Exhibit 10.1
SUBSCRIPTION AGREEMENT
This SUBSCRIPTION AGREEMENT (this “Subscription Agreement”) is entered into this 11th day of September, 2024, by and between PureCycle Technologies, Inc., a corporation incorporated and existing under the laws of the State of Delaware (the “Company”), and the undersigned (“Subscriber”).
WHEREAS, the Company’s common stock, par value $0.001 per share (the “Common Stock”), is listed on the Nasdaq Capital Market (“Nasdaq”) under the ticker symbol “PCT”;
WHEREAS, the Company’s preferred stock, par value $0.001 per share (the “Preferred Stock”), shall be designated “Series A Preferred Stock” and shall have the designations, powers, preferences, rights, qualifications, limitations and restrictions as set forth in the form of Certificate of Designations attached hereto as Exhibit B (the “Certificate of Designations”);
WHEREAS, Subscriber desires to subscribe for and to purchase from the Company (i) that number of shares of Common Stock set forth on the signature page hereto (the “Common Shares”), (ii) that number shares of the Preferred Stock set forth on the signature page hereto (the “Preferred Shares”), and (iii) that number of Series C warrants set forth on the signature page hereto, in the form attached hereto as Exhibit A (the “Series C Warrants”), with each whole Series C Warrant entitling the holder to purchase one share of Common Stock (the “Warrant Common Shares”, and together with the Common Shares, the Preferred Shares and the Series C Warrants, the “Securities”), for the aggregate purchase price set forth on the signature page hereto (the “Purchase Price”), which payment (other than the aggregate par value of the Common Shares and the Preferred Shares) will be directed to the Company, and the Company desires to issue and sell to Subscriber the Common Shares, the Preferred Shares and the Series C Warrants in consideration of the payment of the Purchase Price by or on behalf of Subscriber to the Company;
WHEREAS, to the extent Subscriber would be entitled to a fractional Series C Warrant, the Company shall round down to the nearest whole number of Series C Warrants to be issued to Subscriber;
WHEREAS, to the extent that any redemption of the Preferred Stock by Subscriber or the Company, in each case as applicable, pursuant to the Certificate of Designations in exchange for shares of Common Stock would result in the issuance of shares of Common Stock in excess of the Stock Issuance Cap (as defined below), the Company shall, in lieu of such issuance of shares of Common Stock, issue to Subscriber pre-funded warrants in the form attached hereto as Exhibit C (the “Pre-Funded Warrants”), with each whole Pre-Funded Warrant exercisable for one share of Common Stock, in an amount equal to such number of shares of Common Stock by which such issuance would cause Subscriber to be deemed to exceed the Stock Issuance Cap; and
WHEREAS, certain other “qualified institutional buyers” (within the meaning of Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”) and “accredited investors” (within the meaning of Rule 501(a) under the Securities Act) have entered into separate subscription agreements with the Company (“Other Subscription Agreements”), pursuant to which all such investors (the “Other Subscribers”) have, together with Subscriber pursuant to
this Subscription Agreement, agreed to purchase an aggregate of up to 8,528,786 shares of Common Stock, 50,000 shares of Preferred Stock and 5,000,000 Series C Warrants, with each whole Series C Warrant entitling the holder to purchase one share of Common Stock, at an aggregate purchase price of $90,000,006.34.
NOW, THEREFORE, in consideration of the foregoing and the mutual representations, warranties and covenants, and subject to the conditions herein contained, and intending to be legally bound hereby, the parties hereto hereby agree as follows:
2
3
4
5
6
7
8
9
The Company has established disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and designed such disclosure controls and procedures to ensure that material information relating to the Company is made known to the certifying officers by others within those entities, particularly during the period in which the Company’s most recently filed periodic report under the Exchange Act, as the case may be, is being prepared. The Company has established internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP. The Company’s certifying officers have evaluated the effectiveness of the Company’s disclosure controls and procedures (the “internal controls”) as of the end of the period covered by the most recently filed periodic report under the Exchange Act (such date, the “Evaluation Date”). The Company presented in its most recently filed periodic report under the Exchange Act the conclusions of the certifying officers about the effectiveness of such internal controls based on their evaluations as of the Evaluation Date. Except as otherwise set forth in the SEC Documents, since the Evaluation Date, there have been no significant changes in the Company’s internal controls or in other factors that could significantly affect the Company’s internal controls. The Company maintains and will continue to maintain a standard system of accounting established and administered in accordance with GAAP and the applicable requirements of the Exchange Act.
10
All of the licenses and sublicenses and consent, royalty or other agreements concerning Intellectual Property which are necessary for the conduct of the Company’s business as currently conducted or as currently proposed to be conducted to which the Company is a party or by which any of its assets are bound (other than generally commercially available, non-custom, off-the-shelf software application programs having a retail acquisition price of less than $10,000 per license) (collectively, “License Agreements”) are valid and binding obligations of the Company and, to the Company’s knowledge, the other parties thereto, enforceable in accordance with their terms,
11
except to the extent that enforcement thereof may be limited by bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or other similar laws affecting the enforcement of creditors’ rights generally, and, to the Company’s knowledge, there exists no event or condition which will result in a violation or breach of or constitute (with or without due notice or lapse of time or both) a default by the Company under any such License Agreement, except for such violations, breaches and defaults as have not had and could not reasonably be expected to have a Material Adverse Effect, individually or in the aggregate.
To the Company’s knowledge, the Company owns or has the valid right to use all of the Intellectual Property that is necessary for the conduct of the Company’s business as currently conducted or as currently proposed to be conducted and for the ownership, maintenance and operation of the Company’s properties and assets, free and clear of all liens, encumbrances, adverse claims or obligations to license all such owned Intellectual Property, other than licenses entered into in the ordinary course of the Company’s business, except for such liens, encumbrances, adverse claims or obligations as have not had and could not reasonably be expected to have a Material Adverse Effect. The Company has a valid and enforceable right to use all third party Intellectual Property used or held for use in the business of the Company.
To the Company’s knowledge, the conduct of the Company’s business as currently conducted does not infringe or otherwise impair or conflict with in any material respect (collectively, “Infringe”) any Intellectual Property rights of any third party or any confidentiality obligation owed to a third party, and, to the Company’s knowledge, the Intellectual Property of the Company which is necessary for the conduct of Company’s business as currently conducted or as currently proposed to be conducted is not being Infringed by any third party. There is no litigation or order pending or outstanding or, to the Company’s knowledge, threatened or imminent, that seeks to limit or challenge or that concerns the ownership, use, validity or enforceability of any Intellectual Property of the Company and the Company’s use of any Intellectual Property owned by a third party, and, to the Company’s knowledge, there is no valid basis for the same.
The consummation of the transactions contemplated by this Subscription Agreement will not result in the alteration, loss, impairment of or restriction on the Company’s ownership or right to use any of the Intellectual Property which is necessary for the conduct of Company’s business as currently conducted or as currently proposed to be conducted.
12
13
14
15
THIS SECURITY REPRESENTED HEREBY HAS NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT UNDER ANY CIRCUMSTANCES BE OFFERED, TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE FEDERAL, STATE AND FOREIGN SECURITIES LAWS.
16
17
18
19
20
21
22
23
PureCycle Technologies Inc.
4651 Salisbury Road, Suite 400
Jacksonville, Florida 32256
Attention: Brad Kalter
E-mail: bkalter@purecycle.com
with a required copy to (which copy shall not constitute notice):
Jones Day
1221 Peachtree Street, NE, Suite 400
Atlanta, Georgia 30361
Attention: Joel T. May and Thomas L. Short
E-mail: jtmay@jonesday.com; tshort@jonesday.com
24
25
26
27
28
[Signature Page Follows]
29
IN WITNESS WHEREOF, each of the Company and Subscriber has executed or caused this Subscription Agreement to be executed by its duly authorized representative as of the date set forth below.
PURECYCLE TECHNOLOGIES, INC.
By:
Name:
Title:
[SIGNATURE PAGE OF SUBSCRIBER FOLLOWS]
30
[SIGNATURE PAGE OF SUBSCRIBER]
Accepted and agreed this 11th day of September, 2024.
SUBSCRIBER:
Signature of Subscriber: [Signature of Joint Subscriber, if applicable:
By: By:
Name: Name:
Title: Title:
Date: , 2024
Name of Subscriber: Name of Joint Subscriber, if applicable:
(Please print. Please indicate name and capacity of person signing above)
Name in which securities are to be registered (if different from the name of Subscriber listed directly above):
Email Address:
If there are joint investors, please check one:
☐ Joint Tenants with Rights of Survivorship
☐ Tenants-in-Common
☐ Community Property
Subscriber’s EIN: __________________________ Joint Subscriber’s EIN: ________________
Business Address-Street: Mailing Address-Street (if different):
City, State, Zip: City, State, Zip:
Attn: Attn:
Telephone No.: __________________________ Telephone No.: _____________________
Facsimile No.: __________________________ Facsimile No.: ______________________
Aggregate Number of Common Shares subscribed for:
[____________]
Aggregate Number of Preferred Shares subscribed for:
[____________]
Aggregate Number of Warrant Common Shares underlying the Series C Warrants subscribed for:
31
[__]
Aggregate Purchase Price: The sum of (a) $1,000.00 multiplied the number of Preferred Shares subscribed for and (b) the Common Stock Price multiplied by the aggregate number of Common Shares subscribed for.
In this section: “Common Stock Price” means $4.69.
Subscriber must pay the Aggregate Purchase Price by wire transfer of U.S. dollars in immediately available funds to the account specified by the Company in the Closing Notice.
32
SCHEDULE A
ELIGIBILITY REPRESENTATIONS OF SUBSCRIBER
(Please check the applicable subparagraphs):
*** OR ***
(Please check the applicable subparagraphs):
** AND ***
(Please check the applicable subparagraphs) SUBSCRIBER:
an “affiliate” (as defined in Rule 144 under the Securities Act) of the Company or acting on behalf of an affiliate of the Company.
This page should be completed by Subscriber
and constitutes a part of the Subscription Agreement.
Rule 501(a), in relevant part, states that an “accredited investor” shall mean any person who comes within any of the below listed categories, or who the issuer reasonably believes comes within any of the below listed categories, at the time of the sale of the securities to that person. Subscriber has indicated, by marking and initialing the appropriate box below, the provision(s) below which apply to Subscriber and under which Subscriber accordingly qualifies as an “accredited investor.”
33
☐ Any bank, registered broker or dealer, registered or exempt investment adviser, insurance company, registered investment company, business development company, small business investment company or rural business investment company; any plan established and maintained by a state, its political subdivisions, or any agency or instrumentality of a state or its political subdivisions, for the benefit of its employees, if such plan has total assets in excess of $5,000,000; any employee benefit plan within the meaning of the Employee Retirement Income Security Act of 1974 if the investment decision is made by a plan fiduciary, which is either a bank, savings and loan association, insurance company, or registered investment adviser, or if the employee benefit plan has total assets in excess of $5,000,000 or, if a self-directed plan, with investment decisions made solely by persons that are accredited investors;
☐ Any “family office,” as defined in Section 202(a)(11)(G)-1 under the Investment Advisers Act of 1940 that is not formed for the specific purpose of acquiring the securities offered, and whose prospective investment is directed by a person who has such knowledge and experience in financial and business matters that such family office is capable of evaluating the merits and risks of the prospective investment;
☐ Any “family client,” as defined in Section 202(a)(11)(G)-1 under the Investment Advisers Act of 1940, of a family office meeting the requirements in the paragraph above and whose prospective investment in the Company is directed by such family office;
☐ Any private business development company as defined in Section 202(a)(22) of the Investment Advisers Act of 1940;
☐ Any organization described in Section 501(c)(3) of the Internal Revenue Code, corporation, Massachusetts or similar business trust, or partnership, not formed for the specific purpose of acquiring the securities offered, with total assets in excess of $5,000,000;
☐ Any director, executive officer, or general partner of the issuer of the securities being offered or sold, or any director, executive officer, or general partner of a general partner of that issuer;
☐ Any natural person whose individual net worth, or joint net worth with that person’s spouse or spousal equivalent, exceeds $1,000,000. For purposes of calculating a natural person’s net worth: (i) the person’s primary residence shall not be included as an asset; (ii) indebtedness that is secured by the person’s primary residence, up to the estimated fair market value of the primary residence at the time of the sale of securities, shall not be included as a liability (except that if the amount of such indebtedness outstanding at the time of sale of securities exceeds the amount outstanding 60 days before such time, other than as a result of the acquisition of the primary residence, the amount of such excess shall be included as a liability); and (iii) indebtedness that is secured by the person’s primary residence in excess of the estimated fair market value of the primary residence at the time of the sale of securities shall be included as a liability;
☐ Any natural person who had an individual income in excess of $200,000 in each of the two most recent years or joint income with that person’s spouse or spousal equivalent in excess of $300,000 in each of those years and has a reasonable expectation of reaching the same income level in the current year;
34
☐ Any natural person who holds, in good standing, one of the following professional licenses: the General Securities Representative license (Series 7), the Private Securities Offerings Representative license (Series 82), or the Investment Adviser Representative license (Series 65);
☐ Any natural person who is a “knowledgeable employee,” as defined in Rule 3c-5(a)(4) under the Investment Company Act of 1940, of the Company;
☐ Any trust, with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the securities offered, whose purchase is directed by a sophisticated person;
☐ Any entity in which all of the equity owners are accredited investors meeting one or more of the above tests;
☐ A bank, as defined in Section 3(a)(2) of the Securities Act or any savings and loan association or other institution as defined in Section 3(a)(5)(A) of the Securities Act, whether acting in an individual or a fiduciary capacity.
35
EXHIBIT A
Form of Series C Warrant
36
EXHIBIT B
Certificate of Designations
37
EXHIBIT C
Form of Pre-Funded Warrant
38