Investor Agreement
In connection with the Initial Investment, the Company and SK ecoplant will enter into an Investor Agreement (the “Investor Agreement”) providing for certain rights and restrictions relating to the Initial Investment and the Second Investment.
Board Representation. The Investor Agreement provides that SK ecoplant, effective as of the date of the Second Closing (the “Second Closing Date”), will be entitled to designate one person to be appointed to the Company’s Board of Directors (the “Board”). This right continues until such time as SK ecoplant and its Subsidiaries (as defined in the Investor Agreement) (the “SK Parties”) beneficially own less than five percent (5.0%) of the shares of Common Stock then issued and outstanding.
Standstill. The Investor Agreement provides that the SK Parties will be subject to a standstill provision, with limited exceptions provided their ownership stays under 15% of the Company’s issued and outstanding capital stock, commencing with the closing of the Initial Investment and continuing until the later of (i) the second (2nd) anniversary of the Second Closing Date, (ii) the date on which SK ecoplant ceases to have the right to designate a director to the Board pursuant to the Investor Agreement, and (iii) the date on which the SK Parties beneficially own less than five percent (5.0%) of the shares of Common Stock then issued and outstanding (the “Standstill Term”).
Disposition Restrictions. The Investor Agreement provides that, for a period ending on the second (2nd) anniversary of the Second Closing Date, the SK Parties will be prohibited from disposing of any of the Purchased Securities (as defined in the Investor Agreement).
Voting Obligations. Commensurate with the term of SK ecoplant’s Board representation, SK ecoplant will vote all of its eligible voting securities in accordance with the recommendation of the majority of the Board, including the election of the Board. SK ecoplant has agreed upon request of the Company to execute and deliver an irrevocable proxy to the Company to vote all such voting securities.
Preemptive Right Shares. After the Second Closing Date, if the Company proposes to issue any New Securities (as defined in the Investor Agreement), SK ecoplant shall have the right to purchase up to such number of New Securities as required to maintain its fully-diluted ownership on the same terms and conditions that are applicable to such New Securities.
The foregoing description of the Purchase Agreement and the Investor Agreement does not purport to be complete and is subject to, and is qualified in its entirety by, the full text of the Purchase Agreement (including the form of Investor Agreement attached as an exhibit thereto), which is filed herewith as Exhibit 10.1 and incorporated herein by reference. The foregoing summary description of the material terms of the JVA Amendment and PDA Restatement does not purport to be complete and are qualified in their entirety by reference to the text of each agreement, copies of which the Company expects to file as an exhibit to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2021. The Company expects to seek confidential treatment of certain terms of each agreement at the time each is filed.
The Purchase Agreement has been included to provide investors with information regarding its terms. It is not intended to provide any other factual information about the Company and its subsidiaries and affiliates. The representations and warranties contained in the Purchase Agreement were made only for purposes of the Purchase Agreement (together with the exhibits thereto) and as of specific dates, are solely for the benefit of the parties to the Purchase Agreement, may be subject to limitations agreed upon by the contracting parties, may have been made for the purposes of allocating contractual risk between the parties to the Purchase Agreement instead of establishing these matters as facts, and may be subject to standards of materiality applicable to the contracting parties that differ from those applicable to investors. Investors are not third-party beneficiaries to the representations and warranties contained in the Purchase Agreement and should not rely on the representations and warranties or any descriptions thereof as characterizations of the actual state of facts or condition of the parties thereto or any of their respective subsidiaries or affiliates. Moreover, information concerning the subject matter of representations and warranties may change after the date of the Purchase Agreement, which subsequent information may or may not be fully reflected in the Company’s public disclosures.
| Item 3.02 | Unregistered Sales of Equity Securities. |
The information contained in Item 1.01 of this Current Report on Form 8-K regarding the Purchase Agreement and the Initial Investment is incorporated herein by reference. The Company will offer and sell the RCPS in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”). The Company will rely on this exemption from registration based in part on representations made by SK ecoplant in the Purchase Agreement.
