, without prejudice to the mandatory submissions to the Public Administrations stipulated by Law, and, if
applicable, the Notary succeeding the current Notary, and/or take over his protocol. -----
I read this protocol, in accordance with the legality, to the undersigned by his choice; having been informed of its
contents, as he declares, he freely consents to it and signs it with me, the Notary Public, who attest to the contents and to the fact that it is written on three sheets of exclusive notarial stamped paper, of series and number HE5062191 and the
following two in increasing correlative order., attest to it. -
The signatures of the appearing parties follow.
Signed: Íñigo Casla Uriarte. Signed. There is the stamp of the Notary Office.
------------------------------------------------------------------------------
30
Exhibit 23.1
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM’S CONSENT
We consent to the inclusion in this Registration Statement of RMG Acquisition Corp. III on the Amendment No. 1 to Form S-4 (File No. 333-273150) of our report dated April 17,
2023, which includes an explanatory paragraph as to the Company’s ability to continue as a going concern, with respect to our audits of the financial statements of RMG Acquisition Corp. III as of December 31, 2022 and 2021 and for the years then
ended, which report appears in the Prospectus, which is part of this Registration Statement. We also consent to the reference to our Firm under the heading “Experts” in such Prospectus.
/s/ Marcum llp
Marcum llp
New York, NY
August 14, 2023
Exhibit 23.2
Consent of Independent Registered Public Accounting Firm
We consent to the use in this Amendment No. 1 to the Registration Statement (No. 333-273150) on Form S-4 of RMG Acquisition Corp. III of our report dated July 5, 2023, relating to the consolidated financial statements of
H2B2 Electrolysis Technologies, Inc. appearing in the proxy statement/prospectus, which is part of this Registration Statement.
We also consent to the reference to our firm under the heading “Experts” in such proxy statement/prospectus.
/s/ RSM US LLP
Austin, Texas
August 14, 2023