Form 425 ACKRELL SPAC Partners I Filed by: ACKRELL SPAC Partners I Co.

 

United States

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

Form 8-K

 

Current Report

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported): December 22, 2021

 

ACKRELL SPAC PARTNERS I CO.

(Exact Name of Registrant as Specified in its Charter)

 

Delaware		001-39821		83-3237047
(State or other jurisdiction  of  incorporation)		(Commission File Number)		(I.R.S. Employer  Identification No.)

 

2093 Philadelphia Pike #1968
Claymont, DE 19703

(Address of Principal Executive Offices and Zip Code)

 

Registrant’s telephone number, including area code: (650) 560-4753

 

 

(Former name or former address, if changed since last report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

☐

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Units, each consisting of one subunit and one-half of one warrant		ACKIU		The Nasdaq Stock Market LLC
Subunits included as part of the units, each consisting of one share of common stock, $.0001 par value, and one-half of one warrant		ACKIT		The Nasdaq Stock Market LLC
Redeemable warrants		ACKIW		The Nasdaq Stock Market LLC

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).

 

Emerging growth company ☒

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ 

 

 

 

Ackrell SPAC Partners I Co., a Delaware corporation (“Ackrell”), intends to file with the U.S. Securities and Exchange Commission (the “SEC”) a registration statement on Form S-4 (as may be amended from time to time, the “Registration Statement”), which will include a preliminary proxy statement of Ackrell and a prospectus in connection with the proposed business combination transaction involving Ackrell and North Atlantic Imports, LLC, a Utah limited liability company d/b/a Blackstone Products (the “Company”). The definitive proxy statement and other relevant documents will be mailed to stockholders of Ackrell as of a record date to be established for voting on the proposed business combination. Securityholders of Ackrell and other interested persons are advised to read, when available, the preliminary proxy statement/prospectus, and amendments thereto, and the definitive proxy statement/prospectus in connection with Ackrell’s solicitation of proxies for the special meeting to be held to approve the business combination and related matters because these documents will contain important information about Ackrell, the Company and the business combination and related transactions. Ackrell securityholders and other interested persons will also be able to obtain copies of the Registration Statement and the proxy statement/prospectus, without charge, once available, on the SEC’s website at www.sec.gov or by directing a request to Ackrell by contacting its Chief Executive Officer, Jason Roth, c/o Ackrell SPAC Partners I Co., 2093 Philadelphia Pike #1968, Claymont, DE 19703, at (650) 560-4753.

 

Item 1.01 Entry into a Material Definitive Agreement.

 

Business Combination Agreement

 

This section describes the material provisions of the Business Combination Agreement (as defined below) but does not purport to describe all of the terms thereof. The following summary is qualified in its entirety by reference to the complete text of the Business Combination Agreement, a copy of which is attached hereto as Exhibit 2.1. Ackrell’s stockholders and other interested parties are urged to read such agreement in its entirety. Unless otherwise defined herein, the capitalized terms used below are defined in the Business Combination Agreement.

 

On December 22, 2021, Ackrell, the Company, Blackstone Products, Inc., a newly-formed Delaware corporation and wholly-owned subsidiary of Ackrell (“Newco”), Ackrell Merger Sub Inc., a newly-formed Delaware corporation and wholly-owned subsidiary of Newco (“Merger Sub”), Roger Dahle, an individual residing in Utah and holder of certain membership interests in the Company (“Dahle”), and North Atlantic Imports, Inc., a business company formed under the laws of the British Virgin Islands (“NAI” and together with Dahle, the “Contributors”) entered into a Business Combination Agreement (the “Business Combination Agreement”).

 

The Transactions

 

Pursuant to the Business Combination Agreement, subject to the terms and conditions set forth therein, immediately prior to the consummation of the transactions contemplated by the Business Combination Agreement (the “Closing”), the Company will enter a redemption agreement with Cowell International Inc., a Utah corporation and a wholly-owned subsidiary of NAI (“Cowell”), and Dahle, pursuant to which the Company will redeem, prior to the Closing, certain of its membership interests held by Cowell in exchange for $100,000,000, which will be funded by newly-incurred indebtedness for borrowed money of the Company in the principal amount of $100,000,000.

 

 

Upon the consummation of the Closing, Merger Sub will merge with and into Ackrell (the “Merger” and, together with the other transactions contemplated by the Business Combination Agreement, the “Transactions”), with Ackrell continuing as the surviving corporation in the Merger and a wholly-owned subsidiary of Newco (the “Surviving Corporation”). Immediately following the effective time of the Merger (the “Effective Time”), (i) NAI will contribute 45 shares of Cowell Common Stock, par value $1.00 per share (“Cowell Common Stock”) to Newco and 33 shares of Cowell Common Stock to Ackrell (the “NAI Contributions”), (ii) Cowell will redeem the remaining 22 shares of Cowell Common Stock (the “NAI Redemption”) and (iii) Dahle will contribute all of his membership interests in the Company to Newco (the “Dahle Contribution” and together with the Merger, the NAI Contributions, the NAI Redemption and the other transactions contemplated by the Business Combination Agreement, the “Transactions").

 

The aggregate consideration to be paid in the Transactions is based on a pre-money Company equity valuation of $721,000,000 and will be made up of cash consideration and stock consideration as described below (the “Merger Consideration”).

 

Conversion of Securities and Payment of Merger Consideration

 

As consideration for the Transactions, (i) Ackrell will pay $150,000,000 to NAI as consideration for the contribution of Cowell Common Stock to Ackrell; (ii) Cowell will pay $100,000,000 to NAI as consideration for the NAI Redemption; (iii) Newco will issue and deliver to NAI a number of shares of Newco common stock, par value $0.0001 per share (“Newco Common Stock”) calculated based upon NAI’s ownership percentage (on a fully-diluted basis taking into account the Assumed RSUs (as defined below) and after giving effect to the cash consideration) as of the Closing as consideration for the contribution of Cowell Common Stock to Newco; and (vi) Newco will issue to Dahle a number of shares of Newco Common Stock calculated based upon Dahle’s ownership percentage (on a fully-diluted basis taking into account the Assumed RSUs and after giving effect to the cash consideration) of the Closing as consideration for the Dahle Contribution.  In addition, each contingent right to receive an equity interest in the Company to be issued to Dahle will be assumed by Newco (the “Assumed RSUs”), with such Assumed RSUs representing the right to acquire a number of shares of Newco Common Stock representing the ownership percentage attributable to the Assumed RSUs upon the terms (including vesting) set forth in the Assumed RSUs.

 

Representations and Warranties; Covenants

 

The Business Combination Agreement contains a number of representations, warranties and covenants of the Company, the Contributors, Cowell, Ackrell, Merger Sub and Newco, made solely for the benefit of the other relevant parties to the Business Combination Agreement, which in certain cases are subject to specified exceptions and qualifications, including materiality and material adverse effect qualifiers, contained in the Business Combination Agreement or in information provided pursuant to certain disclosure schedules to the Business Combination Agreement. The representations and warranties are customary for transactions similar to the Transactions.

 

The representations and warranties of the parties terminate as of and do not survive the Closing, and there are no indemnification rights for another party’s breach. The covenants and agreements of the parties shall not survive the Closing, except those covenants and agreements to be performed after the Closing which covenants and agreement shall survive until fully performed.

 

The Business Combination Agreement also contains certain customary covenants by each of the parties during the period between the signing of the Business Combination Agreement and the earlier of the Closing or the termination of the Business Combination Agreement in accordance with its terms, including with respect to (1) the operation of their respective businesses in the ordinary course of business; (2) the provision of access to the properties, books, personnel, and policies of the Company and Ackrell, respectively; (3) provision of financial statements by the Company; (4) Ackrell’s stock listing; (5) notifications of certain breaches, consent requirements, material adverse changes or other matters; (6) efforts to consummate the Closing and obtain third party and regulatory approvals; (7) tax matters and transfer taxes; (8) further assurances; (9) confidentiality; (10) public announcements; (11) directors’ and officers’ indemnification; and (12) compliance with the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”) (if applicable). The parties further agreed to certain customary post-Closing covenants.

 

After the execution of the Business Combination Agreement, Ackrell and Newco will (with the assistance and cooperation of the Company as reasonably requested by Ackrell), use its commercially reasonable efforts to prepare and file with the U.S. Securities and Exchange Commission (the “SEC”) within 10 business days (subject to certain exceptions) after Ackrell’s receipt of the Company’s PCAOB-compliant audited financial statements from the Company a registration statement on Form S-4 in connection with the registration under the Securities Act of 1933, as amended (the “Securities Act”) of the Ackrell Common Stock, to be issued pursuant to the Business Combination Agreement, which registration statement will also contain a proxy statement for Ackrell stockholders and a prospectus.

 

 

Ackrell will include provisions in the proxy statement with respect to (i) the approval of the Business and the adoption and approval of Business Combination Agreement, (ii) the adoption and approval of the amended and restated Newco certificate of incorporation, (iii) the appointment of the post-Closing Newco board of directors, (iv) the approval and adoption of Newco’s omnibus incentive plan, (v) the approval and adoption of Newco’s employee stock purchase plan, (vi) adjournment of the Ackrell stockholders’ meeting, if necessary, to permit further solicitation of proxies because there are not sufficient votes to approve and adopt any of the foregoing proposals and (vii) the approval of any other proposals reasonably agreed by Ackrell and the Company to be necessary or appropriate in connection with the transaction contemplated hereby.

 

The parties have also agreed to take all action within their power as may be necessary or appropriate such that, effective immediately after the Closing, Newco’s board of directors shall consist of seven directors, which shall be divided into three classes with (a) one class of directors, the Class A Directors, initially serving a 1-year term, such term effective from the Closing (but any subsequent Class A Directors serving a 3-year term), (b) a second class of directors, the Class B Directors, initially serving a 2-year term, such term effective from the Closing (but any subsequent Class B Directors serving a 3-year term), and (c) a third class of directors, the Class C Directors, serving a 3-year term, such term effective from the Closing.

 

Closing Conditions

 

The obligations of the parties to complete the Closing are subject to various conditions, including the following mutual conditions of the parties unless waived:

 

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the proposals presented at the Ackrell stockholders’ meeting will have been approved and adopted;

 

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No governmental authority of competent jurisdiction shall have enacted, issued, promulgated, enforced or entered any law, rule, regulation, judgment, decree, executive order or award after the date of the Business Combination Agreement which is then in effect and has the effect of making the Transactions, including the Merger, illegal or otherwise prohibiting consummation of the Transactions, including the Merger;

 

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all required filings under the HSR Act will have been completed and any applicable waiting period (and any extension thereof) applicable to the consummation of the Transactions under the HSR Act shall have expired or been terminated;

 

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the Registration Statement will have been declared effective under the Securities Act, and no stop order suspending the effectiveness, or any proceedings for purposes of suspending the effectiveness, of the Registration Statement will be in effect or will have been initiated or threatened by the SEC;

 

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the Newco Common Stock to be issued in connection with the Transactions will have been approved for listing on Nasdaq, subject only to official notice of issuance thereof; and

 

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upon the Closing, after giving effect to the completion of the Redemption, Ackrell having net tangible assets of at least $5,000,001.

  

Unless waived by Ackrell, the obligations of the Ackrell, Newco and Merger Sub to consummate the Transactions, including the Merger, are subject to the satisfaction of certain customary conditions (in addition to customary certificates and other closing deliverables), as well as the following:

 

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accuracy of the representations and warranties made by the Company in the Business Combination Agreement and material compliance by the Company with the covenants in the Business Combination Agreement;

 

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absence of any Company Material Adverse Effect with respect to the Company between the date of the Business Combination Agreement and the date of the Closing;

 

 

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the Company will have delivered to Ackrell and Newco the Company’s PCAOB-compliant audited financials;

 

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Cowell will have delivered a properly executed certification that the Company shares are not “U.S. real property interests”, together with a notice to the IRS, in accordance with Treasury Regulations;

 

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the Company will have terminated certain specified related party contracts; and

 

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the Manufacturing Supply Agreement between Fugang Technology Inc. and the Company in substantially the form attached to the Business Combination Agreement will remain in effect.

 

Unless waived by the Company, the obligations of the Company to consummate the Merger are subject to the satisfaction of certain customary additional conditions (in addition to customary certificates and other closing deliverables), as well as the following:

 

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accuracy of the representations and warranties made by Ackrell, Newco and Merger Sub in the Business Combination Agreement and material compliance by Ackrell, Newco and Merger Sub with the covenants in the Business Combination Agreement;

 

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absence of any Ackrell Material Adverse Effect with respect to Ackrell, Newco or Merger Sub between the date of the Business Combination Agreement and the date of the Closing;

 

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all members of the board of directors and all officers of Ackrell will have executed written resignations effective as of the Effective Time;

 

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the aggregate amount of proceeds raised in the PIPE Investment plus the amount of funds in the Trust Account (after giving effect to any redemption of Ackrell Common Stock by Ackrell’s stockholders) will be at least $150,000,000; and

 

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the Newco certificate of incorporation will have been amended and restated by Newco.

 

Termination

 

The Business Combination Agreement may be terminated under certain customary and limited circumstances at any time prior to the Closing, including:

 

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by mutual written consent of Ackrell and the Company;

 

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by either Ackrell or the Company if the Closing has not occurred by the date that is six months after the execution of the Business Combination Agreement, other than as a result of a breach by the party seeking termination, provided, that in the event of an extension of the time for Ackrell to complete a Merger in accordance with the terms of Ackrell’s certificate of incorporation, such six month period will automatically be extended by a like period;

 

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by either Ackrell or the Company if a governmental authority shall have issued an order or taken any other action permanently restraining, enjoining or otherwise prohibiting, or if any law is in effect making illegal, the transactions contemplated by the Business Combination Agreement, other than as caused by the breach of the party seeking termination;

 

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by either Ackrell or the Company if Ackrell fails to obtain the required stockholder approvals at Ackrell’s stockholder meeting;

 

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by Ackrell upon a breach of any representation, warranty, covenant or agreement on the part of the Company, NAI or Dahle set forth in the Business Combination Agreement, or if any representation or warranty of the Company, NAI or Dahle becomes untrue and is not cured within 20 days;

 

 

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by the Company upon a breach of any representation, warranty, covenant or agreement on the part of Ackrell, Newco or Merger Sub set forth in the Business Combination Agreement, or if any representation or warranty of Ackrell, Newco or Merger Sub becomes untrue and is not cured within 20 days; and

 

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by Ackrell if the Company has not delivered its PCAOB-compliant audited financials on or prior to February 28, 2022.

  

Governing Law and Arbitration; Trust Account Waiver

 

The Business Combination Agreement is governed by Delaware law and the parties are subject to the non-exclusive jurisdiction of federal and state courts located in the state of Delaware.

 

Each of the Company, NAI and Dahle agreed that it and its affiliates will not have any right, title, interest or claim of any kind in or to any monies in Ackrell’s trust account held for its public stockholders, and agreed not to, and waived any right to, make any claim against the trust account (including any distributions therefrom).

 

The Business Combination Agreement contains representations, warranties and covenants that the respective parties made to each other as of the date of such agreement or other specific dates. The assertions embodied in those representations, warranties 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 in connection with negotiating such agreement. The Business Combination Agreement has been filed to provide investors with information regarding its terms. It is not intended to provide any other factual information about Ackrell, the Company or any other party to the Business Combination Agreement. In particular, the representations, warranties, covenants and agreements contained in the Business Combination Agreement, which were made only for purposes of such agreement and as of specific dates, were solely for the benefit of the parties to the Business Combination Agreement, may be subject to limitations agreed upon by the contracting parties (including being qualified by confidential disclosures made for the purposes of allocating contractual risk between the parties to the Business Combination Agreement instead of establishing these matters as facts) and may be subject to standards of materiality applicable to the contracting parties that differ from those applicable to investors and reports and documents filed with the SEC. Investors should not rely on the representations, warranties, covenants and agreements, or any descriptions thereof, as characterizations of the actual state of facts or condition of any party to the Business Combination Agreement. In addition, the representations, warranties, covenants and agreements and other terms of the Business Combination Agreement may be subject to subsequent waiver or modification. Moreover, information concerning the subject matter of the representations and warranties and other terms may change after the date of the Business Combination Agreement, which subsequent information may or may not be fully reflected in Ackrell’s public disclosures.

 

Related Agreements

 

Amended Registration Rights Agreement 

 

Contemporaneously with the execution and delivery of the Business Combination Agreement, Ackrell, certain stockholders of Ackrell (collectively, the “Initial Investors”), NAI and Dahle entered into an Amended and Restated Registration Rights Agreement (the “Amended Registration Rights Agreement”). Pursuant to the Amended Registration Rights Agreement, the Initial Investors and the undersigned parties listed under “Holder” on the signature page thereto will be provided the right to demand registrations, piggy-back registrations and shelf registrations with respect to Registrable Securities (as defined in the Amended Registration Rights Agreement). The Amended Registration Rights Agreement would supersede the registration rights agreements between Ackrell and certain of the Initial Investors. 

 

Lock-Up Agreement 

 

Contemporaneously with the execution and delivery of the Business Combination Agreement, certain Ackrell stockholders, NAI and Dahle will enter into a Lock-up Agreement with Ackrell (each, a “Lock-Up Agreement”). Pursuant to the Lock-Up Agreements, each party thereto will agree to a 180-day lock-up of its Newco Common Stock following Closing, subject to (i) early release upon certain corporate transactions and (ii) certain limited permitted transfers where the recipient takes the shares subject to the restrictions in Lock-Up Agreement.

 

 

Ackrell Stockholder Support Agreement

 

Contemporaneously with the execution and delivery of the Business Combination Agreement, the Company and certain Ackrell stockholders will enter into Stockholder Support Agreements (the “Ackrell Stockholder Support Agreements”). Pursuant the Ackrell Stockholder Support Agreements, the Ackrell stockholders party thereto will agree, among other things, to vote their shares of Ackrell Common Stock in favor of the adoption an approval of the Business Combination Agreement and the Transactions.

 

The foregoing descriptions of the Amended Registration Rights Agreement, Lock-Up Agreement and Ackrell Stockholder Support Agreements do not purport to be complete and are qualified in their entirety by reference to the complete text of the form of such agreements, copies of which are filed herewith as Exhibits 10.1, 10.2 and 10.3 to this Current Report on Form 8-K, respectively.

 

Private Placement

 

In connection with the proposed business combination between Ackrell and the Company, Ackrell and Newco entered into subscription agreements (the “Subscription Agreements”) with the investors named therein (the “PIPE Investors”), pursuant to which Newco agreed to issue and sell to the PIPE Investors approximately 3,100,000 units (the “Units”) for a purchase price of $10.00 per unit, with each Unit consisting of one share of Newco Common Stock and one-half of a warrant to acquire Newco Common Stock at an exercise price of $11.50 per share and Newco agreed to issue and sell and approximately $111,000,000 principal amount of Newco convertible notes (the “Convertible Notes”) immediately prior to closing of the Merger (the “PIPE Investment”).

 

The PIPE Investment is conditioned on the concurrent closing of the Merger, execution of an indenture (the “Indenture”) containing the terms of the Convertible Notes, certain minimum cash and liquidity requirements, absence of a material adverse effect on Ackrell, Newco or the Company, the operation of the Company’s business in the ordinary course between the execution of the Subscription Agreements until the consummation of the Transaction, certain minimum business performance metrics having been met and other customary closing conditions. The proceeds from the PIPE Investment will be used to fund a portion of the cash consideration for the Merger. The Subscription Agreements provide for certain customary registration rights for the PIPE Investors.

 

As an inducement to enter into the Subscriptions Agreements, certain Ackrell stockholders, NAI and Dahle (the “Transferors”) have agreed, pursuant to a Transferor Agreement entered into contemporaneously with the execution and delivery of the Business Combination Agreement, to effect a transfer of a certain number of shares of Newco Common Stock to purchasers of Units concurrently with the consummation of the purchase of the Units. The Transferors have agreed that a certain number of shares of Newco Common Stock will be deposited into an escrow fund that will be transferred to the purchasers of Units in the event that the trading price of Newco Common Stock (the “Trading Price”) during the measurement period specified in the Subscription Agreements is less than $10.00 (the “Make-Whole Payment”). In the event a Make-Whole Payment is required to be made, the number of shares of Newco Common Stock to be transferred from the escrow fund shall be determined using a formula set forth in the Subscription Agreement; provided that the amount of shares of Newco Common Stock in the Make-Whole Payment shall be determined based upon a Trading Price between $5.75 and $10.00 per share, with more shares being transferred from the escrow fund as the Trading Price decreases. If the Trading Price is greater than $10.00 per share, no Make-Whole Payment shall be required and if the Trading Price is lower than $5.75 per share no additional Make-Whole Payment shall be required to account for the difference between $5.75 per share and the actual Trading Price. Any shares of Newco Common Stock remaining in the escrow fund following the Make-Whole Payment will be returned to the Transferors.

 

The warrants will be issued pursuant to a warrant agreement to be entered into at the Closing of the Transactions. Each whole warrant will entitle the registered holder to purchase one share of common stock at a price of $11.50 per share, subject to adjustment as set forth in the warrant agreement, at any time commencing on the issuance of the warrant until its expiration.

 

 

The warrants may be called for redemption by Newco if at any time after their issuance until the expiration of the warrants, if, and only if, the reported last sale price of the shares of common stock equals or exceeds $18.00 per share (as adjusted for stock splits, stock dividends, reorganizations and recapitalizations), for any 20 trading days within a 30 trading day period and if, and only if, there is a current registration statement in effect with respect to the shares of Newco Common Stock underlying such warrants.

 

The exercise price and number of shares of common stock issuable on exercise of the warrants may be adjusted in certain circumstances including in the event of a stock dividend, extraordinary dividend or our recapitalization, reorganization, merger or consolidation. However, except as described below, the warrants will not be adjusted for issuances of shares of common stock at a price below their respective exercise prices.

 

The Convertible Notes will mature on April 15, 2027 unless earlier repurchased, redeemed or converted in accordance with their terms, and will accrue interest at a rate of 9.875% per annum payable in a combination of cash and “payments-in-kind” (“PIK”). Prior to the second anniversary following the closing date of the Convertible Notes offering, 50% of the interest will be paid in cash with the remaining 50% to be paid in PIK or, at Newco’s option, cash. On and after the second anniversary of the closing date of the Convertible Notes offering, all interest will be paid in cash. However, if any such amount of cash interest is not permitted under the terms of Blackstone’s other credit facilities, the amount of permitted interest shall be paid in cash, and the remaining amount of interest will be paid in PIK. The amount that would otherwise have been paid in cash, but is paid in PIK will be used to repay Blackstone’s other credit facilities.

 

The Convertible Notes may be converted at any time (in whole or in part) into shares of Newco Common Stock, at the option of the holder of such Convertible Note, at a price equal to the lesser of (i) $11.50 and (ii) 15% premium to the lowest per share price of any equity issued prior to or substantially simultaneously with the closing of the Merger (subject to customary adjustments).

 

Newco will have the option to redeem all or any portion of the Convertible Notes after April 15, 2025 if certain conditions (including that the Newco Common Stock is trading at or above $18.00 per share for at least 20 out of any 30 day trading period and the redeemed portion does not exceed a specified level of the Newco Common Stock trading volume over a specified period) are met. The Convertible Notes also contain default provisions, including provisions for potential acceleration of the Convertible Notes.

 

Each holder of a Note will have the right to cause the Newco to repurchase for cash all or a portion of the Notes held by such holder at any time upon the occurrence of a “fundamental change”, a customary definition provided in the Indenture (a “Fundamental Change”), at a price equal to par plus accrued and unpaid interest.

 

In the event of a conversion in connection with a Fundamental Change, the Conversion Price will be adjusted by a usual and customary Fundamental Change make-whole amount to be agreed in the Indenture.

 

The Indenture will include restrictive covenants that, among other things, will limit the ability of Newco to incur indebtedness above certain thresholds (subject to certain exceptions to be set forth in the Indenture), create liens, make certain payments or investments, enter into affiliate transactions, sell certain assets of Newco and its subsidiaries, pay dividends, and complete certain mergers or consolidations.

 

The Indenture also will include customary events of default.

 

Newco has agreed to file a shelf registration statement registering the resale of the shares of Newco Common Stock contained in the Units and Make-Whole Payment or issuable upon exercise of the warrants or conversion of the Convertible Notes. In certain circumstances, the subscribers have piggy-back registration rights in the event that Newco engages in an underwritten offering of Newco Common Stock.

 

A copy of the form of Subscription Agreement and Transferor Agreement are filed as Exhibits 10.4 and 10.5 to this Current Report on Form 8-K and are incorporated herein by reference, and the foregoing description of the form of Subscription Agreement and Transferor Agreement are qualified in their entirety by reference thereto.

 

Item 3.02 Unregistered Sales of Equity Securities.

 

The disclosure set forth above under the heading “Private Placement” in Item 1.01 of this Current Report is incorporated by reference into this Item 3.02. Ackrell Common Stock and the Convertible Notes issued in the PIPE Investment, warrants in the Units, and shares underlying Convertible Notes and warrants will not be registered under the Securities Act, in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act and/or Regulation D promulgated thereunder.

 

 

Item 7.01 Regulation FD Disclosure.

 

On December 23, 2021, Ackrell issued a press release announcing the execution of the Business Combinations Agreement. The press release is attached hereto as Exhibit 99.1.

 

Attached as Exhibits 99.2 and 99.3 hereto are the investor presentation dated December 2021 that will be used by Ackrell and the Company with respect to the transactions contemplated by the Business Combination Agreement and a transcript of management commentary on the investor presentation.

 

The foregoing (including Exhibits 99.1, 99.2 and 99.3) is being furnished pursuant to Item 7.01 and will not be deemed to be filed for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise be subject to the liabilities of that section, nor will it be deemed to be incorporated by reference in any filing under the Securities Act or the Exchange Act.

 

Forward-Looking Statements

 

Certain statements herein are “forward-looking statements” made pursuant to the safe harbor provisions of the United States Private Securities Litigation Reform Act of 1995. Statements that are not historical facts, including statements about the Company and Ackrell and the transactions contemplated by the Business Combination Agreement, and the parties’ perspectives and expectations, are forward looking statements. Such statements include, but are not limited to, statements regarding the Transactions, including the anticipated initial enterprise value and post-closing equity value, the benefits of the Transactions, revenue opportunities, anticipated future financial and operating performance and results, including estimates for growth, the expected management and governance of the combined company, and the expected timing of the Transactions. Such forward-looking statements reflect the Company’s or Ackrell’s current expectations or beliefs concerning future events and actual events may differ materially from current expectations. Forward-looking statements may be identified by the use of words such as “estimate,” “plan,” “project,” “forecast,” “intend,” “will,” “expect,” “anticipate,” “believe,” “seek,” “target,” “designed to” or other similar expressions that predict or indicate future events or trends or that are not statements of historical matters. Any such forward-looking statements are subject to various risks and uncertainties, including (1) the occurrence of any event, change or other circumstances that could give rise to the termination of negotiations and any subsequent definitive agreements with respect to the proposed business combination; (2) the outcome of any legal proceedings that may be instituted against Ackrell, the Company, the combined company or other following the announcement of the proposed business combination and any definitive agreements with respect thereto; (3) the inability to complete the proposed business combination due to the failure to obtain approval of the shareholders of Ackrell, to obtain financing to complete the proposed business combination or to satisfy other conditions to closing; (4) changes to the proposed structure of the proposed business combination that may be required or appropriate as a result of applicable laws or regulations or as a condition to obtaining regulatory approval of the proposed business combination; (5) the ability to meet stock exchange listing standards following the consummation of the proposed business combination; (6) the risk that the proposed business combination disrupts current plans and operations of Ackrell or the Company as a result of the announcement and consummation of the proposed business combination; (7) the ability to recognize the anticipated benefits of the proposed business combination, which may be affected by, among other things, competition and the ability of the combined company to grow and manage growth profitably, maintain relationships with customers and retain its management and key employees; (8) costs related to the proposed business combination; (9) changes in applicable laws or regulations and delays in obtaining, adverse conditions contained in, or the inability to obtain regulatory approvals required to complete the proposed business combination; (10) the Company’s estimates of expenses and profitability and underlying assumptions with respect to stockholder redemptions and purchase price and other adjustments; (11) the Company’s inability to increase outdoor cooking market penetration or expand the categories for outdoor cooking; (12) the addressable market the Company intends to target does not grow as expected; (13) increased regulatory costs and compliance requirements in connection with any international or product line expansion; (14) the Company’s inability to expand and diversify its supply chain; (15) the loss of any key executives; (16) the loss of any relationships with key retailers; (17) the loss of any relationships with key suppliers; (18) the inability to protect the Company’s patents and other intellectual property; (19) lower than expected attachment rate and cross-selling capabilities for new products; (20) new technologies that compete with the Company in the griddle market and other outdoor cooking markets; (21) the inability to increase engagement with end-users via social media or other digital channels; (22) fluctuations in sales of the Company’s major customers; (23) the Company’s ability to execute its business plans and strategy; (24) the Company’s ability to maintain sufficient inventory and meet customer demand; (25) the Company’s inability to deliver expected cost and manufacturing efficiencies; and (26) other risks and uncertainties indicated from time to time in other documents filed or to be filed with the SEC by Ackrell. If any of these risks materialize or any of Ackrell’s or the Company’s assumptions prove incorrect, actual results could differ materially from the results implied by these forward-looking statements. The Company and Ackrell do not undertake to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. See “Risk Considerations” in the investor presentation, which will be provided in a Current Report on Form 8-K to be filed by Ackrell with the SEC and available at www.sec.gov.

 

 

Additional Information and Where to Find It

 

Ackrell intends to file with the SEC a registration statement on Form S-4 with a proxy statement containing information about the proposed transaction and the respective businesses of the Company and Ackrell. Ackrell will mail a final prospectus and definitive proxy statement and other relevant documents after the SEC completes its review. Ackrell stockholders are urged to read the preliminary prospectus and proxy statement and any amendments thereto and the final prospectus and definitive proxy statement in connection with the solicitation of proxies for the special meeting to be held to approve the proposed transaction, because these documents will contain important information about Ackrell, the Company and the proposed transaction. The final prospectus and definitive proxy statement will be mailed to stockholders of Ackrell as of a record date to be established for voting on the proposed transaction. Stockholders of Ackrell will also be able to obtain a free copy of the proxy statement, as well as other filings containing information about Ackrell, without charge, at the SEC’s website (www.sec.gov) or by calling 1-800-SEC-0330. Copies of the proxy statement and Ackrell’s other filings with the SEC can also be obtained, without charge, by directing a request to: Ackrell SPAC Partners I Co., 2093 Philadelphia Pike #1968, Claymont, DE 19703. Additionally, all documents filed with the SEC can be found on Ackrell’s website, https://www.ackrellspac.com.

 

Participants in the Solicitation

 

The Company and Ackrell and their respective directors and officers and other members of management and employees may be deemed participants in the solicitation of proxies in connection with the proposed business combination. Ackrell stockholders and other interested persons may obtain, without charge, more detailed information regarding directors and officers of Ackrell in Ackrell’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021, which was filed with the SEC on March 31, 2021. Information regarding the persons who may, under SEC rules, be deemed participants in the solicitation of proxies from Ackrell’s stockholders in connection with the proposed business combination will be included in the definitive proxy statement/prospectus that Ackrell intends to file with the SEC.

 

No Offer or Solicitation

 

This Current Report on Form 8-K shall not constitute a solicitation of a proxy, consent, or authorization with respect to any securities or in respect of the proposed business combination. This Current Report on Form 8-K shall also not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any states or jurisdictions in which such offer, solicitation, or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offering of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended, or an exemption therefrom.

 

Item 9.01 Financial Statements and Exhibits.

 

(d) Exhibits:

 

Exhibit		Description
2.1*		Business Combination Agreement dated as of December 22, 2021 by and among Ackrell SPAC Partners I Co., Blackstone Products, Inc., Ackrell Merger Sub, Inc., North Atlantic Imports, LLC, Roger Dahle, and North Atlantic Imports, Inc.
10.1		Form of Amended and Restated Registration Rights Agreement.
10.2		Form of Lock-Up Agreement.
10.3		Form of Stockholder Ackrell Support Agreement.
10.4		Form of Subscription Agreement.
10.5		Form of Transferor Agreement.
99.1		Press Release issued by Ackrell SPAC Partners I Co. and North Atlantic Imports, LLC, December 23, 2021.
99.2		Investor Presentation dated December 2021.
99.3		Transcript of Management Commentary to Investor Presentation.
104		Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL document.

 

*

Certain exhibits and schedules to this Exhibit have been omitted in accordance with Regulation S-K Item 601(b)(2). Ackrell agrees to furnish supplementally a copy of all omitted exhibits and schedules to the Securities and Exchange Commission upon its request.

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

Dated: December 23, 2021

 

ACKRELL SPAC PARTNERS I CO.
By:	/s/ Jason Roth
Name:	Jason Roth
Title:	Chief Executive Officer

 

 

10

 

Exhibit 2.1

 

Execution Version

 

 

BUSINESS COMBINATION AGREEMENT

 

BY AND AMONG

 

Ackrell SPAC Partners I Co.,

 

North Atlantic Imports, LLC,

 

Blackstone Products, Inc.,

 

Ackrell Merger Sub, Inc.,

 

Roger Dahle

 

AND

 

North Atlantic Imports, Inc.

 

DATED AS OF DECEMBER 22, 2021

 

 

 

 

Table of Contents

 

		Page
Article I DEFINITIONS		3
Section 1.01	Certain Definitions	3
Section 1.02	Further Definitions	12
Section 1.03	Construction	15
Article II AGREEMENT AND PLAN OF MERGER		16
Section 2.01	The Merger	16
Section 2.02	Closing of the Transactions	16
Section 2.03	Effect of the Merger	16
Section 2.04	Governing Documents	17
Section 2.05	Directors and Officers	17
Article III CONTRIBUTIONS		17
Section 3.01	NAI Contribution	17
Section 3.02	Dahle Contribution	18
Section 3.03	Consideration for NAI Contribution	18
Section 3.04	Consideration for NAI Cash Redemption and Purchase	18
Section 3.05	Consideration for Dahle Contribution	18
Section 3.06	Compliance with the Company Organizational Documents	18
Section 3.07	Company Operating Agreement	18
Article IV CONVERSION OF SECURITIES; EXCHANGE OF ACKRELL SECURITIES		18
Section 4.01	Conversion of Ackrell Securities	18
Section 4.02	No Required Surrender of Ackrell Stock Certificates	19
Section 4.03	Stock Transfer Books	20
Section 4.04	Treatment of Ackrell Warrants	20
Section 4.05	Treatment of Company RSU	20
Section 4.06	Payment of Expenses	20
Article V REPRESENTATIONS AND WARRANTIES OF THE CONTRIBUTORS		21
Section 5.01	Organization of NAI	21
Section 5.02	Authority Relative to this Agreement	21
Section 5.03	No Conflict; Required Filings and Consents	22
Section 5.04	Absence of Litigation	22
Section 5.05	Brokers	22

 

 

Table of Contents

(continued)

 

		Page
Article VI REPRESENTATIONS AND WARRANTIES OF NAI WITH RESPECT TO COWELL		23
Section 6.01	Organization of Cowell	23
Section 6.02	No Conflict	23
Section 6.03	Capitalization of Cowell	23
Section 6.04	Absence of Litigation	24
Section 6.05	Financial Statements of Cowell	24
Section 6.06	Taxes	24
Section 6.07	Operation of Business and Assets	26
Section 6.08	Brokers	26
Article VII REPRESENTATIONS AND WARRANTIES OF THE COMPANY		26
Section 7.01	Organization and Qualification; Subsidiaries	26
Section 7.02	Certificate of Incorporation and Bylaws	27
Section 7.03	Capitalization	27
Section 7.04	Authority Relative to this Agreement	28
Section 7.05	No Conflict; Required Filings and Consents	28
Section 7.06	Permits; Compliance.	29
Section 7.07	Financial Statements; Internal Controls	29
Section 7.08	Absence of Certain Changes or Events	32
Section 7.09	Absence of Litigation	32
Section 7.10	Employee Benefit Plans	32
Section 7.11	Labor and Employment Matters	34
Section 7.12	Real Property; Title to Assets	36
Section 7.13	Intellectual Property	37
Section 7.14	Taxes	39
Section 7.15	Environmental Matters	41
Section 7.16	Material Contracts	42
Section 7.17	Insurance	45
Section 7.18	Interested Party Transactions	45
Section 7.19	Exchange Act	45
Section 7.20	Brokers	45
Section 7.21	Certain Business Practices	46
Section 7.22	Registration Statement	46
Section 7.23	PPP Loan	46
Section 7.24	Key Customers and Suppliers	47
Section 7.25	Investment Company Act	47
Section 7.26	Books and Records	47
Section 7.27	Exclusivity of Representations and Warranties; Company’s Investigation and Reliance	47
Section 7.28	Information Supplied	48

 

 

Table of Contents

(continued)

 

		Page
Article VIII REPRESENTATIONS AND WARRANTIES OF ACKRELL, MERGER SUB AND NEWCO		48
Section 8.01	Corporate Organization	48
Section 8.02	Governing Documents	48
Section 8.03	Capitalization	49
Section 8.04	Authority Relative to this Agreement; Vote Required	50
Section 8.05	No Conflict; Required Filings and Consents	50
Section 8.06	Compliance	51
Section 8.07	SEC Filings; Financial Statements; Sarbanes-Oxley	51
Section 8.08	Absence of Certain Changes or Events	53
Section 8.09	Absence of Litigation	53
Section 8.10	Board Approval	53
Section 8.11	No Prior Operations of Merger Sub or Newco	54
Section 8.12	Brokers	54
Section 8.13	Ackrell Trust Fund	54
Section 8.14	Employees	54
Section 8.15	Taxes	55
Section 8.16	Registration and Listing	56
Section 8.17	Registration Statement	57
Section 8.18	Subscription Agreements	57
Section 8.19	Affiliate Agreements	58
Section 8.20	Ackrell’s and Merger Sub’s Investigation and Reliance	58
Article IX CONDUCT OF BUSINESS PENDING THE MERGER AND THE CONTRIBUTIONS		59
Section 9.01	Conduct of Business by the Company Pending the Transactions	59
Section 9.02	Conduct of Business by Cowell Pending the NAI Contribution	63
Section 9.03	Conduct of Business by Ackrell, Newco and Merger Sub Pending the Merger	63
Section 9.04	Waiver of Claims Against Trust	65
Section 9.05	PPP Loan	66

 

 

Table of Contents

(continued)

 

		Page
Article X ADDITIONAL AGREEMENTS		66
Section 10.01	Registration Statement; Proxy Statement; Consent Solicitation Statement	66
Section 10.02	Ackrell Stockholders’ Meeting	68
Section 10.03	Access to Information; Confidentiality	68
Section 10.04	Exclusivity	69
Section 10.05	Directors’ and Officers’ Indemnification	70
Section 10.06	Notification of Certain Matters	71
Section 10.07	Further Action; Commercially Reasonable Efforts	71
Section 10.08	Public Announcements	72
Section 10.09	Tax Matters	72
Section 10.10	Stock Exchange Listing; Successor Issuer	73
Section 10.11	Antitrust	74
Section 10.12	Financial Statements	75
Section 10.13	Trust Account	75
Section 10.14	Directors	76
Section 10.15	Termination of Certain Agreements	76
Section 10.16	Amendments to Ancillary Agreements	76
Section 10.17	Employment Agreement	76
Article XI CONDITIONS TO THE MERGER		76
Section 11.01	Conditions to the Obligations of Each Party	76
Section 11.02	Conditions to the Obligations of Ackrell, Newco and Merger Sub	77
Section 11.03	Conditions to the Obligations of the Company, NAI and Dahle.	79
Section 11.04	Frustration of Conditions.	80
Article XII TERMINATION, AMENDMENT AND WAIVER		80
Section 12.01	Termination	80
Section 12.02	Effect of Termination	81
Section 12.03	Amendment	81
Section 12.04	Waiver	81
Article XIII GENERAL PROVISIONS		82
Section 13.01	Notices	82
Section 13.02	Nonsurvival of Representations, Warranties and Covenants	83
Section 13.03	Severability	83
Section 13.04	Entire Agreement; Assignment	83
Section 13.05	Parties in Interest	83
Section 13.06	Governing Law	84
Section 13.07	Waiver of Jury Trial	84
Section 13.08	Headings	84
Section 13.09	Counterparts; Electronic Delivery	84
Section 13.10	Specific Performance	85
Section 13.11	No Recourse	85
Section 13.12	Legal Representation	85

 

 

INDEX OF ANNEX AND EXHIBITS

 

Exhibits

A	Amended & Restated Registration Rights Agreement
B	Lock-Up Agreements
C	Subscription Agreement
D	Ackrell Stockholder Support Agreements
E	Newco 2021 Equity Incentive Plan
F	Newco Employee Stock Purchase Plan
G	Newco A&R Charter
H	Newco A&R Bylaws
I	New Operating Agreement
J	Manufacturing Supply Agreement with Fugang Technology Inc.

 

Annexes

 

 

BUSINESS COMBINATION AGREEMENT

 

This BUSINESS COMBINATION AGREEMENT, dated as of December 22, 2021 (this “Agreement”), is made by and among Ackrell SPAC Partners I Co., a Delaware corporation (“Ackrell”), Blackstone Products, Inc., a newly formed Delaware corporation and wholly-owned subsidiary of Ackrell (“Newco”), Ackrell Merger Sub Inc., a newly formed Delaware corporation and wholly-owned subsidiary of Newco (“Merger Sub”), North Atlantic Imports, LLC, a Utah limited liability company (the “Company”), Roger Dahle, an individual residing in Utah and holder of certain membership interests in the Company (“Dahle”) and North Atlantic Imports, Inc., a business company formed under the laws of the British Virgin Islands (“NAI” and together with Dahle, the “Contributors”).

 

RECITALS

 

WHEREAS, Ackrell is a blank check company incorporated to effect a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses;

 

WHEREAS, Cowell International Inc., a Utah corporation (“Cowell”) is a wholly-owned subsidiary of NAI;

 

WHEREAS, Cowell and Dahle, collectively, own all of the membership interests of the Company;

 

WHEREAS, Newco is a wholly-owned direct subsidiary of Ackrell and was formed for the purpose of consummating the transactions contemplated by this Agreement;

 

WHEREAS, Merger Sub is a newly formed, wholly owned, direct subsidiary of Newco, and was formed for the sole purpose of the Merger (as defined below);

 

WHEREAS, immediately prior to the Closing, the Company will enter a redemption agreement with Cowell and Dahle (the “Company Redemption Agreement”), pursuant to which the Company will redeem, prior to the Closing, certain of its membership interests held by Cowell in exchange for one hundred million dollars ($100,000,000);

 

WHEREAS, in connection with the Company Redemption Agreement, the Company incurred certain Indebtedness for borrowed money (the “Company Redemption Debt”) having a principal amount of one hundred million dollars ($100,000,000);

 

WHEREAS, on the Closing Date, upon the terms and subject to the conditions of this Agreement and in accordance with Section 251 of the Delaware General Corporation Law (“DGCL”), Merger Sub will merge with and into Ackrell (the “Merger”), with Ackrell surviving the Merger as a wholly-owned subsidiary of Newco (the “Surviving Corporation”);

 

WHEREAS, on the Closing Date, immediately after the Merger, upon the terms and subject to the conditions of this Agreement and in accordance with the provisions of the Company Operating Agreement, NAI will contribute (the “NAI Contribution”) 45 shares of Cowell Common Stock, par value $1.00 per share (“Cowell Common Stock”) to Newco in exchange for shares of Newco common stock, par value $0.0001 per share (“Newco Common Stock”);

 

WHEREAS, on the Closing Date, immediately after the Merger, upon the terms and subject to the conditions of this Agreement and in accordance with the provisions of the Company Operating Agreement, NAI will transfer 33 shares of Cowell Common Stock to Ackrell and Cowell will redeem 22 shares of Cowell Common Stock (the “NAI Cash Redemption and Purchase”) in exchange for the Cash Consideration;

 

WHEREAS, on the Closing Date, concurrently with but effective immediately after the NAI Contribution, upon the terms and subject to the conditions of this Agreement and in accordance with the Operating Agreement, Dahle will contribute (the “Dahle Contribution” and together with the NAI Contribution, the “Contributions”) all of his membership interests in the Company to Newco in exchange for shares of Newco Common Stock;

 

 

WHEREAS, the respective boards of directors of each of Ackrell, Newco and Merger Sub have each approved, declared advisable and in the best interests of their respective stockholders and resolved to recommend to their respective stockholders, the Transactions (including the Merger) upon the terms and subject to the conditions of this Agreement and in accordance with the DGCL;

 

WHEREAS, the Company Board has approved the Cowell Contribution and the Dahle Contribution and taken all necessary action pursuant to the Company Operating Agreement to authorize the Contributions and the other transactions contemplated by this Agreement;

 

WHEREAS, contemporaneously with the execution and delivery of this Agreement, in connection with the Transactions, Ackrell, certain stockholders of Ackrell, NAI and Dahle shall enter into an Amended & Restated Registration Rights Agreement (the “Registration Rights Agreement”) to be effective upon the Closing, substantially in the form attached hereto as Exhibit A;

 

WHEREAS, contemporaneously with the execution and delivery of this Agreement, in connection with the Transactions, the Sponsor, NAI and Dahle have entered into the Lock-Up Agreement (the “Lock-Up Agreement”) to be effective upon the Closing, substantially in the form attached hereto as Exhibit B;

 

WHEREAS, contemporaneously with the execution and delivery of this Agreement, in connection with the Transactions, Ackrell and each of the parties subscribing for shares of Newco Common Stock thereunder (the “Investors”) have entered into subscription agreements (the “Subscription Agreements”), each substantially in the form attached hereto as Exhibit C, pursuant to which such parties, upon the terms and subject to the conditions set forth therein, shall purchase shares of Newco Common Stock at a price of $10.00 per share and/or new convertible notes to be issued by Newco at a purchase price equal to 100% of the principal amount thereof, in each case, in a private placement or placements (the “PIPE Investment”) to be consummated immediately prior to the Closing;

 

WHEREAS, pursuant to the Ackrell Certificate of Incorporation, Ackrell shall provide an opportunity to its stockholders to have their shares of Ackrell Common Stock redeemed for the consideration, and on the terms and subject to the conditions and limitations, set forth in this Agreement, the Ackrell Certificate of Incorporation, the Trust Agreement, the Prospectus and the Proxy Statement in conjunction with, inter alia, obtaining approval from the Ackrell Stockholders for the Business Combination (the “Ackrell Redemption”);

 

WHEREAS, contemporaneously with the execution and delivery of this Agreement, in connection with the Transactions, the Company and certain stockholders of Ackrell are entering into Stockholder Support Agreements, dated as of the date hereof (the “Ackrell Stockholder Support Agreements”), substantially in the form attached hereto as Exhibit D, providing that, among other things, the Ackrell stockholders party to the Ackrell Stockholder Support Agreements will vote their shares of Ackrell Common Stock in favor of the adoption and approval of this Agreement and the Transactions;

 

WHEREAS, prior to the consummation of the Transactions, Newco shall adopt an omnibus incentive plan (the “Newco 2021 Equity Incentive Plan”) and an employee stock purchase plan (the “Newco Employee Stock Purchase Plan”), substantially in the forms attached hereto as Exhibit E and Exhibit F, respectively;

 

WHEREAS, prior to the consummation of the Transactions, Newco shall amend and restate the Newco Certificate of Incorporation (the “Newco A&R Charter”) in the form attached hereto as Exhibit G;

 

WHEREAS, at the Effective Time, the bylaws of Newco shall be amended and restated in the form attached hereto as Exhibit H (the “Newco A&R Bylaws”);

 

WHEREAS, prior to the Closing, in connection with the Transactions, Newco and Roger Dahle, the Company’s CEO, intend to enter into an employment agreement (the “Employment Agreement”), effective as of the Closing, in form and substance reasonably acceptable to the Company and Ackrell; and

 

WHEREAS, for United States federal and applicable state income Tax purposes, it is intended that (i) the Merger shall qualify as a reorganization within the meaning of Section 368 of the Code, and (ii) the Merger, the PIPE Investment (with respect to the acquisition of Newco Common Stock only), the NAI Contribution and the Dahle Contribution (collectively, the “Contributions”), together, shall qualify as an exchange pursuant to Section 351 of the Code (the “Intended Tax Treatment”);

 

 

 

NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and agreements herein contained, and intending to be legally bound hereby, the parties hereto hereby agree as follows:

 

Article I
DEFINITIONS

 

Section 1.01 Certain Definitions. For purposes of this Agreement:

 

“Ackrell Certificate of Incorporation” means the Amended and Restated Certificate of Incorporation of Ackrell, filed with the Secretary of State of the State of Delaware on December 20, 2020.

 

“Ackrell Board” means the board of directors of Ackrell.

 

“Ackrell Material Adverse Effect” means any Effect that, individually or in the aggregate with any one or more other Effects, (i) has or would reasonably be expected to have a materially adverse effect on the business, condition (financial or otherwise), assets or results of operations of Ackrell or (ii) prevents, materially impairs, materially delays or materially impedes the performance by Ackrell, Newco or Merger Sub of their respective obligations under this Agreement or the consummation of the Merger or any of the other Transactions on a timely basis and in any event before the Outside Date; provided, however, that with respect to clause (i) only, no Effect relating to or resulting or arising from any of the following shall be deemed to constitute, alone or in combination, or be taken into account in the determination of whether, there has been or will be a Ackrell Material Adverse Effect: (a) any change or proposed change in Law or GAAP or change in the interpretation of any Law or GAAP; (b) events or conditions generally affecting the industries or geographic areas in which Ackrell operates; (c) any downturn in general economic conditions, including changes in the credit, debt, securities, financial or capital markets (including changes in interest or exchange rates, prices of any security or market index or commodity or any disruption of such markets); (d) any geopolitical conditions, outbreak of hostilities, acts of war, sabotage, civil unrest, cyberterrorism, terrorism, military actions, earthquakes, volcanic activity, hurricanes, tsunamis, tornadoes, floods, mudslides, wild fires or other natural disasters, weather conditions, epidemics, pandemics (including the COVID-19 pandemic) or other outbreaks of illness or public health events and other force majeure events (including any escalation or general worsening of any of the foregoing); (e) any actions taken or not taken by Ackrell as explicitly required by this Agreement or any Ancillary Agreement to which it is a party; (f) any Effect attributable to the announcement or pendency of the Merger or any of the other Transactions (provided that clause (e) and this clause (f) shall not apply to any representation or warranty set forth in Section 8.04 or Section 8.05, but subject to any disclosures set forth in Section 8.04 and Section 8.05 of the Ackrell Disclosure Schedule or the closing condition relating thereto); (g) any failure in and of itself of the Company to meet any projections or forecasts (provided that the exception in this clause (g) shall not prevent or otherwise affect a determination that any Effect underlying such failure has resulted in or contributed to a Material Adverse Effect); or (h) any actions taken, or failures to take action, or such other changes or events, in each case, which the Company has requested or to which it has consented, in each case, after the date of this Agreement, except in the cases of clauses (a) through (d), in each case, to the extent that Ackrell is disproportionately and adversely affected thereby as compared with other participants in the industry in which Ackrell operates. Notwithstanding the foregoing, the amount of the Ackrell Redemption (or any redemption in connection with an extension, if any, of the time for Ackrell to complete a Business Combination) or the failure to obtain the Ackrell Stockholder Approval shall not be deemed to be an Ackrell Material Adverse Effect.

 

“Ackrell Organizational Documents” means the Ackrell Certificate of Incorporation and bylaws, in each case as amended, modified or supplemented in accordance with the terms of this Agreement.

 

 

“Ackrell Redemption Rights” means the redemption rights provided for in Article VI of the Ackrell Certificate of Incorporation.

 

“Ackrell Stock Consideration” shall mean the aggregate number of shares of Newco Common Stock issuable to Ackrell Stockholders at the Effective Time in accordance with Section 4.01. For the avoidance of doubt, the Ackrell Stock Consideration shall equal the number of shares of Ackrell Common Stock outstanding immediately prior to the Effective Time after giving effect to the Ackrell Redemption.

 

“Ackrell Stockholder” means a holder of Ackrell Common Stock.

 

“Ackrell Stockholders’ Meeting” means a meeting of the holders of Ackrell Common Stock to be held for the purpose of approving the Ackrell Proposals.

 

“Ackrell Units” means the units issued in the IPO or the overallotment consisting of one (1) share of Ackrell Common Stock and one-half (1/2) of one (1) Ackrell Warrant.

 

“Ackrell Warrant Agreement” means the warrant agreement, dated as of December 21, 2020 between Ackrell and Continental Stock Transfer & Trust Company.

 

“Action” means any litigation, suit, claim, action, proceeding, audit or investigation by or before any Governmental Authority.

 

“Affiliate” of a specified Person means a Person who, directly or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, such specified Person.

 

“Allocation Percentage” means the percentage set forth next to the terms “NAI”, “Dahle” and “Company RSU” in Section 1.1(a) of the Company Disclosure Schedule which percentage shall set forth the Membership Interests of the Company attributable to each of NAI and Dahle, as members of the Company, and the percentage of Membership Interests of the Company for which the Company RSU may be exercised, in each case, after giving effect to payment of the Cash Consideration and the redemption of membership interests pursuant to the Company Redemption Agreement. For the avoidance of doubt, the sum of the Allocation Percentages set forth in Section 1.1(a) of the Company Disclosure Schedule shall equal one hundred percent (100%).

 

“Ancillary Agreements” means the Ackrell Stockholder Support Agreement, the Lock-Up Agreement, the Registration Rights Agreement, the Employment Agreement, the Transferor Agreement, and all other agreements, certificates and instruments executed and delivered by Ackrell, Merger Sub or the Company in connection with the Transactions and specifically contemplated by this Agreement.

 

“Anti-Corruption Laws” means, as applicable, (i) the U.S. Foreign Corrupt Practices Act of 1977, (ii) the UK Bribery Act 2010, (iii) anti-bribery legislation promulgated by the European Union and implemented by its member states, (iv) legislation implementing the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions, and (v) similar legislation applicable to the Company from time to time.

 

 

“Business Data” means all confidential business information and data that is accessed, collected, used, stored, shared, distributed, transferred, destroyed, or otherwise processed by any of the Business Systems or otherwise in the course of the conduct of the business of the Company.

 

“Business Day” means any day on which the principal offices of the SEC in Washington, D.C. are open to accept filings, or, in the case of determining a date when any payment is due, any day on which banks are not required or authorized to close in New York, NY; provided, that banks shall not be deemed to be authorized or obligated to be closed due to a “shelter in place” or similar closure of physical branch locations at the direction of any Governmental Authority if such banks’ electronic funds transfer systems (including for wire transfers) are open for use by customers on such day.

 

“Business Systems” means all Software, firmware, middleware, equipment, workstations, routers, hubs, computer hardware (whether general or special purpose), electronic data processors, databases, communications, telecommunications, networks, interfaces, platforms, servers, peripherals, and computer systems, including any outsourced systems and processes, and any Software and systems provided via the cloud or “as a service,” that the Company owns or uses in the conduct of the business of the Company.

 

“Cash Consideration” means two hundred fifty million dollars ($250,000,000) (of which one hundred fifty million dollars ($150,000,000) will be paid by Ackrell and one hundred million dollars ($100,000,000) will be paid from cash on hand at Cowell as set forth in Section 3.04).

 

“Code” means the U.S. Internal Revenue Code of 1986, as amended.

 

“Company Board” the board of managers of the Company appointed in accordance with the Company Operating Agreement.

 

“Company Certificate of Organization” means the Certificate of Organization of the Company, as the same may be amended from time to time.

 

“Company IP” means, collectively, all Company Owned IP and Company Licensed IP.

 

“Company Licensed IP” means all Intellectual Property rights owned or purported to be owned by a third party and licensed to the Company or that the Company otherwise has a right to use.

 

“Company Material Adverse Effect” means any event, circumstance, change or effect (each, an “Effect”) that, individually or in the aggregate with any one or more other Effects, (i) has or would reasonably be expected to have a materially adverse effect on the business, condition (financial or otherwise), assets or results of operations of the Company, taken as a whole, or (ii) prevents, materially impairs, materially delays or materially impedes the performance by the Company, NAI or Dahle of their respective obligations under this Agreement or the consummation of any of the Merger, the Contributions or any of the other Transactions on a timely basis and in any event before the Outside Date; provided, however, that with respect to clause (i) only, no Effect relating to or resulting or arising from any of the following shall be deemed to constitute, alone or in combination, or be taken into account in the determination of whether, there has been or will be a Company Material Adverse Effect: (a) any change or proposed change in or change in Law or GAAP or the interpretation of any Law or GAAP; (b) events or conditions generally affecting the industries or geographic areas in which the Company operates; (c) any downturn in general economic conditions, including changes in the credit, debt, securities, financial or capital markets (including changes in interest or exchange rates, prices of any security or market index or commodity or any disruption of such markets); (d) any geopolitical conditions, outbreak of hostilities, acts of war, sabotage, civil unrest, cyberterrorism, terrorism, military actions, earthquakes, volcanic activity, hurricanes, tsunamis, tornadoes, floods, mudslides, wild fires or other natural disasters, weather conditions, epidemics, pandemics (including the COVID-19 pandemic) or other outbreaks of illness or public health events and other force majeure events (including any escalation or general worsening of any of the foregoing); (e) any actions explicitly taken or not taken by the Company as required by this Agreement or any Ancillary Agreement to which it is a party; (f) any Effect attributable to the announcement or pendency of the Merger or any of the other Transactions (provided that clause (e) and this clause (f) shall not apply to any representation or warranty set forth in Section 7.04, Section 7.05, Section 7.06, Section 7.16 or Section 7.24 but subject to any disclosures set forth in Section 7.04, Section 7.05, Section 7.06, Section 7.16 or Section 7.24 of the Company Disclosure Schedule or the closing condition relating thereto); (g) any failure in and of itself of the Company to meet any projections or forecasts (provided that the exception in this clause (g) shall not prevent or otherwise affect a determination that any Effect underlying such failure has resulted in or contributed to a Material Adverse Effect); or (h) any actions taken, or failures to take action, or such other changes or events, in each case, which Ackrell has requested or to which it has consented, in each case, after the date of this Agreement, except in the cases of clauses (a) through (d), in each case, to the extent that the Company is disproportionately and adversely affected thereby as compared with other participants in the industries in which the Company operates.

 

 

“Company Operating Agreement” means the Amended and Restated Operating Agreement of the Company, dated as of July 13, 2017, as the same may be amended from time to time.

 

“Company Organizational Documents” means the Company Certificate of Organization and the Company Operating Agreement.

 

“Company Owned IP” means all Intellectual Property rights owned or purported to be owned by the Company.

 

“Company RSU” means the contingent right to receive an equity interest in the Company to be issued to Roger Dahle, as grantee, pursuant to a Company Award Agreement, to be entered into by the Company and Dahle prior to the Closing.

 

“Company Stock Consideration” means a number of shares of Newco Common Stock equal to the quotient of (i) the Company Stock Value divided by (ii) 10.

 

“Company Stock Value” means seven hundred twenty one million dollars ($721,000,000) less the Transaction Cash Consideration.

 

“Confidential Information” means any information, knowledge or data concerning the businesses and affairs of the Company or Ackrell, or any Suppliers or customers of the Company or Ackrell or its subsidiaries (as applicable) that is not already generally available to the public and subject to an obligation of confidentiality, including any Intellectual Property rights.

 

“Contracts” means any legally binding contracts, agreements, subcontracts, leases, and purchase orders (other than any Employee Benefit Plans).

 

“control” (including the terms “controlled by” and “under common control with”) means the possession, directly or indirectly, or as trustee or executor, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, as trustee or executor, by contract or otherwise.

 

“Dahle Stock Consideration” means a number of shares of Newco Common Stock, rounded to the nearest whole share, equal to the Allocation Percentage set forth next to Dahle in Section 1.1(a) of the Company Disclosure Schedule multiplied by the Company Stock Consideration.

 

“Disabling Devices” means Software, viruses, time bombs, logic bombs, trojan horses, trap doors, back doors, spyware, malware, worms, other computer instructions, intentional devices, techniques, other technology, disabling codes, instructions, or other similar code or software routines or components that are designed to threaten, infect, assault, vandalize, defraud, disrupt, damage, disable, delete, maliciously encumber, hack into, incapacitate, perform unauthorized modifications, infiltrate or slow or shut down a computer system or data, software, system, network, other device, or any component of such computer system, including any such device affecting system security or compromising or disclosing user data in an unauthorized manner, other than those incorporated by the Company or the applicable third party intentionally to protect Company IP, or Business Systems from misuse.

 

“Employee Benefit Plan” means each “employee benefit plan,” as defined in Section 3(3) of ERISA (whether or not subject to ERISA), any nonqualified deferred compensation plan subject to Section 409A of the Code, and each other retirement, health, welfare, cafeteria, bonus, commission, stock option, stock purchase, restricted stock, other equity or equity-based compensation, performance award, incentive, deferred compensation, retiree medical or life insurance, death or disability benefit, supplemental retirement, severance, retention, change in control, employment, consulting, fringe benefit, sick pay, vacation, or similar plan, program, policy, practice, agreement, or arrangement, whether written or unwritten (excluding governmental programs and de minimis fringe benefits).

 

 

“Environmental Laws” means any United States federal, state or local or non-United States Laws relating to: (i) releases or threatened releases of, or exposure of any Person to, Hazardous Substances or materials containing Hazardous Substances; (ii) the manufacture, handling, transport, use, treatment, storage or disposal of Hazardous Substances or materials containing Hazardous Substances; or (iii) pollution or protection of the environment, natural resources or human health and safety.

 

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

 

“Escrow Agent” has the same meaning as set forth in the Subscription Agreement.

 

“Escrow Shares” has the same meaning as set forth in the Subscription Agreement.

 

“Ex-Im Laws” means all applicable Laws relating to export, re-export, transfer, and import controls, including the U.S. Export Administration Regulations, the customs and import Laws administered by U.S. Customs and Border Protection, and the EU Dual Use Regulation.

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

“GAAP” means generally accepted accounting principles in the United States.

 

“Hazardous Substance(s)” means (i) any substances, wastes, gases or materials defined, listed, designated, identified or regulated as hazardous or toxic or as a pollutant or a contaminant under any Environmental Law; (ii) petroleum and petroleum products, including crude oil and any fractions thereof; (iii) natural gas, synthetic gas, and any mixtures thereof; (iv) polychlorinated biphenyls, per- and polyfluoroalkyl substances, asbestos, radon, mold or urea formaldehyde insulation; and (v) any other substance, material or waste regulated by, or for which standards of care may be imposed under any Environmental Law.

 

“HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976.

 

“Indebtedness” means, with respect to the Company, any liabilities in respect of: (a) borrowed money, whether current, short-term, secured or unsecured or indebtedness issued or incurred in substitution or exchange for indebtedness for borrowed money; (b) indebtedness evidenced by bonds, notes, debentures, mortgages or similar instruments; (c) lease obligations that are required to be capitalized in accordance with GAAP; (d) deferred payments, the deferred purchase price of assets, services or securities (including all seller notes and “earn outs” but excluding ordinary trade accounts payable); (e) conditional sale or other title retention agreements; (f) reimbursement obligations, whether contingent or matured, with respect to letters of credit, including standby letters of credit, bankers’ acceptances (to the extent drawn), surety bonds (to the extent drawn), other financial guarantees and interest rate protection agreements (to the extent drawn, and without duplication of other indebtedness supported or guaranteed thereby); (g) currency or interest rate swaps, collars, caps, hedges, derivatives or similar arrangements; (h) bank overdrafts and deferred liabilities; (i) all Indebtedness of the type referred to in clauses (a) through (h) guaranteed by the Company or secured by any Lien upon any property or asset owned by the Company or guarantees in respect of the purchase or lease of real property; and (j) accrued and unpaid interest, premiums, penalties, breakage costs, redemption fees or pre-payment costs and other amounts owing in respect of the items described in the foregoing clauses (a) through (i). For the avoidance of doubt, Indebtedness shall not include Taxes.

 

 

“Intellectual Property” means (i) patents, patentable inventions, patent applications (including provisional and non-provisional applications) and patent disclosures, together with all reissues, continuations, continuations-in-part, divisionals, revisions, extensions or reexaminations thereof, (ii) trademarks and service marks, trade dress, logos, trade names, corporate names, brand names, slogans, and other source identifiers together with all applications, registrations, and renewals in connection therewith, together with all of the goodwill associated with the foregoing, (iii) copyrights, and other works of authorship (whether or not copyrightable), and moral rights, and registrations and applications for registration, renewals and extensions thereof, (iv) trade secrets, know-how and confidential and proprietary information, (v) rights in Internet domain names and social media accounts, (vi) computer software programs, including all source code, object code, specifications, designs and documentation related thereto, (vii) domain names, Internet addresses and other computer identifiers, (viii) all other intellectual property or proprietary rights of any kind or description, and (ix) all legal rights arising from items (i) through (viii), including the right to prosecute, enforce and perfect such interests and rights to sue, oppose, cancel, interfere, enjoin and collect damages based upon such interests, including such rights based on past infringement, if any, in connection with any of the foregoing.

 

“knowledge” or “to the knowledge” of a Person means in the case of the Company, NAI or Dahle, the actual knowledge of the individuals listed on Section 1.01(F) of the Company Disclosure Schedule after reasonable inquiry (and for all purposes of Section 7.13 hereof, “reasonable inquiry” shall not require the Company to have conducted patent clearance or similar freedom to operate searches, or other Intellectual Property searches), and in the case of Ackrell, Newco or Merger Sub, the actual knowledge of Stephen Cannon, Long Long, William Lamkin or Daniel Sheehan after reasonable inquiry.

 

“Law” means any federal, state, local, municipal, foreign or other law, statute, legislation, principle of common law, ordinance, code, edict, decree, proclamation, treaty, convention, rule, regulation, directive, requirement, writ, injunction, settlement, Order or Consent that is or has been issued, enacted, adopted, passed, approved, promulgated, made, implemented or otherwise put into effect by or under the authority of any Governmental Authority.

 

“Leased Real Property” means the real property leased, subleased, licensed or occupied by the Company as tenant, subtenant, licensee or occupant, together with, to the extent leased, subleased, licensed or occupied by the Company, all buildings and other structures, facilities or improvements located thereon and all easements, licenses, rights and appurtenances of the Company relating to the foregoing.

 

“Lien” means any charge, lien, security interest, mortgage, deed of trust, defect of title, easement, right of way, pledge, adverse claim or other encumbrance of any kind (other than those created under applicable securities Laws).

 

“Merger Sub Organizational Documents” means the certificate of incorporation and bylaws of Merger Sub.

 

“NAI Stock Consideration” means a number of shares of Newco Common Stock, rounded to the nearest whole share, equal to the Allocation Percentage set forth next to NAI in Section 1.1(a) of the Company Disclosure Schedule multiplied by the Company Stock Consideration.

 

“Nasdaq” means The Nasdaq Stock Market LLC.

 

“Open Source Software” means any Software in source code form that is licensed pursuant to (i) any license that is a license approved by the open source initiative and listed at http://www.opensource.org/licenses, which licenses include all versions of the GNU General Public License (GPL), the GNU Lesser General Public License (LGPL), the GNU Affero GPL, the MIT license, the Eclipse Public License, the Common Public License, the CDDL, the Mozilla Public License (MPL), the Artistic License, the Netscape Public License, the Sun Community Source License (SCSL), and the Sun Industry Standards License (SISL), (ii) any license to Software that is considered “free” or “open source software” by the open source foundation or the free software foundation, (iii) the Server Side Public License, or (iv) any Reciprocal License.

 

 

“Organizational Documents” means: (i) in the case of a person that is a corporation or a company, its articles or certificate of incorporation and its bylaws, memorandum of association, articles of association, regulations or similar governing instruments required by the Laws of its jurisdiction of formation or organization; (ii) in the case of a person that is a partnership, its articles or certificate of partnership, formation or association, and its partnership agreement (in each case, limited, limited liability, general or otherwise); (iii) in the case of a person that is a limited liability company, its articles or certificate of formation or organization, and its limited liability company agreement or operating agreement; and (iv) in the case of a person that is none of a corporation, partnership (limited, limited liability, general or otherwise), limited liability company or natural person, its governing instruments as required or contemplated by the Laws of its jurisdiction of organization.

 

“PCAOB” means the Public Company Accounting Oversight Board and any division or subdivision thereof.

 

“Permitted Liens” means (i) such non-monetary imperfections of title, easements, encumbrances, Liens or restrictions that do not materially impair or interfere with the current use of the Company’s assets that are subject thereto, (ii) materialmen’s, mechanics’, carriers’, workmen’s, warehousemen’s, repairmen’s, landlord’s and other similar Liens arising in the ordinary course of business, or deposits to obtain the release of such Liens, (iii) Liens for Taxes not yet due and delinquent, or if delinquent, being contested in good faith and for which appropriate reserves have been made in accordance with GAAP, (iv) zoning, entitlement, conservation restriction and other land use and environmental regulations promulgated by Governmental Authorities that are not violated in any material respect by the Company’s current use of the assets that are subject thereto, (v) non-exclusive licenses (or sublicenses) of Company Owned IP granted in the ordinary course of business, (vi) non-monetary Liens, encumbrances and restrictions on real property (including easements, covenants, rights of way and similar restrictions of record) that do not materially interfere with the present uses of such real property, (vii) Liens identified in the Audited Annual Financial Statements (and, when delivered, the PCAOB Audited Financials), and (viii) Liens on leases, subleases, easements, licenses, rights of use, rights to access and rights of way arising from the provisions of such agreements or benefiting or created by any superior estate, right or interest.

 

“Person” means an individual, corporation, partnership, limited partnership, limited liability company, syndicate, person (including a “person” as defined in Section 13(d)(3) of the Exchange Act), trust, association or entity or government, political subdivision, agency or instrumentality of a government.

 

“Personal Information” means information that relates to or can be used to identify an identifiable individual, or that relates to an individual and can be linked to an individual’s device or IP address. It includes, but is not limited to, “biometric information,” “personal information,” “personal data,” “personally identifiable information” or equivalent terms as defined by applicable Privacy/Data Security Laws.

 

 

“PPP” Means the Paycheck Protection Program from the U.S. Small Business Administration.

 

“PPP Loan” means the loan having a principal amount of $943,003 received by the Company on April 6, 2020 under the PPP.

 

“Privacy/Data Security Laws” means all applicable Laws governing the receipt, collection, use, storage, processing, sharing, security, disclosure, or transfer of Personal Information.

 

“Products” means any products or services under development, developed, manufactured, performed, out-licensed, sold, distributed, or other otherwise made available by or on behalf of the Company, from which the Company has derived previously, is currently deriving or is scheduled to derive, revenue from the sale or provision thereof.

 

“Proxy Statement” means the proxy statement filed by Ackrell as part of the Registration Statement with respect to the Ackrell Stockholders’ Meeting for the purpose of soliciting proxies from Ackrell Stockholders to approve the Ackrell Proposals (which shall also provide the Ackrell Stockholders with the opportunity to redeem their shares of Ackrell Common Stock in connection with a stockholder vote on the Business Combination).

 

“Reciprocal License” means a license of an item of Software that requires or that conditions any rights granted in such license upon (i) the disclosure, distribution or licensing of any other Software (other than such item of licensed Software as provided by a third party in its unmodified form), (ii) a requirement that any disclosure, distribution or licensing of any other Software (other than such item of licensed Software in its unmodified form) be at no charge, (iii) a requirement that any other licensee of the licensed Software be permitted to access the source code of, modify, make derivative works of, or reverse-engineer any other Software, (iv) a requirement that such other Software be redistributable by other licensees, or (v) the grant of any patent rights (other than patent rights in such item of licensed Software), including non-assertion or patent license obligations (other than patent obligations relating to the use of such item of licensed Software).

 

“Registered Intellectual Property” means all Intellectual Property that is the subject of an issued patent or registration (or a patent application or an application for registration), including domain names.

 

“Release” means any release, spill, emission, leaking, pumping, injection, deposit, disposal, discharge, dispersal, or leaching into the indoor or outdoor environment, or into or out of any property.

 

“Remedial Action” means all actions to (i) clean up, remove, treat, or in any other way address any Hazardous Substance, (ii) prevent the Release of any Hazardous Substance so it does not endanger or threaten to endanger public health or welfare or the indoor or outdoor environment, (iii) perform pre-remedial studies and investigations or post-remedial monitoring and care, or (iv) correct a condition of noncompliance with Environmental Laws.

 

“Sanctioned Person” means any Person (i) listed on any Sanctions-related list of designated or blocked persons, (ii) the government of, resident in, or organized under the laws of a country or territory that is the subject of comprehensive economic Sanctions (which includes, as of the date of this Agreement, Cuba, Iran, North Korea, Syria, and the Crimea region), or (iii) majority-owned or otherwise controlled by any of the foregoing.

 

 

“Sanctions” means those applicable, economic and financial sanctions Laws, regulations, embargoes, and restrictive measures administered or enforced by (i) the United States (including the U.S. Treasury Department’s Office of Foreign Assets Control), (ii) the European Union and enforced by its member states, (iii) the United Nations, (iv) Her Majesty’s Treasury, or (v) any other similar governmental authority with jurisdiction over the Company from time to time.

 

“Securities Act” means the Securities Act of 1933, as amended.

 

“Sponsor” means Ackrell SPAC Sponsors I LLC.

 

“Software” means all computer software (in object code or source code format), data and databases, and related documentation and materials.

 

“Sponsor Shares” means the shares of the Ackrell Common Stock held by the Sponsor as of immediately prior to the Closing.

 

“Sponsor Warrants” means the private placement warrants exercisable for Ackrell Common Stock held by the Sponsor as of immediately prior to the Closing.

 

“Stock Consideration” means the Company Stock Consideration plus the Ackrell Stock Consideration.

 

“stockholder” means a holder of stock or shares, as appropriate.

 

“Subsidiary” or “Subsidiaries” of the Company, the Surviving Corporation, Ackrell or any other Person means an Affiliate controlled by such Person, directly or indirectly, through one or more intermediaries.

 

“Supplier” means any Person that supplies inventory or other materials or personal property, components, or other goods or services (including, design, development and manufacturing services) that comprise or are utilized in, including in connection with the design, development, manufacture or sale of, the Products of the Company.

 

“Tax” or “Taxes” means any and all taxes (including any charges, duties, levies or other similar governmental assessments in the nature of taxes), including, but not limited to, income, estimated, business, occupation, corporate, capital, gross receipts, transfer, stamp, registration, employment, payroll, unemployment, insurance, social security, national insurance, business license, business organization, environmental, workers compensation, withholding, occupancy, license, lease, service use, severance, capital, production, premium, net worth, capital stock, capital gains, documentary, recapture, alternative or add-on minimum, disability, recording, ad valorem, excise, commercial rent, escheat, windfall profits, customs duties, real property, personal property, sales, use, turnover, value added and franchise taxes, in each case imposed by any Governmental Authority, whether disputed or not, together with all and any interest, fines, penalties, assessments or additions to tax imposed with respect thereto.

 

 

“Tax Return” means any return, declaration, report, claim for refund, or information return or statement relating to Taxes, including any schedule or attachment thereto and any amendment thereof, in each case filed or required to be filed with a Tax authority.

 

“Transaction Cash Consideration” means one hundred fifty million dollars ($150,000,000).

 

“Transaction Documents” means this Agreement, including all Schedules and Exhibits hereto, the Company Disclosure Schedule, the Ancillary Agreements, the Transferor Agreement, and all other agreements, certificates and instruments executed and delivered by Ackrell, Merger Sub or the Company in connection with the Transactions and specifically contemplated by this Agreement.

 

“Transactions” means the transactions contemplated by this Agreement and the other Transaction Documents.

 

“Transferor Agreement” means that certain Transferor Agreement, dated on or about the date hereof, by and among Newco, Dahle, NAI and Sponsor.

 

“Treasury Regulations” means the United States Treasury regulations issued pursuant to the Code.

 

“Virtual Data Room” means the virtual data room established by the Company or its Representatives, hosted by Vault Rooms, Inc., with access made available to Ackrell and its Representatives.

 

Section 1.02 Further Definitions. The following terms have the meaning set forth in the Sections set forth below:

 

Term		Section
Ackrell		Preamble
Ackrell Acquisition Proposal		10.04(b)(i)
Ackrell Board Recommendation		10.02
Ackrell Certificate		4.02(a)
Ackrell Common Stock		8.03(a)
Ackrell Disclosure Schedule		Article VIII
Ackrell Preferred Stock		8.03(a)
Ackrell Proposals		‎10.01(b)
Ackrell Public Warrants		8.16
Ackrell Redemption		Recitals
Ackrell SEC Reports		8.07(a)
Ackrell Stockholder Approval		8.04(b)
Ackrell Stockholder Support Agreements		Recitals
Ackrell Warrants		8.03(a)
Additional Proposal		‎10.01(b)
Adjournment Proposal		‎10.01(b)
Agreement		Preamble
Antitrust Laws		10.11(a)

 

 

Term		Section
Assumed RSU		4.05
Audited Annual Financial Statements		7.07(a)
Blue Sky Laws		5.03(b)
Business Combination		9.04
CARES Act		‎6.06(n)
Certificate of Merger		2.02(a)
Change of Control		Annex
Charter Proposal		10.01(b)
Chosen Courts		13.06
Closing		2.02(b)
Closing Date		2.02(b)
Closing Filing		10.08
Closing Press Release		10.08
Company		Preamble
Company Acquisition Proposal		10.04(a)(i)
Company Affiliate Agreement		7.18
Company Disclosure Schedule		Article VII
Company Officer’s Certificate		11.02(c)
Company Permits		7.06(a)
Company Redemption Agreement		Recitals
Company Redemption Debt		Recitals
Company Software		7.13(i)
Contributor Disclosure Schedule		Article V
Contributors		Preamble
Cowell		Recitals
Cowell Annual Financial Statements		6.05(a)
Cowell Common Stock		Recitals
Cowell Disclosure Schedule		Article VI
Cowell Interim Financial Statements		6.05(b)
D&O Indemnified Parties		10.05(a)
Dahle		Preamble
Dahle Contribution		Recitals
Data Security Requirements		7.13(j)
Director Proposal		10.01(b)
DGCL		Recitals
Effect		1.01
Effective Time		2.02(a)
Employment Agreement		Recitals
Environmental Permits		7.15(a)
Equity Incentive Plan Proposal		10.01(b)
Equity Plan Proposals		10.01(b)
ERISA Affiliate		7.10(c)
ESPP Proposal		10.01(b)
FFCRA		‎‎6.06(n)
Further Key Customer Contract		7.24

 

 

Term		Section
Further Key Supplier Contract		7.24
Governmental Authority		5.03(b)
Health Plan		7.10(k)
Intended Tax Treatment		Recitals
Interim Financial Statements		7.07(b)
Interim Financial Statements Date		7.07(b)
Investment Company Act		8.13
Investors		Recitals
IPO		9.04
IRS		7.10(b)
Key Customers		7.24 of the Company Disclosure Schedule
Lease		7.12(b)
Lease Documents		7.12(b)
Lock-Up Agreement		Recitals
Material Contracts		7.16(a)
Merger		Recitals
Merger Sub		Preamble
Merger Sub Common Stock		8.03(c)
NAI		Preamble
NAI Cash Redemption and Purchase		Recitals
NAI Contribution		Recitals
Nasdaq Listing Application		10.10(b)
New Operating Agreement		3.07
Newco		Preamble
Newco A&R Bylaws		Recitals
Newco A&R Charter		Recitals
Newco Board		2.05(b)
Newco Common Stock		Recitals
Newco 2021 Equity Incentive Plan		Recitals
Newco Employee Stock Purchase Plan		Recitals
Newco Warrant		4.04
Non-Disclosure Agreement		10.03(b)
Nonparty Affiliate		13.11
Ordinary Commercial Agreement		‎6.06(b)
Outside Date		12.01(b)
Outstanding Ackrell Transaction Expenses		4.06(b)
Outstanding Company Transaction Expenses		4.06(a)
PCAOB Audited Financial Statements		10.01(a)
PCAOB Audited Financials		10.12(b)
PIPE Investment		Recitals
Plans		7.10(a)
PPACA		7.10(k)
Prospectus		9.04

 

 

Term		Section
Proxy Statement		‎1.01
Public Stockholders		9.04
Registration Rights Agreement		Recitals
Registration Statement		10.01(a)
Related Person		7.18
Released Claims		9.04
Remedies Exceptions		5.02
Representatives		10.03(a)
Sarbanes-Oxley Act		8.07(a)
SEC		8.07(a)
Signing Filing		10.08
Signing Press Release		10.08
Stockholder Support Agreements		Recitals
Subscription Agreements		Recitals
Surviving Corporation		Recitals
Terminating Ackrell Breach		12.01(f)
Terminating Company Breach		12.01(e)
Transaction Proposal		10.01(b)
Trust Account		8.13
Trust Agreement		8.13
Trust Fund		8.13
Trustee		8.13

 

Section 1.03 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 definitions contained in this agreement are applicable to the other grammatical forms of such terms, (iv) the terms “hereof,” “herein,” “hereby,” “hereto” and derivative or similar words refer to this entire Agreement, (v) the terms “Article,” “Section,” “Schedule” and “Exhibit” refer to the specified Article, Section, Schedule or Exhibit of or to this Agreement, (vi) the word “including” means “including without limitation,” (vii) the word “or” shall be disjunctive but not exclusive, (viii) references to agreements and other documents shall be deemed to include all subsequent amendments and other modifications thereto except with respect to the Company Disclosure Schedule and the Ackrell Disclosure Schedule and (ix) references to any Law shall include all rules and regulations promulgated thereunder and shall be construed as including all statutory, legal, and regulatory provisions consolidating, amending or replacing such Law.

 

(b) The language used in this Agreement shall be deemed to be the language chosen by the parties to express their mutual intent and no rule of strict construction shall be applied against any party.

 

(c) Whenever this Agreement refers to a number of days, such number shall refer to calendar days unless Business Days are specified, and when counting days, the date of commencement will not be included as a full day for purposes of computing any applicable time periods (except as otherwise may be required under any applicable Law). 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) Any reference in this Agreement to “made available” or similar term means a document or other item of information that was provided or made available to Ackrell, Newco or Merger Sub by the Company or its Representatives or uploaded to the Virtual Data Room, in each case, at least three (3) days prior to the date of this Agreement.

 

(e) All accounting terms used herein and not expressly defined herein shall have the meanings given to them under GAAP.

 

Article II
AGREEMENT AND PLAN OF MERGER

 

Section 2.01 The Merger. Upon the terms and subject to the conditions set forth in Article VIII, and in accordance with the DGCL, at the Effective Time, Merger Sub shall be merged with and into Ackrell. As a result of the Merger, the separate corporate existence of Merger Sub shall cease and Ackrell shall continue as the Surviving Corporation.

 

Section 2.02 Closing of the Transactions.

 

(a) As promptly as practicable, but in no event later than three (3) Business Days, after the satisfaction or, if permissible, waiver of the conditions set forth in Article VIII (other than those conditions that by their nature are to be satisfied at the Closing, it being understood that the occurrence of the Closing shall remain subject to the satisfaction or, if permissible, waiver of such conditions at the Closing), the parties hereto shall cause the Transactions to be consummated, including consummation of the Merger by filing a certificate of merger (the “Certificate of Merger”) with the Secretary of State of the State of Delaware, in such form as is required by, and executed in accordance with, the relevant provisions of the DGCL and mutually agreed by the parties (the date and time of the filing of such Certificate of Merger (or such later time as may be agreed by each of the parties hereto and specified in such Certificate of Merger) being the “Effective Time”).

 

(b) Immediately prior to such filing of the Certificate of Merger in accordance with Section 2.02(a) and consummation for the Contributions in accordance with Article III, a closing (the “Closing”) shall be held by electronic exchange of deliverables and release of signatures for the purpose of confirming the satisfaction or waiver, as the case may be, of the conditions set forth in Article VIII. The date on which the Closing shall occur is referred to herein as the “Closing Date.”

 

Section 2.03 Effect of the Merger. At the Effective Time, the effect of the Merger shall be as provided in the applicable provisions of the DGCL. Without limiting the generality of the foregoing, and subject thereto, at the Effective Time, all the property, rights, privileges, immunities, powers, franchises, licenses and authority of Ackrell and Merger Sub shall vest in the Surviving Corporation, and all debts, liabilities, obligations, restrictions, disabilities and duties of each of Ackrell and Merger Sub shall become the debts, liabilities, obligations, restrictions, disabilities and duties of the Surviving Corporation.

 

 

Section 2.04 Governing Documents.

 

(a) The certificate of incorporation of Ackrell in effect at the Effective Time shall be the certificate of incorporation of the Surviving Corporation, except such certificate of incorporation shall be amended and restated in its entirety, other than its name, to read like the certificate of incorporation of Merger Sub, until amended in accordance with the DGCL.

 

(b) The bylaws of Merger Sub as in effect immediately prior to the Effective Time shall be the bylaws of the Surviving Corporation until thereafter supplemented or amended as provided therein, in the Surviving Corporation’s certificate of incorporation and in accordance with the DGCL.

 

(c) Immediately prior to the Effective Time, the certificate of incorporation of Newco shall be, and the parties shall take or cause to be taken all action (including by filing such certificate of incorporation with the Secretary of State of Delaware) required to cause the certificate of incorporation of Newco to be, amended and restated to be in the form of the Newco A&R Charter, until thereafter amended as provided by the DGCL.

 

(d) At the Effective Time, the bylaws of Newco shall be amended and restated in the form of the Newco A&R Bylaws.

 

Section 2.05 Directors and Officers.

 

(a) The parties will take all requisite actions such that the initial directors of the Surviving Corporation and the initial officers of the Surviving Corporation immediately after the Effective Time shall be the individuals indicated on Section 2.05(a) of the Company Disclosure Schedule, each to hold office in accordance with the provisions of the DGCL and the certificate of incorporation and bylaws of the Surviving Corporation and until their respective successors are, in the case of the initial directors, duly elected or appointed and qualified and, in the case of the initial officers, duly appointed.

 

(b) The parties shall cause the Board of Directors of Newco (the “Newco Board”) and the officers of Newco as of immediately following the Effective Time to be comprised of the individuals set forth on Section 2.05(b) of the Company Disclosure Schedule, each to hold office in accordance with the DGCL and the Newco A&R Charter and the Newco A&R Bylaws and until their respective successors are, in the case of the directors, duly elected or appointed and qualified and, in the case of the officers, duly appointed.

 

Article III
CONTRIBUTIONS

 

Section 3.01 NAI Contribution. Subject to the terms and conditions of this Agreement, on the Closing Date, immediately following the Effective Time, NAI hereby agrees to contribute, convey, deliver and transfer 45 shares of Cowell Common Stock to Newco and 33 shares of Cowell Common Stock to Ackrell. Newco and Ackrell, as the case may be, hereby agree to accept, at the time of the NAI Contribution, all of NAI’s right, title and interest to such Cowell Common Stock. At the time of the NAI Contribution, all of NAI’s rights as a stockholder of Cowell shall cease.

 

 

Section 3.02 Dahle Contribution. Subject to the terms and conditions of this Agreement, on the Closing Date and immediately after the NAI Contribution, Dahle hereby agrees to contribute, convey, deliver and transfer all of his Membership Interests in the Company to Newco. Newco hereby agrees to accept, at the time of the Dahle Contribution, all of Dahle’s right, title and interest to such Membership Interests. Effective at the time of the Dahle Contribution, Dahle shall cease to be a member of the Company, and Newco shall automatically be admitted as a member of the Company with respect to such membership interests.

 

Section 3.03 Consideration for NAI Contribution. Subject to the terms of the Transferor Agreement, in exchange for the NAI Contribution, at the time of the NAI Contribution, Newco will issue and deliver to NAI, and instruct the transfer agent to register in the name of NAI, the NAI Stock Consideration.

 

Section 3.04 Consideration for NAI Cash Redemption and Purchase. In exchange for the transfer of Cowell Common Stock pursuant to the NAI Cash Redemption and Purchase, NAI shall receive payment of consideration as follows:

 

(a) Ackrell will pay to NAI by wire transfer of immediately available funds to an account designated by NAI, from the Cash Consideration, an amount equal to one hundred fifty million dollars ($150,000,000); and

 

(b) Cowell will pay to NAI by wire transfer of immediately available funds to an account designated by NAI, from the Cash Consideration, an amount equal to one hundred million dollars ($100,000,000) from funds received in connection with payments under, and in accordance with the terms of, the Redemption Agreement.

 

Section 3.05 Consideration for Dahle Contribution. Subject to the terms of the Transferor Agreement, in exchange for the Dahle Contribution, at the time of the Dahle Contribution, Newco will issue and deliver to Dahle, and instruct the transfer agent to register in the name of Dahle, the Dahle Stock Consideration.

 

Section 3.06 Compliance with the Company Organizational Documents. Dahle shall, and NAI shall cause Cowell, in their respective capacity as the managing members of the Company, to consent to the Contributions and waive all rights of first refusal and transfer restrictions under the Company Organizational Documents.

 

Section 3.07 Company Operating Agreement. From and after the time of the Dahle Contribution, Cowell and Newco, as the members of the Company from and after such time, hereby agree that the Company Operating Agreement shall be amended and restated in its entirety to take the form set forth on Exhibit I hereto (the “New Operating Agreement”).

 

Article IV
CONVERSION OF SECURITIES; EXCHANGE OF ACKRELL SECURITIES

 

Section 4.01 Conversion of Ackrell Securities. At the Effective Time, by virtue of the Merger and without any action on the part of Ackrell, Merger Sub, the Company, NAI, Dahle or the Ackrell Stockholders:

 

(a) Subject to the terms of the Transferor Agreement (with respect to Sponsor only), each share of Ackrell Common Stock issued and outstanding immediately prior to the Effective Time shall automatically be converted into and exchanged for one validly issued, fully paid and nonassessable share of Newco Common Stock (the “Ackrell Per Share Consideration”).

 

 

(b) Each share of Ackrell Common Stock held in the treasury of Ackrell and each share of Ackrell Common Stock Share owned by Merger Sub, the Company or any direct or indirect wholly-owned subsidiary of Ackrell immediately prior to the Effective Time shall be canceled without any conversion thereof and no payment or distribution shall be made with respect thereto.

 

(c) Each share of Merger Sub Common Stock issued and outstanding as of immediately prior to the Effective Time shall automatically be converted into and exchanged for one validly issued, fully paid and nonassessable ordinary share of the Surviving Company.

 

Section 4.02  No Required Surrender of Ackrell Stock Certificates.

 

(a) At and after the Effective Time, (i) each certificate which, immediately prior to the Effective Time, represented outstanding shares of Ackrell Common Stock (an “Ackrell Certificate”) shall be deemed for all purposes to evidence ownership of, and to represent, the number of shares of Newco Common Stock into which the shares of Ackrell Common Stock represented by such Ackrell Certificate immediately prior to the Effective Time have been converted pursuant to Section 4.01(a) and (ii) where no Ackrell Certificate has been issued in the name of a holder of shares of Ackrell Common Stock, a “book-entry” (i.e., a computerized or manual entry) shall be made in the stockholder records of Newco to evidence the issuance to such holder of the number of uncertificated shares of Newco Common Stock into which such shares of Ackrell Common Stock have been converted pursuant to Section 4.01(a).

 

(b) The registered holder of any Ackrell Certificate outstanding immediately prior to the Effective Time, as such holder appears in the books and records of Ackrell, or of the transfer agent, in respect of the shares of Ackrell Common Stock, immediately prior to the Effective Time, shall, until such Ackrell Certificate is surrendered for transfer or exchange, have and be entitled to exercise any voting and other rights with respect to, and to receive any dividends or other distributions on, the shares of Newco Common Stock into which the shares of Ackrell Common Stock represented by any such Ackrell Certificate have been converted pursuant to Section 4.01, subject to the DGCL.

 

(c) If any Ackrell Certificate shall have been lost, stolen or destroyed, Newco may, in its discretion and as a condition to the issuance of any shares of Newco Common Stock, require the owner of such lost, stolen or destroyed Ackrell Certificate to post a bond, in such reasonable and customary amount as Newco may direct, as indemnity against any claim that may be made against New Parent or the Surviving Corporation with respect to such Existing Parent Certificate.

 

(d) If any shares of Newco Common Stock are to be issued in a name other than that in which the Ackrell Certificate surrendered for exchange is registered, such exchange shall be conditioned upon (i) the Ackrell Certificate so surrendered being properly endorsed or otherwise in proper form for transfer and (ii) the person requesting such exchange either paying any transfer or other taxes required by reason of the issuance of the Newco Certificate in a name other than that of the registered holder of the Ackrell Certificate surrendered, or establishing to the satisfaction of Newco or the transfer agent in respect of the Newco Common Stock, that such tax has been paid or is not applicable; provided that Newco shall not be obligated to issue a certificate representing Newco Common Stock to represent any shares that are not then certificated.

 

 

Section 4.03 Stock Transfer Books. At the Effective Time, the stock transfer books of Ackrell shall be closed and thereafter there shall be no further registration of transfers of shares of Ackrell Common Stock theretofore outstanding on the records of Ackrell.

 

Section 4.04 Treatment of Ackrell Warrants. At the Effective Time, each Ackrell Warrant that is outstanding immediately prior to the Effective Time shall, pursuant to the Ackrell Warrant Agreement, cease to represent a right to acquire one (1) share of Ackrell Common Stock and shall be converted in accordance with the terms of such Ackrell Warrant Agreement, at the Effective Time, into a right to acquire one (1) share of Newco Common Stock (a “Newco Warrant” and collectively, the “Newco Warrants”) on substantially the same terms as were in effect immediately prior to the Effective Time under the terms of the Ackrell Warrant Agreement. The parties shall cause the Ackrell Warrant Agreement to be amended or exchanged as of immediately prior the Effective Time to the extent necessary to give effect to this Section 4.04, including adding Newco as a party thereto, with the effect that Ackrell Warrants outstanding immediately prior to the Effective Time will be exchanged for Newco Warrants.

 

Section 4.05 Treatment of Company RSU. Effective as of the Closing, the Company RSU shall be assumed by Newco (the “Assumed RSU”). Except as otherwise set forth in this Agreement, the Company RSU so assumed by Newco pursuant to this Section 4.05 shall continue to have, and be subject to, the same terms and conditions (including vesting terms) set forth in the Company RSU, as in effect immediately prior to the Closing, except that such Assumed RSU shall cover that number of whole shares of Newco Common Stock, rounded down to the nearest whole share, equal to the product of the Allocation Percentage set forth next to Company RSU in Section 1.1(a) of the Company Disclosure Schedule multiplied by the Company Stock Consideration.

 

Section 4.06 Payment of Expenses.

 

(a) No sooner than five (5) nor later than two (2) Business Days prior to the Closing Date, the Company shall provide to Ackrell a written report setting forth a list of all of the following fees and expenses incurred by or on behalf of the Company in connection with the preparation, negotiation and execution of this Agreement and the consummation of the Transactions (together with written invoices and wire transfer instructions for the payment thereof), solely to the extent such fees and expenses are incurred and expected to remain unpaid as of the close of business on the Business Day immediately preceding the Closing Date: (i) the fees and disbursements of outside counsel to the Company incurred in connection with the Transactions and (ii) the fees and expenses of any other agents, advisors, consultants, experts, financial advisors and other service providers engaged by the Company in connection with the Transactions (collectively, the “Outstanding Company Transaction Expenses”). On the Closing Date, following the Closing, Newco shall pay or cause to be paid, by wire transfer of immediately available funds, all such Outstanding Company Transaction Expenses.

 

 

(b) No sooner than five (5) nor later than two (2) Business Days prior to the Closing Date, Ackrell shall provide to the Company a written report setting forth a list of all fees, expenses and disbursements incurred by or on behalf of Ackrell, Newco, Merger Sub or Sponsor for outside counsel, agents, advisors, consultants, experts, financial advisors and other service providers engaged by or on behalf of Ackrell, Newco, Merger Sub or Sponsor in connection with the Transactions or otherwise in connection with Ackrell’s operations (together with written invoices and wire transfer instructions for the payment thereof) (collectively, the “Outstanding Ackrell Transaction Expenses”). On the Closing Date, Ackrell shall pay or cause to be paid, by wire transfer of immediately available funds, all such Outstanding Ackrell Transaction Expenses.

 

(c) Except as set forth in this Section 4.06 or elsewhere in this Agreement, all expenses incurred in connection with this Agreement and the Transactions shall be paid by the party incurring such expenses, whether or not the Merger or any other Transactions are consummated, except that Ackrell and the Company shall each pay fifty percent (50%) of all filing fees relating to all SEC and other regulatory filing fees (including those incurred in connection with the Registration Statement and the filing fees for the Notification and Report Forms filed under the HSR Act). Notwithstanding the foregoing, the Company shall pay, on behalf of Ackrell, the costs and expenses required to be paid by Ackrell pursuant to Section 4 of that certain letter agreement, dated on or around the date hereof, by and between Ackrell and FS Global Credit Opportunities Fund.

 

Article V
REPRESENTATIONS AND WARRANTIES OF THE CONTRIBUTORS

 

Except as set forth in the disclosure schedule delivered by the Contributors to Ackrell, Newco and Merger Sub in connection with this Agreement (the “Contributor Disclosure Schedule”) (each section of which qualifies (a) the correspondingly numbered representation, warranty or covenant specified therein and (b) such other representations, warranties or covenants where its relevance as an exception to (or disclosure for purposes of) such other representation, warranty or covenant is reasonably apparent on its face or cross-referenced), NAI, with respect to NAI only, and Dahle, with respect to Dahle only, severally and not jointly, hereby represent and warrant to Ackrell, Newco and Merger Sub as follows:

 

Section 5.01 Organization of NAI. NAI is a business company organized under the laws of the British Virgin Islands and has the requisite corporate power and authority and all necessary governmental approvals to own, lease and operate its properties and to carry on its business as it is now being conducted.

 

Section 5.02 Authority Relative to this Agreement. Each of the Contributors has all necessary corporate and other power and authority to execute and deliver this Agreement and the Transaction Documents to which it is a party, to perform its obligations hereunder and thereunder and to consummate the Transactions. The execution and delivery of this Agreement by the Contributors and the consummation by the Contributors of the Transactions have been duly and validly authorized by all necessary corporate action, and no other corporate proceedings on the part of the Contributors are necessary to authorize this Agreement or to consummate the Transactions. This Agreement (and each other Transaction Document to which the Contributors are a party and has executed) has been duly and validly executed and delivered by each of the Contributors and, assuming the due authorization, execution and delivery by the other parties hereto and thereto, as applicable, constitutes a legal, valid and binding obligation of the Contributors, enforceable against the Contributors in accordance with its terms, except as limited by applicable bankruptcy, insolvency, reorganization, moratorium and other Laws of general application affecting enforcement of creditors’ rights generally and by general equitable principles (the “Remedies Exceptions”)

 

 

Section 5.03 No Conflict; Required Filings and Consents.

 

(a) The execution and delivery of this Agreement by the each of the Contributors does not, and subject to receipt of the filing and recordation of appropriate merger documents as required by the DGCL and of the consents, approvals, authorizations or permits, filings and notifications, expiration or termination of waiting periods after filings and other actions referenced in Section 10.11 and set forth on Section 7.05(b) of the Company Disclosure Schedule being made, obtained or given, the consummation of the transactions contemplated by this Agreement will not (i) conflict with or violate the Organizational Documents of NAI, (ii) conflict with or violate any Law applicable to the Contributors, or (iii) result in any breach of or constitute a default (or an event which, with notice or lapse of time or both, would become a default) under, or give to others any right of termination, amendment, acceleration or cancellation of any Contract to which any of the Contributors is a party or by which its assets are bound, except, with respect to clauses (ii) and (iii), for any such conflicts, violations, breaches, defaults or other occurrences which would not have or reasonably be expected to have a material adverse effect on the ability of the Contributors to consummate the transactions contemplated by this Agreement.

 

(b) The execution and delivery of this Agreement by each of the Contributors does not, and the performance of this Agreement by each of the Contributors will not, require any consent, approval, authorization or permit of, or filing with or notification to, or expiration or termination of any waiting period by, any United States federal, state, county or local or non-United States government, governmental, regulatory or administrative authority, agency, instrumentality or commission or any court, tribunal, or judicial or arbitral body or commission, or other similar dispute-resolving panel (a “Governmental Authority”), except (i) for applicable requirements, if any, of the Exchange Act, the Securities Act, state securities or “blue sky” laws (“Blue Sky Laws”) and state takeover Laws, the pre-merger notification requirements of the HSR Act, and (ii) where the failure to obtain such consents, approvals, authorizations or permits, or to make such filings or notifications, would not have or reasonably be expected to have a material adverse effect on the ability of the Contributors to consummate the transactions contemplated by this Agreement.

 

Section 5.04 Absence of Litigation. There is no material Action pending or, to the knowledge of the Contributors, threatened against the Contributors which are reasonably likely to impair materially the ability of any Contributor to perform its obligations under this Agreement.

 

Section 5.05 Brokers. Except as set forth on Section 5.05 of the Contributor Disclosure Schedule, no broker, finder or investment banker is entitled to any brokerage, finder’s or other fee or commission in connection with the Transactions based upon arrangements made by or on behalf of the Contributors.

 

 

Article VI
REPRESENTATIONS AND WARRANTIES OF NAI WITH RESPECT TO COWELL

 

Except as set forth in the disclosure schedule delivered by the NAI to Ackrell, Newco and Merger Sub in connection with this Agreement (the “Cowell Disclosure Schedule”) (each section of which qualifies (a) the correspondingly numbered representation, warranty or covenant specified therein and (b) such other representations, warranties or covenants where its relevance as an exception to (or disclosure for purposes of) such other representation, warranty or covenant is reasonably apparent on its face or cross-referenced), NAI hereby represents and warrants to Ackrell, Newco and Merger Sub as follows:

 

Section 6.01 Organization of Cowell. Cowell is a corporation organized under the laws of the state of Utah and has the requisite corporate power and authority and all necessary governmental approvals to own, lease and operate its properties and to carry on its business as it is now being conducted.

 

Section 6.02 No Conflict. The execution and delivery of this Agreement by the parties hereto does not conflict with or violate the Organizational Documents of Cowell, (ii) conflict with or violate any Law applicable to Cowell, or (iii) result in any breach of or constitute a default (or an event which, with notice or lapse of time or both, would become a default) under, or give to others any right of termination, amendment, acceleration or cancellation of any Contract to which Cowell is a party or by which its assets are bound, except, with respect to clauses (ii) and (iii), for any such conflicts, violations, breaches, defaults or other occurrences which would not have or reasonably be expected to have a material adverse effect on the property, assets or business of Cowell, taken as a whole.

 

Section 6.03 Capitalization of Cowell.

 

(a) The authorized and issued capital stock of Cowell consists of (i) 2,000 shares of Cowell Common Stock, 100 shares of which are issued and outstanding, and (ii) no shares of preferred stock. All outstanding shares of Cowell Common Stock are validly issued, fully paid and non-assessable and not subject to any preemptive rights, and no shares of Cowell Common Stock are held in the treasury of Cowell.

 

(b) All outstanding shares of Cowell Common Stock have been issued and granted in compliance with all applicable securities Laws and other applicable Laws and were issued free and clear of all Liens other than transfer restrictions under applicable securities Laws and the Organizational Documents of Cowell.

 

(c) Cowell has not issued any options, warrants, preemptive rights, calls, convertible securities or other rights, agreements, arrangements or commitments of any character relating to the issued or unissued capital stock of Cowell or obligating Cowell to issue or sell any shares of capital stock of, or other equity interests in, Cowell. Cowell is not a party to, or otherwise bound by, and has not granted, any equity appreciation rights, participations, phantom equity or similar rights. Neither NAI nor Cowell is a party to any voting trusts, voting agreements, proxies, shareholder agreements or other agreements with respect to the voting or transfer of Cowell Common Stock or any of the equity interests or other securities of Cowell.

 

(d) NAI owns all of the equity interests of Cowell, free and clear of any Liens (other than Permitted Liens). Except as set forth on Section 6.03(d) of the Cowell Disclosure Schedule, Cowell does not hold any assets or conduct any operations other than its ownership of the Company’s Membership Interests.

 

 

Section 6.04 Absence of Litigation. There is no material Action pending or, to the knowledge of NAI, threatened against Cowell, or any property or asset of Cowell. None of Cowell or any property or asset of Cowell, or any of its current or former directors or officers (provided, that any of the following matters involving the directors or officers of Cowell must be related to Cowell’s business, equity securities or assets) is subject to any continuing order of, consent decree, settlement agreement or other similar written agreement with, or, to the knowledge of the NAI, continuing investigation by, any Governmental Authority, or any order, writ, judgment, injunction, decree, determination or award of any Governmental Authority. In the past five (5) years, none of the current or former officers, senior management or directors of Cowell have been charged with, indicted for, arrested for, or convicted of any felony or any crime involving fraud.

 

Section 6.05 Financial Statements of Cowell.

 

(a) The Company has made available to Ackrell in the Virtual Data Room true and complete copies of the unaudited balance sheets of Cowell as of December 31, 2019 and as of December 31, 2020, and the related statements of profit and loss of Cowell for each of the years then ended (collectively, the “Cowell Annual Financial Statements”). Each of the Cowell Annual Financial Statements fairly presents, in all material respects, the financial position and results of profit and loss of Cowell as of and at the date thereof and for the period indicated therein, except as otherwise noted therein.

 

(b) The Company has made available to Ackrell in the Virtual Data Room true and complete copies of the unaudited profit and loss statement of Cowell as of September 30, 2021 (collectively, the “Cowell Interim Financial Statements”). The Cowell Interim Financial Statements fairly present, in all material respects, the financial position and results of profit and loss of Cowell as of and at the date thereof and for the period indicated therein, except as otherwise noted therein and subject to normal and recurring year-end adjustments.

 

Section 6.06 Taxes.

 

(a) Cowell: (i) has duly and timely filed all material Tax Returns it is required to have filed as of the date hereof (taking into account any extension of time within which to file) and all such filed Tax Returns are complete and accurate in all material respects; (ii) has paid all Taxes that it is required to have paid; (iii) has not waived any statute of limitations with respect to Taxes or agreed to any extension of time with respect to a Tax assessment or deficiency (other than pursuant to customary extensions of the due date for filing a Tax Return obtained in the ordinary course of business); (iv) does not have any deficiency, assessment, claim, audit, examination, investigation, litigation or other proceeding in respect of Taxes or Tax matters pending or asserted, proposed or threatened in writing, for a Tax period which the statute of limitations for assessments remains open. The unpaid Taxes of Cowell as of the date of the Interim Financial Statements did not exceed the reserves for the Taxes of Cowell set forth in the Interim Financial Statements.

 

(b) Cowell is not a party to, is not bound by and does not have an obligation under any Tax sharing agreement, Tax indemnification agreement, Tax allocation agreement or similar contract or arrangement, and does not have any liability or obligation to any Person as a result of or pursuant to any such agreement, contract or arrangement, in each case other than an agreement, contract or arrangement the primary purpose of which is not the sharing of Taxes (an “Ordinary Commercial Agreement”).

 

 

(c) Cowell will not be required to include any material item of income in, or exclude any material item of deduction from, taxable income for any Tax period (or portion thereof) ending after the Closing Date as a result of any: (i) change in method of accounting made prior to the Closing under Section 481(c) of the Code (or any corresponding or similar provision of state, local or non-U.S. income Tax Law); (ii) “closing agreement” as described in Section 7121 of the Code (or any corresponding or similar provision of state, local or non-U.S. income Tax Law) executed prior to the Closing; (iii) installment sale or open transaction disposition made prior to the Closing; (iv) intercompany transaction or any excess loss account described in Treasury Regulations under Section 1502 of the Code (or any corresponding or similar provision of state, local or non-U.S. Tax law) entered into or created prior to the Closing; or (v) prepaid amount received prior to the Closing outside the ordinary course of business.

 

(d) Cowell has withheld and paid to the appropriate Tax authority all Taxes required to have been withheld and paid in connection with amounts paid or owing to any third party.

 

(e) Cowell has never been a member of an affiliated group filing a consolidated, combined or unitary U.S. federal, state, local or non-U.S. income Tax Return.

 

(f) Cowell does not have any liability for the Taxes of any other Person under Treasury Regulation Section 1.1502-6 (or any similar provision of state, local or non-U.S. law), or as a transferee or successor.

 

(g) Cowell has not distributed stock of another Person, or has had its stock distributed by another Person, in a transaction that was purported or intended to be governed in whole or in part by Section 355 of the Code.

 

(h) Neither the IRS nor any other U.S. or non-U.S. taxing authority or agency has asserted in writing against Cowell any deficiency or claim for any Taxes or interest thereon or penalties in connection therewith that has not been paid or otherwise resolved in full.

 

(i) Cowell has not engaged in or entered into a “listed transaction” within the meaning of Treasury Regulation Section 1.6011-4(b)(2).

 

(j) There are no Tax Liens upon any assets of Cowell except for Permitted Liens.

 

(k) Cowell has not been a United States real property holding corporation within the meaning of Section 897(c)(2) of the Code during the applicable period specified in Section 897(c)(1)(A)(ii) of the Code.

 

(l) Cowell has not received written notice of any claim from a Tax authority in a jurisdiction in which Cowell does not file Tax Returns stating that Cowell is subject to Tax in such jurisdiction.

 

(m) For U.S. federal income tax purposes, the Company is, and has been since its formation, classified as a corporation.

 

 

(n) Cowell has not (i) applied for or received any loan under the Paycheck Protection Program under the CARES Act, (ii) deferred any Taxes under Section 2302 of the CARES Act, the Presidential Memorandum on “Deferring Payroll Tax Obligations in Light of the Ongoing COVID-19 Disaster” dated August 8, 2020, or Notice 2020-65, 2020-38 I.R.B. 567 or claimed any Tax credit under Section 2301 of the CARES Act or Sections 7001-7003 of the FFCRA, or (iii) with respect to (i) or (ii), any corresponding or similar provision of state, local or non-U.S. Tax Law. “CARES Act” means the Coronavirus Aid, Relief, and Economic Security Act of 2020, Pub. L. 116-136 (as the same may be amended or modified). “FFCRA” means the Families First Coronavirus Response Act (as the same may be amended or modified).

 

(o) Cowell, after consultation with its tax advisors, is not aware of the existence of any fact, or any action it has taken (or failed to take) or agreed to take, that would reasonably be expected to prevent or impede the Contributions from qualifying for the Intended Tax Treatment.

 

Section 6.07 Operation of Business and Assets. Except as set forth on Section 6.03(d) of the Cowell Disclosure Schedule, Cowell does not hold any assets or conduct any operations other than its ownership of the Company’s Membership Interests.

 

Section 6.08 Brokers. Except as set forth on Section 6.08 of the Cowell Disclosure Schedule, no broker, finder or investment banker is entitled to any brokerage, finder’s or other fee or commission in connection with the Transactions based upon arrangements made by or on behalf of the Contributors.

 

Article VII
REPRESENTATIONS AND WARRANTIES OF THE COMPANY

 

Except as set forth in the disclosure schedule delivered by the Company to Ackrell, Newco and Merger Sub in connection with this Agreement (the “Company Disclosure Schedule”) (each section of which qualifies (a) the correspondingly numbered representation, warranty or covenant specified therein and (b) such other representations, warranties or covenants where its relevance as an exception to (or disclosure for purposes of) such other representation, warranty or covenant is reasonably apparent on its face or cross-referenced), the Company hereby represents and warrants to Ackrell, Newco and Merger Sub as follows:

 

Section 7.01 Organization and Qualification; Subsidiaries.

 

(a) The Company is a limited liability company duly organized, validly existing and in good standing under the Laws of the State of Utah and has the requisite limited liability company power and authority and all necessary governmental approvals to own, lease and operate its properties and to carry on its business as it is now being conducted. The Company is (i) duly qualified or licensed as a foreign limited liability company to do business, and is in good standing, and (ii) has registered a fictitious name or “doing business as” or similar registration, in each jurisdiction where the character of the properties owned, leased or operated by it or the nature of its business makes such qualification, licensing or registration necessary, except for such failures to be so qualified, licensed or registered and in good standing that would not, individually or in the aggregate, be expected to have a Company Material Adverse Effect.

 

 

(b) The Company has no Subsidiaries (provided, that in the event of any breach of the foregoing representation and warranty, without limiting the rights and remedies available to Ackrell, any reference in this Agreement to the Company will include its Subsidiaries to the extent reasonably applicable). The Company does not directly or indirectly own, and has never owned, any equity or similar interest in, or any interest convertible into or exchangeable or exercisable for any equity or similar interest in, any other corporation, partnership, joint venture or business association or other Person.

 

Section 7.02 Certificate of Incorporation and Bylaws. The Company has prior to the date of this Agreement made available to Ackrell in the Virtual Data Room a complete and correct copy of the Company Organizational Documents. The Company Organizational Documents are accurate and complete and is in full force and effect. The Company is not in violation of any of the provisions of the Company Organizational Documents.

 

Section 7.03 Capitalization.

 

(a) ‎Section 7.03(a) of the Company Disclosure Schedule sets forth, as of the Agreement Date, a true, correct and complete list of (i) the membership interests of the Company (the “Membership Interests”) and (ii) the number and type of Membership Interests owned by each of member of the Company. All Membership Interests were issued in compliance with applicable Law and all requirements set forth in the Company Organizational Documents. There are no issued or outstanding equity interests in the Company other than the Membership Interests that are set forth on Section 7.03(a) of the Company Disclosure Schedule. Except as set forth in the Company Operating Agreement and the Company Redemption Agreement, none of the members of the Company own, or have any interest in or right to acquire, any equity interests of the Company. Upon and after giving effect to the Contributions, the Merger and the other transactions contemplated by this Agreement, Newco will, directly or indirectly, own 100% of the Membership Interests, free and clear of all Liens (other than Permitted Liens).

 

(b) There are no options, warrants, preemptive rights, calls, convertible securities, conversion rights or other rights, agreements, arrangements or commitments of any character relating to the issued or unissued membership interests of the Company or obligating the Company to issue or sell any membership interests of, or other equity or voting interests in, or any securities convertible into or exchangeable or exercisable for membership interests or other equity or other voting interests in, the Company. Except for the Company RSU, which shall be entered into by the Company prior to the Closing, the Company is not a party to, or otherwise bound by, and the Company has not granted any equity appreciation rights, participations, profits interests, phantom equity, restricted shares, restricted share units, performance shares, contingent value rights or similar securities or rights that are derivative of, or provide economic benefits based, directly or indirectly, on the value or price of, any shares, or other securities or ownership interests in, the Company. Except as set forth in the Company Operating Agreement, there are no voting trusts, voting agreements, proxies, shareholder agreements or other agreements to which the Company is a party, or to the Company’s knowledge, among any member of the Company.

 

 

(c) Except for the Company Redemption Agreement, the Company Operating Agreement and as set forth in this Agreement, there are no outstanding contractual obligations of the Company to repurchase, redeem or otherwise acquire any Membership Interests or to provide funds to or make any investment (in the form of a loan, capital contribution or otherwise) in any Person.

 

Section 7.04 Authority Relative to this Agreement. The Company has all necessary limited liability company power and authority to execute and deliver this Agreement and the Transaction Documents to which it is a party, to perform its obligations hereunder and thereunder and to consummate the Transactions. The execution and delivery of this Agreement by the Company and the consummation by the Company of the Transactions have been duly and validly authorized by all necessary corporate action, and no other corporate proceedings on the part of the Company are necessary to authorize this Agreement or to consummate the Transactions. This Agreement and each other Transaction Document to which the Company is a party and has executed has been duly and validly executed and delivered by the Company and, assuming the due authorization, execution and delivery by Ackrell, Merger Sub, NAI and Dahle and the other parties thereto, as applicable, constitutes a legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, subject to the Remedies Exceptions.

 

Section 7.05 No Conflict; Required Filings and Consents.

 

(a) The execution and delivery of this Agreement by the Company does not, and subject to receipt of the filing and recordation of appropriate merger documents as required by the DGCL and of the consents, approvals, authorizations or permits, filings and notifications, expiration or termination of waiting periods after filings and other actions referenced in Section 7.05(b) and set forth on ‎Section 7.05(b) of the Company Disclosure Schedule being made, obtained or given, the consummation of the transactions contemplated by this Agreement will not (i) conflict with or violate the Company Organizational Documents, (ii) conflict with or violate any Law applicable to the Company or by which any property or asset of the Company is bound or affected, or (iii) result in any breach of or constitute a default (or an event which, with notice or lapse of time or both, would become a default) under, or give to others any right of termination, amendment, acceleration or cancellation of, or result in the creation of a Lien (other than any Permitted Lien) on any material property or asset of the Company pursuant to, any Contract to which the Company is a party or by which its assets are bound, except, with respect to clauses (ii) and (iii), for any such conflicts, violations, breaches, defaults or other occurrences which would not have or reasonably be expected to have a Company Material Adverse Effect.

 

(b) The execution and delivery of this Agreement by the Company does not, and the performance of this Agreement by the Company will not, require any consent, approval, authorization or permit of, or filing with or notification to, or expiration or termination of any waiting period by any Governmental Authority, except (i) for applicable requirements, if any, of the Exchange Act, the Securities Act, Blue Sky Laws and state takeover Laws, the pre-merger notification requirements of the HSR Act, and (ii) where the failure to obtain such consents, approvals, authorizations or permits, or to make such filings or notifications, would not have or would not reasonably be expected to have a Company Material Adverse Effect.

 

 

Section 7.06 Permits; Compliance.

 

(a) Each of the Company is in possession of all material franchises, grants, authorizations, licenses, permits, easements, variances, exceptions, consents, certificates, approvals and orders of any Governmental Authority necessary for the Company to own, lease and operate their respective properties or to carry on their respective businesses as they are now being conducted (the “Company Permits”). Each Company Permit is in full force and effect in accordance with its terms and no suspension or cancellation of any of the Company Permits is pending or, to the knowledge of the Company, threatened. To the knowledge of the Company, none of such Company Permits upon its termination or expiration in the ordinary due course will not be renewed or reissued in the ordinary course of business upon terms and conditions substantially similar to its existing terms and conditions. There are no Actions pending or, to the knowledge of the Company, threatened, that seek the revocation, cancellation, limitation, restriction or termination of any Company Permit. Each of the Company is in material compliance with all Company Permits applicable to the Company.

 

(b) The Company is, and since December 31, 2016 has been, in compliance in all material respects with all applicable Laws. The Company has not received any written notice from any Governmental Authority of any violation of any applicable Law by the Company at any time since December 31, 2016, which violation would, individually or in the aggregate, reasonably be expected to be material to the Company.

 

Section 7.07 Financial Statements; Internal Controls.

 

(a) The Company has made available to Ackrell in the Virtual Data Room true and complete copies of the audited balance sheets of the Company as of December 31, 2019 and as of December 31, 2020, and the related statements of operations and cash flows of the Company for each of the years then ended (collectively, the “Audited Annual Financial Statements”). Each of the Audited Annual Financial Statements (including the notes thereto) (i) was prepared in accordance with GAAP applied on a consistent basis throughout the periods indicated (except as may be indicated in the notes thereto) and (ii) fairly presents, in all material respects, the financial position, results of operations and cash flows of the Company as of and at the date thereof and for the period indicated therein, except as otherwise noted therein. Each of the PCAOB Audited Financials (as described in ‎Section 10.01(b)) (including the notes thereto), when delivered in accordance with this Agreement (i) will be prepared in accordance with GAAP applied on a consistent basis throughout the periods indicated (except as may be indicated in the notes thereto) and (ii) will fairly present, in all material respects, the financial position, results of operations and cash flows of the Company as of and at the date thereof and for the period indicated therein, except as otherwise noted therein.

 

(b) The Company has made available to Ackrell in the Virtual Data Room true and complete copies of the unaudited balance sheet of the Company as of June 30, 2021 (the “Interim Financial Statements Date”), and the related unaudited statements of operations and cash flows of the Company for the three-month period then ended (collectively, the “Interim Financial Statements”), which are attached as ‎Section 7.07(b) of the Company Disclosure Schedule. The Interim Financial Statements were prepared in accordance with GAAP applied on a consistent basis throughout the periods indicated (except for the omission of footnotes, certain non-GAAP measures set forth therein and subject to year-end adjustments) and fairly present, in all material respects, the financial position, results of operations and cash flows of the Company as of and at the date thereof and for the period indicated therein, except as otherwise noted therein and subject to normal and recurring year-end adjustments.

 

 

(c) Except as and to the extent set forth on the Audited Annual Financial Statements or the Interim Financial Statements, or, when delivered, the PCAOB Audited Financials, the Company does not have any liability, debt or obligation of a nature (whether accrued, absolute, contingent or otherwise), whether or not required to be reflected on a consolidated balance sheet prepared in accordance with GAAP consistently applied and in accordance with past practice, except for: (i) liabilities that were incurred in the ordinary course of business consistent with past practice since the Interim Financial Statements Date, (ii) liabilities or obligations disclosed in ‎Section 7.07(c) of the Company Disclosure Schedule or (iii) such other liabilities and obligations which would not, individually or in the aggregate, reasonably be expected to be material to the Company. None of the Company is a party to, or has any commitment to become a party to, any contract or arrangement that would constitute an “off balance sheet arrangement” (as defined in Item 303(a) of Regulation S-K under the Exchange Act), where the result, purpose or intended effect of such contract or arrangement is to avoid disclosure of any material transaction involving, or material liabilities of, the Company on the Audited Annual Financial Statements or the Interim Financial Statements, or, when delivered, the PCAOB Audited Financials.

 

(d) Since December 31, 2018, (i) none of the Company or, to the Company’s knowledge, any director, officer, employee, auditor, accountant or Representative of the Company, has received or otherwise had or obtained knowledge of any complaint, allegation, assertion or claim, whether written or, to the knowledge of the Company, oral, regarding the accounting or auditing practices, procedures, methodologies or methods of the Company or its internal accounting controls, including any such complaint, allegation, assertion or claim that the Company has engaged in questionable accounting or auditing practices and (ii) there have been no internal investigations regarding accounting or revenue recognition discussed with, reviewed by or initiated at the direction of the chief executive officer, chief financial officer, general counsel, the Company Board or any committee thereof.

 

(e) To the knowledge of the Company, no employee of the Company has provided or is providing information to any law enforcement agency regarding the commission or possible commission of any crime or the violation or possible violation of any applicable Law. None of the Company or, to the knowledge of the Company, any officer, employee, contractor, subcontractor or agent of the Company has discharged, demoted, suspended, threatened, harassed or in any other manner discriminated against an employee of the Company in the terms and conditions of employment because of any act of such employee described in 18 U.S.C. sec. 1514A(a).

 

(f) All accounts receivable of the Company reflected on the Interim Financial Statements or arising thereafter have arisen from bona fide transactions in the ordinary course of business consistent with past practices and in accordance with GAAP and are collectible, subject to bad debts reserved in the Interim Financial Statements. To the knowledge of the Company, such accounts receivables are not subject to valid defenses, setoffs or counterclaims, other than routine credits granted for errors in ordering, shipping, pricing, discounts, rebates, returns in the ordinary course of business and other similar matters. The Company’s reserve for contractual allowances and doubtful accounts is adequate in all material respects and has been calculated in a manner consistent with past practices. Since December 31, 2020 the Company has not modified or changed in any material respect its sales practices or methods, including such practices or methods in accordance with which the Company sells goods, fills orders or record sales.

 

 

(g) All accounts payable of the Company reflected on the Interim Financial Statements or arising thereafter are the result of bona fide transactions in the ordinary course of business and have been paid or are not yet due or payable. Since December 31, 2020, none of the Company has altered in any material respects its practices for the payment of such accounts payable, including the timing of such payment.

 

(h) The Company maintain systems of internal control over financial reporting that are sufficient to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP, including policies and procedures sufficient to provide reasonable assurance: (i) that the Company maintains records that in reasonable detail accurately and fairly reflect, in all material respects, its transactions and dispositions of assets; (ii) that transactions are recorded as necessary to permit the preparation of financial statements in conformity with GAAP; (iii) that receipts and expenditures are being made only in accordance with authorizations of the Company’s management and the Company Board; and (iv) regarding prevention or timely detection of unauthorized acquisition, use or disposition of its assets that could have a material effect on its financial statements. The Company has made available to Ackrell a true and complete copy of any disclosure (or, if unwritten, a summary thereof) by any representative of the Company to the Company’s respective independent auditors relating to any material weaknesses in internal controls and any significant deficiencies in the design or operation of internal controls that would adversely affect the ability of the Company to record, process, summarize and report financial data. The Company has no knowledge of any fraud or whistle-blower allegations, whether or not material, that involve management or other employees or consultants who have or had a significant role in the internal control over financial reporting of the Company. Since December 31, 2020, there have been no material changes in the Company’s respective internal control over financial reporting.

 

(i) Neither the Company (including any employee thereof) nor the Company’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 the Company, (ii) any fraud, whether or not material, that involves the Company’s respective management or other employees who have a role in the preparation of financial statements or the internal accounting controls utilized by the Company or (iii) any claim or allegation regarding any of the foregoing.

 

(j) The Company does not have any Indebtedness other than the Indebtedness set forth on Schedule7.07(j), which schedule sets for the amounts (including principal and any accrued but unpaid interest or other obligations) with respect to such Indebtedness. Except as disclosed on Schedule7.07(j), no Indebtedness of the Company contains any restriction upon (i) the prepayment of any of such Indebtedness, (ii) the incurrence of Indebtedness by the Company, or (iii) the ability of the Company to grant any Lien on its properties or assets.

 

 

Section 7.08 Absence of Certain Changes or Events.

 

(a) Since December 31, 2020 and prior to the date of this Agreement, except as otherwise reflected in the Annual Financial Statements or the Interim Financial Statements, or as expressly contemplated by this Agreement, (i) the Company has conducted its businesses in all material respects in the ordinary course and in a manner consistent with past practice, other than due to any actions taken due to a “shelter in place,” “non-essential employee” or similar direction of any Governmental Authority, (ii) the Company has not sold, assigned, transferred, permitted to lapse, abandoned, or otherwise disposed of any right, title or interest in or to any of their respective material assets (including Company Owned IP) other than non-exclusive licenses (or sublicenses of Company Owned IP granted in the ordinary course of business), and (iii) the Company has not taken any action that, if taken after the date of this Agreement, would constitute a material breach of any of the covenants set forth in ‎Section 9.01.

 

(b) Since December 31, 2020 through the date hereof, there has not been a Company Material Adverse Effect.

 

Section 7.09 Absence of Litigation. There is no Action pending or, to the knowledge of the Company, threatened against the Company, or any property or asset of the Company. None of the Company or any property or asset of the Company, or any of its current or former directors or officers (provided, that any of the following matters involving the directors or officers of the Company must be related to the Company’s business, equity securities or assets) is subject to any continuing order of, consent decree, settlement agreement or other similar written agreement with, or, to the knowledge of the Company, continuing investigation by, any Governmental Authority, or any order, writ, judgment, injunction, decree, determination or award of any Governmental Authority. In the past five (5) years, none of the current or former officers, senior management or directors of the Company have been charged with, indicted for, arrested for, or convicted of any felony or any crime involving fraud.

 

Section 7.10 Employee Benefit Plans.

 

(a) ‎Section 7.10(a) of the Company Disclosure Schedule lists, as of the date of this Agreement, all Employee Benefit Plans that are maintained, contributed to, required to be contributed to, or sponsored by the Company for the benefit of any current or former employee, officer, director or consultant, or under which the Company has or could incur any liability (contingent or otherwise) (collectively, the “Plans”).

 

(b) With respect to each Plan, the Company has made available to Ackrell in the Virtual Data Room, if applicable (i) a true and complete copy of the current plan document and all amendments thereto and each trust, insurance contract, or other funding arrangement, (ii) copies of the most recent summary plan description and any summaries of material modifications, (iii) a copy of the 2019 filed Internal Revenue Service (“IRS”) Form 5500 annual report and accompanying schedules, (iv) copies of the most recently received IRS determination, opinion or advisory letter, (v) the three (3) most recent nondiscrimination testing reports, and (vi) any material, non-routine correspondence from any Governmental Authority with respect to any Plan since December 31, 2016. The Company does not have any commitment to modify, change or terminate any Plan, other than with respect to a modification, change or termination required by ERISA or the Code, or other applicable Law.

 

 

(c) None of the Plans is or was since December 31, 2016, nor does the Company or any ERISA Affiliate have or reasonably expect to have any liability or obligation under (i) a multiemployer plan (within the meaning of Section 3(37) or 4001(a)(3) of ERISA), (ii) a single employer pension plan (within the meaning of Section 4001(a)(15) of ERISA) subject to Section 412 of the Code or Title IV of ERISA, (iii) a multiple employer plan subject to Section 413(c) of the Code, (iv) a multiple employer welfare arrangement under ERISA, or (v) a voluntary employees’ beneficiary association as defined in Section 501(c)(9) of the Code. For purposes of this Agreement, “ERISA Affiliate” means any entity that together with the Company would be deemed a “single employer” for purposes of Section 4001(b)(1) of ERISA or Sections 414(b), (c) or (m) of the Code.

 

(d) The Company is not, nor will be, obligated, whether under any Plan or otherwise, to pay separation, severance, termination, retention, change in control, or similar benefits to any Person as a result of any Transaction, nor will any Transaction accelerate the time of payment or vesting, or increase the amount, of any benefit or other compensation due to any Person. The Transactions shall not be the direct or indirect cause of any amount paid or payable by the Company being classified as an “excess parachute payment” under Section 280G of the Code and no arrangement exists pursuant to which the Company will be required to “gross up” or otherwise compensate any Person because of the imposition of any excise tax on a payment to such Person.

 

(e) None of the Plans provides, nor does the Company have or reasonably expect to have any obligation to provide, medical or other welfare benefits to any current or former employee, officer, director or consultant of the Company after termination of employment or service except as may be required under Section 4980B of the Code and Part 6 of Title I of ERISA and the regulations thereunder.

 

(f)  Each Plan is and has been since December 31, 2016 in compliance, in all material respects, in accordance with its terms and the requirements of all applicable Laws, including ERISA and the Code. The Company and its ERISA Affiliates have performed, in all material respects, all obligations required to be performed by them under, are not in any material respect in default under or in violation of, and have no knowledge of any default or violation in any material respect by any party to, any Plan. No Action is pending or, to the knowledge of the Company, threatened with respect to any Plan (other than claims for benefits in the ordinary course) and, to the knowledge of the Company, no fact or event exists that could reasonably be expected to give rise to any such Action.

 

(g) Each Plan that is intended to be qualified under Section 401(a) of the Code has (i) timely received a favorable determination letter from the IRS covering all of the provisions applicable to the Plan for which determination letters are currently available that the Plan is so qualified and each trust established in connection with such Plan is exempt from federal income Tax under Section 501(a) of the Code or (ii) is entitled to rely on a favorable opinion or advisory letter from the IRS, and to the knowledge of Company, no fact or event has occurred since the date of such determination, opinion, or advisory letter or letters from the IRS that could reasonably be expected to adversely affect the qualified status of any such Plan or the exempt status of any such trust.

 

(h) There has not been any prohibited transaction (within the meaning of Section 406 of ERISA or Section 4975 of the Code) nor any reportable events (within the meaning of Section 4043 of ERISA) with respect to any Plan that could reasonably be expected to result in material liability to the Company. There have been no acts or omissions by the Company or any ERISA Affiliate that have given or could reasonably be expected to give rise to any material fines, penalties, Taxes or related charges under Sections 502 or 4071 of ERISA or Section 511 or Chapter 43 of the Code for which the Company or any ERISA Affiliate may be liable.

 

 

(i) All contributions, premiums or payments required to be made with respect to any Plan have been, in all material respects, timely made to the extent due or properly accrued on the consolidated financial statements of the Company.

 

(j) The Company and each ERISA Affiliate has complied in all material respects with the notice and continuation coverage requirements, and all other requirements, of Section 4980B of the Code and Parts 6 and 7 of Title I of ERISA, and the regulations thereunder, with respect to each Plan that is, or was during any taxable year for which the statute of limitations on the assessment of federal income Taxes remains open, by consent or otherwise, a group health plan within the meaning of Section 5000(b)(1) of the Code.

 

(k) The Company and each Plan that is a “group health plan” as defined in Section 733(a)(1) of ERISA (each, a “Health Plan”) is and has been in compliance, in all material respects, with the Patient Protection and Affordable Care Act of 2010 (“PPACA”), and no event has occurred, and no condition or circumstance exists, that could reasonably be expected to subject the Company, any ERISA Affiliate or any Health Plan to any material liability for penalties or excise Taxes under Sections 4980D or 4980H of the Code or any other provision of the PPACA.

 

(l) Each Plan that constitutes a nonqualified deferred compensation plan subject to Section 409A of the Code has been administered and operated, in all material respects, in compliance with the provisions of Section 409A of the Code and the Treasury Regulations thereunder, and no additional Tax under Section 409A(a)(1)(B) of the Code has been or could reasonably be expected to be incurred by a participant in any such Plan. No Company RSU or other equity-based awards have been issued or granted by the Company are subject to Section 409A of the Code. There is no Contract or plan to which the Company is a party or by which it is bound to compensate any employee, consultant, director, or other Person for penalty taxes paid pursuant to Section 409A of the Code.

 

Section 7.11 Labor and Employment Matters.

 

(a) ‎Section 7.11(a) of the Company Disclosure Schedule sets forth a true, correct and complete list of all employees of the Company as of the date hereof, including any employee who is on a leave of absence of any nature, authorized or unauthorized, and sets forth for each such individual by first and last name the following: (i) title or position (including whether full or part time); (ii) hire date and service date (if different); (iii) current annualized base salary or (if paid on an hourly basis) hourly rate of pay; (iv) commission, bonus or other incentive based compensation; (v) whether the employee is classified as exempt or non-exempt; and (vi) location. As of the date hereof, all compensation, including wages, commissions and bonuses, due and payable to all employees 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’s financial statements) in all material respects. Except as set forth in ‎Section 7.11(a) of the Company Disclosure Schedule, (i) each Company Employee is employed “at will” and (ii) the Company has no obligation or Liability (whether or not contingent) with respect to severance payments to any such employees under the terms of any written or, to the Company’s Knowledge, oral agreement. Except as set forth in ‎Section 7.11(a) of the Company Disclosure Schedule, each Company employee has entered into the Company’s standard form of employee non-compete, non-solicit, confidentiality and inventions agreement with the Company, a copy of which has been made available to Ackrell in the Virtual Data Room.

 

 

(b) ‎Section 7.11(b) of the Company Disclosure Schedule sets forth a true, correct and complete list of all individual independent contractors (including consultants) currently engaged by the Company, along with the each such contractor’s date of retention and rate of remuneration. Except as set forth on ‎Section 7.11(b) of the Company Disclosure Schedule, all of such independent contractors are a party to a written Contract with the Company.

 

(c) (i) There are no Actions pending or, to the knowledge of the Company, threatened against the Company by any of their respective current or former employees, a Person alleging to be a current or former employee or any Governmental Authority, relating to any alleged violation of Law or regulation, breach of any express or implied contract of employment, wrongful termination of employment, or any other discriminatory, wrongful or tortious conduct in connection with the employment relationship; (ii) the Company is not, nor has the Company been since December 31, 2016, a party to, bound by, or negotiating any collective bargaining agreement or other contract with a union, works council or labor organization applicable to Persons employed by the Company, nor, to the knowledge of the Company, are there any activities or proceedings of any labor union to organize any such employees; (iii) there are no unfair labor practice complaints pending against the Company before the National Labor Relations Board; and (iv) there has never been, nor, to the knowledge of the Company, has there been any threat of, any strike, slowdown, work stoppage, lockout, concerted refusal to work overtime or other similar labor disruption or dispute affecting, or, to the knowledge of the Company, threat thereof, by or with respect to any employees of the Company.

 

(d) The Company is, and has been since December 31, 2016, in material compliance in all respects with all applicable Laws relating to the employment, employment practices, employment discrimination, terms and conditions of employment, mass layoffs and plant closings (including the Worker Adjustment and Retraining Notification Act of 1988 or any similar state or local Laws), immigration, employee classification, meal and rest breaks, pay equity, workers’ compensation, family and medical leave, and occupational safety and health requirements, payment of wages and overtime wages, hours of work, employee scheduling, employee terminations and collective bargaining as required by the appropriate Governmental Authority and is not liable for any material arrears of wages, penalties or other sums for failure to comply with any of the foregoing nor is liable for any material payment to any Governmental Authority with respect to unemployment compensation benefits, social security or other benefits or obligations for employees, independent contractors or consultants (other than routine payments to be made in the ordinary course of business and consistent with past practice).

 

(e) Except as would not be material, (i) all individuals who perform or have performed services for the Company have been properly classified under applicable Law (A) as employees or individual independent contractors and (B) for employees, as an “exempt” employee or a “non-exempt” employee (within the meaning of the FLSA and state Law), (ii) no such individual has been improperly included or excluded from any Plan, and (iii) the Company has no notice of any pending or threatened inquiry or audit from any Governmental Authority concerning any such classifications.

 

 

Section 7.12 Real Property; Title to Assets.

 

(a) The Company does not own any real property.

 

(b) ‎Section 7.12(b) of the Company Disclosure Schedule lists the street address of each parcel of Leased Real Property, and sets forth a list of each lease, sublease, license or occupancy agreement pursuant to which the Company leases, subleases, licenses or occupies any real property (each, a “Lease”), with the name of the lessor or any other party thereto, and the date of the Lease in connection therewith and each material amendment, extension, renewal or guaranty to any of the foregoing (collectively, the “Lease Documents”). True, correct and complete copies of all Lease Documents have been made available to Ackrell in the Virtual Data Room. Except as otherwise set forth in ‎Section 7.12(b) of the Company Disclosure Schedule, (i) there are no leases, licenses, subleases, sublicenses, concessions or other Contracts granting to any Person other than the Company the right to use or occupy any Leased Real Property, and (ii) all such Leases are in full force and effect, are valid and enforceable in accordance with their respective terms, subject to the Remedies Exceptions, and there is not, under any of such Leases, any existing default or event of default (or event which, with notice or lapse of time, or both, would constitute a default) by the Company or, to the Company’s knowledge, by the other party to such Leases, except as would not, individually or in the aggregate, be material to the Company. the Company, has not subleased, sublicensed or otherwise granted to any Person any right to use, occupy or possess any portion of the Leased Real Property.

 

(c) Other than any actions taken due to a “shelter in place,” “non-essential employee” or similar direction of any Governmental Authority, there are no contractual or legal restrictions that preclude or restrict the ability of the Company to use any Leased Real Property by such party for the purposes for which it is currently being used, except as would not, individually or in the aggregate, be material to the Company. There are no latent defects or adverse physical conditions affecting the Leased Real Property, and improvements thereon, other than those that would not, individual or in the aggregate, be material to the Company.

 

(d) The Company have legal and valid title to, or, in the case of Leased Real Property and assets, valid leasehold or subleasehold interests in, all of its properties and assets, tangible and intangible, real, personal and mixed, used or held for use in its business, free and clear of all Liens other than Permitted Liens, except as would not, individually or in the aggregate, be material to the Company.

 

(e) All of the land, buildings, structures and other improvements leased, licensed or otherwise used or occupied by the Company in the conduct of the Business are included in the Leased Real Property.

 

 

Section 7.13 Intellectual Property.

 

(a) ‎Section 7.13(a) of the Company Disclosure Schedule contains a true, correct and complete list of all of the following that are (as applicable) owned or purported to be owned, used or held for use by the Company: (1) Registered Intellectual Property constituting Company Owned IP (showing in each, as applicable, the filing date, date of issuance, and registration or application number, and registrar or applicable jurisdiction), (2) all material unregistered Company Owned IP and (3) all Contracts or agreements to use any material Company Licensed IP (other than Contracts for (x) commercially available, “off-the-shelf” Software and Open Source Software, and (y) commercially available Business Systems). The Company IP constitutes all Intellectual Property rights necessary for, or to the knowledge of the Company, otherwise used in, the operation of the business of the Company as currently conducted and is sufficient for the conduct of such business as currently conducted as of the date hereof. For clarity, the Company’s only representations of non-infringement are as set out in ‎Section 7.13(d) hereof. For each patent right listed in ‎Section 7.13(a) of the Company Disclosure Schedule, the Company, and their respective attorneys, agents and relevant employees and other representatives have met their duty of disclosure and candor and good faith as required under 37 C.F.R. § 1.56 and complied with analogous laws and regulations where applicable outside of the United States.

 

(b) Other than as set forth in ‎Section 7.13(b) of the Company Disclosure Schedule, the Company owns and possesses, free and clear of all Liens (other than Permitted Liens and non-exclusive licenses), all right, title and interest in and to the Company Owned IP and has the right to use pursuant to a valid and enforceable written contract or license, all material Company Licensed IP. All material Company Owned IP is subsisting, and to the knowledge of the Company, valid and (other than pending applications) enforceable, and payment of all renewal and maintenance fees and expenses in respect thereof, and all filing fees related thereto, in each case due prior to the date hereof, have been duly made.

 

(c) The Company has taken and takes commercially reasonable actions to maintain, protect and enforce all material Company Owned IP, including the secrecy, confidentiality and value of its trade secrets and other material Confidential Information. The Company has not disclosed any trade secrets or other Confidential Information that relates to the Products or is otherwise material to the business of the Company to any other Person other than pursuant to a written confidentiality agreement under which such other Person agrees to maintain the confidentiality and protect such Confidential Information. No funding or facilities of a Governmental Authority or a university, college, other educational institution or research center was used in the development of any Company Owned IP.

 

(d) Other than as set forth in ‎Section 7.13(d) of the Company Disclosure Schedule, (i) there have been no claims filed and served or material claims threatened in writing, against the Company by any Person (A) contesting the validity, use, ownership, enforceability, patentability or registrability of any of the Company Owned IP, or (B) alleging any infringement or misappropriation of, or other violation of, any Intellectual Property rights of other Persons (including any unsolicited written demands or written offers to license any Intellectual Property rights from any other Person); (ii) the operation of the business of the Company (including the Products) has not and does not infringe, misappropriate or violate, any Intellectual Property rights of other Persons; (iii) to the Company’s knowledge, no other Person has infringed, misappropriated or violated any of the Company Owned IP; and (iv) the Company has not received written notice of any of the foregoing or received any formal written opinion of counsel regarding the foregoing.

 

 

(e) Other than as set forth in ‎Section 7.13(e) of the Company Disclosure Schedule, all Persons who have contributed, developed or conceived any Company Owned IP have executed valid and enforceable written agreements with the Company substantially in the form made available to Merger Sub or Ackrell in the Virtual Data Room, pursuant to which each Person (i) conveys to the Company any and all right, title and interest in and to all Intellectual Property developed by such Person specifically for the Company and (ii) obligates such Person to keep any Confidential Information, including trade secrets, of the Company confidential both during and after the term of employment or engagement.

 

(f) Section 7.13(f) of the Company Disclosure Schedule sets forth a list of all Open Source Software that has been used in, incorporated into, integrated or bundled with any Products by the Company, and for each such item of Open Source Software, the name and version number of the applicable license.

 

(g) The Company does not use and has not used any Open Source Software or any modification or derivative thereof in a manner that would (i) grant or purport to grant to any other Person any rights to or immunities under any of the Company Owned IP, or (ii) subject any of the Company Owned IP to any Reciprocal License.

 

(h) The Company owns, leases, licenses, or otherwise has the legal right to use all Business Systems, and such Business Systems are sufficient in all material respects for the current needs of the business of the Company as currently conducted by the Company. The Company maintains commercially reasonable data backup, data breach, data storage, system redundancy, disaster recovery, business continuity and risk assessment plans, procedures and facilities. The Business Systems controlled by the Company (i) are in operating condition and in a good state of maintenance and repair (ordinary wear and tear excepted) and perform the functions necessary to carry on the conduct of the business of the Company, (ii) conform in all material respects with all representations and warranties established by the Company to its customers pursuant to its contractual obligations to its customers, (iii) have been maintained by the Company in accordance with its contractual obligations to its customers and (iv) do not contain any virus, software routine or hardware component designed to permit unauthorized access to or disable or otherwise harm any computer, systems or software, or any software routine designed to disable. To the Company’s knowledge, since December 31, 2016, there has not been any material failure, breakdown, or other adverse event with respect to any of the Business Systems that are material to the conduct of the business of the Company that has not been remedied or replaced in all material respects.

 

(i) The Company has possession of or access to the source code for each material version of Software owned or purported to be owned by the Company (“Company Software”), as well as documentation related thereto, sufficient to enable a software developer of reasonable skill to understand, debug, repair, revise, modify, enhance, compile, support and otherwise utilize such Software. Except as set forth on ‎Section 7.13(i) of the Company Disclosure Schedule, to the knowledge of the Company, no Person other than the Company and its contractors engaged to provide services relating to the Company Software has possession of or access to or rights in the source code of any Company Software. With respect to all material Company Software, the Company is in actual possession and control of the applicable source code, object code, code writes, notes, documentation, and know-how to the extent required for use, distribution, development, enhancement, maintenance and support of such Company Software. The Company has not disclosed source code for Company Software to a third party outside of the scope of a written agreement that reasonably protects the Company’s rights in such source code. Other than pursuant to agreements entered into in the ordinary course of business, no Person other than the Company has any rights to use any Company Software.

 

 

(j) The Company currently and since December 31, 2016 has been in material compliance with (i) all Privacy/Data Security Laws applicable to the Company, (ii) any applicable written privacy or other policies of the Company published on a Company website or otherwise made publicly available by the Company concerning the collection, dissemination, storage or use of Personal Information in the Company’s possession, custody or control, (iii) industry standards to which the Company is contractually bound to adhere with respect to Personal Information in the Company’s possession, custody or control, and (iv) all contractual commitments that the Company has entered into or is otherwise bound with respect to privacy or data security (collectively, the “Data Security Requirements”). The Company has implemented commercially reasonable data security safeguards to protect the security and integrity of the Business Systems constituting Company Owned IP and any Personal Information in the Company’s possession, custody or control. The employees and contractors of the Company receive commercially reasonable training on information security issues. To the Company’s knowledge there is no Disabling Device in any of the Business Systems constituting Company Owned IP or Product components. Since December 31, 2016, the Company has not (i) to the Company’s knowledge, experienced any data security breaches, unauthorized access or use of any of the Business Systems constituting Company Owned IP, or unauthorized acquisition, destruction, damage, disclosure, loss, corruption, alteration, or use of any Personal Information in the Company’s possession, custody or control; or (ii) been subject to or received notice of any audits, proceedings or investigations by any Governmental Authority or any customer, or received any claims or complaints regarding the collection, dissemination, storage or use of Personal Information in the Company’s possession, custody or control, or the violation of any applicable Data Security Requirements.

 

(k) The Company (i) owns the Business Data constituting Company Owned IP free and clear of any restrictions other than those imposed by Data Security Requirements, or (ii) has the right, as applicable, to use, exploit, publish, reproduce, distribute, license, sell, and create derivative works of the other Business Data, in whole or in part, in the manner in which the Company receives and uses such Business Data prior to the Closing Date subject to any restrictions under Data Security Requirements.

 

(l) The Company is not, nor has it ever been, a member or promoter of, or a contributor to, any industry standards body or similar standard setting organization that could require or obligate the Company to grant or offer to any other Person any license or right to any Company Owned IP.

 

Section 7.14 Taxes.

 

(a) The Company: (i) has duly and timely filed all material Tax Returns it is required to have filed as of the date hereof (taking into account any extension of time within which to file) and all such filed Tax Returns are complete and accurate in all material respects; (ii) has paid all Taxes that it is required to have paid; (iii) has not waived any statute of limitations with respect to Taxes or agreed to any extension of time with respect to a Tax assessment or deficiency (other than pursuant to customary extensions of the due date for filing a Tax Return obtained in the ordinary course of business); (iv) does not have any deficiency, assessment, claim, audit, examination, investigation, litigation or other proceeding in respect of Taxes or Tax matters pending or asserted, proposed or threatened in writing, for a Tax period which the statute of limitations for assessments remains open. The unpaid Taxes of the Company as of the date of the Interim Financial Statements did not exceed the reserves for Taxes of the Company set forth in the Interim Financial Statements.

 

 

(b) The Company is not a party to, is not bound by and does not have an obligation under any Tax sharing agreement, Tax indemnification agreement, Tax allocation agreement or similar contract or arrangement, and does not have any liability or obligation to any Person as a result of or pursuant to any such agreement, contract or arrangement, in each case other than an Ordinary Commercial Agreement.

 

(c) The Company will not be required to include any material item of income in, or exclude any material item of deduction from, taxable income for any Tax period (or portion thereof) ending after the Closing Date as a result of any: (i) change in method of accounting made prior to the Closing under Section 481(c) of the Code (or any corresponding or similar provision of state, local or non-U.S. income Tax Law); (ii) “closing agreement” as described in Section 7121 of the Code (or any corresponding or similar provision of state, local or non-U.S. income Tax Law) executed prior to the Closing; (iii) installment sale or open transaction disposition made prior to the Closing; (iv) intercompany transaction or any excess loss account described in Treasury Regulations under Section 1502 of the Code (or any corresponding or similar provision of state, local or non-U.S. Tax Law) entered into or created prior to the Closing; or (v) prepaid amount received prior to the Closing outside the ordinary course of business.

 

(d) The Company has withheld and paid to the appropriate Tax authority all Taxes required to have been withheld and paid in connection with amounts paid or owing to any employee, independent contractor, creditor, shareholder or other third party.

 

(e) The Company has never been a member of an affiliated group filing a consolidated, combined or unitary U.S. federal, state, local or non-U.S. income Tax Return.

 

(f)   The Company does not have any liability for the Taxes of any other Person as a transferee or successor.

 

(g) The Company has not engaged in or entered into a “listed transaction” within the meaning of Treasury Regulation Section 1.6011-4(b)(2).

 

(h) Neither the IRS nor any other U.S. or non-U.S. taxing authority or agency has asserted in writing against the Company any deficiency or claim for any Taxes or interest thereon or penalties in connection therewith that has not been paid or otherwise resolved in full.

 

(i) There are no Tax Liens upon any assets of the Company except for Permitted Liens.

 

(j) The Company has not received written notice of any claim from a Tax authority in a jurisdiction in which the Company does not file Tax Returns stating that the Company is subject to Tax in such jurisdiction.

 

(k) For U.S. federal income tax purposes, the Company is, and has been since its formation, classified as a partnership.

 

 

(l) The Company has not (i) applied for or received any loan under the Paycheck Protection Program under the CARES Act, (ii) deferred any Taxes under Section 2302 of the CARES Act, the Presidential Memorandum on “Deferring Payroll Tax Obligations in Light of the Ongoing COVID-19 Disaster” dated August 8, 2020, or Notice 2020-65, 2020-38 I.R.B. 567 or claimed any Tax credit under Section 2301 of the CARES Act or Sections 7001-7003 of the FFCRA, or (iii) with respect to (i) or (ii), any corresponding or similar provision of state, local or non-U.S. Tax Law.

 

(m)   The Company, after consultation with its tax advisors, is not aware of the existence of any fact, or any action it has taken (or failed to take) or agreed to take, that would reasonably be expected to prevent or impede the Contributions from qualifying for the Intended Tax Treatment.

 

Section 7.15 Environmental Matters.

 

(a) The Company is in material compliance with, and since December 31, 2016 has not materially violated, applicable Environmental Laws, including obtaining, maintaining in good standing, and complying in all material respects with all permits, licenses and other authorizations required of the Company under applicable Environmental Law (“Environmental Permits”), and, to the Company’s knowledge, no facts, circumstances, or conditions currently exist that could adversely affect such continued compliance with Environmental Laws and Environmental Permits or require material capital expenditures to achieve or maintain such continued compliance with Environmental Laws and Environmental Permits.

 

(b) None of the properties currently or, to the knowledge of the Company, formerly owned, leased or operated by the Company (including soils and surface and ground waters) are or have been contaminated with, any Hazardous Substances, and the Company has not manufactured, treated, stored, disposed of, arranged for or permitted the disposal of, generated, handled or Released any Hazardous Substances, in each case in a manner, quantity or concentration that has given or would reasonably be expected to give rise to any material liability or obligation under applicable Environmental Laws. To the knowledge of the Company, there is not located at any of the properties of the Company any (i) underground storage tanks, (ii) asbestos-containing material, or (iii) equipment containing polychlorinated biphenyls. The Company is not, in any material respect, actually, potentially or allegedly liable pursuant to applicable Environmental Laws for any off-site contamination by Hazardous Substances.

 

(c) The Company has all required Environmental Permits, the Company is and has been in compliance in all material respects with such Environmental Permits, and no Action is pending or, to the Company’s knowledge, threatened, to revoke, modify, or terminate any such Environmental Permit.

 

(d) The Company is not the subject of any pending or, or to the Company’s knowledge, threatened Action, nor has the Company received any written notice, alleging any material violation of or, or material liability under, Environmental Laws or its Environmental Permits or relating to Hazardous Substances.

 

 

(e) The Company is not the subject of any outstanding Order or Contract with any Governmental Authority or other Person in respect of any (i) Environmental Laws, (ii) Remedial Action, or (iii) Release or threatened Release of a Hazardous Substance.

 

(f)   The Company has provided or made available to Ackrell in the Virtual Data Room all material environmental site assessments, studies, reports, analysis and results of investigations that have been performed in respect of the currently or previously owned, leased, or operated properties of the Company.

 

Section 7.16 Material Contracts.

 

(a) ‎Section 7.16(a) of the Company Disclosure Schedule lists the following types of Contracts and agreements to which the Company is a party, excluding for this purpose, any purchase orders submitted by customers and the Plans listed on ‎Section 7.10(a) of the Company Disclosure Schedule (such contracts and agreements as are required to be set forth in ‎Section 7.16(a) of the Company Disclosure Schedule being the “Material Contracts”):

 

(i) all Contracts and agreements with consideration payable to or by the Company, exclusive of postage or interchange, of more than $250,000], in the aggregate, over any 12-month period;

 

(ii) all Contracts and agreements with suppliers to the Company, including those relating to the design, development, manufacture or sale of Products of the Company, for expenditures paid or payable by the Company of more than $250,000, in the aggregate, over any 12-month period;

 

(iii) all Contracts with any of the top five (5) customers of the Company based on revenue for the fiscal year ended December 31, 2020 or top five (5) suppliers of the Company based on amounts paid by the Company, for the fiscal year ended December 31, 2020;

 

(iv)   all material Contracts granting rights to manufacture, produce, assemble, license, market or sell any Products of the Company;

 

(v) all material Contracts with any original equipment manufacturer or “Tier 1” original equipment manufacturer or supplier;

 

(vi)   all broker, distributor, dealer, manufacturer’s representative, franchise, agency, sales promotion, market research, marketing consulting and advertising Contracts and agreements to which the Company is a party that are material to the business of the Company;

 

(vii) all management Contracts (excluding Contracts for employment) to the extent material to the business of the Company;

 

 

(viii) all Contracts with any directors, officers or employees of the Company (other than the Plans listed on ‎Section 7.10(a) of the Company Disclosure Schedule or at-will employment arrangements with employees entered into in the ordinary course of business consistent with past practice);

 

(ix)   all Contracts or agreements involving the payment of royalties or other amounts calculated based upon the revenues or income of the Company or income or revenues related to any Product of the Company to which the Company is a party;

 

(x) all Contracts and agreements evidencing Indebtedness in an amount greater than $100,000, and any pledge agreements, security agreements or other collateral agreements in which the Company granted to any Person a security interest in or Lien on any of the property or assets of the Company, and all agreements or instruments guaranteeing the debts or other obligations of any Person;

 

(xi)   all Contracts establishing any joint venture, partnership, strategic alliance or other collaboration that is material to the business of the Company;

 

(xii) any Contract with outstanding obligations for the sale or purchase of personal property (excluding Intellectual Property), fixed assets or real estate having a value individually, with respect to all sales or purchases thereunder, in excess of $250,000 or, together with all related Contracts, in excess of $500,000 in the calendar year ended December 31, 2020 or any subsequent calendar year;

 

(xiii) all Contracts and agreements with any Governmental Authority to which the Company is a party, other than any Company Permits;

 

(xiv)   all Contracts and agreements that limit, or purport to limit, the ability of the Company to compete in any line of business or with any Person or in any geographic area or during any period of time, excluding Contracts as to which any such limit or limits are solely in respect of confidentiality obligations or use restrictions on confidential information exchanged thereunder;

 

(xv)   all Contracts or arrangements that result in any Person holding a power of attorney from the Company that materially relates to the Company, or materially impacts its business;

 

(xvi)   all Leases, and all leases or master leases of personal property, reasonably likely to result in annual payments of $250,000 or more in a 12-month period;

 

(xvii)   all Contracts required to be listed in ‎Section 7.13(a) of the Company Disclosure Schedule;

 

(xviii)   all Contracts which involve the license or grant of rights to Company Owned IP by the Company that are material to the business of the Company, other than non-exclusive licenses (or sublicenses) granted in the ordinary course of business;

 

 

(xix)   all Contracts or agreements under which the Company has agreed to purchase goods or services from a vendor, supplier or other Person on a preferred supplier or “most favored supplier” basis;

 

(xx)   all Contracts or agreements for the development of Company Owned IP for the benefit of the Company that are material to the Company, other than employment and consulting agreements entered into on the form of such agreement made available in the Virtual Data Room, without material modification;

 

(xxi)   all Contracts or agreements under which any broker, finder or investment banker is entitled to any brokerage, finder’s or other fee or commission in connection with the Transactions, or which has a fee tail still in effect, based upon arrangements made by or on behalf of the Company;

 

(xxii)   any Company Affiliate Agreement that will not be terminated at or prior to the Closing;

 

(xxiii)   any Contract that contains an existing obligation (contingent or otherwise) to pay any amounts in respect of indemnification obligations, purchase price adjustment, earn-outs, backend payment, deferred payments or similar obligation;

 

(xxiv) any Contract that grants to any Person any option, right of first offer or right of first refusal or similar right to purchase, lease, sublease, license, use, possess or occupy any securities, assets or other interest of the Company;

 

(xxv) any principal transaction Contract entered into in connection with a completed acquisition or disposition by the Company since December 31, 2018 involving consideration in excess of $250,000 of any Person or other business organization, division or business of any Person (including through merger or consolidation or the purchase of a controlling equity interest in or substantially all of the assets of such Person or by any other manner); and

 

(xxvi) any Contract not made in the ordinary course of business and not disclosed pursuant to any other clause under this ‎Section 7.16 that resulted in revenue or required expenditures in excess of $1,000,000 in the calendar year ended December 31, 2020.

 

(b) Except as has not been, and would not reasonably be expected to be, individually or in the aggregate, material to the Company taken as a whole (i) each Material Contract is a legal, valid and binding obligation of the Company and, to the knowledge of the Company, the other parties thereto, and the Company is not in breach or violation of, or default, or would be in breach or violation of, or default, with the giving of notice or lapse of time or both, under, any Material Contract nor has any Material Contract been canceled by the other party; (ii) to the Company’s knowledge, no other party is in breach or violation of, or default, or would be in breach or violation of, or default, with the giving of notice or lapse of time or both, under, any Material Contract; and (iii) the Company has not received any written, or to the knowledge of the Company, oral claim of any default under any such Material Contract. The Company has furnished or made available to Ackrell in the Virtual Data Room true and complete copies, in all respects, of all Material Contracts, including amendments thereto that are material in nature.

 

 

Section 7.17 Insurance.

 

(a) ‎Section 7.17(a) of the Company Disclosure Schedule sets forth, with respect to each material insurance policy (including binders of property, fire and casualty, product liability, workers’ compensation, and other forms of insurance) under which the Company is an insured, a named insured or otherwise the principal beneficiary of coverage as of the date of this Agreement (i) the names of the insurer, the principal insured and each named insured, (ii) the policy number, (iii) the period, scope and amount of coverage and (iv) the premium most recently charged. A true, correct and complete copy of each such insurance policy as in effect as of the date hereof has previously been made available to Ackrell in the Virtual Data Room.

 

(b) With respect to each such material insurance policy: (i) the policy is legal, valid, binding and enforceable in accordance with its terms (subject to the Remedies Exceptions) and, except for policies that have expired under their terms in the ordinary course, is in full force and effect; (ii) the Company is not in material breach or default (including any such breach or default with respect to the payment of premiums or the giving of notice), the Company has not received any written notice of cancellation or termination, and no event has occurred which, with notice or the lapse of time, would constitute such a material breach or default, or permit termination or modification, under the policy; and (iii) to the knowledge of the Company, no insurer on the policy has been declared insolvent or placed in receivership, conservatorship or liquidation. Except as disclosed on ‎Section 7.17 of the Company Disclosure Schedule, no insurer has denied or disputed coverage of any material claim under an insurance policy during the last twelve (12) months.

 

Section 7.18 Interested Party Transactions. Except for employment relationships and the payment of compensation, benefits and expense reimbursements and advances in the ordinary course of business, no stockholder, director, employee, officer or other affiliate of the Company or any of its Affiliates or immediate family members (each of the foregoing, a “Related Person”), to the Company’s knowledge, has or has had, directly or indirectly: (a) an economic interest in any Person that has furnished or sold, or furnishes or sells, services or Products that the Company furnishes or sells, or proposes to furnish or sell; (b) an economic interest in any Person that purchases from or sells or furnishes to, the Company, any goods or services; (c) a beneficial interest in any contract or agreement disclosed in ‎Section 7.16(a) of the Company Disclosure Schedule; (d) beneficial ownership interest (within the meaning of Section 13(d) of the Exchange Act) of 5% or more of the capital stock or equity interests of any of the Company or (e) any contractual or other arrangement with the Company, other than customary indemnity arrangements; provided, however, that ownership of no more than five percent (5%) of the outstanding voting stock of a publicly traded corporation shall not be deemed an “economic interest in any person” for purposes of this ‎Section 7.18 (each of the foregoing, a “Company Affiliate Agreement”). The Company has not, since December 31, 2018, (i) extended or maintained credit, arranged for the extension of credit or renewed an extension of credit in the form of a personal loan to or for any Related Person (or equivalent thereof) of the Company, or (ii) materially modified any term of any such extension or maintenance of credit.

 

Section 7.19 Exchange Act. The Company is not currently (nor has it previously been) subject to the requirements of Section 12 of the Exchange Act.

 

Section 7.20 Brokers. Except as disclosed on ‎Section 7.20 of the Company Disclosure Schedule, no broker, finder or investment banker is entitled to any brokerage, finder’s or other fee or commission in connection with the Transactions based upon arrangements made by or on behalf of the Company.

 

 

Section 7.21 Certain Business Practices.

 

(a) Since December 31, 2016, none of the Company nor any of its directors, officers, or employees nor, to the Company’s knowledge, agents, while acting on behalf of the Company has: (i) used any funds for unlawful contributions, gifts, entertainment or other unlawful expenses related to political activity; or (ii) made any unlawful payment to foreign or domestic government officials or employees or to foreign or domestic political parties or campaigns or violated any applicable Anti-Corruption Law.

 

(b) Since December 31, 2016, none of the Company, any of its directors, officers, or employees or, to the Company’s knowledge, agents (i) is or has been a Sanctioned Person; or (ii) has transacted business with or for the benefit of any Sanctioned Person, unless authorized, or has otherwise violated applicable Sanctions, while acting on behalf of the Company. Since December 31, 2016, the Company, and its directors, officers, and employees, and, to the Company’s knowledge, agents, while acting on behalf of the Company have been in compliance in all material respects with applicable Ex-Im Laws.

 

(c) Since December 31, 2016, there have not been any material internal investigations, external investigations to which the Company has knowledge of, audits, actions or proceedings pending, or any voluntary or involuntary disclosures made to a Governmental Authority, with respect to any apparent or suspected violation by the Company or any of its officers, directors, employees, or agents with respect to any Anti-Corruption Laws, Sanctions, or Ex-Im Laws.

 

Section 7.22 Registration Statement. The Company represents that the information supplied by the Company for inclusion in the Registration Statement or any current report of Ackrell on Form 8-K shall not contain any untrue statement of a material fact or fail 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 were made, not misleading, at (i) the time the Registration Statement is declared effective, (ii) the time the Proxy Statement (or any amendment thereof or supplement thereto) is first mailed to the stockholders of Ackrell, (iii) the time of the Ackrell Stockholders’ Meeting, (iv) the Effective Time and (v) in the case of any current report of Ackrell on Form 8-K, when such current report is filed, made available, mailed or distributed; provided, however, notwithstanding the foregoing provisions of this ‎Section 7.22, no representation or warranty is made by the Company with respect to information or statements made or incorporated by reference in the Registration Statement that were not supplied by or on behalf of the Company for use therein.

 

Section 7.23 PPP Loan. The PPP Loan has been forgiven.

 

 

Section 7.24 Key Customers and Suppliers. ‎Section 7.24 of the Company Disclosure Schedule lists, by dollar volume received or paid, as applicable, for each of (a) the twelve (12) months ended on December 31, 2020 and (b) the period from January 1, 2021 through June 30, 2021, the Key Customers (as defined in the Company Disclosure Schedule) and the Key Suppliers (as defined in the Company Disclosure Schedule), along with the amounts of such dollar volumes. The Company has not received any written notice or, to the knowledge of the Company, oral notice from any Key Customer or Key Supplier that such Key Customer or Key Supplier, as applicable, shall not continue as a customer or supplier (directly or indirectly) of the Company or that such Key Customer or Key Supplier intends to terminate or modify in a material and adverse manner to the Company its direct or indirect relationship with the Company in any material respect. To the extent that any Contract with a Key Customer in effect on the date hereof contemplates or requires that the Company enter into one or more further Contracts with such Key Customer (or another of its Affiliates) (a “Further Key Customer Contract”), (a) each of the Key Customer (and its applicable Affiliates), on the one hand, and the Company, on the other hand, is continuing to negotiate in good faith such Further Key Customer Contract and (b) neither the Key Customer (or any of its applicable Affiliates) nor the Company has provided written notice or, to the knowledge of the Company, oral notice that the other party is not negotiating in good faith such Further Key Customer Contract. To the extent that any Contract with a Key Supplier in effect on the date hereof contemplates or requires that the Company enter into one or more further Contracts with such Key Supplier (or another of its Affiliates) (a “Further Key Supplier Contract”), (1) each of the Key Supplier (and its applicable Affiliates), on the one hand, and the Company, on the other hand, is continuing to negotiate in good faith such Further Key Supplier Contract and (2) neither the Key Supplier (or any of its applicable Affiliates) nor the Company has provided written notice or, to the knowledge of the Company, oral notice that the other party is not negotiating in good faith such Further Key Supplier Contract. There is no pending or, to the knowledge of the Company, threatened Action by (x) the Company against any Key Customer or Key Supplier or any of its respective Affiliates or (y) a Key Customer or Key Supplier any of its respective Affiliates against the Company.

 

Section 7.25 Investment Company Act. The Company is not an “investment company” within the meaning of the Investment Company Act of 1940, as amended.

 

Section 7.26 Books and Records. All of the financial books and records of the Company are complete and accurate in all material respects and have been maintained in the ordinary course consistent with past practice and in accordance with applicable Laws.

 

Section 7.27 Exclusivity of Representations and Warranties; Company’s Investigation and Reliance. Except as otherwise expressly provided in this ‎Article VII (as modified by the Company Disclosure Schedule) or any other Ancillary Agreement, the Company hereby expressly disclaims and negates, any other express or implied representation or warranty whatsoever (whether at Law or in equity) with respect to the Company, its Affiliates, and any matter relating to any of them, including their affairs, the condition, value or quality of the assets, liabilities, financial condition or results of operations, or with respect to the accuracy or completeness of any other information made available to Ackrell, its Affiliates or any of their respective Representatives by, or on behalf of, the Company, and any such representations or warranties are expressly disclaimed. Without limiting the generality of the foregoing, except as expressly set forth in this Agreement (as modified by the Company Disclosure Schedule) or any other Ancillary Agreement or in the Company Officer’s Certificate, neither the Company nor any other Person on behalf of the Company has made or makes, any representation or warranty, whether express or implied, with respect to any projections, forecasts, estimates or budgets made available to Ackrell, its Affiliates or any of their respective Representatives of future revenues, future results of operations (or any component thereof), future cash flows or future financial condition (or any component thereof) of the Company (including the reasonableness of the assumptions underlying any of the foregoing), whether or not included in any management presentation, in any other information made available to Ackrell, its Affiliates or any of their respective Representatives or any other Person or in the Registration Statement, and any such representations or warranties are expressly disclaimed. The Company and its Representatives have been provided with adequate access to the Representatives, properties, offices and other facilities, books and records of Ackrell and other information that they have requested in connection with their investigation of Ackrell and the Transactions. The Company is not relying on any statement, representation or warranty, oral or written, express or implied, made by Ackrell, Newco, Merger Sub or any of their respective Representatives, except as expressly set forth in this Agreement (as modified by the Ackrell Disclosure Schedule) or the other Transaction Documents. None of Ackrell, Newco, Merger Sub nor any of its respective shareholders, Affiliates or Representatives shall have any liability to the Company or any of their respective stockholders, Affiliates or Representatives resulting from the use of any information, documents or materials provided to the Company in any form in expectation of the Transactions.

 

 

Section 7.28 Information Supplied. None of the information supplied or to be supplied by the Company expressly for inclusion or incorporation by reference: (a) in any current report on Form 8-K, and any exhibits thereto or any other report, form, registration or other filing made with any Governmental Authority or stock exchange with respect to the transactions contemplated by this Agreement or any Ancillary Documents; (b) in the Registration Statement; or (c) in the mailings or other distributions to Ackrell’s stockholders and/or prospective investors with respect to the consummation of the transactions contemplated by this Agreement or in any amendment to any of documents identified in (a) through (c), will, when filed, made available, mailed or distributed, as the case may be, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading. None of the information supplied or to be supplied by the Company expressly for inclusion or incorporation by reference in any of the Signing Press Release, the Signing Filing, the Closing Press Release and the Closing Filing will, when filed or distributed, as applicable, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading. Notwithstanding the foregoing, the Company makes no representation, warranty or covenant with respect to any information supplied by or on behalf of Ackrell or its Affiliates.

 

Article VIII
REPRESENTATIONS AND WARRANTIES OF ACKRELL, MERGER SUB AND NEWCO

 

Except as set forth in the disclosure schedule delivered by Ackrell, Merger Sub and Newco to the Company in connection with this Agreement (the “Ackrell Disclosure Schedule”) (each section of which qualifies (a) the correspondingly numbered representation, warranty or covenant specified therein and (b) such other representations, warranties or covenants where its relevance as an exception to (or disclosure for purposes of) such other representation, warranty or covenant is reasonably apparent on its face or cross-referenced) or in Ackrell SEC Reports (excluding disclosures referred to in “Forward-Looking Statements,” “Risk Factors” and any other disclosures therein to the extent they are of a predictive or cautionary nature or related to forward-looking statements), Ackrell, Merger Sub and Newco, jointly and severally, hereby represent and warrant to the Company, NAI and Dahle as follows:

 

Section 8.01 Corporate Organization.

 

(a) Each of Ackrell, Merger Sub and Newco is a corporation duly organized, validly existing and in good standing under the Laws of the State of Delaware and has the requisite corporate power and authority and all necessary governmental approvals to own, lease and operate its properties and to carry on its business as it is now being conducted, except where the failure to have such power, authority and governmental approvals would not result in a Ackrell Material Adverse Effect.

 

(b) Merger Sub and Newco are the only Subsidiaries of Ackrell. Except for Merger Sub and Newco, Ackrell does not directly or indirectly own any equity or similar interest in, or any interest convertible into or exchangeable or exercisable for any equity or similar interest in, any corporation, partnership, joint venture, business association or other Person.

 

Section 8.02 Governing Documents. Each of Ackrell, Newco and Merger Sub has heretofore furnished to the Company complete and correct copies of the Ackrell Organizational Documents and the Organizational Documents of Merger Sub and Newco. The Ackrell Organizational Documents and Organizational Documents of Merger Sub and Newco are in full force and effect. Neither Ackrell, Newco nor Merger Sub is in violation of any of the provisions of the Ackrell Organizational Documents or the Organizational Documents of Merger Sub or Newco.

 

 

Section 8.03 Capitalization.

 

(a) The authorized capital stock of Ackrell consists of (i) 100,000,000 shares of Ackrell Common Stock, par value $0.0001 per share (“Ackrell Common Stock” and (ii) 1,000,000 shares of preferred stock, par value $0.0001 per share (“Ackrell Preferred Stock”). The issued and outstanding capital stock of Ackrell as of the date of this Agreement is as set forth on ‎Section 8.03(a) of the Ackrell Disclosure Schedule. All outstanding shares of Ackrell Common Stock are validly issued, fully paid and non-assessable and not subject to any preemptive rights, and no shares of Ackrell Common Stock are held in the treasury of Ackrell. The shares of Ackrell Common Stock issuable in respect of Ackrell’s private placement warrants (as described in the Prospectus) and Ackrell Public Warrants (collectively, the “Ackrell Warrants”) are as set forth on ‎Section 8.03(a) of the Ackrell Disclosure Schedule. As of the date of this Agreement, there are no shares of Ackrell Preferred Stock issued and outstanding. Each Ackrell Warrant is exercisable for one share of Ackrell Common Stock at an exercise price of $11.50.

 

(b) The authorized capital stock of Newco consists of 1,000 shares of Newco Common Stock. 1,000 shares of Newco Common Stock are issued and outstanding. All outstanding shares of Newco Common Stock have been duly authorized, validly issued, fully paid and are non-assessable and are not subject to preemptive rights, and are held by Ackrell free and clear of all Liens, other than transfer restrictions under applicable securities laws and the Organizational Documents of Newco.

 

(c) The authorized capital stock of Merger Sub consists of 1,000 shares of common stock, par value $0.0001 per share (the “Merger Sub Common Stock”). 1,000 shares of Merger Sub Common Stock are issued and outstanding. All outstanding shares of Merger Sub Common Stock have been duly authorized, validly issued, fully paid and are non-assessable and are not subject to preemptive rights, and are held by Ackrell free and clear of all Liens, other than transfer restrictions under applicable securities laws and the Merger Sub Organizational Documents.

 

(d) All outstanding shares of Ackrell Common Stock and Ackrell Warrants have been issued and granted in compliance with all applicable securities Laws and other applicable Laws and were issued free and clear of all Liens other than transfer restrictions under applicable securities Laws and the Ackrell Organizational Documents.

 

(e) Assuming the effectiveness of the filing of the Newco A&R Charter, the Stock Consideration being delivered by Newco hereunder shall be duly and validly issued, fully paid and nonassessable, and each such share or other security shall be issued free and clear of preemptive rights and all Liens, other than transfer restrictions under applicable securities Laws and the Newco Organizational Documents and any other Ancillary Agreement. The Stock Consideration will be issued in compliance with all applicable securities Laws and other applicable Laws and without contravention of any other Person’s rights therein or with respect thereto.

 

(f) Except for securities issued pursuant to the Subscription Agreements, securities issued by Ackrell as permitted by this Agreement and the Sponsor Warrants, Ackrell has not issued any options, warrants, preemptive rights, calls, convertible securities or other rights, agreements, arrangements or commitments of any character relating to the issued or unissued capital stock of Ackrell or obligating Ackrell to issue or sell any shares of capital stock of, or other equity interests in, Ackrell. All shares of Ackrell Common Stock subject to issuance as aforesaid, upon issuance on the terms and conditions specified in the instruments pursuant to which they are issuable, will be duly authorized, validly issued, fully paid and non-assessable. Neither Ackrell nor any subsidiary of Ackrell is a party to, or otherwise bound by, and neither Ackrell nor any Subsidiary of Ackrell has granted, any equity appreciation rights, participations, phantom equity or similar rights. Except for the Transaction Documents, Ackrell is not a party to any voting trusts, voting agreements, proxies, shareholder agreements or other agreements with respect to the voting or transfer of Ackrell Common Stock or any of the equity interests or other securities of Ackrell or any of its Subsidiaries. Except with respect to the Ackrell Redemption Rights and the Ackrell Warrants, there are no outstanding contractual obligations of Ackrell to repurchase, redeem or otherwise acquire any shares of Ackrell Common Stock. There are no outstanding contractual obligations of Ackrell to make any investment (in the form of a loan, capital contribution or otherwise) in any Person.

 

 

Section 8.04 Authority Relative to this Agreement; Vote Required.

 

(a) Each of Ackrell, Newco and Merger Sub have all necessary corporate power and authority to execute and deliver this Agreement and the Transaction Documents to which it is a party and, upon receipt of the Ackrell Stockholder Approval and the sole stockholder approval of each of Merger Sub and Newco and the effectiveness of the filing of the Newco A&R Charter, to perform its respective obligations hereunder and to consummate the Transactions. The execution and delivery of this Agreement by each of Ackrell, Newco and Merger Sub and the consummation by each of Ackrell, Newco and Merger Sub of the Transactions, have been duly and validly authorized by all necessary corporate action, and, except for the Ackrell Stockholder Approval and the sole stockholder approval of Merger Sub and Newco and the effectiveness of the filing of the Newco A&R Charter, no other corporate proceedings on the part of Ackrell, Newco or Merger Sub are necessary to authorize this Agreement or to consummate the Transactions (other than the effectiveness of the filing of the Newco A&R Charter and the appropriate merger documents as required by the DGCL). This Agreement has been duly and validly executed and delivered by each of Ackrell, Newco and Merger Sub and, assuming due authorization, execution and delivery by the other parties hereto constitutes a legal, valid and binding obligation of Ackrell, Newco or Merger Sub, enforceable against Ackrell, Newco or Merger Sub in accordance with its terms subject to the Remedies Exceptions.

 

(b) The affirmative vote of holders of a majority of the outstanding shares of Ackrell Common Stock (present in person or represented by proxy at the Ackrell Meeting, in each case, assuming a quorum is present) shall be required to approve each of the Ackrell Stockholder Proposals. The Ackrell Proposals are the only votes of any of Ackrell’s capital stock necessary in connection with the entry into this Agreement by Ackrell, and the consummation of the transactions contemplated hereby, including the Closing (the approval by Ackrell Stockholders of all of the foregoing, collectively, the “Ackrell Stockholder Approval”). No state takeover Law or similar restrictions are applicable to the Merger or the other Transactions.

 

Section 8.05 No Conflict; Required Filings and Consents.

 

(a) The execution and delivery of this Agreement by each of Ackrell, Newco and Merger Sub do not, and (in the case of Ackrell), upon the receipt of the Ackrell Stockholder Approval and the sole stockholder approval of Merger Sub and Newco and the effectiveness of the filing of the Newco A&R Charter, the performance of this Agreement by each of Ackrell, Newco and Merger Sub will not, (i) conflict with or violate the Ackrell Organizational Documents or the Organizational Documents of Merger Sub or Newco, (ii) assuming that all consents, approvals, authorizations, expiration or termination of waiting periods and other actions described in ‎Section 8.05(b) have been obtained and all filings and obligations described in ‎Section 8.05(b) have been made, conflict with or violate any Law applicable to each of Ackrell, Newco or Merger Sub or by which any of their property or assets is bound or affected, or (iii) result in any breach of, or constitute a default (or an event which, with notice or lapse of time or both, would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, or result in the creation of a Lien on any property or asset of each of Ackrell, Newco or Merger Sub pursuant to, any note, bond, mortgage, indenture, contract, agreement, lease, license, permit, franchise or other instrument or obligation to which each of Ackrell, Newco or Merger Sub is a party or by which each of Ackrell, Newco or Merger Sub or any of their property or assets is bound or affected, except, with respect to clauses (ii) and (iii), for any such conflicts, violations, breaches, defaults or other occurrences which would not have or reasonably be expected to have a Ackrell Material Adverse Effect.

 

(b) The execution and delivery of this Agreement by each of Ackrell, Newco and Merger Sub does not, and the performance of this Agreement by each of Ackrell, Newco and Merger Sub will not, require any consent, approval, authorization or permit of, or filing with or notification to, or expiration or termination of any waiting period by, any Governmental Authority, except (i) for applicable requirements, if any, of the Exchange Act, the Securities Act, Blue Sky Laws and state takeover Laws, the pre-merger notification requirements of the HSR Act, and filing and recordation of appropriate charter amendment and merger documents as required by the DGCL, (ii) the filing and effectiveness of appropriate merger documents as required by the DGCL, (iii) the effectiveness of the filing of the Newco A&R Charter and (iv) where the failure to obtain such consents, approvals, authorizations or permits, or to make such filings or notifications, would not, individually or in the aggregate, prevent or materially delay consummation of any of the Transactions or otherwise prevent Ackrell, Newco or Merger Sub from performing its material obligations under this Agreement.

 

 

Section 8.06 Compliance. Neither Ackrell, Newco nor Merger Sub is or has been since its formation in conflict with, or in default, breach or violation of, (a) any Law applicable to Ackrell, Newco or Merger Sub or by which any property or asset of Ackrell, Newco or Merger Sub is bound or affected, or (b) any note, bond, mortgage, indenture, contract, agreement, lease, license, permit, franchise or other instrument or obligation to which Ackrell, Newco or Merger Sub is a party or by which Ackrell, Newco or Merger Sub or any property or asset of Ackrell, Newco or Merger Sub is bound, except, in each case, for any such conflicts, defaults, breaches or violations that would not have or reasonably be expected to have a Ackrell Material Adverse Effect. Each of Ackrell, Newco and Merger Sub is in possession of all material franchises, grants, authorizations, licenses, permits, easements, variances, exceptions, consents, certificates, approvals and orders of any Governmental Authority necessary for Ackrell, Newco or Merger Sub to own, lease and operate its properties or to carry on its business as it is now being conducted.

 

Section 8.07 SEC Filings; Financial Statements; Sarbanes-Oxley.

 

(a) Except as set forth on ‎Section 8.07(a) of the Ackrell Disclosure Schedule, Ackrell has filed all forms, reports, schedules, statements and other documents, including any exhibits thereto, required to be filed by it with the Securities and Exchange Commission (the “SEC”) since December 1, 2020, together with any amendments, restatements or supplements thereto (collectively, the “Ackrell SEC Reports”). Ackrell has heretofore furnished to the Company true and correct copies of any material amendments and modifications that have not been filed by Ackrell with the SEC to all agreements, documents and other instruments that previously had been filed by Ackrell with the SEC and are currently in effect. As of their respective dates, the Ackrell SEC Reports (i) complied in all material respects with the applicable requirements of the Securities Act, the Exchange Act and the Sarbanes-Oxley Act of 2002 and the rules and regulations promulgated thereunder (the “Sarbanes-Oxley Act”), and (ii) did not, at the time they were filed, or, if amended, as of the date of such amendment, contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading. Each director and executive officer of Ackrell has filed with the SEC on a timely basis all documents required with respect to Ackrell by Section 16(a) of the Exchange Act.

 

(b) Each of the financial statements (including, in each case, any notes thereto) contained in the Ackrell SEC Reports was prepared in accordance with GAAP (applied on a consistent basis) and Regulation S-X and Regulation S-K, as applicable, throughout the periods indicated (except as may be indicated in the notes thereto or, in the case of unaudited financial statements, as permitted by Form 10-Q of the SEC) and each fairly presents, in all material respects, the financial position, results of operations, changes in stockholders equity and cash flows of Ackrell as at the respective dates thereof and for the respective periods indicated therein, (subject, in the case of unaudited statements, to normal and recurring year-end adjustments which have not had, and would not reasonably be expected to individually or in the aggregate be material). Ackrell has no off-balance sheet arrangements that are not disclosed in the Ackrell SEC Reports. No financial statements other than those of Ackrell are required by GAAP to be included in the consolidated financial statements of Ackrell.

 

(c) Except as and to the extent set forth in the Ackrell SEC Reports, neither Ackrell, Newco nor Merger Sub has any liability or obligation of a nature (whether accrued, absolute, contingent or otherwise) required to be reflected on a balance sheet prepared in accordance with GAAP, except for (i) liabilities that were incurred in the ordinary course of Ackrell’s, Newco’s or Merger Sub’s business, (ii) liabilities or obligations disclosed in the Ackrell Disclosure Schedule or (iii) such other liabilities and obligations which would not, individually or in the aggregate, reasonably be expected to be material to Ackrell.

 

(d) Ackrell is in compliance in all material respects with the applicable listing and corporate governance rules and regulations of the Nasdaq.

 

 

(e) Ackrell has established and maintains disclosure controls and procedures (as defined in Rule 13a-15 under the Exchange Act). Such disclosure controls and procedures are designed to ensure that material information relating to Ackrell and other material information required to be disclosed by Ackrell in the reports and other documents that it files or furnishes under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC, and that all such material information is accumulated and communicated to Ackrell’s principal executive officer and its principal financial officer as appropriate to allow timely decisions regarding required disclosure and to make the certifications required pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act. Such disclosure controls and procedures are effective in timely alerting Ackrell’s principal executive officer and principal financial officer to material information required to be included in Ackrell’s periodic reports required under the Exchange Act.

 

(f) Ackrell maintains systems of internal control over financial reporting that are sufficient to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP, including policies and procedures sufficient to provide reasonable assurance: (i) that Ackrell maintains records that in reasonable detail accurately and fairly reflect, in all material respects, its transactions and dispositions of assets; (ii) that transactions are recorded as necessary to permit the preparation of financial statements in conformity with GAAP; (iii) that receipts and expenditures are being made only in accordance with authorizations of management and its board of directors; and (iv) regarding prevention or timely detection of unauthorized acquisition, use or disposition of its assets that could have a material effect on its financial statements. Ackrell has delivered to the Company a true and complete copy of any disclosure (or, if unwritten, a summary thereof) by any representative of Ackrell to Ackrell’s independent auditors relating to any material weaknesses in internal controls and any significant deficiencies in the design or operation of internal controls that would adversely affect the ability of Ackrell to record, process, summarize and report financial data. Ackrell has no knowledge of any fraud or whistle-blower allegations, whether or not material, that involve management or other employees or consultants who have or had a significant role in the internal control over financial reporting of Ackrell. Since February 2, 2021, there have been no material changes in Ackrell internal control over financial reporting.

 

(g) There are no outstanding loans or other extensions of credit made by Ackrell to any executive officer (as defined in Rule 3b-7 under the Exchange Act) or director of Ackrell and Ackrell has not taken any action prohibited by Section 402 of the Sarbanes-Oxley Act.

 

(h) Neither Ackrell (including any employee thereof) nor Ackrell’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 Ackrell, (ii) any fraud, whether or not material, that involves Ackrell’s management or other employees who have a role in the preparation of financial statements or the internal accounting controls utilized by Ackrell or (iii) any claim or allegation regarding any of the foregoing.

 

(i) As of the date hereof, there are no outstanding SEC comments from the SEC with respect to the Ackrell SEC Reports. To the knowledge of Ackrell, none of the Ackrell SEC Reports filed on or prior to the date hereof is subject to ongoing SEC review or investigation as of the date hereof.

 

(j) Neither Ackrell nor any of its Subsidiaries is an “investment company” within the meaning of the Investment Company Act of 1940, as amended.

 

(k) Notwithstanding anything to the contrary herein, the representations and warranties in this Section 8.07 will exclude, and Ackrell does not make any representations with respect to (A) Ackrell’s historical accounting of the Ackrell Warrants as equity rather than as liabilities that was or may be required as a result of the Staff Statement on Accounting and Reporting Considerations for Warrants Issued by Special Purpose Acquisition Companies that was issued by the SEC on April 12, 2021, and related guidance by the SEC, (B) Ackrell’s accounting or classification of Ackrell’s outstanding redeemable shares as temporary, as opposed to permanent, equity that was or may be required as a result of related statements by the SEC staff or recommendations or requirements of Ackrell’s auditors or (C) Ackrell’s historical or future accounting relating to any other guidance from the SEC staff after the date hereof relating to non-cash accounting matters and that generally impacts special purpose acquisition companies (clauses (A) through (C), collectively, “SEC SPAC Accounting Changes”). The parties acknowledge and agree that any restatement, revision or other modification of the Ackrell SEC Reports or the financial statements therein as a result of, and only to the extent of, any SEC SPAC Accounting Changes shall be deemed not material for purposes of this Agreement.

 

 

 

Section 8.08 Absence of Certain Changes or Events. (a) Since the date of its formation, except as expressly contemplated by this Agreement, Ackrell has conducted its business in all material respects in the ordinary course and in a manner consistent with past practice, other than due to any actions taken due to a “shelter in place,” “non-essential employee” or similar direction of any Governmental Authority and (b) since December 31, 2020 through the date of this Agreement there has not been any Ackrell Material Adverse Effect.

 

Section 8.09 Absence of Litigation. There is no Action pending or, to the knowledge of Ackrell, threatened against Ackrell, or any property or asset of Ackrell, before any Governmental Authority. Neither Ackrell nor any material property or asset of Ackrell, nor any of its current or former directors or officers (provided, that any of the following matters involving the directors or officers of Ackrell must be related to the Ackrell’s or a Subsidiary’s business, equity securities or assets) is subject to any continuing order of, consent decree, settlement agreement or other similar written agreement with, or, to the knowledge of Ackrell, continuing investigation by, any Governmental Authority, or any order, writ, judgment, injunction, decree, determination or award of any Governmental Authority. In the past five (5) years, none of the current or former officers, senior management or directors of Ackrell have been charged with, indicted for, arrested for, or convicted of any felony or any crime involving fraud.

 

Section 8.10 Board Approval.

 

(a) The Ackrell Board, by resolutions duly adopted by unanimous vote of those voting at a meeting duly called and held and not subsequently rescinded or modified in any way, has duly (i) determined that this Agreement and the Transactions are fair to, advisable and in the best interests of Ackrell and its stockholders, (ii) determined that the fair market value of the Company is equal to at least 80% of the net assets held in the Trust Account (net of amounts withdrawn to fund regulatory compliance costs and to pay Taxes and excluding the amount of any deferred underwriting discount), (iii) approved the transactions contemplated by this Agreement as a Business Combination, (iv) approved this Agreement and the Transactions and declared their advisability, and (v) resolved to recommend that the stockholders of Ackrell approve each of the matters requiring Ackrell Stockholder Approval, including each of the Ackrell Proposals, and directed that this Agreement and the Merger as well as the other Ackrell Proposals, be submitted for consideration by the stockholders of Ackrell at the Ackrell Stockholders’ Meeting.

 

(b) The board of directors of Merger Sub has approved and declared advisable, this Agreement and the Transactions, and Ackrell, in its capacity as the sole stockholder of Merger Sub shall approve and adopt this Agreement by written consent following its execution.

 

 

Section 8.11 No Prior Operations of Merger Sub or Newco. Each of Merger Sub and Newco was formed solely for the purpose of effecting the Merger and the Transactions and have not engaged in any business activities or conducted any operations or incurred any obligation or liability, other than as contemplated by this Agreement or the Transaction Documents.

 

Section 8.12 Brokers. Except as set forth on ‎Section 8.12 of the Ackrell Disclosure Schedule, no broker, finder or investment banker is entitled to any brokerage, finder’s or other fee or commission in connection with the Transactions based upon arrangements made by or on behalf of Ackrell, Newco or Merger Sub.

 

Section 8.13 Ackrell Trust Fund. As of the date of this Agreement, Ackrell has no less than one hundred thirty-eight million ($138,000,000) in the trust fund established by Ackrell for the benefit of its public stockholders (the “Trust Fund”) maintained in a trust account (the “Trust Account”). The monies of such Trust Account are invested in United States Government securities within the meaning of Section 2(a)(16) of the Investment Company Act of 1940 (the “Investment Company Act”), having a maturity of 185 days or less, or in money market funds meeting the conditions of paragraphs (d)(1), (d)(2), (d)(3) and (d)(4) of Rule 2a-7 promulgated under the Investment Company Act and held in trust by Continental Stock Transfer & Trust Company, a New York Corporation (the “Trustee”) pursuant to the Investment Management Trust Agreement, made effective as of January 21, 2021, between Ackrell and the Trustee (the “Trust Agreement”). The Trust Agreement has not been amended or modified and is a valid and binding obligation of Ackrell and is in full force and effect and is enforceable in accordance with its terms, subject to the Remedies Exceptions. Ackrell has complied in all material respects with the terms of the Trust Agreement and is not in material breach thereof or material default thereunder and there does not exist under the Trust Agreement any event which, with the giving of notice or the lapse of time, would constitute such a material breach or material default by Ackrell or the Trustee. There are no separate Contracts, side letters or other understandings (whether written or unwritten, express or implied): (i) between Ackrell and the Trustee that would cause the description of the Trust Agreement in the Ackrell SEC Reports to be inaccurate in any material respect; or (ii) to the knowledge of Ackrell, that would entitle any Person (other than stockholders of Ackrell who shall have elected to redeem their shares of Ackrell Common Stock pursuant to the Ackrell Redemption) 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 except as set forth in the Ackrell Organizational Documents and the Prospectus. As of the date hereof, there are no Actions pending or, to the knowledge of Ackrell, threatened in writing with respect to the Trust Account. Upon consummation of the Merger and notice thereof to the Trustee pursuant to the Trust Agreement, Ackrell shall cause the Trustee to, and the Trustee shall thereupon be obligated to, release to Ackrell as promptly as practicable, the Trust Funds in accordance with the Trust Agreement at which point the Trust Account shall terminate; provided, however, that the liabilities and obligations of Ackrell due and owing or incurred at or prior to the Effective Time shall be paid as and when due, including all amounts payable (a) to stockholders of Ackrell who shall have exercised their Ackrell Redemption Rights and (b) to the Trustee for fees and costs incurred in accordance with the Trust Agreement.

 

Section 8.14 Employees. Other than any officers as described in the Ackrell SEC Reports and consultants and advisors in the ordinary course of business or in connection with Ackrell’s or Sponsor’s identification, evaluation, negotiation or consummation of a Business Combination, Ackrell, Newco and Merger Sub have never employed any employees or retained any contractors. Other than reimbursement of any out-of-pocket expenses incurred by Ackrell’s officers and directors in connection with activities on Ackrell’s behalf in an aggregate amount not in excess of the amount of cash held by Ackrell outside of the Trust Account, Ackrell has no unsatisfied material liability with respect to any officer or director. Ackrell, Newco and Merger Sub have never and do not currently maintain, sponsor, or contribute to or have any direct or material liability under any Employee Benefit Plan.

 

 

Section 8.15 Taxes.

 

(a) Ackrell, Newco and Merger Sub (i) have duly and timely filed all material Tax Returns they are required to have filed as of the date hereof (taking into account any extension of time within which to file) and all such filed Tax Returns are complete and accurate in all material respects; (ii) have paid all Taxes that are required to have paid; (iii) have not waived any statute of limitations with respect to Taxes or agreed to any extension of time with respect to a Tax assessment or deficiency (other than pursuant to customary extensions of the due date for filing a Tax Return obtained in the ordinary course of business); (iv) do not have any deficiency, assessment, claim, audit, examination, investigation, litigation or other proceeding in respect of Taxes or Tax matters pending or asserted, proposed or threatened in writing, for a Tax period which the statute of limitations for assessments remains open; and (v) have provided adequate reserves in accordance with GAAP in the most recent consolidated financial statements of Ackrell, for any Taxes of Ackrell as of the date of such financial statements that have not been paid.

 

(b) Neither Ackrell, Newco nor Merger Sub is a party to, is bound by or has an obligation under any Tax sharing agreement, Tax indemnification agreement, Tax allocation agreement or similar contract or arrangement or has a liability or obligation to any Person as a result of or pursuant to any such agreement, contract or arrangement, each case other than an Ordinary Commercial Agreement.

 

(c) Neither Ackrell, Newco nor Merger Sub will be required to include any material item of income in, or exclude any material item of deduction from, taxable income for any Tax period (or portion thereof) ending after the Closing Date as a result of any: (i) change in method of accounting made prior to the Closing under Section 481(c) of the Code (or any corresponding or similar provision of state, local or non-U.S. income Tax Law); (ii) “closing agreement” as described in Section 7121 of the Code (or any corresponding or similar provision of state, local or non-U.S. income Tax Law) executed prior to the Closing; (iii) installment sale or open transaction disposition made prior to the Closing; (iv) intercompany transaction or any excess loss account described in Treasury Regulations under Section 1502 of the Code (or any corresponding or similar provision of state, local or non-U.S. Tax Law) entered into or created prior to the Closing; or (v) prepaid amount received prior to the Closing outside the ordinary course of business.

 

(d) Each of Ackrell, Newco and Merger Sub has withheld and paid to the appropriate Tax authority all Taxes required to have been withheld and paid in connection with amounts paid or owing to any employee, independent contractor, creditor, shareholder or other third party.

 

(e) Neither Ackrell, Newco nor Merger Sub has been a member of an affiliated group filing a consolidated, combined or unitary U.S. federal, state, local or non-U.S. income Tax Return.

 

 

(f) Neither Ackrell, Merger Sub nor Newco has any liability for the Taxes of any Person (other than Ackrell, Newco and Merger Sub) under Treasury Regulation Section 1.1502-6 (or any similar provision of state, local or non-U.S. law), or as a transferee or successor.

 

(g) Neither Ackrell, Newco nor Merger Sub has distributed stock of another Person, or has had its stock distributed by another Person, in a transaction that was purported or intended to be governed in whole or in part by Section 355 of the Code.

 

(h) Neither Ackrell, Newco nor Merger Sub has engaged in or entered into a “listed transaction” within the meaning of Treasury Regulation Section 1.6011-4(b)(2).

 

(i) Neither the IRS nor any other U.S. or non-U.S. taxing authority or agency has asserted in writing against Ackrell, Newco or Merger Sub any deficiency or claim for any Taxes or interest thereon or penalties in connection therewith that has not been paid or otherwise resolved in full.

 

(j) There are no Tax Liens upon any assets of Ackrell, Newco or Merger Sub except for Permitted Liens.

 

(k) Neither Ackrell, Newco nor Merger Sub has been a United States real property holding corporation within the meaning of Section 897(c)(2) of the Code during the applicable period specified in Section 897(c)(1)(A)(ii) of the Code.

 

(l) Neither Ackrell, Newco nor Merger Sub has received written notice of any claim from a Tax authority in a jurisdiction in which Ackrell, Newco or Merger Sub does not file Tax Returns stating that Ackrell, Newco or Merger Sub is subject to Tax in such jurisdiction.

 

(m) For U.S. federal income tax purposes, each of Ackrell, Newco and Merger Sub is, and has been since its formation, classified as a corporation.

 

(n) Neither Ackrell, Newco nor Merger Sub has (i) applied for or received any loan under the Paycheck Protection Program under the CARES Act, (ii) deferred any Taxes under Section 2302 of the CARES Act, the Presidential Memorandum on “Deferring Payroll Tax Obligations in Light of the Ongoing COVID-19 Disaster” dated August 8, 2020, or Notice 2020-65, 2020-38 I.R.B. 567 or claimed any Tax credit under Section 2301 of the CARES Act or Sections 7001-7003 of the FFCRA, or (iii) with respect to (i) or (ii), any corresponding or similar provision of state, local or non-U.S. Tax Law.

 

(o) Ackrell, Newco and Merger Sub, after consultation with their tax advisors, are not aware of the existence of any fact, or any action it has taken (or failed to take) or agreed to take, that would reasonably be expected to prevent or impede the Contributions from qualifying for the Intended Tax Treatment.

 

Section 8.16 Registration and Listing. The issued and outstanding Ackrell Units are registered pursuant to Section 12(b) of the Exchange Act and are listed for trading on the Nasdaq under the symbol “ACKIU.” The issued and outstanding shares of Ackrell Common Stock are registered pursuant to Section 12(b) of the Exchange Act and are listed for trading on the Nasdaq under the symbol “ACKIT.” The issued and outstanding Ackrell Warrants that were included as part of the Ackrell Units (the “Ackrell Public Warrants”) are registered pursuant to Section 12(b) of the Exchange Act and are listed for trading on the Nasdaq under the symbol “ACKIW” As of the date of this Agreement, there is no Action pending or, to the knowledge of Ackrell, threatened in writing against Ackrell by the Nasdaq or the SEC with respect to any intention by such entity to deregister the Ackrell Units, the shares of Ackrell Common Stock, or Ackrell Warrants or terminate the listing of Ackrell on the Nasdaq Capital Market. None of Ackrell or any of its Affiliates has taken any action in an attempt to terminate the registration of the Ackrell Units, the shares of Ackrell Common Stock, or the Ackrell Warrants under the Exchange Act.

 

 

Section 8.17 Registration Statement. Ackrell represents that the information supplied by Ackrell for inclusion in the Registration Statement shall not contain any untrue statement of a material fact or fail 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 were made, not misleading at (i) the time the Registration Statement is declared effective, (ii) the time the Proxy Statement (or any amendment thereof or supplement thereto) is first mailed to the stockholders of Ackrell, (iii) the time of the Ackrell Stockholders’ Meeting, and (iv) the Effective Time; provided, however, that Ackrell makes no representations or warranties as to the information contained in or omitted from the Registration Statement in reliance upon and in conformity with information furnished in writing to Ackrell by or on behalf of the Company specifically for inclusion in the Registration Statement.

 

Section 8.18 Subscription Agreements; Forward Purchase Agreements.

 

(a) Ackrell has delivered to the Company a true, correct and complete copy of each Subscription Agreement to be executed contemporaneously with this Agreement, pursuant to which certain Investors have committed, subject to the terms and conditions therein, to purchase 3,066,700 Units (as defined in the Subscription Agreements) consisting one share of Newco Common Stock and one-half of a Warrant to purchase Newco Common Stock at an exercise price of $11.50 per share and $111,333,000 principal amount of Convertible Notes (as defined in the Subscription Agreement); provided that Ackrell may enter into additional Subscription Agreements between the date of this Agreement and Closing Date on identical terms to the existing Subscription Agreements with the prior written consent of the Company. To the knowledge of Ackrell, immediately following its execution and delivery by the parties thereto, each Subscription Agreement will be in full force and effect and a legal, valid and binding upon Ackrell and the applicable Investor, enforceable in accordance with its terms, subject to the Remedies Exceptions. As of the date hereof, there are no side letters or Contracts to which Ackrell, Newco or Merger Sub is a party related to the provision or funding, as applicable, of the purchases contemplated by each Subscription Agreement or the transactions contemplated hereby other than as expressly set forth in this Agreement, each Subscription Agreement or any other agreement entered into (or to be entered into) in connection with the Transactions delivered to the Company. Ackrell has fully paid any and all commitment fees or other fees required in connection with each Subscription Agreement that are payable on or prior to the date hereof and will pay any and all such fees when and as the same become due and payable after the date hereof pursuant to each Subscription Agreement. There are no conditions precedent or other contingencies related to the consummation of the purchases set forth in each Subscription Agreement, other than as expressly set forth in each Subscription Agreement. As of the date hereof, no event has occurred which, with or without notice, lapse of time or both, would or would reasonably be expected to (i) constitute a default or breach on the part of Ackrell or, to the knowledge of Ackrell as of the date hereof, any Investor, (ii) constitute a failure to satisfy a condition on the part of Ackrell or, to the knowledge of Ackrell as of the date hereof, the applicable Investor or (iii) to the knowledge of Ackrell as of the date hereof, result in any portion of the amounts to be paid by each Investor in accordance with each Subscription Agreement being unavailable on the Closing Date.

 

 

(b) Notwithstanding anything contained herein to the contrary, Ackrell may, or may cause Newco to, enter into one or more forward purchase agreements for the purchase of Ackrell Common Stock or Newco Common Stock, as the case may be, with the prior written consent of the Company and having such terms and provisions as are satisfactory to the Company.

 

Section 8.19 Affiliate Agreements. Except for, (x) in the case of any employee, officer or director, any employment Contract or (y) Contract with respect to the issuance of equity in Ackrell, to the knowledge of Ackrell, none of Ackrell or any of its Subsidiaries is a party to any material transaction, agreement, arrangement or understanding with any (a) present or former executive officer or director of any of Ackrell or its Subsidiaries, (b) beneficial owner (within the meaning of Section 13(d) of the Exchange Act) of 5% or more of the capital stock or equity interests of any of the Ackrell or its Subsidiaries as of the date hereof or (c) Affiliate, “associate” or member of the “immediate family” (as such terms are respectively defined in Rules 12b-2 and 16a-1 of the Exchange Act) of any of the foregoing that is required to be disclosed pursuant to Item 404 of Regulation S-K that has not been disclosed.

 

Section 8.20 Ackrell’s and Merger Sub’s Investigation and Reliance. Each of Ackrell, Newco and Merger Sub is a sophisticated purchaser and has made its own independent investigation, review and analysis regarding the Company, Cowell and the Transactions, which investigation, review and analysis were conducted by Ackrell, Newco and Merger Sub together with expert advisors, including legal counsel, that they have engaged for such purpose. Ackrell and its Representatives have been provided with reasonable access to the Representatives, properties, offices and other facilities, books and records of the Company, Cowell and other information that they have requested in connection with their investigation of the Company, Cowell and the Transactions. Neither Ackrell, Newco nor Merger Sub is relying on any statement, representation or warranty, oral or written, express or implied, made by the Company, NAI or Dahle or any of their respective Representatives, except as expressly set forth in this Agreement (as modified by the Company Disclosure Schedule, the Cowell Disclosure Schedule or the Contributor Disclosure Schedule) or the other Transaction Documents. Neither the Company, NAI, Dahle nor any of their respective shareholders, Affiliates or Representatives shall have any liability to Ackrell, Newco or Merger Sub or any of their respective stockholders, Affiliates or Representatives resulting from the use of any information, documents or materials made available to Ackrell, Newco and Merger Sub or any of their Representatives, whether orally or in writing, in any confidential information memoranda, “data rooms,” management presentations, due diligence discussions or in any other form in expectation of the Transactions except as set forth in this Agreement and the other Transaction Documents. Neither the Company, NAI, Dahle nor any of their stockholders (if applicable), Affiliates or Representatives is making, directly or indirectly, any representation or warranty with respect to any estimates, projections or forecasts involving the Company and the other Transaction Documents. Ackrell, Newco and Merger Sub each acknowledge and agreement to the representations and warranties set forth in ‎Section 7.27 hereof.

 

 

Article IX
CONDUCT OF BUSINESS PENDING THE MERGER AND THE CONTRIBUTIONS

 

Section 9.01 Conduct of Business by the Company Pending the Transactions.

 

(a) The Company agrees that, between the date of this Agreement and the Closing or the earlier termination of this Agreement in accordance with the terms hereof, except as (1) expressly required by any other provision of this Agreement or any other Ancillary Agreement, (2) expressly set forth in ‎Section 9.01 of the Company Disclosure Schedule, and (3) as required by applicable Law, unless Ackrell shall otherwise consent in writing (which consent shall not be unreasonably conditioned, withheld or delayed):

 

(i) the Company shall conduct its business in the ordinary course of business and in a manner consistent with past practice; and

 

(ii) the Company shall use its reasonable best efforts to (A) preserve substantially intact the business organization of the Company, to keep available the services of the current officers, key employees and consultants of the Company and to preserve the current relationships of the Company with customers, suppliers and other Persons with which the Company has significant business relations and (B) maintain all insurance policies of the Company or substitutes therefor.

 

(b) By way of amplification and not limitation, except as (1) expressly required by any other provision of this Agreement or any Ancillary Agreement, including entry into the Company Redemption Agreement and the issuance of the Company RSU, (2) as expressly set forth in ‎Section 9.01 of the Company Disclosure Schedule, and (3) as required by applicable Law, the Company shall not between the date of this Agreement and the Effective Time or the earlier termination of this Agreement, directly or indirectly, do any of the following without the prior written consent of Ackrell (which consent shall not be unreasonably conditioned, withheld or delayed):

 

(i) amend or otherwise change its certificate of incorporation, bylaws or other organizational documents;

 

(ii) issue, sell, transfer, pledge, dispose of, grant or encumber, or authorize the issuance, sale, transfer, pledge, disposition, grant or encumbrance of, (A) any membership interests (or comparable equity interest) of the Company, or any options, warrants, restricted share units, convertible securities or other rights of any kind to acquire any membership interests (or comparable equity interest) or that derive their value therefrom, or any other ownership interest (including any phantom interest), of the Company, or engage in any hedging transaction with a third person with respect to any such securities; or (B) any material assets of the Company, other than in the ordinary course of business consistent with past practice;

 

(iii) acquire any equity interest or other interest in any other Person, enter into a joint venture or business association with any other Person or establish any Subsidiary;

 

 

(iv) declare, set aside, make or pay any dividend or other distribution, payable in cash, equity interests, property or otherwise, with respect to any of its membership interests (or comparable equity interest); provided, however, that the Company may distribute to its members any retained earnings as of December 31, 2020 that have not been previously distributed as of the date of this Agreement;

 

(v) (A) acquire (including by merger, consolidation, or acquisition of stock or substantially all of the assets or any other business combination) any corporation, partnership, other business organization or any division thereof or purchase a material portion of the assets (other than in the ordinary course of business) or equity of, any corporation, partnership, other business organization or any division thereof; or (B) incur any Indebtedness for borrowed money or otherwise or issue any debt securities or assume, guarantee or endorse, or otherwise become responsible for, the obligations of any Person, or make any loans or advances, or intentionally grant any security interest in any of its assets in an amount not to exceed five million dollars ($5,000,000) in the aggregate except, with respect to this clause (B), the incurrence of Indebtedness for borrowed money pursuant to the instruments listed on ‎Section 9.01(b)(v) of the Company Disclosure Schedule,

 

(vi) (A) grant any increase in the compensation, incentives or benefits payable or to become payable to any current director, officer, employee or consultant of the Company other than in the ordinary course of business, consistent with past practice, and in any event not in the aggregate by more than five percent (5%), (B) enter into any new, or materially amend any existing, employment, retention, bonus, change in control, or termination agreement with any current or former director, officer, employee or consultant, (C) accelerate or commit to accelerate the funding, payment, or vesting of any compensation or benefits to any current or former director, officer, employee or consultant, (D) establish or become obligated under any collective bargaining agreement or other contract or agreement with a labor union, trade union, works council, or other representative of employees, or (E) hire any new employee whose individual annual base compensation shall exceed $250,000, except that the Company may (1) provide increases in salary, wages, bonuses or benefits to employees as required or permitted under any Plan or other employment or consulting agreement in effect on the date of this Agreement, (2) change the title of its employees in the ordinary course of business, (3) make annual or quarterly bonus or commission payments in the ordinary course of business and in accordance with the bonus or commission plans existing on the date of this Agreement or(4) enter into the retention agreements with executive officers, key employees or directors in the amounts set forth on ‎Section 9.01(b)(vi) of the Company Disclosure Schedule;

 

(vii) other than as required by Law or pursuant to the terms of a plan or an agreement entered into prior to the date of this Agreement and reflected and quantified on ‎Section 7.10(a) of the Company Disclosure Schedule, grant any severance or termination pay to, any employee or director or officer of the Company other than in the ordinary course of business, consistent with past practice;

 

(viii) adopt, amend or terminate any Plan or any Employee Benefit Plan that would be a Plan if in effect as of the date hereof except as may be required by applicable Law, as is necessary in order to consummate the Transactions, or health and welfare plan renewals in the ordinary course of business;

 

 

(ix) make or rescind any material election relating to Taxes, settle any claim, action, suit, litigation, proceeding, arbitration, investigation, audit or controversy relating to Taxes, file any amended Tax Return or claim for refund, or make any material change in its accounting or Tax policies or procedures, in each case except as required by applicable Law or in compliance with GAAP;

 

(x) materially amend, modify or consent to the termination (excluding any expiration in accordance with its terms) of any Material Contract or amend, waive, modify or consent to the termination (excluding any expiration in accordance with its terms) of the Company’s respective material rights thereunder, in each case in a manner that is adverse to the Company;

 

(xi) intentionally permit any material item of Company IP to lapse or to be abandoned, invalidated, dedicated to the public, or disclaimed, or otherwise become unenforceable or fail to perform or make any applicable filings, recordings or other similar actions or filings, or fail to pay all required fees and Taxes required or advisable to maintain and protect its interest in each and every material item of Company IP, or transfer or license to any Person any Company IP (excluding non-exclusive licenses of Company IP in the ordinary course of business consistent with past practice), or disclose to any Person who has not entered into a confidentiality agreement any trade secrets;

 

(xii) waive, release, assign, settle or compromise any Action (including any suit, action, claim, proceeding or investigation relating to this Agreement or the transactions contemplated hereby), other than waivers, releases, assignments, settlements or compromises that involve only confidentiality obligations and the payment of monetary damages (and not the imposition of equitable relief on, or the admission of wrongdoing by, the Company or its Affiliates) not in excess of $250,000 individually or $500,000 in the aggregate;

 

(xiii) enter into, amend, modify or terminate or waive, assign or transfer any rights under any Lease;

 

(xiv) acquire or dispose of any interest in real property or fail to exercise any rights of renewal under any Lease that by its terms would otherwise expire;

 

(xv) enter into any material new line of business outside of the business currently conducted by the Company as of the date of this Agreement;

 

(xvi) enter into, renew, amend or terminate any Company Affiliate Agreement or any transaction with any Related Person, other than the Employment Agreement;

 

(xvii) fail to maintain its existence or adopt or enter into a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization (other than the transactions contemplated by this Agreement);

 

 

(xviii) other than Contracts with suppliers and customers entered into in the ordinary course of business, enter into any Contract that would qualify as a Material Contract if entered into as of the date hereof;

 

(xix) make any capital expenditures (or commitment to make any capital expenditures) that exceed $1,500,000 in the aggregate, other than any capital expenditure (or series of related capital expenditures) consistent in all material respects with the Company’s annual capital expenditure budget for periods following the date hereof, which has been made available to Ackrell;

 

(xx) fail to maintain its books, accounts and records in all material respects in the ordinary course of business consistent with past practice;

 

(xxi) fail to use commercially reasonable efforts to keep in force insurance policies or replacement or revised policies providing insurance coverage with respect to its assets, operations and activities in such amount and scope of coverage substantially similar to that which is currently in effect;

 

(xxii) revalue any of its material assets or make any material change in accounting methods, principles or practices, except to the extent required to comply with GAAP and after consulting with the Company’s outside auditors;

 

(xxiii) close or materially reduce its business activities, or effect any mass layoff or other mass personnel reduction, at any of its facilities;

 

(xxiv) sell, lease, exclusively license, transfer, exchange or swap, mortgage or otherwise pledge or encumber (including securitizations), or otherwise dispose of any material portion of its properties, assets or rights, other than in the ordinary course of business consistent with past practice;

 

(xxv) enter into any agreement, or legally binding understanding or arrangement, with respect to the voting of equity securities of the Company;

 

(xxvi) take any action that would reasonably be expected to significantly delay or significantly impair the obtaining of any Consents of any Governmental Authority to be obtained in connection with this Agreement;

 

(xxvii) accelerate the collection of any trade receivables or delay the payment of trade payables or any other liabilities other than in the ordinary course of business consistent with past practice; or

 

(xxviii) enter into any formal or informal agreement or otherwise make a commitment to do any of the foregoing.

 

Nothing herein shall require the Company to obtain consent from Ackrell to do any of the foregoing if obtaining such consent would reasonably be expected to violate applicable Law, and nothing contained in this ‎Section 9.01 shall give to Ackrell, directly or indirectly, the right to control or direct the ordinary course of business operations of the Company prior to the Closing Date. Prior to the Closing Date, each of Ackrell and the Company shall exercise, consistent with the terms and conditions hereof, complete control and supervision of its respective operations, as required by Law.

 

 

Section 9.02 Conduct of Business by Cowell Pending the NAI Contribution. Except as expressly contemplated by any other provision of this Agreement, the Company Redemption Agreement or any Ancillary Agreement, and except as set forth on ‎Section 9.02 of the Cowell Disclosure Schedule and as required by applicable Law (including as may be requested or compelled by any Governmental Authority), NAI agrees to cause Cowell from the date of this Agreement until the earlier of the termination of this Agreement and the Closing, unless Ackrell shall otherwise consent in writing (which consent shall not be unreasonably withheld, delayed or conditioned), the businesses of Cowell shall be conducted in the ordinary course of business and in a manner consistent with past practice.

 

Section 9.03 Conduct of Business by Ackrell, Newco and Merger Sub Pending the Merger. Except as expressly contemplated by any other provision of this Agreement or any Ancillary Agreement (including entering into various Subscription Agreements and consummating the PIPE Investment), and except as set forth on ‎Section 9.03 of Ackrell’s Disclosure Schedule and as required by applicable Law (including as may be requested or compelled by any Governmental Authority), Ackrell agrees that from the date of this Agreement until the earlier of the termination of this Agreement and the Effective Time, unless the Company shall otherwise consent in writing (which consent shall not be unreasonably withheld, delayed or conditioned), the businesses of Ackrell, Newco and Merger Sub shall be conducted in the ordinary course of business and in a manner consistent with past practice. By way of amplification and not limitation, except as expressly contemplated by any other provision of this Agreement or any Ancillary Agreement (including entering into various Subscription Agreements and consummating the PIPE Investment), or in connection with the terms and conditions of, any Subscription Agreement, as set forth on ‎Section 9.03 of the Ackrell Disclosure Schedule or as required by applicable Law (including as may be requested or compelled by any Governmental Authority), neither Ackrell, Newco nor Merger Sub shall, between the date of this Agreement and the Effective Time or the earlier termination of this Agreement, directly or indirectly, do any of the following without the prior written consent of the Company, which consent shall not be unreasonably withheld, delayed or conditioned:

 

(a) other than to effectuate the Newco A&R Charter and the Newco A&R Bylaws or to extend the time to complete a Business Combination, amend or otherwise change the Ackrell Organizational Documents or Organizational Documents of Merger Sub or Newco or form any subsidiary of Ackrell other than Merger Sub and Newco;

 

(b) declare, set aside, make or pay any dividend or other distribution, payable in cash, stock, property or otherwise, with respect to any of its capital stock, other than redemptions from the Trust Fund that are required pursuant to the Ackrell Organizational Documents;

 

(c) reclassify, combine, split, subdivide or redeem, or purchase or otherwise acquire, directly or indirectly, any of the Ackrell Common Stock or Ackrell Warrants except for redemptions from the Trust Fund that are required pursuant to the Ackrell Organizational Documents;

 

 

(d) issue, sell, transfer, pledge, dispose of, grant or encumber, or authorize the issuance, sale, transfer, pledge, disposition, grant or encumbrance of, any shares of any class of capital stock or other securities of Ackrell, Newco or Merger Sub, or any options, warrants, convertible securities or other rights of any kind to acquire any shares of such capital stock or that derive their value therefrom, or any other ownership interest (including any phantom interest), of Ackrell, Newco or Merger Sub, except (i) to permitted transferees under that certain letter agreement among Ackrell and certain other Persons entered into in connection with the IPO, (ii) in connection with the Transactions (including the transactions contemplated by the Subscription Agreements);

 

(e) acquire (including by merger, consolidation, or acquisition of stock or assets or any other business combination) any corporation, partnership, other business organization or any division thereof, purchase a material portion of the assets or equity of, any corporation, partnership, other business organization or any division thereof, or enter into any strategic joint ventures, partnerships or alliances with any other Person;

 

(f) incur any Indebtedness or assume, guarantee, endorse or otherwise become responsible for any such indebtedness of another Person or Persons, make any loans or advances, issue or sell any debt securities or options, warrants, calls or other rights to acquire any debt securities of Ackrell, as applicable, enter into any “keep well” or other agreement to maintain any financial statement condition or enter into any arrangement having the economic effect of any of the foregoing, in each case, in excess of $100,000 individually or $250,000 in the aggregate, except in the ordinary course of business, and provided, that this Section shall not prevent Ackrell from borrowing funds necessary to finance its ordinary course administrative costs and expenses and expenses incurred in connection with the consummation of the Merger and the other transactions contemplated by this Agreement (including any PIPE investment and any costs and expenses necessary for an extension of the deadline by which Ackrell must complete its Business Combination), up to aggregate additional Indebtedness in an amount not to exceed $5,000,000;

 

(g) make any material tax election, amend a material Tax Return, settle or compromise any material United States federal, state, local or non-United States income Tax liability, change any method of accounting for Tax purposes or surrender any right to a refund of material Taxes;

 

(h) make any change in financial accounting methods, principles or practices of Ackrell, except insofar as may have been required by a change in GAAP or applicable Law;

 

(i) acquire any equity interest or other interest in any other entity or enter into a joint venture or business association with any other Person;

 

(j) waive, release, assign, settle or compromise any Action, other than waivers, releases, assignments, settlements or compromises that result solely in customary confidentiality obligations and monetary obligations of Ackrell and its Subsidiaries not in excess of $250,000 individually or $500,000 in the aggregate;

 

(k) hire any employees or adopt, become obligated to contribute to, enter into or incur incremental liability (contingent or otherwise) under any Employee Benefit Plan of Ackrell;

 

(l) enter into, renew or amend in any material respect, any Contract with any Affiliate of Ackrell;

 

(m) liquidate, dissolve, reorganize or otherwise wind up the business and operations of Ackrell, Newco or Merger Sub;

 

 

(n) amend the Trust Agreement in any manner adverse to Ackrell;

 

(o) take any action that would reasonably be expected to significantly delay or significantly impair the obtaining of any Consents of any Governmental Authority to be obtained in connection with this Agreement; or

 

(p) other than as set forth in the Ackrell Certificate of Incorporation, enter into any formal or informal agreement or otherwise make a commitment to do any of the foregoing.

 

Nothing in this ‎Section 9.03 shall give to the Company, directly or indirectly, the right to control or direct the ordinary course of business operations of Ackrell prior to the Closing Date. Prior to the Closing Date, each of Ackrell and the Company shall exercise, consistent with the terms and conditions hereof, complete control and supervision of its respective operations, as required by Law.

 

Section 9.04 Waiver of Claims Against Trust. Reference is made to the final prospectus of Ackrell, dated as of December 21, 2020 and filed with the SEC (Registration Nos. 333-251060 and 333-251537) on December 22, 2020 (the “Prospectus”). The Company, NAI and Dahle hereby represent and warrant that they have read the Prospectus and understands that Ackrell has established the Trust Account containing the proceeds of its initial public offering (the “IPO”) and the overallotment shares acquired by its underwriters and from certain private placements occurring simultaneously with the IPO (including interest accrued from time to time thereon) for the benefit of Ackrell’s public stockholders (including overallotment shares acquired by Ackrell’s underwriters the “Public Stockholders”), and that, except as otherwise described in the Prospectus, Ackrell may disburse monies from the Trust Account only: (a) to the Public Stockholders in the event they elect to redeem their Ackrell Common Stock pursuant to the Ackrell Redemption in connection with the consummation of Ackrell’s initial business combination (as such term is used in the Prospectus) (the “Business Combination”), (b) to the Public Stockholders if Ackrell fails to consummate a Business Combination within twelve (12) months after the closing of the IPO, subject to extension by amendment to Ackrell’s Organizational Documents or as otherwise set forth in the Ackrell Certificate of Incorporation, (c) with respect to any interest earned on the amounts held in the Trust Account, as necessary to pay any Taxes and up to $100,000 in dissolution expenses, or (d) to Ackrell after or concurrently with the consummation of a Business Combination. For and in consideration of Ackrell entering into this Agreement, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, each of the Company, NAI and Dahle hereby agree on behalf of itself and its controlled Affiliates that, notwithstanding anything to the contrary in this Agreement, none of the Company, NAI, Dahle nor any of its respective controlled Affiliates do now or shall at any time hereafter have any right, title, interest or claim of any kind in or to any monies in the Trust Account or distributions therefrom, or make any claim against the Trust Account (including any distributions therefrom), regardless of whether such claim arises as a result of, in connection with or relating in any way to, this Agreement or the Transaction Documents or any proposed or actual business relationship between Ackrell or its Representatives, on the one hand, and the Company, NAI, Dahle or their Representatives, on the other hand, or any other matter, and regardless of whether such claim arises based on contract, tort, equity or any other theory of legal liability (any and all such claims are collectively referred to hereafter as the “Released Claims”). Each of the Company, NAI and Dahle, on behalf of itself and its controlled Affiliates hereby irrevocably waives any Released Claims that any of the Company, NAI or Dahle or any of their respective controlled Affiliates may have against the Trust Account (including any distributions therefrom) now or in the future as a result of, or arising out of, any negotiations or Contracts with Ackrell or its Representatives and will not seek recourse against the Trust Account (including any distributions therefrom) for any reason whatsoever (including for an alleged breach of this Agreement or any other agreement with Ackrell or its Affiliates). Each of the Company, NAI and Dahle agrees and acknowledges that such irrevocable waiver is material to this Agreement and specifically relied upon by Ackrell and its Affiliates to induce Ackrell to enter in this Agreement, and each of the Company, NAI and Dahle further intends and understands such waiver to be valid, binding and enforceable against the Company, NAI, Dahle and each of their controlled Affiliates under applicable Law. To the extent the Company, NAI, Dahle or any of their controlled Affiliates commences any action or proceeding based upon, in connection with, relating to or arising out of any matter relating to Ackrell or its Representatives, which proceeding seeks, in whole or in part, monetary relief against Ackrell or its Representatives, each of the Company, NAI and Dahle hereby acknowledges and agrees that the Company’s, NAI’s, Dahle’s and their controlled Affiliates’ sole remedy shall be against funds held outside of the Trust Account and that such claim shall not permit the Company, NAI, Dahle or their controlled Affiliates (or any Person claiming on any of their behalves or in lieu of any of them) to have any claim against the Trust Account (including any distributions therefrom) or any amounts contained therein. In the event the Company, NAI, Dahle or any of their controlled Affiliates commences any action or proceeding based upon, in connection with, relating to or arising out of any matter relating to Ackrell or its Representatives, which proceeding seeks, in whole or in part, relief against the Trust Account (including any distributions therefrom) or the Public Stockholders of Ackrell, whether in the form of money damages or injunctive relief, Ackrell and its Representatives, as applicable, shall be entitled to recover from the Company, NAI, Dahle and their controlled Affiliates, as applicable, the associated legal fees and costs in connection with any such action, in the event Ackrell or its Representatives, as applicable, prevails in such action or proceeding. Notwithstanding anything in this Agreement to the contrary, the provisions of this paragraph shall survive indefinitely with respect to the obligations set forth in this Agreement. Notwithstanding anything to the contrary in this ‎Section 9.04, any action by any non-controlled Affiliate of the Company, NAI or Dahle that, if taken by the Company, NAI, Dahle or one of their controlled Affiliates, would be a breach of this ‎Section 9.04 shall constitute a breach of this ‎Section 9.04 by the Company, NAI or Dahle, as applicable, and for which the Company shall be liable.

 

 

Section 9.05 PPP Loan. The Company shall use reasonable best efforts to do one of the following: (a) obtain a consent under the PPP Loan prior to Closing so there is no default or event of default arising under the PPP Loan from the Merger or the other Transactions, (b) submit the applicable forgiveness application for the PPP Loan in accordance with applicable requirements of applicable Law prior to Closing and obtain forgiveness of outstanding amounts under the PPP Loan or (c) submit the applicable forgiveness application for the PPP Loan in accordance with applicable requirements of applicable Law prior to Closing and substantially concurrently deposit funds into an escrow account with the lender equal to the outstanding amounts under the PPP Loan until a determination as to whether such amounts will be forgiven is made.

 

Article X
ADDITIONAL AGREEMENTS

 

Section 10.01 Registration Statement; Proxy Statement; Consent Solicitation Statement.

 

(a) After the execution of this Agreement, Ackrell and Newco (with the assistance and cooperation of the Company as reasonably requested by Ackrell) shall use commercially reasonable efforts to prepare and file with the SEC a registration statement on Form S-4 (as amended or supplemented from time to time, and including the Proxy Statement contained therein, the “Registration Statement”) within ten (10) Business Days after Ackrell’s receipt of the PCAOB Audited Financials from the Company, and if not within such ten (10)-Business Day period, as promptly as practicable thereafter, in connection with the registration under the Securities Act of the Newco Common Stock to be issued under this Agreement, which Registration Statement will also contain the Proxy Statement; provided, that if the Unaudited Interim Financial Statements are required pursuant to Form S-4 and Regulation S-X to be included in the Registration Statement, references in this sentence to “PCAOB Audited Financial Statements” shall be replaced with “PCAOB Audited Financial Statements and the Unaudited Interim Financial Statements”. The Registration Statement shall include for registration all shares of Newco Common Stock issued under this Agreement, including shares issued in connection with the Merger, the Contributions.

 

(b) Ackrell agrees to include provisions in the Proxy Statement and to take reasonable action related thereto, with respect to (i) the approval of the Business Combination (as defined in the Ackrell Certificate of Incorporation) and the adoption and approval of this Agreement (the “Transaction Proposal”), (ii) the adoption and approval of the Newco A&R Charter (the “Charter Proposal”), (iii) the approval and adoption of the Newco 2021 Equity Incentive Plan (the “Equity Incentive Plan Proposal”), (v) the approval and adoption of the Newco Employee Stock Purchase Plan (the “ESPP Proposal,” and together with the Equity Incentive Plan Proposal, the “Equity Plan Proposals”), (vi) the election of directors of Newco effective as of the Closing as contemplated by Section 2.05(b) (the “Director Proposal”), (vi) adjournment of the Ackrell Stockholders’ Meeting, if necessary, to permit further solicitation of proxies because there are not sufficient votes to approve and adopt any of the foregoing proposals (the “Adjournment Proposal”) and (vii) the approval of any other proposals reasonably agreed by Ackrell and the Company to be necessary or appropriate in connection with the transaction contemplated hereby (the “Additional Proposal” and together with the Transaction Proposal, the Charter Proposal, the Equity Plan Proposals, the Director Proposal and the Adjournment Proposal, the “Ackrell Proposals”). The Proxy Statement shall also include the Ackrell Redemption and the opportunity for the public holders of Ackrell’s Common Stock to redeem such shares in accordance with the Ackrell Redemption. The Equity Incentive Plan Proposal shall provide that an aggregate number of shares of Newco Common Stock equal to the percentage set forth on ‎Section 10.01(b) of the Company Disclosure Schedule of the outstanding shares of Newco Common Stock as of Closing shall be reserved for issuance pursuant to the Newco 2021 Equity Incentive Plan, subject to annual increases as provided therein, and the ESPP Proposal shall provide that an aggregate number of shares of Newco Common Stock equal to the percentage set forth on ‎Section 10.01(b) of the Company Disclosure Schedule of the outstanding shares of Newco Common Stock as of Closing shall be reserved for issuance pursuant to the Newco Employee Stock Purchase Plan, subject to annual increases as provided therein. Without the prior written consent of the Company, the Ackrell Proposals shall be the only matters (other than procedural matters) which Ackrell shall propose to be acted on by Ackrell’s stockholders at the Ackrell Stockholders’ Meeting.

 

 

(c) Ackrell, Newco and the Company each shall use their commercially reasonable efforts to (i) cause the Registration Statement when filed with the SEC to comply in all material respects with all legal requirements applicable thereto, (ii) respond as promptly as reasonably practicable to and resolve all comments received from the SEC concerning the Registration Statement, (iii) cause the Registration Statement to be declared effective under the Securities Act as promptly as practicable and (iv) to keep the Registration Statement effective as long as is necessary to consummate the Transactions. As promptly as practicable after the Registration Statement becomes effective, Ackrell shall cause the Proxy Statement to be mailed to Ackrell Stockholders. Each of Ackrell, Newco, NAI and Dahle and the Company shall promptly furnish all information concerning it as may reasonably be requested by any other party in connection with such actions and the preparation of the Registration Statement, Proxy Statement.

 

(d) Ackrell, Newco and the Company each will advise the other, promptly after they receive notice thereof, of the time when the Registration Statement has become effective or any supplement or amendment thereto has been filed, of the issuance of any stop order, of the suspension of the qualification of the Newco Common Stock to be issued or issuable to the stockholders of Ackrell, NAI or Dahle in connection with this Agreement for offering or sale in any jurisdiction, or of any request by the SEC for amendment of the Registration Statement or comments thereon and responses thereto or requests by the SEC for additional information. Each of Ackrell, Newco and the Company shall cooperate and mutually agree upon (such agreement not to be unreasonably withheld or delayed), any response to comments of the SEC with respect to the Registration Statement and any amendment to the Registration Statement filed in response thereto.

 

(e) If, at any time prior to the Effective Time, any event or circumstance relating to Ackrell, Newco, or Merger Sub, or their respective officers or directors, should be discovered by Ackrell which should be set forth in an amendment or a supplement to the Registration Statement, Ackrell shall promptly inform the Company and as promptly as practicable file with the SEC such amendment or supplement and, to the extent required by applicable Law, mail it to the Ackrell stockholders. If, at any time prior to the Effective Time, any event or circumstance relating to the Company, NAI or Dahle, or their respective officers or directors, should be discovered by the Company which should be set forth in an amendment or a supplement to the Registration Statement, the Company shall promptly inform Ackrell, Newco and Merger Sub. Each of Ackrell, Newco and the Company shall use its commercially reasonable efforts to cause all documents that Ackrell and the Company are responsible for filing with the SEC in connection with the Merger, the Contributions or the other transactions contemplated by this Agreement to comply as to form and substance in all material respects with the applicable requirements of the Securities Act and the Exchange Act. Any filing of, or amendment or supplement to the Proxy Statement or the Registration Statement, will be provided by Ackrell, Newco or the Company, as the case may be, to the respective other party for review, and each of Ackrell and the Company shall give due consideration to any comments of such other party.

 

 

Section 10.02 Ackrell Stockholders’ Meeting. Ackrell shall call and hold the Ackrell Stockholders’ Meeting as promptly as practicable after the Registration Statement becomes effective (but in any event shall hold the Ackrell Stockholders’ Meeting no later than the later of thirty-five (35) days after the date on which the Proxy Statement is mailed to stockholders of Ackrell and such other date as agreed by Ackrell and the Company) for the purpose of voting solely upon the Ackrell Proposals and for the purpose of effecting the Ackrell Redemption; provided that Ackrell may postpone or adjourn the Ackrell Stockholders’ Meeting on one or more occasions for up to (but no more than) 30 days in the aggregate upon the good faith determination by the Ackrell Board that such postponement or adjournment is necessary to (i) solicit additional proxies to obtain approval of the Ackrell Proposals, (ii) obtain a quorum if one is not present at any then-scheduled Ackrell Stockholders’ Meeting or (iii) ensure that any supplement or amendment to the Proxy Statement that is required by applicable Law is provided to the Ackrell Stockholders with adequate time for review prior to the Ackrell Stockholders’ Meeting. Ackrell (x) shall use its commercially reasonable efforts to obtain the approval of the Ackrell Proposals at the Ackrell Stockholders’ Meeting, including by soliciting from its stockholders proxies as promptly as possible in favor of the Ackrell Proposals, and (y) shall use its commercially reasonable efforts to take all other action necessary or advisable to secure the required vote or consent of its stockholders. The Ackrell Board shall recommend to its stockholders that they approve the Ackrell Proposals (the “Ackrell Board Recommendation”) and shall include the Ackrell Board Recommendation in the Proxy Statement, in each case, subject to the provisions of this ‎Section 10.02. Except as required by applicable Law, neither the Ackrell Board nor any committee thereof shall withhold, withdraw or modify, or publicly propose or resolve to withhold, withdraw or modify in a manner adverse to the Company the Ackrell Board Recommendation.

 

Section 10.03 Access to Information; Confidentiality.

 

(a) From the date of this Agreement until the Effective Time, the Company and Ackrell shall (and shall cause their respective subsidiaries to): (i) provide to the other party (and the other party’s officers, directors, employees, accountants, consultants, legal counsel, agents and other representatives, collectively, “Representatives”) reasonable access at reasonable times upon prior notice to the officers, employees, agents, properties, offices and other facilities of such party and its subsidiaries and to the books and records thereof; and (ii) furnish promptly to the other party such information concerning the business, properties, Contracts, assets, liabilities, personnel and other aspects of such party and its subsidiaries as the other party or its Representatives may reasonably request, including in connection with any Tax disclosure in any statement, filing, notice or application relating to the Intended Tax Treatment. Notwithstanding the foregoing, neither the Company nor Ackrell shall be required to provide access to or disclose information where the access or disclosure would jeopardize the protection of attorney-client privilege or contravene applicable Law (it being agreed that the parties shall use their commercially reasonable efforts to cause such information to be provided in a manner that would not result in such jeopardy or contravention).

 

(b) All information obtained by the parties pursuant to this ‎Section 10.03 shall be kept confidential in accordance with the Mutual Nondisclosure Agreement, dated as of January 27, 2021 (the “Non-Disclosure Agreement”), between Ackrell and the Company.

 

 

Section 10.04 Exclusivity.

 

(a) Exclusivity Obligations of the Company.

 

(i) From the date hereof until the earlier of the termination of this Agreement in accordance with its terms and the Closing, each of the Company, NAI and Dahle shall not, and shall not authorize or permit any of its Affiliates or any of its or their representatives to, directly or indirectly, (i) encourage, solicit, initiate, facilitate or continue inquiries regarding a Company Acquisition Proposal; (ii) enter into discussions or negotiations with, or furnish or disclose any non-public information about the Company to, any Person in connection with or that could reasonably be expected to lead to a possible Company Acquisition Proposal; or (iii) enter into any agreements or other instruments (whether or not binding) regarding a Company Acquisition Proposal. Each of the Company, NAI and Dahle shall immediately cease and cause to be terminated, and shall cause its Affiliates and all of its and their representatives to immediately cease and cause to be terminated, all existing discussions or negotiations with any Persons conducted heretofore with respect to, or that could lead to, a Company Acquisition Proposal. For purposes hereof, “Company Acquisition Proposal” shall mean any inquiry, proposal or offer from any Person (other than Ackrell or any of its Affiliates) concerning (i) a merger, consolidation, liquidation, recapitalization, share exchange or other business combination transaction involving the Company; (ii) the issuance or acquisition of outstanding shares of capital stock or other equity securities of the Company; or (iii) the sale, lease, exchange or other disposition of all or substantially all of the Company properties or assets.

 

(ii) In addition to the other obligations under this ‎Section 10.04(a), each of the Company, NAI and Dahle shall promptly (and in any event within 24 hours after receipt thereof by the Company, NAI or Dahle or their representatives) advise Ackrell orally and in writing of any Company Acquisition Proposal, any request for information with respect to any Company Acquisition Proposal, or any inquiry with respect to or which could reasonably be expected to result in a Company Acquisition Proposal, the material terms and conditions of such request, Company Acquisition Proposal or inquiry, and the identity of the Person making the same.

 

(iii) Each of the Company, NAI and Dahle agrees that the rights and remedies for noncompliance with this ‎Section 10.04(a) shall include having such provision specifically enforced by any court having equity jurisdiction, it being acknowledged and agreed that any such breach or threatened breach shall cause irreparable injury to Ackrell and that money damages would not provide an adequate remedy to Ackrell.

 

(b) Exclusivity Obligations of Ackrell

 

(i) From the date hereof until the earlier of the termination of this Agreement in accordance with its terms and the Closing, Ackrell shall not, and shall not authorize or permit any of its Affiliates or any of its or their representatives (including the Sponsor) to, directly or indirectly, (A) encourage, solicit, initiate, facilitate or continue inquiries regarding a Ackrell Acquisition Proposal; (B) enter into discussions or negotiations with, or furnish or disclose any non-public information about Ackrell to, any Person in connection with or that could reasonably be expected to lead to a possible Ackrell Acquisition Proposal; or (C) enter into any agreements or other instruments (whether or not binding) regarding a Ackrell Acquisition Proposal. Ackrell shall immediately cease and cause to be terminated, and shall cause its Affiliates and all of its and their representatives to immediately cease and cause to be terminated, all existing discussions or negotiations with any Persons conducted heretofore with respect to, or that could lead to, a Ackrell Acquisition Proposal. For purposes hereof, “Ackrell Acquisition Proposal” shall mean any inquiry, proposal or offer from any Person (other than the Company or any of its Affiliates) with respect to a transaction (other than the transactions contemplated by this Agreement) involving a business combination with Ackrell. Any breach of the terms and provisions of this ‎Section 10.04(b)(i) by any Affiliate of Ackrell or any of Ackrell’s or its Affiliate’s representatives, including the Sponsor (assuming that such Persons were directly bound by, and subject to, the terms and provisions of this ‎Section 10.04(b)(i)) shall be deemed a breach by Ackrell.

 

 

(ii) In addition to the other obligations under this ‎Section 10.04(b), Ackrell shall promptly (and in any event within 24 hours after receipt thereof by Ackrell or its representatives) advise the Company orally and in writing of any Ackrell Acquisition Proposal, any request for information with respect to any Ackrell Acquisition Proposal, or any inquiry with respect to or which could reasonably be expected to result in an Ackrell Acquisition Proposal, the material terms and conditions of such request, Ackrell Acquisition Proposal or inquiry, and the identity of the Person making the same.

 

(iii) Ackrell agrees that the rights and remedies for noncompliance with this ‎Section 10.04(b) shall include having such provision specifically enforced by any court having equity jurisdiction, it being acknowledged and agreed that any such breach or threatened breach shall cause irreparable injury to the Company and that money damages would not provide an adequate remedy to the Company.

 

Section 10.05 Directors’ and Officers’ Indemnification.

 

(a) The certificate of incorporation and bylaws of the Surviving Corporation and the New Operating Agreement shall each contain provisions no less favorable with respect to indemnification, advancement or expense reimbursement than are set forth in the Organizational Documents of the applicable D&O Indemnified Parties (as defined below), which provisions shall not be amended, repealed or otherwise modified for a period of six years from the Effective Time in any manner that would affect adversely the rights thereunder of individuals who, at or prior to the Effective Time, were current or former directors and officers of the Company, Ackrell, Newco or Merger Sub and each Person who served as a director, officer, member, trustee or fiduciary of another corporation, partnership, joint venture, trust, pension or other employee benefit plan or enterprise at the request of the Company, Ackrell, Newco or Merger Sub (collectively, “D&O Indemnified Parties”), unless such modification shall be required by applicable Law. From and after the Effective Time, Newco agrees that it shall indemnify and hold harmless each of 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 claim, action, suit, proceeding or investigation, 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, Ackrell, Newco or Merger Sub, as applicable, would have been permitted under applicable Law, any indemnification agreements between the Company, Ackrell, Newco or Merger Sub and such D&O Indemnified Parties, the organizational documents of the applicable entity in effect on the date of this Agreement to indemnify such Person (including the advancing of expenses as incurred to the fullest extent permitted under applicable Law).

 

(b) From the date hereof, and for a period of six years from the Effective Time, Newco shall maintain in effect directors’ and officers’ liability insurance covering those Persons who are currently covered by the Company’s directors’ and officers’ liability insurance policy (true, correct and complete copies of which have been heretofore made available to Ackrell or its agents or Representatives in the Virtual Data Room) or Ackrell’s directors’ and officers’ liability insurance policy in effect prior to the Closing, in each case, on terms not less favorable than the terms of such current insurance coverage; provided, however, that (i) Newco may cause coverage to be extended under the current directors’ and officers’ liability insurance of the Company or Ackrell by obtaining a six-year “tail” policy at prevailing market rates 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-year period, any insurance required to be maintained under this ‎Section 10.05(b) shall be continued in respect of such claim until the final disposition thereof.

 

(c) On the Closing Date, to the extent not already entered into, Newco shall enter into customary indemnification agreements reasonably satisfactory to each of the Company and Ackrell with the post-Closing directors and officers of Newco, which indemnification agreements shall continue to be effective following the Closing.

 

 

Section 10.06 Notification of Certain Matters. The Company shall give prompt notice to Ackrell, and Ackrell shall give prompt notice to the Company, of any event which a party becomes aware of between the date of this Agreement and the Closing (or the earlier termination of this Agreement in accordance with ‎Article XII), the occurrence, or non-occurrence, of which causes or would reasonably be expected to cause any of the conditions set forth in ‎Article XII to fail; provided, however, that no such notice shall be deemed to cure such breach.

 

Section 10.07 Further Action; Commercially Reasonable Efforts.

 

(a) Except where a different efforts standard is expressly set forth herein, upon the terms and subject to the conditions of this Agreement, each of the parties hereto shall use its commercially reasonable efforts to take, or cause to be taken, appropriate action, and to do, or cause to be done, such things as are necessary, proper or advisable under applicable Laws or otherwise, and each shall cooperate with the other, to consummate and make effective the Transactions, including using its commercially reasonable efforts to obtain all permits, consents, approvals, authorizations, qualifications and orders of, and the expiration or termination of waiting periods by, Governmental Authorities and parties to Contracts with the Company as set forth in ‎Section 7.05 necessary for the consummation of the Transactions and to fulfill the conditions to the Merger. In case, at any time after the Effective Time, any further action is necessary or desirable to carry out the purposes of this Agreement, the proper officers and directors of each party shall use their commercially reasonable efforts to take all such action. Ackrell shall use commercially reasonable efforts to consummate the Ackrell Redemption in accordance with the terms hereof and the Proxy Statement.

 

(b) Each of the parties shall keep each other apprised of the status of matters relating to the Transactions, including promptly notifying the other parties of any communication it or any of its Affiliates receives from any Governmental Authority relating to the matters that are the subject of this Agreement and permitting the other parties to review in advance, and to the extent practicable consult about, any proposed communication by such party to any Governmental Authority in connection with the Transactions. No party to this Agreement shall agree to participate in any meeting, video or telephone conference, or other communications with any Governmental Authority in respect of any filings, investigation or other inquiry unless it consults (to the extent legally permissible) with the other parties in advance and, to the extent permitted by such Governmental Authority, gives the other parties the opportunity to attend and participate at such meeting, conference or other communications. Subject to the terms of the Non-Disclosure Agreement, the parties will coordinate and cooperate with each other in exchanging such information and providing such assistance as the other parties may reasonably request in connection with the foregoing. Subject to the terms of the Non-Disclosure Agreement, the parties will provide each other with copies of all material correspondence, filings or communications, including any documents, information and data contained therewith, between them or any of their Representatives, on the one hand, and any Governmental Authority, on the other hand, with respect to this Agreement and the Transactions contemplated hereby. No party shall take or cause to be taken any action before any Governmental Authority that is inconsistent with or intended to delay its action on requests for a consent or the consummation of the Transactions.

 

(c) Notwithstanding the generality of the foregoing, Ackrell and Newco shall use its commercially reasonable efforts to consummate the PIPE Investment in accordance with the Subscription Agreements, and the Company shall reasonably cooperate with Ackrell in such efforts. Ackrell and Newco shall not, without the prior written consent of the Company (such consent not to be unreasonably withheld, delayed or conditioned), permit or consent to any amendment, supplement or modification to, or a waiver, assignment or transfer of, any Subscription Agreement (or any provision therein). Without limiting the generality of the foregoing, Ackrell and Newco shall give the Company prompt (under the circumstances) written notice:  (i) of any material breach or material default by any party to any Subscription Agreement, which material breach, material default, event or circumstance is known to Ackrell or Newco; (ii) of its receipt of any written notice or other written communication from any party to any Subscription Agreement with respect to any actual, potential or claimed expiration, lapse, withdrawal, breach, default, termination or repudiation by any party to any Subscription Agreement of any provisions of any Subscription Agreement in any material respect; and (iii) if it becomes known to Ackrell or Newco that any portion of the PIPE Investment will not be funded in accordance with the terms of the applicable Subscription Agreement(s).

 

 

Section 10.08 Public Announcements. The initial press release relating to this Agreement shall be a joint press release, the text of which has been agreed to by each of Ackrell and the Company (the “Signing Press Release”). Promptly after the issuance of the Signing Press Release, Ackrell shall file a current report on Form 8-K (the “Signing Filing”) with the Signing Press Release and a description of this Agreement as required by Federal securities Laws, which the Company shall review, comment upon and approve (which approval shall not be unreasonably withheld, conditioned or delayed) prior to filing (with the Company reviewing, commenting upon and approving such Signing Filing in any event no later than the third (3^rd) Business Day after the execution of this Agreement). Thereafter, between the date of this Agreement and the Closing Date (or the earlier termination of this Agreement in accordance with ‎Article XII) unless otherwise prohibited by applicable Law or the requirements of Nasdaq, each of Ackrell and the Company shall each use its commercially reasonable efforts to consult with each other before issuing any press release or otherwise making any public statements with respect to this Agreement, the Merger, the Contributions or any of the other Transactions, and shall not issue any such press release or make any such public statement without the prior written consent of the other party (such consent not to be unreasonably withheld, conditioned or delayed). Newco shall, as promptly as practicable after the Closing (but in any event within four (4) Business Days thereafter), issue a press release announcing the consummation of the transactions contemplated by this Agreement (the “Closing Press Release”). Promptly after the issuance of the Closing Press Release, Newco shall file a current report on Form 8-K (the “Closing Filing”) with the Closing Press Release and a description of the Closing as required by Federal securities Laws. In connection with the preparation of the Signing Press Release, the Signing Filing, the Closing Filing, the Closing Press Release, or any other report, statement, filing notice or application made by or on behalf of a party to any Governmental Authority or other third party in connection with the transactions contemplated hereby, each party shall, upon request by any other party, furnish the parties with all information concerning themselves, their respective directors, officers and equity holders, and such other matters as may be reasonably necessary or advisable in connection with the Transactions contemplated hereby, or any other report, statement, filing, notice or application made by or on behalf of a party to any third party and/or any Governmental Authority in connection with the Transactions contemplated hereby. Furthermore, nothing contained in this ‎Section 10.08 shall prevent Ackrell or the Company or its respective Affiliates from furnishing customary or other reasonable information concerning the Transactions to their investors and prospective investors that is substantively consistent with public statements previously consented to by the other party in accordance with this ‎Section 10.08.

 

Section 10.09 Tax Matters.

 

(a) None of Newco, Ackrell, Merger Sub or the Company shall (and each shall cause its Affiliates not to) take any action (or fail to take any reasonable action) which action (or failure to act), whether before or after the Effective Time, would reasonably be expected to prevent or impede the Contributions from qualifying for the Intended Tax Treatment.

 

(b) This Agreement is intended to constitute, and the parties hereto hereby adopt this Agreement as, a “plan of reorganization” within the meaning of Treasury Regulation Sections 1.368-2(g) and 1.368-3(a). Each of Newco, Ackrell, Merger Sub and the Company shall report the Contributions consistent with the Intended Tax Treatment unless otherwise required pursuant to a “determination” within the meaning of Section 1313(a) of the Code.

 

(c) Each party shall promptly notify the other party in writing if, before the Closing Date, such party knows or has reason to believe that the Contributions may not qualify for the Intended Tax Treatment (and whether the terms of this Agreement could be reasonably amended in order to facilitate the Contributions qualifying for the Intended Tax Treatment).

 

 

(d) The redemption of Cowell Common Stock by Cowell pursuant to ‎Section 3.04(b) of this Agreement is intended to be treated as a taxable sale or exchange of such redeemed stock under Section 302(a) of the Code and the parties shall not take any position inconsistent therewith unless otherwise required pursuant to a “determination” within the meaning of Section 1313(a) of the Code.

 

Section 10.10 Stock Exchange Listing; Successor Issuer.

 

(a) During the period from the date hereof until the Closing, Ackrell shall use its commercially reasonable efforts to keep the Ackrell Common Stock and Ackrell Public Warrants listed for trading on the Nasdaq.

 

(b) Prior to the Closing, each of Ackrell, Newco, Merger Sub and the Company shall use commercially reasonable efforts to cause the shares of Newco Common Stock to be issued in connection with the Transactions to be approved for listing on the Nasdaq under a ticker symbol to be mutually agreed upon in writing by the parties hereto, including by submitting prior to the Closing an initial listing application with the Nasdaq (the “Nasdaq Listing Application”) with respect to such shares, subject to official notice of issuance. Each of Ackrell, Newco, Merger Sub and the Company shall promptly furnish all information concerning itself and its Affiliates as may be reasonably requested by the other parties hereto and shall otherwise reasonably assist and cooperate with such other parties in connection with the preparation, filing and distribution of the Nasdaq Listing Application. Each of Ackrell, Newco, Merger Sub and the Company will use their respective commercially reasonable efforts to (i) cause the Nasdaq Listing Application, when filed, to comply in all material respects with all legal requirements applicable thereto, (ii) respond as promptly as reasonably practicable to and resolve all comments received from the Nasdaq or its staff concerning the Nasdaq Listing Application and (iii) have the Nasdaq Listing Application approved by the Nasdaq as promptly as practicable after such filing. No submission of, or amendment or supplement to, the Nasdaq Listing Application, or response to Nasdaq comments with respect thereto, will be made by Ackrell, Newco, Merger Sub or the Company, as applicable, without the other parties’ prior consent (which shall not be unreasonably withheld, conditioned or delayed) and without providing such other parties hereto a reasonable opportunity to review and comment thereon. Each of Ackrell, Newco, Merger Sub and the Company will promptly notify the other parties hereto upon the receipt of any comments from the Nasdaq or any request from the Nasdaq for amendments or supplements to the Nasdaq Listing Application and will, as promptly as practicable after receipt thereof, provide the other with copies of all material correspondence between it and its Representatives, on the one hand, and the Nasdaq, on the other hand, and all written comments with respect to the Nasdaq Listing Application received from the Nasdaq and advise the other on any oral comments with respect to the Nasdaq Listing Application received from the Nasdaq. Ackrell and Newco will advise the Company, promptly after Ackrell or Newco receives notice thereof, of the time of the approval of the Nasdaq Listing Application and the approval of the shares of Newco Common Stock to be issued in connection with the Transactions for listing on the Nasdaq, subject only to official notice of issuance.

 

 

(c) Ackrell and Newco shall take all necessary actions for Newco to be the successor issuer to Ackrell following completion of the Transactions.

 

Section 10.11 Antitrust.

 

(a) To the extent required under any Laws that are designed to prohibit, restrict or regulate actions having the purpose or effect of monopolization or restraint of trade, including the HSR Act (“Antitrust Laws”), each party hereto agrees to promptly make any required filing or application under Antitrust Laws, as applicable, and no later than ten (10) Business Days after the date of this Agreement, the Company and Ackrell each shall file (or cause to be filed) with the Antitrust Division of the U.S. Department of Justice and the U.S. Federal Trade Commission a Notification and Report Form as required by the HSR Act. The parties hereto agree to supply as promptly as reasonably practicable any additional information and documentary material that may reasonably be requested pursuant to Antitrust Laws and to take all other actions necessary, proper or advisable to cause the expiration or termination of the applicable waiting periods or obtain required approvals, as applicable under Antitrust Laws as soon as practicable, including by requesting early termination of the waiting period provided for under the HSR Act (if available).

 

(b) Ackrell and the Company each shall, in connection with its efforts to obtain all requisite approvals and expiration or termination of waiting periods for the Transactions under any Antitrust Law, use its commercially reasonable efforts to: (i) cooperate in all respects with each other party or its Affiliates in connection with any filing or submission and in connection with any investigation or other inquiry, including any proceeding initiated by a private Person; (ii) keep the other reasonably informed of any communication received by such party from, or given by such party to, any Governmental Authority and of any communication received or given in connection with any proceeding by a private Person, in each case regarding any of the Transactions, and promptly furnish the other with copies of all such written communications; (iii) permit the other to review in advance any written communication to be given by it to, and consult with each other in advance of any meeting or conference with, any Governmental Authority or, in connection with any proceeding by a private Person, with any other Person, and to the extent permitted by such Governmental Authority or other Person, give the other party the opportunity to attend and participate in such meetings and conferences; (iv) in the event a party is prohibited from participating in or attending any meetings or conferences, the other shall keep such party promptly and reasonably apprised with respect thereto; and (v) use commercially reasonable efforts to cooperate in the filing of any memoranda, white papers, filings, correspondence or other written communications explaining or defending the Transactions, articulating any regulatory or competitive argument, or responding to requests or objections made by any Governmental Authority; provided that materials required to be provided pursuant to this ‎Section 10.11(b) may be limited to outside counsel and may be redacted (x) to remove references to the valuation of the Company, and (y) as necessary to comply with contractual arrangements.

 

(c) No party hereto shall 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 of any required filings or applications under Antitrust Laws, 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.

 

 

Section 10.12 Financial Statements.

 

(a) During the period from the date of this Agreement through the Closing, within thirty (30) calendar days following the end of each three-month quarterly fiscal period, the Company shall deliver to Ackrell an unaudited consolidated income statement and an unaudited consolidated balance sheet of the Company for the period from the date of the balance sheet contained in the Interim Financial Statements through the end of such quarterly period and the applicable comparative period in the preceding fiscal year. From the date hereof through the Closing Date, the Company will also promptly deliver to Ackrell copies of any audited consolidated financial statements of the Company that the Company’s certified public accountants may issue.

 

(b) The Company shall use reasonable best efforts to deliver true and complete copies of (i) the audited consolidated balance sheet of the Company as of December 31, 2018, December 31, 2019 and December 31, 2020, and the related audited consolidated statements of income, changes in shareholder equity, and cash flows of the Company and the for the years then ended, in each case, prepared in accordance with GAAP and Regulation S-X and audited in accordance with the auditing standards of the PCAOB (collectively, the “PCAOB Audited Financials”) within 45 days from the date hereof (but in any event no later than February 28, 2022 days (such date, the “FS Trigger Date”)) and (ii) unaudited financial statements, including consolidated balance sheets and consolidated statements of income, changes in shareholder equity, and cash flows, of the Company relating to any interim period required to be included in the Registration Statement pursuant to Form S-4 and Regulation S-X, prepared in accordance with GAAP and Regulation S-X (the “Unaudited Interim Financial Statements”). To the extent Unaudited Interim Financial Statements are required, the Company shall use commercially reasonable efforts to deliver true and complete copies of such Unaudited Interim Financials as soon as reasonably practicable after the date they are required to be included in the Registration Statement pursuant to Form S-4 and Regulation S-X.

 

Section 10.13 Trust Account. As of the Effective Time, the obligations of Ackrell to dissolve or liquidate within a specified time period as contained in Ackrell’s Certificate of Incorporation will be terminated and, following the disbursement of funds in the Trust Account described in this ‎Section 10.13, Ackrell shall have no obligation whatsoever to dissolve and liquidate the assets of Ackrell by reason of the consummation of the Merger or otherwise, and no stockholder of Ackrell shall be entitled to receive any amount from the Trust Account. At least 48 hours prior to the Effective Time, Ackrell shall provide notice to the Trustee in accordance with the Trust Agreement and shall deliver any other documents, opinions or notices required to be delivered to the Trustee pursuant to the Trust Agreement and cause the Trustee prior to or at the Effective Time to, and the Trustee shall thereupon be obligated to, cause the funds in the Trust Account to be disbursed in accordance with the Trust Agreement for the following: (a) the redemption of any shares of Ackrell Common Stock in connection with the Ackrell Redemption; (b) the payment of the Outstanding Company Transaction Expenses and Outstanding Ackrell Transaction Expenses pursuant to ‎Section 4.06(a) and ‎Section 4.06(b); and (c) the balance of the assets in the Trust Account, if any, after payment of the amounts required under the foregoing clauses (a) and (b), to be disbursed to Ackrell. Following such disbursement, Ackrell shall cause the Trust Account and the Trust Agreement to terminate.

 

 

Section 10.14 Directors. Subject to any limitation imposed under applicable Laws or Nasdaq listing requirements, Ackrell, Newco and the Company shall take all necessary action so that immediately after the Effective Time (and giving effect to the effectiveness of the Newco A&R Charter), the board of directors of Newco is comprised of the individuals (and each is assigned to his or her respective class of the board of directors and to committees of the board of directors) designated on ‎Section 2.05(b) of the Company Disclosure Schedule. Pursuant to the Newco A&R Charter as in effect as of the Closing, the post-Closing board of directors of Newco shall be a classified board with three classes of directors, with (A) one class of directors, the Class A Directors, initially serving a one (1)-year term, such term effective from the Closing (but any subsequent Class A Directors serving a three (3)-year term), (b) a second class of directors, the Class B Directors, initially serving a two (2)-year term, such term effective from the Closing (but any subsequent Class B Directors serving a three (3)-year term), and (c) a third class of directors, the Class C Directors, serving a three (3)-year term, such term effective from the Closing.

 

Section 10.15 Termination of Certain Agreements. Prior to the Closing, the Company shall take all actions necessary to cause the Contracts listed on Section 10.15 of the Company Disclosure Schedule to be terminated without any further force and effect and without any cost or other liability or obligation to the Company effective as of immediately prior to the Closing, and there shall be no further obligations of any of the relevant parties thereunder following the Closing.

 

Section 10.16 Amendments to Ancillary Agreements. Prior to the Closing, neither Ackrell nor the Company shall, without the prior written consent of the other (such consent not to be unreasonably withheld, conditioned or delayed), permit or consent to any amendment, supplement or modification to any of the Ancillary Agreements.

 

Section 10.17 Employment Agreement. Ackrell shall use commercially reasonable efforts to cause Newco to execute and deliver to Roger Dahle, and the Company shall use commercially reasonable efforts to cause such individual to execute and deliver to the Company, the Employment Agreement prior to the Closing.

 

Article XI
CONDITIONS TO THE MERGER

 

Section 11.01 Conditions to the Obligations of Each Party. The obligations of the Company, Ackrell, Newco and Merger Sub to consummate the Transactions, including the Merger, are subject to the satisfaction or waiver (where permissible) at or prior to the Closing of the following conditions:

 

(a) Ackrell Stockholder Approval. The Ackrell Stockholder Approval shall have been obtained.

 

(b) No Order. No Governmental Authority of competent jurisdiction shall have enacted, issued, promulgated, enforced or entered any Law, rule, regulation, judgment, decree, executive order or award after the date hereof which is then in effect and has the effect of making the Transactions, including the Merger, illegal or otherwise prohibiting consummation of the Transactions, including the Merger.

 

 

(c) Antitrust Approvals and Waiting Periods. All required filings under the HSR Act shall have been completed and any applicable waiting period (and any extension thereof) applicable to the consummation of the Transactions under the HSR Act shall have expired or been terminated.

 

(d) Registration Statement. The Registration Statement shall have been declared effective under the Securities Act. No stop order suspending the effectiveness of the Registration Statement shall be in effect, and no proceedings for purposes of suspending the effectiveness of the Registration Statement shall have been initiated or be threatened by the SEC.

 

(e) Stock Exchange Listing. The Newco Common Stock to be issued in connection with the Transactions shall have been approved for listing on the Nasdaq, subject only to official notice of issuance thereof.

 

(f) Ackrell Net Tangible Assets. Upon the Closing, Ackrell shall have at least five million one dollars ($5,000,001) of net tangible assets (as determined in accordance with Rule 3a51-1(g)(1) under the Exchange Act) remaining after completion of the Ackrell Redemption.

 

Section 11.02 Conditions to the Obligations of Ackrell, Newco and Merger Sub. The obligations of Ackrell, Newco and Merger Sub to consummate the Transactions, including the Merger, are subject to the satisfaction or waiver (where permissible) at or prior to the Closing of the following additional conditions:

 

(a) Representations and Warranties. (i) The representations and warranties of the Company, the Contributors and NAI contained in Section 5.01 (Organization of NAI), Section 5.02 (Authority Relative to this Agreement), Section 5.05 (Brokers), Section 6.01 (Organization of Cowell), Section 6.03 (Capitalization of Cowell), Section 6.08 (Brokers), Section 7.01 (Organization and Qualification; Subsidiaries), Section 7.02 (Certificate of Incorporation and Bylaws), Section 7.03 (Capitalization) (except for Section 7.03(a) which is subject to clause (iii) below), Section 7.04 (Authority Relative to this Agreement) and Section 7.20 (Brokers) shall each be true and correct in all material respects (unless such representations and warranties are qualified or limited as to Company Material Adverse Effect or other materiality qualification, in which case those such representations and warranties shall be true and correct) as of the date hereof and as of the Closing Date as if made anew at and as of that time, except to the extent of any changes that reflect actions expressly permitted in accordance with Section 9.01 and except to the extent that any such representation and warranty expressly speaks as of an earlier date, in which case such representation and warranty shall be true and correct as of such earlier date, (ii) Section 7.08(b) (Absence of Certain Change or Events) shall be true and correct in all respects as of the date hereof and the Effective Time, (iii) Section 7.03(a) (Capitalization) shall be true and correct in all respects as of the date hereof and as of the Closing Date, as if made anew at and as of that time (except to the extent of any changes that reflect actions expressly permitted in accordance with Section 9.01 and except to the extent that any such representation or warranty expressly is made as of an earlier date, in which case such representation and warranty shall be true and correct as of such specified date), except where the failure of such representations and warranties to be so true and correct would not, individually or in the aggregate, be reasonably expected to result in more than de minimis additional cost, expense or liability to the Company, Ackrell, Newco, Merger Sub or their Affiliates, and (iv) all other representations and warranties of the Company set forth in Article V, Article VI and Article VII shall be true and correct in all respects (without giving any effect to any limitation as to “materiality” or “Company Material Adverse Effect” or any similar limitation set forth therein) as of the date hereof and as of the Closing Date (except to the extent that any such representation and warranty expressly speaks as of an earlier date, in which case such representation and warranty shall be true and correct as of such earlier date), as if made anew at and as of that time, except where the failure of such representations and warranties to be true and correct (whether as of the Closing Date or such earlier date), taken as a whole, does not result in a Company Material Adverse Effect or have a material adverse effect on the ability of NAI and Dahle to consummate the Transactions.

 

 

(b) Agreements and Covenants. The Company, NAI and Dahle shall have performed or complied in all material respects with all agreements and covenants required by this Agreement to be performed or complied with by it on or prior to the Effective Time.

 

(c) Officer’s Certificate. The Company, NAI and Dahle shall have delivered to Ackrell one or more certificate (the “Company Officer’s Certificates”), dated as of the Closing Date, signed by an officer of the Company or NAI or by Dahle, individually, as the case may be, certifying as to the satisfaction of the conditions specified in ‎Section 11.02(a), ‎Section 11.02(b) and ‎Section 11.02(d).

 

(d) Material Adverse Effect. No Company Material Adverse Effect shall have occurred between the date of this Agreement and the Closing Date.

 

(e) PCAOB Audited Financials. The Company shall have delivered to Ackrell and Newco the PCAOB Audited Financials.

 

(f) Withholding Certificates. At least two (2) days prior to the Closing, (i) Cowell shall deliver to Ackrell and Newco, in a form reasonably acceptable to Ackrell and Newco, a properly executed certification that Company Shares are not “U.S. real property interests” in accordance with the Treasury Regulations under Sections 897 and 1445 of the Code, together with a notice to the IRS (which shall be filed by Ackrell with the IRS following the Closing) in accordance with the provisions of Section 1.897-2(h)(2) of the Treasury Regulations, and (ii) Dahle shall deliver to Ackrell and Newco a validly completed and duly executed IRS Form W-9.

 

(g) Termination of Certain Agreements. The Company shall have terminated the Contracts listed on ‎Section 10.15 of the Company Disclosure Schedule.

 

(h) Manufacturing Supply Agreement. The Manufacturing Supply Agreement with Fugang Technology Inc. and the Company in substantially in the form attached hereto as Exhibit J shall remain in effect.

 

 

Section 11.03 Conditions to the Obligations of the Company, NAI and Dahle. The obligations of the Company to consummate the Transactions, including the Merger, are subject to the satisfaction or waiver (where permissible) at or prior to Closing of the following additional conditions:

 

(a) Representations and Warranties. The representations and warranties of Ackrell, Newco and Merger Sub contained in (i) Section 8.01 (Corporate Organization), Section 8.02 (Governing Documents), Section 8.03 (Capitalization) (except for Section 8.03(a) and Section 8.03(e) which are subject to clause (iii) below), Section 8.04 (Authority Relative to this Agreement; Vote Required) and Section 8.12 (Brokers) shall each be true and correct in all material respects (unless such representations and warranties are qualified or limited as to Ackrell Material Adverse Effect or other materiality qualification, in which case those such representations and warranties shall be true and correct) as of the date hereof and as of the Closing Date as if made anew at and as of that time, except to the extent that any changes that reflect actions expressly permitted in accordance with Section 9.03 and except to the extent that any such representation and warranty expressly speaks as of an earlier date, in which case such representation and warranty shall be true and correct as of such earlier date, (ii) Section 8.08 (Absence of Certain Change or Events) shall be true and correct in all respects as of the date hereof and the Effective Time, (iii) Section 8.03(a) and Section 8.03(e) (Capitalization) shall be true and correct in all respects as of the date hereof and as of the Closing Date, as if made anew at and as of that time (except to the extent of any changes that reflect actions expressly permitted in accordance with Section 9.03 and except to the extent that any such representation or warranty expressly is made as of an earlier date, in which case such representation and warranty shall be true and correct as of such specified date), except where the failure of such representations and warranties to be so true and correct would not, individually or in the aggregate, be reasonably expected to result in more than de minimis additional cost, expense or liability to the Company, Ackrell, Newco, Merger Sub or their Affiliates and (iv) all other representations and warranties of Ackrell, Newco and Merger Sub contained in this Agreement shall be true and correct in all respects (without giving any effect to any limitation as to “materiality” or “Company Material Adverse Effect” or any similar limitation set forth therein) as of the date hereof and as of the Closing Date (except to the extent that any such representation and warranty expressly speaks as of an earlier date), as if made anew at and as of that time, except where the failure of such representations and warranties to be true and correct (whether as of the Closing Date or such earlier date), taken as a whole, does not result in a Ackrell Material Adverse Effect.

 

(b) Agreements and Covenants. Ackrell, Newco and Merger Sub shall have performed or complied in all material respects with all agreements and covenants required by this Agreement to be performed or complied with by it on or prior to the Effective Time.

 

(c) Officer’s Certificate. Ackrell shall have delivered to the Company a certificate, dated as of the Closing Date, signed by an officer of Ackrell, certifying as to the satisfaction of the conditions specified in ‎Section 11.03(a), ‎Section 11.03(b) and ‎Section 11.03(d).

 

(d) Material Adverse Effect. No Ackrell Material Adverse Effect shall have occurred between the date of this Agreement and the Closing Date.

 

(e) Board and Officer Resignations. All members of the Ackrell Board and all officers of Ackrell shall have executed written resignations effective as of the Effective Time.

 

(f) PIPE Financing. The aggregate amount of proceeds raised in the PIPE Investment plus the amount of funds in the Trust Account (after giving effect to the Ackrell Redemption) shall be at least one hundred fifty million dollars ($150,000,000).

 

 

(g) Newco A&R Charter. The Newco Certificate of Incorporation shall have been amended and restated by the Newco A&R Charter.

 

Section 11.04 Frustration of Conditions. Notwithstanding anything contained herein to the contrary, no party may rely on the failure of any condition set forth in this ‎Article XI to be satisfied if such failure was caused by the failure of such party or its Affiliates (or with respect to the Company, any Company Stockholder) to comply with or perform any of its covenants or obligations set forth in this Agreement.

 

Article XII
TERMINATION, AMENDMENT AND WAIVER

 

Section 12.01 Termination. This Agreement may be terminated and the Merger, the Contributions and the other Transactions may be abandoned at any time prior to the Closing, notwithstanding any requisite approval and adoption of this Agreement and the Transactions by the stockholders of the Company or Ackrell, as follows:

 

(a) by mutual written consent of Ackrell and the Company;

 

(b) by written notice from either Ackrell or the Company to the other if the Effective Time shall not have occurred prior to the date that is six (6) months after the date hereof (the “Outside Date”); provided, however, that in the event of an extension of the time for Ackrell to complete a Business Combination in accordance with the terms and procedures set forth in Article 6F of the Ackrell Certificate of Incorporation the Outside Date shall automatically be extended by a like period; provided that that all covenants to this Agreement shall have been diligently performed and provided, further, that this Agreement may not be terminated under this ‎Section 12.01(b) by or on behalf of any party that either directly or indirectly through its Affiliates is in material breach or violation of any representation, warranty, covenant, agreement or obligation contained herein and such material breach or violation is the principal cause of the failure of a condition set forth in ‎Article XI on or prior to the Outside Date;

 

(c) by written notice from either Ackrell or the Company to the other if any Governmental Authority in the United States shall have enacted, issued, promulgated, enforced or entered any injunction, order, decree or ruling (whether temporary, preliminary or permanent) which has become final and non-appealable and has the effect of making consummation of the Transactions, including the Merger and the Contributions, illegal or otherwise preventing or prohibiting consummation of the Transactions or the Merger;

 

(d) by written notice from either Ackrell or the Company to the other if Ackrell shall have failed to obtain the Ackrell Stockholder Approval at the Ackrell Stockholders’ Meeting (subject to any adjournment or recess of the meeting); provided, however, that this Agreement may not be terminated under this ‎Section 12.01(d) by or on behalf of Ackrell if Ackrell, Newco or Merger Sub is in material breach or violation of ‎Section 10.01 or ‎Section 10.02;

 

(e) by written notice from Ackrell to the Company upon a breach of any representation, warranty, covenant or agreement on the part of the Company, NAI or Dahle set forth in this Agreement, or if any representation or warranty of the Company, NAI or Dahle set forth in this Agreement shall have become untrue, in either case such that the conditions set forth in ‎Section 11.02(a) and ‎Section 11.02(b) would not be satisfied (“Terminating Company Breach”); provided that Ackrell has not waived in writing such Terminating Company Breach and Ackrell, Newco and Merger Sub are not then in material breach of their representations, warranties, covenants or agreements in this Agreement; provided, further that, if such Terminating Company Breach is curable by the Company, NAI or Dahle, Ackrell may not terminate this Agreement under this ‎Section 12.01(e) for so long as the Company, NAI or Dahle, as applicable, continues to exercise its commercially reasonable efforts to cure such breach, unless such breach is not cured within the earlier of (i) twenty (20) days after notice of such breach is provided by Ackrell to the Company and (ii) the Outside Date;

 

 

(f) by written notice from the Company to Ackrell upon a breach of any representation, warranty, covenant or agreement on the part of Ackrell, Newco or Merger Sub set forth in this Agreement, or if any representation or warranty of Ackrell, Newco or Merger Sub set forth in this Agreement shall have become untrue, in either case such that the conditions set forth in Sections ‎11.03(a) and ‎11.03(b) would not be satisfied (“Terminating Ackrell Breach”); provided that the Company has not waived such Terminating Ackrell Breach and none of the Company, NAI nor Dahle are then in material breach of their representations, warranties, covenants or agreements in this Agreement; provided, however, that, if such Terminating Ackrell Breach is curable by Ackrell, Newco or Merger Sub, the Company may not terminate this Agreement under this ‎Section 12.01(f) for so long as Ackrell, Newco or Merger Sub continue to exercise their commercially reasonable efforts to cure such breach, unless such breach is not cured within the earlier of (i) twenty (20) days after notice of such breach is provided by the Company to Ackrell and (ii) the Outside Date; or

 

(g) by written notice from Ackrell to the Company if copies of the PCAOB Audited Financial Statements have not been delivered to Ackrell on or prior to the FS Trigger Date.

 

Section 12.02 Effect of Termination. Except as otherwise set forth in this ‎Section 12.02, in the event of the termination of this Agreement pursuant to ‎Section 12.01, this Agreement shall forthwith become void, and there shall be no liability under this Agreement on the part of any party hereto, except as set forth in this ‎Section 12.02, ‎Article XIII, and any corresponding definitions set forth in ‎Article I. Notwithstanding anything contained herein to the contrary, if this Agreement is terminated by Ackrell or the Company under ‎Section 12.01 as a result of the gross negligence or willful misconduct of Ackrell, Ackrell shall pay fifty percent (50%) of the interest expenses accrued on the Company Redemption Debt through the date of such termination. The obligation shall survive the termination of this Agreement.

 

Section 12.03 Amendment. This Agreement may be amended in writing by the parties hereto at any time prior to the Effective Time. This Agreement may not be amended except by an instrument in writing signed by each of the parties hereto.

 

Section 12.04 Waiver. At any time prior to the Effective Time, (i) Ackrell may (a) extend the time for the performance of any obligation or other act of the Company, NAI or Dahle, (b) waive any inaccuracy in the representations and warranties of the Company, NAI or Dahle contained herein or in any document delivered by the Company, NAI or Dahle pursuant hereto and (c) waive compliance with any agreement of the Company, NAI or Dahle or any condition to its own obligations contained herein and (ii) the Company may (a) extend the time for the performance of any obligation or other act of Ackrell, Newco or Merger Sub, (b) waive any inaccuracy in the representations and warranties of Ackrell, Newco or Merger Sub contained herein or in any document delivered by Ackrell, Newco or Merger Sub pursuant hereto and (c) waive compliance with any agreement of Ackrell, Newco or Merger Sub or any condition to its own obligations contained herein. Any such extension or waiver shall be valid only if set forth in an instrument in writing signed by the party or parties to be bound thereby.

 

 

Article XIII
GENERAL PROVISIONS

 

Section 13.01 Notices. All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be given (and shall be deemed to have been duly given upon receipt) by delivery in person, by email or by registered or certified mail (postage prepaid, return receipt requested) to the respective parties at the following addresses (or at such other address for a party as shall be specified in a notice given in accordance with this ‎Section 13.01):

 

if to Ackrell, Newco or Merger Sub at or prior to the Closing:

 

Ackrell SPAC Partners I CO.
2093 Philadelphia Pike #1968
Claymont, DE 19703
Attention: William Lamkin
Email: [email protected]

 

with a copy to:

 

Ellenoff Grossman & Schole LLP

1345 Avenue of the Americas, 11^th Floor

New York, NY 10105

	Attention:	Stuart Neuhauser
		Matthew A. Gray
	Email:	[email protected]
		[email protected]

 

if to the Company:

 

North Atlantic Imports, LLC
1073 W. 1700 N.
Logan, UT 84321

Attention: Roger Dahle
Email: [email protected]

 

with a copy to:

 

O’Melveny & Myers LLP
2765 Sand Hill Road

Menlo Park, CA 94025

	Attention:	Warren Lazarow
		Noah Kornblith
	Email:	[email protected]
		[email protected]

 

 

Section 13.02 Nonsurvival of Representations, Warranties and Covenants. The representations and warranties of the Company, NAI, Dahle, Ackrell, Newco and Merger Sub contained in this Agreement or in any certificate or instrument delivered by or on behalf of the Company, NAI, Dahle, Ackrell, Newco and Merger Sub pursuant to this Agreement shall not survive the Closing, and from and after the Closing, the Company, NAI, Dahle, Ackrell, Newco and Merger Sub and their respective Representatives shall not have any further obligations, nor shall any claim be asserted or action be brought against the Company, NAI, Dahle, Ackrell, Newco and Merger Sub or their respective Representatives with respect thereto. The covenants and agreements made by the Company, NAI, Dahle, Ackrell, Newco and Merger Sub in this Agreement or in any certificate or instrument delivered pursuant to this Agreement, including any rights arising out of any breach of such covenants or agreements, shall not survive the Closing, except for those covenants and agreements contained herein and therein that by their terms apply or are to be performed in whole or in part after the Closing (which such covenants shall survive the Closing and continue until fully performed in accordance with their terms), and this ‎Article XIII and any corresponding definitions set forth in ‎Article I.

 

Section 13.03 Severability. If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any rule of law, or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the Transactions is not affected in any manner materially adverse to any party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in a mutually acceptable manner in order that the Transactions be consummated as originally contemplated to the fullest extent possible.

 

Section 13.04 Entire Agreement; Assignment. This Agreement and the Ancillary Agreements constitute the entire agreement among the parties with respect to the subject matter hereof and supersede, except as set forth in ‎Section 10.03(b), all prior agreements and undertakings, both written and oral, among the parties, or any of them, with respect to the subject matter hereof, except for the Non-Disclosure Agreement. This Agreement shall not be assigned (whether pursuant to a merger, by operation of law or otherwise) by any party without the prior express written consent of the other parties hereto. Subject to the foregoing, this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective permitted successors and assigns. Any attempted assignment in violation of the terms of this ‎Section 13.04 shall be null and void, ab initio.

 

Section 13.05 Parties in Interest. This Agreement shall be binding upon and inure solely to the benefit of each party hereto, and nothing in this Agreement, express or implied, is intended to or shall confer upon any other Person any right, benefit or remedy of any nature whatsoever under or by reason of this Agreement, other than ‎Section 10.05 (which is intended to be for the benefit of the Persons covered thereby and may be enforced by such Persons).

 

 

Section 13.06 Governing Law. This Agreement shall be governed by, and construed in accordance with, the Laws of the State of Delaware applicable to contracts executed in and to be performed in that State. All actions and proceedings arising out of or relating to this Agreement shall be heard and determined exclusively in any Delaware Chancery Court, or if such court does not have subject matter jurisdiction, any state or federal court located in the State of Delaware (the “Chosen Courts”). The parties hereto hereby (a) irrevocably submit to the exclusive jurisdiction of the Chosen Courts for themselves and with respect to their respective properties for the purpose of any Action arising out of or relating to this Agreement brought by any party hereto, and (b) agree not to commence any Action relating thereto except in the Chosen Courts, other than Actions in any court of competent jurisdiction to enforce any judgment, decree or award rendered by any such Chosen Court as described herein. Each of the parties further agrees that notice as provided herein shall constitute sufficient service of process and the parties further waive any argument that such service is insufficient. Each of the parties hereby irrevocably and unconditionally waives, and agrees not to assert, by way of motion or as a defense, counterclaim or otherwise, in any Action arising out of or relating to this Agreement or the transactions contemplated hereby, (i) any claim that it is not personally subject to the jurisdiction of the courts in Delaware as described herein for any reason, (ii) that it or its property is exempt or immune from jurisdiction of any such court or from any legal process commenced in such courts (whether through service of notice, attachment prior to judgment, attachment in aid of execution of judgment, execution of judgment or otherwise) and (iii) that (A) the Action in any such court is brought in an inconvenient forum, (B) the venue of such Action is improper or (C) this Agreement, or the subject matter hereof, may not be enforced in or by such courts.

 

Section 13.07 Waiver of Jury Trial. Each of the parties hereto hereby waives to the fullest extent permitted by applicable Law any right it may have to a trial by jury with respect to any litigation directly or indirectly arising out of, under or in connection with this Agreement or the Transactions. Each of the parties hereto (a) certifies that 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 that foregoing waiver and (b) acknowledges that it and the other hereto have been induced to enter into this Agreement and the Transactions, as applicable, by, among other things, the mutual waivers and certifications in this ‎Section 13.07.

 

Section 13.08 Headings. The descriptive headings contained in this Agreement are included for convenience of reference only and shall not affect in any way the meaning or interpretation of this Agreement.

 

Section 13.09 Counterparts; Electronic Delivery. This Agreement and each other Transaction Document may be executed and delivered (including by facsimile or portable document format (pdf) transmission) in one or more counterparts, and by the different parties hereto in separate counterparts, each of which when executed shall be deemed to be an original but all of which taken together shall constitute one and the same agreement. Delivery by email to counsel for the other parties of a counterpart executed by a party shall be deemed to meet the requirements of the previous sentence.

 

 

Section 13.10 Specific Performance. The parties agree that irreparable damage would occur if any provision of this Agreement were not performed in accordance with the terms hereof, and, accordingly, that the parties shall be entitled to an injunction or injunctions to prevent breaches of this Agreement or to enforce specifically the performance of the terms and provisions hereof (including the parties’ obligation to consummate the Merger) in the Federal and state courts located in New York, New York or, if any such court does not have jurisdiction, any court of the United States located in the State of New York without proof of actual damages or otherwise, in addition to any other remedy to which they are entitled at law or in equity as expressly permitted in this Agreement. Each of the parties hereby further waives (a) any defense in any action for specific performance that a remedy at law would be adequate and (b) any requirement under any Law to post security or a bond as a prerequisite to obtaining equitable relief.

 

Section 13.11 No Recourse. Except in the case of fraud, all actions, claims, obligations, liabilities or causes of actions (whether in contract or in tort, in law or in equity, or granted by statute whether by or through attempted piercing of the corporate, limited partnership or limited liability company veil) that may be based upon, in respect of, arise under, out or by reason of, be connected with, or relate in any manner to: (a) this Agreement, (b) the negotiation, execution or performance of this Agreement (including any representation or warranty made in, in connection with, or as an inducement to, this Agreement), (c) any breach of this Agreement and (d) any failure of the Merger to be consummated, may be made only against (and, without prejudice to the rights of any express third-party beneficiary to whom rights under this Agreement inure pursuant to this ‎Section 13.11), solely those Persons that are expressly identified as parties to this Agreement and not against any Nonparty Affiliate (as defined below). Except in the case of fraud, no other Person, including any director, officer, employee, incorporator, member, partner, manager, stockholder, optionholder, Affiliate, agent, attorney or representative of, or any financial advisor or lender to, any party to this Agreement, or any director, officer, employee, incorporator, member, partner, manager, stockholder, Affiliate, agent, attorney or representative of, or any financial advisor or lender to (each of the foregoing, a “Nonparty Affiliate”) any of the foregoing shall have any liabilities (whether in contract or in tort, in law or in equity, or granted by statute whether by or through attempted piercing of the corporate, limited partnership or limited liability company veil) for any claims, causes of action, obligations or liabilities arising under, out of, in connection with or related in any manner to the items in the immediately preceding clauses (a) through (d) and each party, on behalf of itself and its Affiliates, hereby irrevocably releases and forever discharges each of the Nonparty Affiliate from any such liability or obligation.

 

Section 13.12 Legal Representation. The parties agree that, notwithstanding the fact that Ellenoff Grossman & Schole LLP (“EGS”) may have, prior to the Closing, jointly represented Ackrell, Newco, Merger Sub and/or the Sponsor in connection with this Agreement, the Ancillary Documents and the transactions contemplated hereby and thereby, and has also represented Ackrell and/or its Affiliates in connection with matters other than the transaction that is the subject of this Agreement, EGS will be permitted in the future, after the Closing, to represent the Sponsor or its Affiliates in connection with matters in which such Persons are adverse to Ackrell or any of its Affiliates, including any disputes arising out of, or related to, this Agreement. The Company, who is or has the right to be represented by independent counsel in connection with the transactions contemplated by this Agreement, hereby agree, in advance, to waive (and to cause their Affiliates to waive) any actual or potential conflict of interest that may hereafter arise in connection with EGS’s future representation of one or more of the Sponsor or its Affiliates in which the interests of such Person are adverse to the interests of Ackrell or the Company or any of their respective Affiliates, including any matters that arise out of this Agreement or that are substantially related to this Agreement or to any prior representation by EGS of Ackrell, Merger Sub, the Sponsor or any of their respective Affiliates. The parties acknowledge and agree that, for the purposes of the attorney-client privilege, the Sponsor shall be deemed the client of EGS with respect to the negotiation, execution and performance of this Agreement and the Ancillary Documents. All such communications shall remain privileged after the Closing and the privilege and the expectation of client confidence relating thereto shall belong solely to the Sponsor, shall be controlled by the Sponsor and shall not pass to or be claimed by Ackrell or the Surviving Corporation; provided, further, that nothing contained herein shall be deemed to be a waiver by Ackrell or any of its Affiliates (including, after the Effective Time, the Surviving Corporation and its Affiliates) of any applicable privileges or protections that can or may be asserted to prevent disclosure of any such communications to any third party.

 

[Signature Page Follows]

 

 

IN WITNESS WHEREOF, Ackrell, Newco, Merger Sub, the Company, NAI and Dahle have caused this Agreement to be executed as of the date first written above by their respective officers thereunto duly authorized.

 

	Ackrell SPAC Partners I Co.
	By:	/s/ Long Long
	Name:	Long Long
	Title:	Chief Financial Officer

 

 

	Ackrell Merger Sub Inc.
	By:	/s/ Daniel L. Sheehan
	Name:	Daniel L. Sheehan
	Title:	President and Secretary

 

 

	Blackstone Products, Inc.
	By:	/s/ Daniel L. Sheehan
	Name:	Daniel L. Sheehan
	Title:	President and Secretary

 

 

	North Atlantic Imports, LLC
	By:	/s/ Roger Dahle
	Name:	Roger Dahle
	Title:	Chief Executive Officer

 

 

	Roger Dahle
	/s/ Roger Dahle

 

 

	North Atlantic Imports, Inc.
	By:	/s/ Johnny Lee
	Name:	Johnny Lee
	Title:	Director

 

 

EXHIBIT A

 

Amended & Restated Registration Rights Agreement

 

[See attached]

 

 

EXHIBIT B

 

Lock-Up Agreement

 

[See attached]

 

 

EXHIBIT C

 

Subscription Agreements

 

[See attached]

 

 

EXHIBIT D

 

Ackrell Stockholder Support Agreements

 

[See attached]

 

 

EXHIBIT E

 

Newco 2021 Equity Incentive Plan

 

[See attached]

 

 

EXHIBIT F

 

Newco Employee Stock Purchase Plan

 

[See attached]

 

 

EXHIBIT G

 

Newco A&R Charter

 

[See attached]

 

 

EXHIBIT H

 

Newco A&R Bylaws

 

[See attached]

 

 

EXHIBIT I

 

New Operating Agreement

 

[See attached]

 

 

EXHIBIT J

 

Manufacturing Supply Agreement with Fugang Technology Inc.

 

[See attached]

 

 

 

Exhibit 10.1

 

AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT

 

THIS AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT (this “Agreement”) is entered into as of December 22, 2021, by and among Blackstone Products, Inc., a Delaware corporation (the “Company”), Ackrell SPAC Partners I Co., a Delaware corporation (“SPAC”), Ackrell SPAC Sponsors I LLC, a Delaware limited liability company (“Sponsor”), EarlyBirdCapital, Inc. a Delaware corporation (“EBC”), William A. Lamkin (“Lamkin”) and Daniel L. Sheehan (“Sheehan,” and collectively, with Sponsor, EBC, Lamkin, the “Initial Investors”) and the undersigned parties listed under Holders on the signature page hereto (each such party, together with the Initial Investors and any person or entity who hereafter becomes a party to or bound by this Agreement pursuant to Section 6.2 hereof “Holder” and collectively, the “Holders”).

 

WHEREAS, the Company, SPAC, Ackrell Merger Sub, Inc., a Delaware corporation (“Merger Sub”), North Atlantic Imports, LLC, a Utah limited liability company (“NAI”), Roger Dahle, an individual residing in Utah and holder of certain membership interests in NAI and North Atlantic Imports, Inc., a business company formed under the laws of the British Virgin Islands, are party to that certain Business Combination Agreement dated as of the date hereof (as such agreement may be amended, supplemented, restated or otherwise modified from time to time (the “Business Combination Agreement”), pursuant to which (and subject to the terms and conditions set forth therein) inter alia, Merger Sub will be merged with and into SPAC, with SPAC surviving the Merger as a wholly-owned subsidiary of the Company;

 

WHEREAS, the Initial Investors and SPAC entered into that certain Registration Rights Agreement dated December 21, 2020 (as such agreement may be amended, supplemented, restated or otherwise modified from time to time until the consummation of the Business Combination, the “Existing Agreement”); and

 

WHEREAS, upon the consummation of the Business Combination, each party to the Existing Agreement desires to amend and restate the Existing Agreement in its entirety as set forth herein and the Company and the Holders desire to enter into this Agreement, pursuant to which the Company shall grant the Holders certain registration rights with respect to the Registrable Securities (as defined below) on the terms and conditions set forth in this Agreement.

 

NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

 

1. DEFINITIONS. The following capitalized terms used herein have the following meanings:

 

“Agreement” means this Agreement, as amended, restated, supplemented, or otherwise modified from time to time.

 

“Business Combination” means the acquisition of direct or indirect ownership through a merger, stock exchange, asset acquisition, stock purchase, recapitalization, reorganization or other similar type of transaction, of one or more businesses or entities.

 

“Commission” means the Securities and Exchange Commission, or any other Federal agency then administering the Securities Act or the Exchange Act.

 

 

“Company” is defined in the preamble to this Agreement.

 

“Company Common Stock” means the common stock, par value $0.0001 per share, of the Company.

 

“Demand Registration” is defined in Section 2.1.1.

 

“Demanding Holder” is defined in Section 2.1.1.

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations of the Commission promulgated thereunder, all as the same shall be in effect at the time.

 

“Extension Loan Shares” means the shares of SPAC Common Stock underlying the Extension Loan Subunits issued to Initial Investors as a result of the conversion of loans made by the Initial Investors or their designees to SPAC to extend the period of time SPAC has to consummate a Business Combination.

 

“Extension Loan Subunits” means the Subunits underlying the Extension Loan Units issued to Initial Investors as a result of the conversion of loans made by the Initial Investors or their designees to SPAC to extend the period of time SPAC has to consummate a Business Combination.

 

“Extension Loan Units” means the Units issued to Initial Investors as a result of the conversion of loans made by the Initial Investors or their designees to SPAC to extend the period of time SPAC has to consummate a Business Combination.

 

“Extension Loan Warrants” means the Warrants underlying the Extension Loan Units and Subunits issued to Initial Investors as a result of the conversion of loans made by the Initial Investors or their designees to SPAC to extend the period of time SPAC has to consummate a Business Combination.

 

“Founder Shares” means the 3,450,000 shares of SPAC Common Stock issued to SPAC’s sponsor prior to SPAC’s initial public offering.

 

“Indemnified Party” is defined in Section 4.3.

 

“Indemnifying Party” is defined in Section 4.3.

 

“Holder” is defined in the preamble to this Agreement.

 

“Holder Indemnified Party” is defined in Section 4.1.

 

“Maximum Number of Shares” is defined in Section 2.1.4.

 

“Notices” is defined in Section 6.3.

 

“Piggy-Back Registration” is defined in Section 2.2.1.

 

 

“Private Shares” means the shares of SPAC Common Stock underlying the Private Subunits that certain of the Initial Investors privately purchased simultaneously with the consummation of SPAC’s initial public offering.

 

“Private Subunits” means the Subunits underlying the Private Units that certain of the Initial Investors privately purchased simultaneously with the consummation of SPAC’s initial public offering.

 

“Private Units” means the Units that certain of the Initial Investors privately purchased simultaneously with the consummation of SPAC’s initial public offering.

 

“Private Warrants” means the Warrants underlying the Private Units and Subunits that certain of the Initial Investors privately purchased simultaneously with the consummation of SPAC’s initial public offering.

 

“Pro Rata” is defined in Section 2.1.4.

 

“Register,” “Registered” and “Registration” mean a registration effected by preparing and filing a registration statement or similar document in compliance with the requirements of the Securities Act, and the applicable rules and regulations promulgated thereunder, and such registration statement becoming effective.

 

“Registrable Securities” means any shares of Company Common Stock and other equity securities convertible into or exercisable or exchangeable for shares of Company Common Stock held by the Holders, and the shares of Company Common Stock underlying such equity securities, including (i) the Founder Shares, (ii) the Representative Shares, (iii) the Private Units (and underlying securities), (iv) the Working Capital Units (and underlying securities), if any, and (v) the Extension Loan Units (and underlying securities), if any. Registrable Securities include any warrants, shares of capital stock or other securities of the Company issued as a dividend or other distribution with respect to or in exchange for or in replacement of such Founder Shares, Representative Shares, Private Units (and underlying securities), Working Capital Units (and underlying securities) and Extension Loan Units (and underlying securities). As to any particular Registrable Securities, such securities shall cease to be Registrable Securities when: (a) a Registration Statement with respect to the sale of such securities shall have become effective under the Securities Act and such securities shall have been sold, transferred, disposed of or exchanged in accordance with such Registration Statement; (b) such securities shall have been otherwise transferred, new certificates for them not bearing a legend restricting further transfer shall have been delivered by the Company, and subsequent public distribution of them shall not require registration under the Securities Act; (c) such securities shall have ceased to be outstanding, or (d) the Registrable Securities are freely saleable under Rule 144 under the Securities Act without volume limitations.

 

“Registration Statement” means a registration statement filed by the Company with the Commission in compliance with the Securities Act and the rules and regulations promulgated thereunder for a public offering and sale of equity securities, or securities or other obligations exercisable or exchangeable for, or convertible into, equity securities (other than a registration statement on Form S-4 or Form S-8, or their successors, or any registration statement covering only securities proposed to be issued in exchange for securities or assets of another entity).

 

 

“Representative” means EarlyBirdCapital, Inc.

 

“Representative Shares” means the 380,000 shares of SPAC Common Stock issued to the Representative and its designees prior to the consummation of SPAC’s initial public offering.

 

“SPAC Common Stock” means the common stock, par value $0.0001 per share, of SPAC.

 

“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations of the Commission promulgated thereunder, all as the same shall be in effect at the time.

 

“Underwriter” means a securities dealer who purchases any Registrable Securities as principal in an underwritten offering and not as part of such dealer’s market-making activities.

 

“Units” means the units of the Company, each comprised of (i) one Subunit, consisting of one share of Common Stock and one-half of one warrant and (ii) one-half of one warrant, each whole warrant entitling the holder to purchase one share of Common Stock.

 

“Working Capital Shares” means the shares of SPAC Common Stock underlying the Working Capital Subunits held by Initial Investors, officers or directors of SPAC or their affiliates which may be issued in payment of working capital loans made to SPAC.

 

“Working Capital Subunits” means the Subunits underlying the Working Capital Units held by Initial Investors, officers or directors of SPAC or their affiliates which may be issued in payment of working capital loans made to SPAC.

 

“Working Capital Units” means the Units held by Initial Investors, officers or directors of SPAC or their affiliates which may be issued in payment of working capital loans made to SPAC.

 

“Working Capital Warrants” means the Warrants Underlying the Working Capital Units and Subunits held by Initial Investors, officers or directors of SPAC or their affiliates which may be issued in payment of working capital loans made to SPAC.

 

2. REGISTRATION RIGHTS.

 

2.1 Demand Registration; Shelf Registration.

 

2.1.1 Request for Registration. At any time and from time to time, the holders of a majority-in-interest of the then-outstanding Registrable Securities may make a written demand for registration under the Securities Act of all or part of their Registrable Securities (a “Demand Registration”). Any demand for a Demand Registration shall specify the number of shares of Registrable Securities proposed to be sold and the intended method(s) of distribution thereof. The Company will notify all holders of Registrable Securities of the demand, and each other holder of Registrable Securities who wishes to include all or a portion of such holder’s Registrable Securities in the Demand Registration (each such holder including shares of Registrable Securities in such registration, a “Demanding Holder”) shall so notify the Company within fifteen (15) days after the receipt by the holder of the notice from the Company. Upon any such request, the Demanding Holders shall be entitled to have their Registrable Securities included in the Demand Registration, subject to the provisions of the Lock-Up Agreements (as defined in the Business Combination Agreement), Section 2.1.4, Section 2.1.6, and the provisos set forth in Section 3.1.1 and provided that the Company does not have an effective Registration Statement pursuant to Section 2.1.6 covering the Registrable Securities. The Company shall not be obligated to effect more than an aggregate of two (2) Demand Registrations under this Section 2.1.1 in respect of all Registrable Securities.

 

 

2.1.2 Effective Registration. A registration will not count as a Demand Registration until the Registration Statement filed with the Commission with respect to such Demand Registration has been declared effective and the Company has complied with all of its obligations under this Agreement with respect thereto; provided, however, that if, after such Registration Statement has been declared effective, the offering of Registrable Securities pursuant to a Demand Registration is interfered with by any stop order or injunction of the Commission or any other governmental agency or court, the Registration Statement with respect to such Demand Registration will be deemed not to have been declared effective, unless and until, (i) such stop order or injunction is removed, rescinded or otherwise terminated, and (ii) a majority-in-interest of the Demanding Holders thereafter elect to continue the offering; provided, further, that the Company shall not be obligated to file a second Registration Statement until a Registration Statement that has been filed is counted as a Demand Registration or is terminated.

 

2.1.3 Underwritten Offering. If a majority-in-interest of the Demanding Holders so elect and such holders so advise the Company as part of their written demand for a Demand Registration, the offering of such Registrable Securities pursuant to such Demand Registration shall be in the form of an underwritten offering. In such event, the right of any holder to include its Registrable Securities in such registration shall be conditioned upon such holder’s participation in such underwriting and the inclusion of such holder’s Registrable Securities in the underwriting to the extent provided herein. All Demanding Holders proposing to distribute their Registrable Securities through such underwriting shall enter into an underwriting agreement in customary form with the Underwriter or Underwriters selected for such underwriting by a majority-in-interest of the holders initiating the Demand Registration, which Underwriter or Underwriters shall be reasonably acceptable to the Company.

 

2.1.4 Reduction of Offering. If the managing Underwriter or Underwriters for a Demand Registration that is to be an underwritten offering advises the Company and the Demanding Holders in writing that the dollar amount or number of shares of Registrable Securities which the Demanding Holders desire to sell, taken together with all other shares of Common Stock or other securities which the Company desires to sell and the shares of Common Stock, if any, as to which registration has been requested pursuant to written contractual piggy-back registration rights held by other stockholders of the Company who desire to sell, exceeds the maximum dollar amount or maximum number of shares that can be sold in such offering without adversely affecting the proposed offering price, the timing, the distribution method, or the probability of success of such offering (such maximum dollar amount or maximum number of shares, as applicable, the “Maximum Number of Shares”), then the Company shall include in such registration: (i) first, the Registrable Securities as to which Demand Registration has been requested by the Demanding Holders (pro rata in accordance with the number of shares that each such Person has requested be included in such registration, regardless of the number of shares held by each such Person (such proportion is referred to herein as “Pro Rata”)) that can be sold without exceeding the Maximum Number of Shares; (ii) second, to the extent that the Maximum Number of Shares has not been reached under the foregoing clause (i), the shares of Common Stock or other securities that the Company desires to sell that can be sold without exceeding the Maximum Number of Shares; and (iii) third, to the extent that the Maximum Number of Shares has not been reached under the foregoing clauses (i) and (ii), the shares of Common Stock or other securities for the account of other persons that the Company is obligated to register pursuant to written contractual arrangements with such persons and that can be sold without exceeding the Maximum Number of Shares.

 

 

2.1.5 Withdrawal. If a majority-in-interest of the Demanding Holders disapprove of the terms of any underwriting or are not entitled to include all of their Registrable Securities in any offering, such majority-in-interest of the Demanding Holders may elect to withdraw from such offering by giving written notice to the Company and the Underwriter or Underwriters of their request to withdraw prior to the effectiveness of the Registration Statement filed with the Commission with respect to such Demand Registration. If the majority-in-interest of the Demanding Holders withdraws from a proposed offering relating to a Demand Registration, then such registration shall not count as a Demand Registration provided for in Section 2.1.

 

2.1.6 Shelf Registration.

 

(a) The Company shall file, after the filing of the amendment to the Proxy Statement (as defined in the Business Combination Agreement) following the receipt of the first round of comments on the Proxy Statement from the Commission, and use commercially reasonable efforts to cause to be declared effective as soon as practicable after the Closing (as defined in the Business Combination Agreement), a Registration Statement for a Shelf Registration on Form S-1 (the “Form S-1 Shelf”) or, if the Company is eligible to use a Registration Statement on Form S-3, a Shelf Registration on Form S-3, or any similar short-form registration statement which may be available at such time (the “Form S-3 Shelf” and together with the Form S-1 Shelf or similar short-form registration statement, each a “Shelf”), in each case, covering the resale of all the Registrable Securities (determined as of two (2) Business Days prior to such filing) on a delayed or continuous basis. 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 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 Form S-1 Shelf) to a Form S-3 Shelf as soon as practicable after the Company is eligible to use Form S-3.

 

(b) Notwithstanding the foregoing, if the Commission prevents the Company from including any or all of the Registrable Securities proposed to be registered under the Registration Statement due to limitations on the use of Rule 415 under the Securities Act for the resale of Registrable Securities held by the Holders or otherwise, such Registration Statement shall register for resale such number of Registrable Securities which is equal to the maximum number of shares of Registrable Securities as is permitted by the Commission. In such event, the number of Registrable Securities to be registered for each selling security holder named in the Registration Statement shall be reduced pro rata among all such selling security holders. In the event the Commission informs the Company that all of such Registrable Securities cannot, as a result of the application of Rule 415, be registered for resale on the Registration Statement, the Company agrees to promptly inform the Holders thereof and use its reasonable best efforts to file amendments to the Registration Statement as required by the Commission, covering the maximum number of Registrable Securities permitted to be registered by the Commission, on Form S-1 or such other form available to register for resale such Registrable Securities as a secondary offering.

 

 

(c) Notwithstanding anything to the contrary herein, to the extent there is an active Shelf under this subsection 2.1.6, covering a Holder’s or Holders’ Registrable Securities, and such Holder or Holders qualify as Demanding Holders pursuant to subsection 2.1.1 and wish to request an Underwritten Offering from such Shelf, such Underwritten Offering shall follow the procedures of Section 2.1, subsections 2.1.3, 2.1.4, 2.1.5 (except that any withdrawal must be made before the public announcement of such Underwritten Offering) and this subsection 2.1.6), but such Underwritten Offering shall be made from the Shelf and shall count against the number of long form Demand Registrations that may be made pursuant to Section 2.1.1.

 

(d) Subject to Section 3.2, 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 such Holder, shall promptly use its reasonable best efforts to cause the resale of such Registrable Securities to be covered by the then available Shelf by means of a post-effective amendment; provided, however, that the Company shall only be required to cause such Registrable Securities to be so covered once per calendar year for any Holder and no more than three (3) times per calendar year for all Holders. The Company shall have the right to remove any persons no longer holding Registrable Securities from the Shelf or any other shelf registration statement by means of a post-effective amendment.

 

2.2 Piggy-Back Registration.

 

2.2.1 Piggy-Back Rights. If at any time the Company proposes to file a Registration Statement under the Securities Act with respect to an offering of equity securities, or securities or other obligations exercisable or exchangeable for, or convertible into, equity securities, by the Company for its own account or for shareholders of the Company for their account (or by the Company and by shareholders of the Company including, without limitation, pursuant to Section 2.1), other than a Registration Statement (i) filed in connection with any employee stock option or other benefit plan, (ii) for an exchange offer or offering of securities solely to the Company’s existing shareholders, (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 (x) give written notice of such proposed filing to the holders of Registrable Securities as soon as practicable but in no event less than ten (10) days before the anticipated filing date, which notice shall describe the amount and type of securities to be included in such offering, the intended method(s) of distribution, and the name of the proposed managing Underwriter or Underwriters, if any, of the offering, and (y) offer to the holders of Registrable Securities in such notice the opportunity to register the sale of such number of shares of Registrable Securities as such holders may request in writing within five (5) days following receipt of such notice (a “Piggy-Back Registration”). Subject to subsection 2.2.2, the Company shall cause such Registrable Securities to be included in such registration and shall use its best efforts to cause the managing Underwriter or Underwriters of a proposed underwritten offering to permit the Registrable Securities requested to be included in a Piggy-Back Registration on the same terms and conditions as any similar securities of the Company and to permit the sale or other disposition of such Registrable Securities in accordance with the intended method(s) of distribution thereof. All holders of Registrable Securities proposing to distribute their securities through a Piggy-Back Registration that involves an Underwriter or Underwriters shall enter into an underwriting agreement in customary form with the Underwriter or Underwriters selected for such Piggy-Back Registration.

 

 

2.2.2 Reduction of Offering. If the managing Underwriter or Underwriters for a Piggy-Back Registration that is to be an underwritten offering advises the Company and the holders of Registrable Securities in writing that the dollar amount or number of shares of Common Stock which the Company desires to sell, taken together with shares of Common Stock, if any, as to which registration has been demanded pursuant to separate written contractual arrangements with persons or entities other than the holders of Registrable Securities hereunder, the Registrable Securities as to which registration has been requested under this Section 2.2, and the shares of Common Stock, if any, as to which registration has been requested pursuant to the written contractual piggy-back registration rights of other stockholders of the Company, exceeds the Maximum Number of Shares, then the Company shall include in any such registration:

 

(a) If the registration is undertaken for the Company’s account: (A) the shares of Common Stock or other securities that the Company desires to sell that can be sold without exceeding the Maximum Number of Shares; (B) to the extent that the Maximum Number of Shares has not been reached under the foregoing clause (A), the shares of Common Stock or other securities, if any, comprised of Registrable Securities, as to which registration has been requested pursuant to the applicable written contractual piggy-back registration rights of such security holders, Pro Rata, that can be sold without exceeding the Maximum Number of Shares; and (C) to the extent that the Maximum Number of Shares has not been reached under the foregoing clauses (A) and (B), the shares of Common Stock or other securities for the account of other persons that the Company is obligated to register pursuant to written contractual piggy-back registration rights with such persons and that can be sold without exceeding the Maximum Number of Shares; and

 

(b) If the registration is a “demand” registration undertaken at the demand of persons other than holders of Registrable Securities, (A) first, the shares of Common Stock or other securities for the account of the demanding persons that can be sold without exceeding the Maximum Number of Shares; (B) second, to the extent that the Maximum Number of Shares has not been reached under the foregoing clause (A), the shares of Common Stock or other securities that the Company desires to sell that can be sold without exceeding the Maximum Number of Shares; (C) third, to the extent that the Maximum Number of Shares has not been reached under the foregoing clauses (A) and (B), collectively, the shares of Common Stock or other securities comprised of Registrable Securities, Pro Rata, as to which registration has been requested pursuant to the terms of this Section 2.2, that can be sold without exceeding the Maximum Number of Shares; and (D) fourth, to the extent that the Maximum Number of Shares has not been reached under the foregoing clauses (A), (B) and (C), the shares of Common Stock or other securities for the account of other persons that the Company is obligated to register pursuant to written contractual arrangements with such persons, that can be sold without exceeding the Maximum Number of Shares.

 

 

2.2.3 Withdrawal. Any holder of Registrable Securities may elect to withdraw such holder’s request for inclusion of Registrable Securities in any Piggy-Back Registration by giving written notice to the Company of such request to withdraw prior to the effectiveness of the Registration Statement. The Company (whether on its own determination or as the result of a withdrawal by persons making a demand pursuant to written contractual obligations) may withdraw a Registration Statement at any time prior to the effectiveness of such Registration Statement. Notwithstanding any such withdrawal, the Company shall pay all expenses incurred by the holders of Registrable Securities in connection with such Piggy-Back Registration as provided in Section 3.3.

 

3. REGISTRATION PROCEDURES.

 

3.1 Filings; Information. Whenever the Company is required to effect the registration of any Registrable Securities pursuant to Section 2, the Company shall use its best efforts to effect the registration and sale of such Registrable Securities in accordance with the intended method(s) of distribution thereof as expeditiously as practicable, and in connection with any such request:

 

3.1.1 Filing Registration Statement. The Company shall use its best efforts to, as expeditiously as possible after receipt of a request for a Demand Registration pursuant to Section 2.1, prepare and file with the Commission a Registration Statement on any form for which the Company then qualifies or which counsel for the Company shall deem appropriate and which form shall be available for the sale of all Registrable Securities to be registered thereunder in accordance with the intended method(s) of distribution thereof, and shall use its reasonable best efforts to cause such Registration Statement to become effective and use its best efforts to keep it effective for the period required by Section 3.1.3; provided, however, that the Company shall have the right to defer any Demand Registration for up to thirty (30) days, and any Piggy-Back Registration for such period as may be applicable to deferment of any demand registration to which such Piggy-Back Registration relates, in each case if the Company shall furnish to the holders a certificate signed by the President or Chairman of the Company stating that, in the good faith judgment of the Board of Directors of the Company, it would be materially detrimental to the Company and its shareholders for such Registration Statement to be effected at such time; provided further, however, that the Company shall not have the right to exercise the right set forth in the immediately preceding proviso more than once in any 365-day period in respect of a Demand Registration hereunder.

 

3.1.2 Copies. The Company shall, prior to filing a Registration Statement or prospectus, or any amendment or supplement thereto, furnish without charge to the holders of Registrable Securities included in such registration, and such holders’ legal counsel, copies of such Registration Statement as proposed to be filed, each amendment and supplement to such Registration Statement (in each case including all exhibits thereto and documents incorporated by reference therein), the prospectus included in such Registration Statement (including each preliminary prospectus), and such other documents as the holders of Registrable Securities included in such registration or legal counsel for any such holders may request in order to facilitate the disposition of the Registrable Securities owned by such holders.

 

 

3.1.3 Amendments and Supplements. The Company shall prepare and file with the Commission such amendments, including post-effective amendments, and supplements to such Registration Statement and the prospectus used in connection therewith as may be necessary to keep such Registration Statement effective and in compliance with the provisions of the Securities Act until all Registrable Securities and other securities covered by such Registration Statement have been disposed of in accordance with the intended method(s) of distribution set forth in such Registration Statement or such securities have been withdrawn.

 

3.1.4 Notification. After the filing of a Registration Statement, the Company shall promptly, and in no event more than two (2) business days after such filing, notify the holders of Registrable Securities included in such Registration Statement of such filing, and shall further notify such holders promptly and confirm such advice in writing in all events within two (2) business days of the occurrence of any of the following: (i) when such Registration Statement becomes effective; (ii) when any post-effective amendment to such Registration Statement becomes effective; (iii) the issuance or threatened issuance by the Commission of any stop order (and the Company shall take all actions required to prevent the entry of such stop order or to remove it if entered); and (iv) any request by the Commission for any amendment or supplement to such Registration Statement or any prospectus relating thereto or for additional information or of the occurrence of an event requiring the preparation of a supplement or amendment to such prospectus so that, as thereafter delivered to the purchasers of the securities covered by such Registration Statement, such prospectus will not contain an untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading, and promptly make available to the holders of Registrable Securities included in such Registration Statement any such supplement or amendment; except that before filing with the Commission a Registration Statement or prospectus or any amendment or supplement thereto, including documents incorporated by reference, the Company shall furnish to the holders of Registrable Securities included in such Registration Statement and to the legal counsel for any such holders, copies of all such documents proposed to be filed sufficiently in advance of filing to provide such holders and legal counsel with a reasonable opportunity to review such documents and comment thereon, and the Company shall not file any Registration Statement or prospectus or amendment or supplement thereto, including documents incorporated by reference, to which such holders or their legal counsel shall object.

 

3.1.5 State Securities Laws Compliance. The Company shall use its best efforts to (i) register or qualify the Registrable Securities covered by the Registration Statement under such securities or “blue sky” laws of such jurisdictions in the United States as the holders of Registrable Securities included in such Registration Statement (in light of their intended plan of distribution) may request and (ii) take such action necessary to cause such Registrable Securities covered by the Registration Statement to be registered with or approved by such other governmental authorities as may be necessary by virtue of the business and operations of the Company and do any and all other acts and things that may be necessary or advisable to enable the holders of Registrable Securities included in such Registration Statement to consummate the disposition of such Registrable Securities in such jurisdictions; provided, however, that the Company shall not be required to qualify generally to do business in any jurisdiction where it would not otherwise be required to qualify but for this paragraph or subject itself to taxation in any such jurisdiction.

 

 

3.1.6 Agreements for Disposition. The Company shall enter into customary agreements (including, if applicable, an underwriting agreement in customary form) and take such other actions as are reasonably required in order to expedite or facilitate the disposition of such Registrable Securities. The representations, warranties and covenants of the Company in any underwriting agreement which are made to or for the benefit of any Underwriters, to the extent applicable, shall also be made to and for the benefit of the holders of Registrable Securities included in such registration statement. No holder of Registrable Securities included in such registration statement shall be required to make any representations or warranties in the underwriting agreement except, if applicable, with respect to such holder’s organization, good standing, authority, title to Registrable Securities, lack of conflict of such sale with such holder’s material agreements and organizational documents, and with respect to written information relating to such holder that such holder has furnished in writing expressly for inclusion in such Registration Statement.

 

3.1.7 Cooperation. The principal executive officer of the Company, the principal financial officer of the Company, the principal accounting officer of the Company and all other officers and members of the management of the Company shall cooperate fully in any offering of Registrable Securities hereunder, which cooperation shall include, without limitation, the preparation of the Registration Statement with respect to such offering and all other offering materials and related documents, and participation in meetings with Underwriters, attorneys, accountants and potential investors.

 

3.1.8 Records. The Company shall make available for inspection by the holders of Registrable Securities included in such Registration Statement, any Underwriter participating in any disposition pursuant to such registration statement and any attorney, accountant or other professional retained by any holder of Registrable Securities included in such Registration Statement or any Underwriter, all financial and other records, pertinent corporate documents and properties of the Company, as shall be necessary to enable them to exercise their due diligence responsibility, and cause the Company’s officers, directors and employees to supply all information requested by any of them in connection with such Registration Statement.

 

3.1.9 Opinions and Comfort Letters. The Company shall furnish to each holder of Registrable Securities included in any Registration Statement a signed counterpart, addressed to such holder, of (i) any opinion of counsel to the Company delivered to any Underwriter and (ii) any comfort letter from the Company’s independent public accountants delivered to any Underwriter. In the event no legal opinion is delivered to any Underwriter, the Company shall furnish to each holder of Registrable Securities included in such Registration Statement, at any time that such holder elects to use a prospectus, an opinion of counsel to the Company to the effect that the Registration Statement containing such prospectus has been declared effective and that no stop order is in effect.

 

 

3.1.10 Earnings Statement. The Company shall comply with all applicable rules and regulations of the Commission and the Securities Act, and make available to its shareholders, as soon as practicable, an earnings statement covering a period of twelve (12) months, which earnings statement shall satisfy the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder; provided that the Company will be deemed to have satisfied such requirement to the extent such information is filed on the Commission’s EDGAR or any successor system.

 

3.1.11 Listing. The Company shall use its best efforts to cause all Registrable Securities included in any registration to be listed on such exchanges or otherwise designated for trading in the same manner as similar securities issued by the Company are then listed or designated or, if no such similar securities are then listed or designated, in a manner satisfactory to the holders of a majority of the Registrable Securities included in such registration.

 

3.1.12 Road Show. If the registration involves the registration of Registrable Securities involving gross proceeds in excess of $25,000,000, the Company shall use its commercially reasonable 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 any underwritten offering.

 

3.2 Obligation to Suspend Distribution. Upon receipt of any notice from the Company of the happening of any event of the kind described in Section 3.1.4(iv), or, in the case of a resale registration on Form S-3 pursuant to Section 2.3 hereof, upon any suspension by the Company, pursuant to a written insider trading compliance program adopted by the Company’s Board of Directors, of the ability of all “insiders” covered by such program to transact in the Company’s securities because of the existence of material non-public information, each holder of Registrable Securities included in any registration shall immediately discontinue disposition of such Registrable Securities pursuant to the Registration Statement covering such Registrable Securities until such holder receives the supplemented or amended prospectus contemplated by Section 3.1.4(iv) or the restriction on the ability of “insiders” to transact in the Company’s securities is removed, as applicable, and, if so directed by the Company, each such holder will deliver to the Company all written copies, other than permanent file copies then in such holder’s possession, of the most recent prospectus covering such Registrable Securities at the time of receipt of such notice.

 

3.3 Registration Expenses. The Company shall bear all costs and expenses incurred in connection with any Demand Registration pursuant to Section 2.1, any Piggy-Back Registration pursuant to Section 2.2, and any registration on Form S-1 or Form S-3 effected pursuant to Section 2.1.6, and all expenses incurred in performing or complying with its other obligations under this Agreement, whether or not the Registration Statement becomes effective, including, without limitation: (i) all registration and filing fees; (ii) fees and expenses of compliance with securities or “blue sky” laws (including fees and disbursements of counsel in connection with blue sky qualifications of the Registrable Securities); (iii) printing expenses; (iv) the Company’s internal expenses (including, without limitation, all salaries and expenses of its officers and employees); (v) the fees and expenses incurred in connection with the listing of the Registrable Securities as required by Section 3.1.11; (vi) Financial Industry Regulatory Authority fees; (vii) fees and disbursements of counsel for the Company and fees and expenses for independent certified public accountants retained by the Company (including the expenses or costs associated with the delivery of any opinions or comfort letters requested pursuant to Section 3.1.9); (viii) the fees and expenses of any special experts retained by the Company in connection with such registration; and (ix) the fees and expenses of one legal counsel selected by the holders of a majority-in-interest of the Registrable Securities included in such registration. The Company shall have no obligation to pay any underwriting discounts or selling commissions attributable to the Registrable Securities being sold by the holders thereof, which underwriting discounts or selling commissions shall be borne by such holders. Additionally, in an underwritten offering, all selling shareholders and the Company shall bear the expenses of the Underwriter pro rata in proportion to the respective amount of shares each is selling in such offering.

 

 

3.4 Information. The holders of Registrable Securities shall provide such information as may reasonably be requested by the Company, or the managing Underwriter, if any, in connection with the preparation of any Registration Statement, including amendments and supplements thereto, in order to effect the registration of any Registrable Securities under the Securities Act pursuant to Section 2 and in connection with the Company’s obligation to comply with federal and applicable state securities laws.

 

3.5 Limitations on Registration Rights. Notwithstanding anything herein to the contrary, (i) the Representative may not exercise its rights under Section 2.1 and 2.2 hereunder after five (5) and seven (7) years after the effective date of the registration statement relating to the Business Combination, respectively, and (ii) the Representative may not exercise its rights under Section 2.1 more than one time.

 

4. INDEMNIFICATION AND CONTRIBUTION.

 

4.1 Indemnification by the Company. The Company agrees to indemnify and hold harmless each Holder and each other holder of Registrable Securities, and each of their respective officers, employees, affiliates, directors, partners, members, attorneys and agents, and each person, if any, who controls a Holder and each other holder of Registrable Securities (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act) (each, an “Holder Indemnified Party”), from and against any out-of-pocket expenses, losses, judgments, claims, damages or liabilities, whether joint or several, arising out of or based upon any untrue statement (or allegedly untrue statement) of a material fact contained in any Registration Statement under which the sale of such Registrable Securities was registered under the Securities Act, any preliminary prospectus, final prospectus or summary prospectus contained in the Registration Statement, or any amendment or supplement to such Registration Statement, or arising out of or based upon any omission (or alleged omission) to state a material fact required to be stated therein or necessary to make the statements therein not misleading, or any violation by the Company of the Securities Act or any rule or regulation promulgated thereunder applicable to the Company and relating to action or inaction required of the Company in connection with any such registration; and the Company shall promptly reimburse the Holder Indemnified Party for any legal and any other expenses reasonably incurred by such Holder Indemnified Party in connection with investigating and defending any such out-of-pocket expense, loss, judgment, claim, damage, liability or action whether or not any such person is a party to any such claim or action and including any and all legal and other expenses incurred in giving testimony or furnishing documents in response to a subpoena or otherwise; provided, however, that the Company will not be liable in any such case to the extent that any such out-of-pocket expense, loss, claim, damage or liability arises out of or is based upon any untrue statement or allegedly untrue statement or omission or alleged omission made in such Registration Statement, preliminary prospectus, final prospectus, or summary prospectus, or any such amendment or supplement, in reliance upon and in conformity with information furnished to the Company, in writing, by such selling holder expressly for use therein. The Company also shall indemnify any Underwriter of the Registrable Securities, their officers, affiliates, directors, partners, members and agents and each person who controls such Underwriter on substantially the same basis as that of the indemnification provided above in this Section 4.1.

 

 

4.2 Indemnification by Holders of Registrable Securities. Subject to the limitations set forth in Section 4.4.3 hereof, each selling holder of Registrable Securities will, in the event that any registration is being effected under the Securities Act pursuant to this Agreement of any Registrable Securities held by such selling holder, indemnify and hold harmless the Company, each of its directors and officers and each Underwriter (if any), and each other selling holder and each other person, if any, who controls another selling holder or such Underwriter within the meaning of the Securities Act, against any losses, claims, judgments, damages or liabilities, whether joint or several, insofar as such losses, claims, judgments, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or allegedly untrue statement of a material fact contained in any Registration Statement under which the sale of such Registrable Securities was registered under the Securities Act, any preliminary prospectus, final prospectus or summary prospectus contained in the Registration Statement, or any amendment or supplement to the Registration Statement, or arise out of or are based upon any omission or the alleged omission to state a material fact required to be stated therein or necessary to make the statement therein not misleading, if the statement or omission was made in reliance upon and in conformity with information furnished in writing to the Company by such selling holder expressly for use therein, and shall reimburse the Company, its directors and officers, and each other selling holder or controlling person for any legal or other expenses reasonably incurred by any of them in connection with investigation or defending any such loss, claim, damage, liability or action. Each selling holder’s indemnification obligations hereunder shall be several and not joint and shall be limited to the amount of any net proceeds actually received by such selling holder.

 

4.3 Conduct of Indemnification Proceedings. Promptly after receipt by any person of any notice of any loss, claim, damage or liability or any action in respect of which indemnity may be sought pursuant to Section 4.1 or 4.2, such person (the “Indemnified Party”) shall, if a claim in respect thereof is to be made against any other person for indemnification hereunder, notify such other person (the “Indemnifying Party”) in writing of the loss, claim, judgment, damage, liability or action; provided, however, that the failure by the Indemnified Party to notify the Indemnifying Party shall not relieve the Indemnifying Party from any liability which the Indemnifying Party may have to such Indemnified Party hereunder, except and solely to the extent the Indemnifying Party is actually prejudiced by such failure. If the Indemnified Party is seeking indemnification with respect to any claim or action brought against the Indemnified Party, then the Indemnifying Party shall be entitled to participate in such claim or action, and, to the extent that it wishes, jointly with all other Indemnifying Parties, to assume control of the defense thereof with counsel satisfactory to the Indemnified Party. After notice from the Indemnifying Party to the Indemnified Party of its election to assume control of the defense of such claim or action, the Indemnifying Party shall not be liable to the Indemnified Party for any legal or other expenses subsequently incurred by the Indemnified Party in connection with the defense thereof other than reasonable costs of investigation; provided, however, that in any action in which both the Indemnified Party and the Indemnifying Party are named as defendants, the Indemnified Party shall have the right to employ separate counsel (but no more than one such separate counsel) to represent the Indemnified Party and its controlling persons who may be subject to liability arising out of any claim in respect of which indemnity may be sought by the Indemnified Party against the Indemnifying Party, with the fees and expenses of such counsel to be paid by such Indemnifying Party if, based upon the written advice of counsel of such Indemnified Party, representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them. No Indemnifying Party shall, without the prior written consent of the Indemnified Party, consent to entry of judgment or effect any settlement of any claim or pending or threatened proceeding in respect of which the Indemnified Party is or could have been a party and indemnity could have been sought hereunder by such Indemnified Party, unless such judgment or settlement includes an unconditional release of such Indemnified Party from all liability arising out of such claim or proceeding.

 

 

4.4 Contribution.

 

4.4.1 If the indemnification provided for in the foregoing Sections 4.1, 4.2 and 4.3 is unavailable to any Indemnified Party in respect of any loss, claim, damage, liability or action referred to herein, then each such Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall contribute to the amount paid or payable by such Indemnified Party as a result of such loss, claim, damage, liability or action in such proportion as is appropriate to reflect the relative fault of the Indemnified Parties and the Indemnifying Parties in connection with the actions or omissions which resulted in such loss, claim, damage, liability or action, as well as any other relevant equitable considerations. The relative fault of any Indemnified Party and any Indemnifying Party shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by such Indemnified Party or such Indemnifying Party and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission.

 

4.4.2 The parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 4.4 were determined by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to in the immediately preceding Section 4.4.1.

 

4.4.3 The amount paid or payable by an Indemnified Party as a result of any loss, claim, damage, liability or action referred to in the immediately preceding paragraph shall be deemed to include, subject to the limitations set forth above, any legal or other expenses incurred by such Indemnified Party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this Section 4.4, no holder of Registrable Securities shall be required to contribute any amount in excess of the dollar amount of the net proceeds (after payment of any underwriting fees, discounts, commissions or taxes) actually received by such holder from the sale of Registrable Securities which gave rise to such contribution obligation. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) with respect to any action shall be entitled to contribution in such action from any person who was not guilty of such fraudulent misrepresentation.

 

 

5. UNDERWRITING AND DISTRIBUTION.

 

5.1 Rule 144. The Company covenants that it shall file any reports required to be filed by it under the Securities Act and the Exchange Act and shall take such further action as the holders of Registrable Securities may reasonably request, all to the extent required from time to time to enable such holders to sell Registrable Securities without registration under the Securities Act within the limitation of the exemptions provided by Rule 144 under the Securities Act, as such Rules may be amended from time to time, or any similar rule or regulation hereafter adopted by the Commission.

 

6. MISCELLANEOUS.

 

6.1 Effectiveness; Other Registration Rights.

 

6.1.1 As of the Closing, this Agreement shall be automatically effective, without further action by any party hereto, and each of the Initial Investors and SPAC represent and warrant that this Agreement shall amend and restate the Existing Agreement in its entirety and supersede any other registration rights agreement or similar agreement. If the Business Combination Agreement is terminated for any reason, then this Agreement shall be void and of no force and effect.

 

6.1.2 The Company represents and warrants that no person, other than the holders of the Registrable Securities, has any right to require the Company to register any shares of the Company’s capital stock for sale or to include shares of the Company’s capital stock in any registration filed by the Company for the sale of shares of capital stock for its own account or for the account of any other person.

 

6.2 Assignment; No Third Party Beneficiaries. 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. This Agreement and the rights, duties and obligations of the holders of Registrable Securities hereunder may be freely assigned or delegated by such holder of Registrable Securities in conjunction with and to the extent of any transfer of Registrable Securities by any such holder. This Agreement and the provisions hereof shall be binding upon and shall inure to the benefit of each of the parties, to the permitted assigns of the Holders or holder of Registrable Securities or of any assignee of the Holders or holder of Registrable Securities. This Agreement is not intended to confer any rights or benefits on any persons that are not party hereto other than as expressly set forth in Article 4 and this Section 6.2.

 

6.3 Notices. All notices, demands, requests, consents, approvals or other communications (collectively, “Notices”) required or permitted to be given hereunder or which are given with respect to this Agreement shall be in writing and shall be personally served, delivered by reputable air courier service with charges prepaid, or transmitted by hand delivery, telegram, telex or facsimile, addressed as set forth below, or to such other address as such party shall have specified most recently by written notice. Notice shall be deemed given on the date of service or transmission if personally served or transmitted by telegram, telex or facsimile; provided, that if such service or transmission is not on a business day or is after normal business hours, then such notice shall be deemed given on the next business day. Notice otherwise sent as provided herein shall be deemed given on the next business day following timely delivery of such notice to a reputable air courier service with an order for next-day delivery.

 

 

To the Company:

 

c/o North Atlantic Imports, LLC

1073 W. 1700

N. Logan, UT 84321

Attention: Roger Dahle

Email: [email protected]

 

with a copy to:

 

O’Melveny & Myers LLP

2765 Sand Hill Road

Menlo Park, CA 94025

Attention: Warren T. Lazarow, Esq. and Noah Kornblith

Email: [email protected] and [email protected]

To a Holder, to the address set forth below such Holder’s name on Exhibit A hereto.

 

6.4 Severability. This Agreement shall be deemed severable, and the invalidity or unenforceability of any term or provision hereof shall not affect the validity or enforceability of this Agreement or of any other term or provision hereof. Furthermore, in lieu of any such invalid or unenforceable term or provision, the parties hereto intend that there shall be added as a part of this Agreement a provision as similar in terms to such invalid or unenforceable provision as may be possible that is valid and enforceable.

 

6.5 Counterparts. This Agreement may be executed in multiple counterparts, each of which shall be deemed an original, and all of which taken together shall constitute one and the same instrument. Delivery of a signed counterpart of this Agreement by facsimile or email/pdf transmission shall constitute valid and sufficient delivery thereof.

 

6.6 Entire Agreement. This Agreement (including all agreements entered into pursuant hereto and all certificates and instruments delivered pursuant hereto and thereto) constitute the entire agreement of the parties with respect to the subject matter hereof and supersede all prior and contemporaneous agreements, representations, understandings, negotiations and discussions between the parties, whether oral or written.

 

6.7 Modifications and Amendments. No amendment, modification or termination of this Agreement shall be binding upon any party unless executed in writing by such party.

 

6.8 Titles and Headings. Titles and headings of sections of this Agreement are for convenience only and shall not affect the construction of any provision of this Agreement.

 

6.9 Waivers and Extensions. Any party to this Agreement may waive any right, breach or default which such party has the right to waive, provided that such waiver will not be effective against the waiving party unless it is in writing, is signed by such party, and specifically refers to this Agreement. Waivers may be made in advance or after the right waived has arisen or the breach or default waived has occurred. Any waiver may be conditional. No waiver of any breach of any agreement or provision herein contained shall be deemed a waiver of any preceding or succeeding breach thereof nor of any other agreement or provision herein contained. No waiver or extension of time for performance of any obligations or acts shall be deemed a waiver or extension of the time for performance of any other obligations or acts.

 

 

6.10 Remedies Cumulative. In the event that the Company fails to observe or perform any covenant or agreement to be observed or performed under this Agreement, the Holder or any other holder of Registrable Securities may proceed to protect and enforce its rights by suit in equity or action at law, whether for specific performance of any term contained in this Agreement or for an injunction against the breach of any such term or in aid of the exercise of any power granted in this Agreement or to enforce any other legal or equitable right, or to take any one or more of such actions, without being required to post a bond. None of the rights, powers or remedies conferred under this Agreement shall be mutually exclusive, and each such right, power or remedy shall be cumulative and in addition to any other right, power or remedy, whether conferred by this Agreement or now or hereafter available at law, in equity, by statute or otherwise.

 

6.11 Governing Law. This Agreement shall be governed by, interpreted under, and construed in accordance with the internal laws of the State of New York applicable to agreements made and to be performed within the State of New York, without giving effect to any choice-of-law provisions thereof that would compel the application of the substantive laws of any other jurisdiction. The Company irrevocably submits to the nonexclusive jurisdiction of any New York State or United States Federal court sitting in The City of New York, Borough of Manhattan, over any suit, action or proceeding arising out of or relating to this Agreement. The Company irrevocably waives, to the fullest extent permitted by law, any objection that they may now or hereafter have to the laying of venue of any such suit, action or proceeding brought in such a court and any claim that any such suit, action or proceeding brought in such a court has been brought in an inconvenient forum.

 

6.12 Waiver of Trial by Jury. EACH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES THE RIGHT TO A TRIAL BY JURY IN ANY ACTION, SUIT, COUNTERCLAIM OR OTHER PROCEEDING (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF, CONNECTED WITH OR RELATING TO THIS AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREBY, OR THE ACTIONS OF THE HOLDER IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE OR ENFORCEMENT HEREOF.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

 

IN WITNESS WHEREOF, the parties have caused this Amended and Restated Registration Rights Agreement to be executed and delivered by their duly authorized representatives as of the date first written above.

 

 

COMPANY:
ACKRELL SPAC PARTNERS I CO.
By:
	Name:
	Title:
INITIAL INVESTORS:
ACKRELL SPAC SPONSORS I LLC
By:
	Name:
	Title:
EARLYBIRDCAPITAL, INC.
By:
	Name:
	Title:

 

WILLIAM A. LAMKIN
By:
	Name:	William A. Lamkin
DANIEL L. SHEEHAN
By:
	Name:	Daniel L. Sheehan

 

[Signature Page to Registration Rights Agreement]

 

 

HOLDERS:
NORTH ATLANTIC IMPORTS, INC.
By:
Name:
Title:
ROGER DAHLE
By:
Name:	Roger Dahle

 

[Signature Page to Registration Rights Agreement]

 

 

EXHIBIT A

 

Name and Address of Holders

 

Ackrell SPAC Sponsors I LLC
c/o Steve Cannon
2093 Philadelphia Pike #1968
Claymont, DE 19703

 

EarlyBirdCapital, Inc.
366 Madison Avenue, 8th Floor
New York, NY 10017

 

William A. Lamkin
2093 Philadelphia Pike #1968
Claymont, DE 19703

 

Daniel L. Sheehan
2093 Philadelphia Pike #1968
Claymont, DE 19703

 

Roger Dahle
1073 W 1700 N

Logan, Utah 84341

 

North Atlantic Imports, Inc.

OMC Chambers, Wickhams Cay 1, Road Town

Tortola, British Virgin Islands

 

 

A-1

 

Exhibit 10.2

 

Execution Version

 

LOCK-UP AGREEMENT

 

This Lock-Up Agreement is dated as of December 22, 2021 and is by and among Blackstone Products, Inc., a Delaware corporation (the “Company”), and each of the stockholder parties identified on Exhibit A hereto and the other Persons who enter into a joinder to this Agreement substantially in the form of Exhibit B hereto with the Company in order to become a “Stockholder Party” for purposes of this Agreement (collectively, the “Stockholder Parties”).

 

BACKGROUND:

 

WHEREAS, the Stockholder Parties own or will own equity interests in the Company and/or Ackrell SPAC Partners I Co., a Delaware corporation (“SPAC”);

 

WHEREAS, pursuant to that certain Business Combination Agreement, dated as of December 22, 2021 by and among the Company, SPAC, Ackrell Merger Sub, Inc. , a newly formed Delaware corporation and wholly-owned subsidiary of the Company (“Merger Sub”), North Atlantic Imports, LLC, a Utah limited liability company (“NAI”), Roger Dahle, an individual residing in Utah and holder of certain membership interests in the Company (“Dahle”), and North Atlantic Imports, Inc., a business company formed under the laws of the British Virgin Islands (“NAI-BV”) (as it may be amended, supplemented, restated or otherwise modified from time to time, the “Business Combination Agreement”), (i) Merger Sub will be merged with and into SPAC, with SPAC surviving the Merger as a wholly-owned subsidiary of the Company (the “Merger”), (ii) each share of SPAC’s common stock, par value $0.0001 per share (“SPAC Common Stock”) issued and outstanding immediately prior to the Effective Time shall automatically be converted into and exchanged (the “Conversion”) for one validly issued, fully paid and nonassessable share of the Company’s common stock, par value $0.0001 per share (“Company Common Stock”), (iii) NAI-BV will contribute (the “NAI Contribution”) 45 shares of common stock, par value $1.00 per share of Cowell International Inc. (“Cowell”), a Utah corporation (“Cowell Common Stock”) to the Company in exchange for Company Common Stock, and 33 shares of Cowell Common Stock to SPAC and Cowell will redeem 22 shares of Cowell Common Stock in exchange for the Cash Consideration, (iv) Dahle will contribute (the “Dahle Contribution”) all of his membership interests in the Company to Company in exchange for shares of Company Common Stock, on the terms and subject to the conditions set forth therein (collectively, the Merger, Conversion, NAI Contribution, Dahle Contribution and the other transactions contemplated by the Business Combination Agreement, the “Transactions”) and (v) following the consummation of the Transactions, the Company will be renamed “Blackstone Holdings, Inc.” (the Company from and after the Transactions sometimes referred to herein as the “Surviving Corporation”); and

 

WHEREAS, the parties wish to enter into this Agreement to set forth obligations described above and make certain additional agreements to each other in connection with the Transactions, including (among others) with respect to restrictions on transfer of certain equity interests in the Surviving Corporation.

 

NOW, THEREFORE, the parties agree as follows:

 

 

Article I

INTRODUCTORY MATTERS

 

1.1 Defined Terms. Capitalized terms used but not otherwise defined herein shall have the respective meanings ascribed to such terms in the Business Combination Agreement. For purposes of this Agreement:

 

“Action” has the meaning set forth in Section 3.8.

 

“Affiliate” has the meaning set forth in Rule 12b-2 promulgated under the Exchange Act, as in effect on the date hereof.

 

“Agreement” means this Lock-up Agreement, as the same may be amended, supplemented, restated or otherwise modified from time to time in accordance with the terms hereof.

 

“Board” means the board of directors of the Company.

 

“Business Combination Agreement” has the meaning set forth in the Background.

 

“Business Day” means a day other than a Saturday, Sunday, federal or New York State holiday or other day on which commercial banks in New York City are authorized or required by Law to close; provided, that banks shall not be deemed to be authorized or obligated to be closed due to a “shelter in place” or similar closure of physical branch locations at the direction of any Governmental Authority if such banks’ electronic funds transfer systems (including for wire transfers) are open for use by customers on such day.

 

“Change of Control” has the meaning set forth in Section 2.1(b)(iii).

 

“Chosen Courts” has the meaning set forth in Section 3.7.

 

“Company” has the meaning set forth in the Background.

 

“Company Common Stock” has the meaning set forth in the Background.

 

“Covered Securities” has the meaning set forth in Section 2.1(a).

 

“Escrowed Shares” has the meaning set forth in the Subscription Agreement.

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder, as the same may be amended from time to time.

 

“Governmental Authority” means any nation or government, any state or other political subdivision thereof, and any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government (including stock exchange authorities).

 

“immediate family member” has the meaning set forth in Section 2.1(b).

 

“Law” means any federal, state, local, municipal, foreign or other law, statute, legislation, principle of common law, ordinance, code, edict, decree, proclamation, treaty, convention, rule, regulation, directive, requirement, writ, injunction, settlement, Order or Consent that is or has been issued, enacted, adopted, passed, approved, promulgated, made, implemented or otherwise put into effect by or under the authority of any Governmental Authority.

 

 

“Lock-Up Period” has the meaning set forth in Section 2.1(a).

 

“Merger” has the meaning set forth in the Background.

 

“Non-Recourse Party” means any past, present or future director, officer, employee, incorporator, member, partner, stockholder, Affiliate, agent, attorney, advisor or representative of any named party to this Agreement and any past, present or future director, officer, employee, incorporator, member, partner, stockholder, Affiliate, agent, attorney, advisor or representative of any of the foregoing.

 

“Permitted Transferees” means with respect to a Stockholder Party, a Transferee of shares that agrees to become party to, and to be bound to the same extent as its Transferor by the terms of, this Agreement.

 

“Person” means an individual, a partnership, a corporation, a limited partnership, a limited liability company, a syndicate, an association, a joint stock company, a trust, an entity, a joint venture, an unincorporated organization, or other form of business organization, whether or not regarded as a legal entity under applicable Law, a person (including, without limitation, a “person” as defined in Section 13(d)(3) of the Exchange Act) or any Governmental Authority or any department, agency or political subdivision thereof.

 

“Remaining Shares” has the meaning set forth in the Subscription Agreements.

 

“shares” means shares of Company Common Stock received by the Stockholder Parties pursuant to the Business Combination Agreement; provided, however, that, for the avoidance of doubt, such term shall not include (i) shares of Company Common Stock or other securities convertible into or exercisable or exchangeable for Company Common Stock, in each case, acquired in open market transactions after the Closing Date, or (ii) shares of Company Common Stock issued in any private investment in public securities financing being conducted by the SPAC in connection with the Merger.

 

“Stockholder Parties” has the meaning set forth in the Preamble.

 

“Subscribers” has the meaning set forth the Subscription Agreements.

 

“Surviving Corporation” has the meaning set forth in the Background.

 

“Transferors” has the meaning set forth in the Subscription Agreements.

 

1.2 Construction. The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent, and no rule of strict construction will be applied against any party. Unless the context otherwise requires: (a) “or” is disjunctive but not exclusive, (b) words in the singular include the plural, and in the plural include the singular, and (c) the words “hereof”, “herein”, and “hereunder” and words of similar import when used in this Agreement refer to this Agreement as a whole and not to any particular provision of this Agreement, and Section references are to sections of this Agreement unless otherwise specified.

 

 

Article II
LOCK-UP

 

2.1 Lock-Up.

 

(a) During the period beginning at the Effective Time and continuing to and including the date that is one hundred eighty (180) days after the Closing Date (as defined in the Business Combination Agreement) (the “Lock-Up Period”), each Stockholder Party agrees not to, directly or indirectly, offer, sell, contract to sell, pledge, grant any option to purchase, make any short sale or otherwise dispose of any shares of Company Common Stock, together with any (a) securities paid as dividends or distributions with respect to such securities or (b) securities that are exchangeable or convertible into shares of Company Common Stock, owned directly by such Stockholder Party (including holding as a custodian) or with respect to which such Stockholder Party has beneficial ownership within the rules and regulations of the U.S. Securities and Exchange Commission (collectively, the “Covered Securities”). The foregoing restriction is expressly agreed to preclude such Stockholder Parties from engaging in any hedging or other transaction which is designed to or which reasonably could be expected to lead to or result in a sale or disposition of the Covered Securities even if such Covered Securities would be disposed of by someone other than such Stockholder Parties. Such prohibited hedging or other transactions would include, without limitation, any short sale or any purchase, sale or grant of any right (including, without limitation, any put or call option) with respect to any of the Covered Securities or with respect to any security that includes, relates to, or derives any significant part of its value from such Covered Securities.

 

(b) Notwithstanding the foregoing or anything in this Agreement to the contrary, at any time after (but in no event before) the later of (x) the date that the Escrowed Shares are transferred to the Subscribers or (y) the Remaining Shares are transferred to the Transferors in each case pursuant to the applicable provisions of Section 2 of the Subscription Agreements, a Stockholder Party may transfer or dispose of its Covered Securities (i) by will, other testamentary document or intestacy, (ii) as a bona fide gift or gifts, including to charitable organizations or for bona fide estate planning purposes, (iii) to any trust, partnership, limited liability company, corporation or other entity for the direct or indirect benefit of the undersigned or an immediate family member of the undersigned (for purposes of this Section 2.1, “immediate family member” shall mean any relationship by blood, current or former marriage or adoption, not more remote than first cousin), (iv) in the case of an individual, (x) to any immediate family member or other dependent or (y) to a trust, the beneficiary of which is either an immediate family member of such individual or a charitable organization and, in each case, the sole trustee of which is such individual, (v) in the case of an individual, pursuant to a qualified domestic relations order, (vi) as a pro rata distribution to limited partners, members or stockholders of such Stockholder Party, (vii) to its Affiliated investment fund or other Affiliated entity controlled or managed by such Stockholder Party or its Affiliates, (viii) to a nominee or custodian of a Person to whom a disposition or transfer would be permissible under clauses (i) through (vii) above, (ix) pursuant to an order or decree of a Governmental Authority, (x) pursuant to a bona fide third-party tender offer, merger, consolidation or other similar transaction, in each case, both approved by the Board and made to all holders of the shares involving a Change of Control (as defined below) (including negotiating and entering into an agreement providing for any such transaction), provided that in the event that such tender offer, merger, consolidation or other such transaction is not completed, such Stockholder Party’s Covered Securities shall remain subject to the provisions of this Section 2.1, (xi) to the Company (1) pursuant to the exercise of any option to purchase Company Common Stock granted by the Company pursuant to any employee benefit plans or arrangements (including employee benefit plans or arrangements assumed in connection with the Merger) which are set to expire during the Lock-Up Period, where any Company Common Stock received by the undersigned upon any such exercise will be subject to the terms of this Section 2.1, or (2) for the purpose of satisfying any withholding taxes (including estimated taxes) due as a result of the exercise of any option to purchase Company Common Stock or the vesting of any restricted stock awards granted by the Company pursuant to employee benefit plans or arrangements (including employee benefit plans or arrangements assumed in connection with the Merger) which are set to expire or automatically vest during the Lock-Up Period, where any Company Common Stock received by such Stockholder Party upon any such exercise or vesting will be subject to the terms of this Section 2.1, (xii) pursuant to transactions to satisfy any U.S. federal, state, or local income tax obligations of the Stockholder Party (or its direct or indirect owners) arising from a change in the U.S. Internal Revenue Code of 1986, as amended (the “Code”), or the U.S. Treasury Regulations promulgated thereunder (the “Regulations”) after the date on which the Business Combination Agreement was executed by the parties thereto, and such change prevents such transaction from qualifying as an exchange to which Section 351 of the Code applies (and such transaction 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), or (xiii) with the prior written consent of the Company (with the approval of a majority of the disinterested directors); provided that:

 

 

(i) in the case of each transfer or distribution pursuant to clauses (ii) through (viii) above, (a) each donee, trustee, distributee or transferee, as the case may be, agrees to be bound in writing by the restrictions set forth in this Section 2.1; and (b) any such transfer or distribution shall not involve a disposition for value, other than with respect to any such transfer or distribution for which the transferor or distributor receives (x) equity interests of such transferee or (y) such transferee’s interests in the transferor;

 

(ii) in the case of each transfer or distribution pursuant to clauses (ii) through (viii) above, if any public reports or filings (including filings under Section 16(a) of the Exchange Act) reporting a reduction in beneficial ownership of shares shall be required or shall be voluntarily made during the Lock-Up Period such report or filing shall disclose that such donee, trustee, distributee or transferee, as the case may be, agrees to be bound in writing by the restrictions set forth herein; and

 

(iii) for purposes of clause (xi) above, “Change of Control” shall mean the transfer to or acquisition by (whether by tender offer, merger, consolidation, division or other similar transaction), in one transaction or a series of related transactions, a Person or group of Affiliated Persons (other than an underwriter pursuant to an offering), of the Company’s voting securities if, after such transfer or acquisition, such Person or group of Affiliated Persons would beneficially own (within the meaning set forth in Rule 13d-3 promulgated under the Exchange Act) more than 50% of the outstanding voting securities of the Company.

 

(c) For the avoidance of doubt, each Stockholder Party shall be permitted to convert outstanding preferred stock, warrants to acquire preferred stock or convertible securities or warrants to acquire shares of Company Common Stock into shares of Company Common Stock; provided that any such shares of Company Common Stock or warrants received upon such conversion shall be subject to the restrictions set forth in this Section 2.1.

 

(d) Each Stockholder Party shall be permitted to enter into a trading plan established in accordance with Rule 10b5-1 under the Exchange Act during the applicable Lock-Up Period so long as no transfers or other dispositions of such Stockholder Party’s Covered Securities in contravention of this Section 2.1(d) are effected prior to the expiration of the applicable Lock-Up Period.

 

(e) Each Stockholder Party also agrees and consents to the entry of stop transfer instructions with the Company’s transfer agent and registrar against the transfer of the Covered Securities except in compliance with the foregoing restrictions and to the addition of a legend to such Stockholder Party’s shares describing the foregoing restrictions. If any transfer is made or attempted to be made contrary to the provisions of this Agreement, such purported prohibited transfer shall be null and void ab initio, and the Company shall refuse to recognize any such purported transferee of the Covered Securities as one of its equity holders for any purpose. The Company agrees that it shall not unreasonably delay or condition or refuse to provide its consent to the transfer agent to remove such restrictions for transfers permitted or not prohibited under this Agreement or the Prospectus.

 

Article III
GENERAL PROVISIONS

 

3.1 Termination. Subject to Section 3.13 or the early termination of any provision as a result of an amendment to this Agreement agreed to by the Company and the Stockholder Parties, as provided under Section 3.3, this Agreement (other than Article III hereof), shall not terminate with respect to a Stockholder Party and its Permitted Transferees until the expiration of the Lock-Up Period.

 

 

3.2 Notices. All notices and other communications among the parties shall be in writing and shall be deemed to have been duly given (i) when delivered in person, (ii) when delivered after posting in the United States mail having been sent registered or certified mail return receipt requested, postage prepaid, (iii) when delivered by FedEx or other nationally recognized overnight delivery service or (iv) when e-mailed during normal business hours (and otherwise as of the immediately following Business Day), addressed as follows:

 

If to the Company (or the Surviving Corporation), to:

 

Prior to the Closing Date:

 

Ackrell SPAC Partners I Co.
2093 Philadelphia Pike #1968
Claymont, DE 19703
Attention:
Email:

 

with a copy (not constituting notice) to:

 

Ellenoff Grossman & Schole LLP

1345 Avenue of the Americas, 11^th Floor

New York, NY 10105

Attention: Stuart Neuhauser and Matthew A. Gray

Email: [email protected] and [email protected]

 

On or following the Closing Date:

 

c/o North Atlantic Imports, LLC
1073 W. 1700 N.
Logan, UT 84321
Attention: Roger Dahle, Chief Executive Officer
Email: [email protected]

 

with a copy (not constituting notice) to:

 

O’Melveny & Myers LLP
2765 Sand Hill Road

Menlo Park, CA 94025

Attention: Warren Lazarow and Noah Kornblith
Email: [email protected] and [email protected]

 

If to any Stockholder Party, to such address indicated on the Company’s records with respect to such Stockholder Party or to such other address or addresses as such Stockholder Party may from time to time designate in writing.

 

3.3 Amendment; Waiver.

 

(a) The terms and provisions of 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 each of the Stockholder Parties (if this Agreement has not been terminated with respect to such Stockholder Party). Prior to the consummation of the Merger, this Agreement may not be amended without the prior written consent of NAI.

 

 

(b) Except as expressly set forth in this Agreement, neither the failure nor delay on the part of any party hereto to exercise any right, remedy, power or privilege under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any right, remedy power or privilege preclude any other or further exercise of the same or of any other right, remedy, power or privilege, nor shall any waiver of any right, remedy, power or privilege with respect to any occurrence be construed as a waiver of such right, remedy, power or privilege with respect to any other occurrence.

 

(c) No party shall be deemed to have waived any claim arising out of this Agreement, or any right, remedy, power or privilege under this Agreement, unless the waiver of such claim, right, remedy, power or privilege is expressly set forth in a written instrument duly executed and delivered on behalf of such party; and any such waiver shall not be applicable or have any effect except in the specific instance in which it is given.

 

(d) Any party hereto may unilaterally waive any of its rights hereunder in a signed writing delivered to the Company.

 

3.4 Further Assurances. The parties hereto will sign such further documents and do and perform and cause to be done such further acts and things necessary, proper or advisable in order to give full effect to this Agreement and every provision hereof.

 

3.5 Assignment. No party hereto shall assign this Agreement or any part hereof without the prior written consent of the other parties. Subject to the foregoing, this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective permitted successors and assigns. Any attempted assignment in violation of the terms of this Section 3.5 shall be null and void, ab initio.

 

3.6 Third Parties. Except as provided for in Article III with respect to any Non-Recourse Party, 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.

 

3.7 Governing Law and Jurisdiction. This Agreement shall be governed by, and construed in accordance with, the Laws of the State of Delaware applicable to contracts executed in and to be performed in that State. All actions and proceedings arising out of or relating to this Agreement shall be heard and determined exclusively in any Delaware Chancery Court, or if such court does not have subject matter jurisdiction, any state or federal court located in the State of Delaware (the “Chosen Courts”). The parties hereto hereby (a) irrevocably submit to the exclusive jurisdiction of the Chosen Courts for themselves and with respect to their respective properties for the purpose of any Action arising out of or relating to this Agreement brought by any party hereto, and (b) agree not to commence any Action relating thereto except in the Chosen Courts, other than Actions in any court of competent jurisdiction to enforce any judgment, decree or award rendered by any such Chosen Court as described herein. Each of the parties further agrees that notice as provided herein shall constitute sufficient service of process and the parties further waive any argument that such service is insufficient. Each of the parties hereby irrevocably and unconditionally waives, and agrees not to assert, by way of motion or as a defense, counterclaim or otherwise, in any Action arising out of or relating to this Agreement or the transactions contemplated hereby, (i) any claim that it is not personally subject to the jurisdiction of the courts in Delaware as described herein for any reason, (ii) that it or its property is exempt or immune from jurisdiction of any such court or from any legal process commenced in such courts (whether through service of notice, attachment prior to judgment, attachment in aid of execution of judgment, execution of judgment or otherwise) and (iii) that (A) the Action in any such court is brought in an inconvenient forum, (B) the venue of such Action is improper or (C) this Agreement, or the subject matter hereof, may not be enforced in or by such courts.

 

 

3.8 Waiver of Jury Trial. Each of the parties hereto hereby waives to the fullest extent permitted by applicable Law any right it may have to a trial by jury with respect to any litigation directly or indirectly arising out of, under or in connection with this Agreement. Each of the parties hereto (a) certifies that 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 that foregoing waiver and (b) acknowledges that it and the other hereto have been induced to enter into this Agreement by, among other things, the mutual waivers and certifications in this ‎Section 3.8.

 

3.9 Specific Performance. The parties agree that irreparable damage for which monetary damages, even if available, would not be an adequate remedy, would occur in the event that the parties do not perform their obligations under the provisions of this Agreement in accordance with its specified terms or otherwise breach such provisions. The parties acknowledge and agree that (a) the parties shall be entitled to an injunction, specific performance, or other equitable relief, to prevent breaches of this Agreement and to enforce specifically the terms and provisions hereof, without proof of damages, prior to the valid termination of this Agreement, and (b) the right of specific enforcement is an integral part of the transactions contemplated by this Agreement and without that right, none of the parties would have entered into this Agreement. Each party agrees that it will not oppose the granting of specific performance and other equitable relief on the basis that the other parties have an adequate remedy at law or that an award of specific performance is not an appropriate remedy for any reason at law or equity. The parties acknowledge and agree that any party seeking an injunction to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement in accordance with this Section 3.9 shall not be required to provide any bond or other security in connection with any such injunction.

 

3.10 Entire Agreement. This Agreement constitutes the entire agreement among the parties relating to the subject matter hereof and supersedes any other agreements, whether written or oral, that may have been made or entered into by or among any of the parties hereto relating to the subject matter hereof. No representations, warranties, covenants, understandings, agreements, oral or otherwise, relating to the subject matter of this Agreement exist between the parties except as expressly set forth or referenced in this Agreement.

 

3.11 Severability. If any provision of this Agreement is held invalid or unenforceable by any court of competent jurisdiction, the other provisions of this Agreement 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.

 

3.12 Headings; Counterparts. The captions 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 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. A signed copy of this Agreement delivered by facsimile, e-mail or other means of electronic transmission shall be deemed to have the same legal effect as delivery of an original signed copy of this Agreement.

 

 

3.13 Effectiveness; Termination of Existing Stockholders and Securityholders Agreements. This Agreement shall be valid and enforceable as of the date of this Agreement and may not be revoked by any party hereto; provided that the provisions herein (other than this Article III) shall not be effective until the consummation of the Merger. In the event the Business Combination Agreement is terminated in accordance with its terms, this Agreement shall automatically terminate and be of no further force or effect.

 

3.14 Non-Recourse. 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 entities that are expressly named as parties hereto, and then only with respect to the specific obligations set forth herein with respect to such party. Except to the extent a named party to this Agreement (and then only to the extent of the specific obligations undertaken by such named party in this Agreement), no Non-Recourse Party 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 the parties to this Agreement or for any claim based on, arising out of, or related to this Agreement or the transactions contemplated hereby.

 

3.15 Representation of NAI. Each Stockholder Party acknowledges and agrees that it has had an adequate opportunity to review this Agreement with its counsel prior to executing this Agreement. Each Stockholder Party further acknowledges and agrees that O’Melveny & Myers LLP represents NAI only, and such law firm does not represent any Stockholder Party in connection with the Business Combination Agreement, this Agreement or any of the transactions contemplated thereby or hereby.

 

[Remainder of Page Intentionally Left Blank]

 

 

IN WITNESS WHEREOF, the parties hereto have executed this Lock-Up Agreement on the day and year first above written.

 

	BLACKSTONE PRODUCTS, INC.
	By:
	Name:
	Title:

 

 

IN WITNESS WHEREOF, the parties hereto have executed this Lock-Up Agreement on the day and year first above written.

 

	ACKRELL SPAC SPONSORS I LLC
	By:
		Name:
		Title:
	Roger Dahle
	NORTH ATLANTIC IMPORTS, INC.
	By:
		Name:
		Title:

 

 

Exhibit A

Schedule of Stockholder Parties

 

Ackrell SPAC Sponsors I LLC

 

Roger Dahle

 

North Atlantic Imports, Inc.

 

 

Exhibit B

FORM OF JOINDER TO LOCK-UP AGREEMENT

 

December 22, 2021

 

Reference is made to the Lock-Up Agreement, dated as of December 22, 2021, by and among Blackstone Products, Inc., a Delaware corporation (the “Company”, as applicable), and the other Stockholder Parties (as defined therein) from time to time party thereto (as amended from time to time, the “Lock-Up Agreement”). Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to such terms in the Lock-Up Agreement.

 

Each of the Company and each undersigned holder of shares of the Company (each, a “New Stockholder Party”) agrees that this Joinder to the Lock-Up Agreement (this “Joinder”) is being executed and delivered for good and valuable consideration.

 

Each undersigned New Stockholder Party hereby agrees to and does become party to the Lock-Up Agreement as a Stockholder Party. This Joinder shall serve as a counterpart signature page to the Lock-Up Agreement and by executing below each undersigned New Stockholder Party is deemed to have executed the Lock-Up Agreement with the same force and effect as if originally named a party thereto.

 

This Joinder may be executed in multiple counterparts, including by means of facsimile or electronic signature, each of which shall be deemed an original, but all of which together shall constitute the same instrument.

 

[Remainder of Page Intentionally Left Blank.]

 

 

IN WITNESS WHEREOF, the undersigned have duly executed this Joinder as of the date first set forth above.

 

	[NEW STOCKHOLDER PARTY]
	By:
	Name:
	Title:
	BLACKSTONE PRODUCTS, INC
	By:
	Name:
	Title:

 

 

14

Exhibit 10.3

 

STOCKHOLDER SUPPORT AGREEMENT

 

This Stockholder Support Agreement (this “Agreement”), dated as of December 22, 2021, is entered into by and among Ackrell SPAC Partners I Co., a Delaware corporation (“Ackrell”), North Atlantic Imports, LLC, a Utah limited liability company (the “Company”), and Ackrell SPAC Sponsors I LLC, a Delaware limited liability company (the “Stockholder”). Capitalized terms used but not otherwise defined in this Agreement shall have the meanings ascribed to them in the Business Combination Agreement (as defined below).

 

RECITALS

 

WHEREAS, concurrently herewith, Ackrell, the Company, Blackstone Products, Inc., a newly formed Delaware corporation and wholly-owned subsidiary of Ackrell (“Newco”), Ackrell Merger Sub, Inc., a newly formed Delaware corporation and wholly-owned subsidiary of Newco (“Merger Sub”), Roger Dahle, an individual residing in Utah and holder of certain membership interests in the Company (“Dahle”), and North Atlantic Imports, Inc., a business company formed under the laws of the British Virgin Islands (“NAI BVI”), are entering into that certain Business Combination Agreement (as amended, supplemented, restated or otherwise modified from time to time, the “Business Combination Agreement”), pursuant to which (and subject to the terms and conditions set forth therein), inter alia, (i) Merger Sub will be merged with and into Ackrell, with Ackrell surviving the Merger as a wholly-owned subsidiary of Newco (the “Merger”), (ii) each share of Ackrell Common Stock issued and outstanding immediately prior to the Effective Time shall automatically be converted into and exchanged (the “Conversion”) for one validly issued, fully paid and nonassessable share of the Newco’s common stock, par value $0.0001 per share (“Newco Common Stock”) and (iii) NAI BVI will contribute (the “NAI BVI Contribution”) 45 shares of common stock, par value $1.00 per share of Cowell International Inc. (“Cowell”), a Utah corporation (“Cowell Common Stock”) to Newco in exchange for shares of Newco Common Stock, and 33 shares of Cowell Common Stock to Ackrell and Cowell will redeem 22 shares of Cowell Common Stock in exchange for the Cash Consideration, and (iv) Dahle will contribute (the “Dahle Contribution”) all of his membership interests in the Company to Newco in exchange for shares of Newco Common Stock (collectively, the NAI BVI Contribution, Dahle Contribution, Merger, Conversion and the other transactions contemplated by the Business Combination Agreement, the “Transactions”);

 

WHEREAS, as of the date hereof, the Stockholder is the record and “beneficial owner” (within the meaning of Rule 13d-3 under the Securities Exchange Act of 1934, as amended (together with the rules and regulations promulgated thereunder, the “Exchange Act”)) of and is entitled to dispose of and vote the shares of Ackrell Common Stock set forth on the Stockholder’s signature page hereto (the “Owned Shares”; the Owned Shares and any additional shares of Ackrell Common Stock (or any securities convertible into or exercisable or exchangeable for Ackrell Common Stock) in which the Stockholder acquires record and beneficial ownership after the date hereof, including, without limitation, by purchase, as a result of a stock dividend, stock split, recapitalization, combination, reclassification, exchange or change of such securities, or upon exercise or conversion of any securities, the “Covered Shares”); and

 

WHEREAS, as a condition and inducement to the willingness of the Company to enter into the Business Combination Agreement, the Company, Ackrell and the Stockholder are entering into this Agreement.

 

 

AGREEMENT

 

NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and agreements herein contained, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound hereby, the Company, Ackrell and the Stockholder hereby agree as follows:

 

1. Agreement to Vote. Subject to the earlier termination of this Agreement in accordance with Section 3, the Stockholder, in its capacity as a stockholder of Ackrell, irrevocably and unconditionally agrees that, at the Ackrell Stockholders’ Meeting or any other meeting of the stockholders of Ackrell (whether annual or special and whether or not an adjourned or postponed meeting, however called and including any adjournment or postponement thereof), the Stockholder shall, and shall cause any other holder of record of any of the Stockholder’s Covered Shares to:

 

(a) if and when such meeting is held, appear at such meeting or otherwise cause the Stockholder’s Covered Shares to be counted as present thereat for the purpose of establishing a quorum;

 

(b) vote (or execute and return an action by written consent), or cause to be voted at such meeting (or validly execute and return and cause such consent to be granted with respect to), all of the Stockholder’s Covered Shares owned as of the record date for such meeting (or the date that any written consent is executed by the Stockholder) in favor of the Merger and other Transactions and the adoption of the Business Combination Agreement and any other matters necessary or reasonably requested by the Company for consummation of the Merger and the other Transactions, including, without limitation, any actions necessary to effectuate the matters contemplated by the Ackrell Proposals; and

 

(c) vote (or execute and return an action by written consent), or cause to be voted at such meeting, or validly execute and return and cause such consent to be granted with respect to, all of the Stockholder’s Covered Shares against any Ackrell Acquisition Proposal and any other action that (i) would reasonably be expected to materially impede, interfere with, delay, postpone or adversely affect the Merger or any of the other Transactions or result in a breach of any covenant, representation or warranty or other obligation or agreement of Ackrell under the Business Combination Agreement or (ii) would result in the failure of any condition set forth in Section 11.01, Section 11.02 or Section 11.03 of the Business Combination Agreement to be satisfied or result in a breach of any covenant, representation or warranty or other obligation or agreement of the Stockholder contained in this Agreement or (iii) would reasonably be expected to result in a breach of Section 10.04(b) of the Business Combination Agreement.

 

The obligations of the Stockholder specified in this Section 1 shall apply whether or not the Merger or any action described above is recommended by the Board of Directors of Ackrell.

 

 

2. No Inconsistent Agreements. The Stockholder hereby covenants and agrees that the Stockholder shall not, at any time prior to the Termination Date, (i) enter into any voting agreement or voting trust with respect to any of the Stockholder’s Covered Shares that is inconsistent with the Stockholder’s obligations pursuant to this Agreement, (ii) grant a proxy or power of attorney with respect to any of the Stockholder’s Covered Shares that is inconsistent with the Stockholder’s obligations pursuant to this Agreement, or (iii) enter into any agreement or undertaking that is otherwise inconsistent with, or would interfere with, or prohibit or prevent it from satisfying, its obligations pursuant to this Agreement.

 

3. Termination. This Agreement shall automatically terminate, without any notice or other action by any party, be void ab initio and no party shall have any further obligations or liabilities under this Agreement, upon the earliest of (i) the Effective Time, (ii) the termination of the Business Combination Agreement in accordance with its terms or (iii) the time this Agreement is terminated upon the mutual written agreement of Ackrell, the Company and the Stockholder (in each case, without the Stockholder’s prior written consent) (the earliest such date under clause (i), (ii) or (iii) being referred to herein as the “Termination Date”); provided, that the provisions set forth in Sections 10 to 23 shall survive the termination of this Agreement; provided, further, that termination of this Agreement shall not relieve any party hereto from any liability for any Willful Breach of, or actual and intentional fraud in connection with, this Agreement prior to such termination.

 

4. Representations and Warranties of the Stockholder. The Stockholder hereby represents and warrants to Ackrell and the Company as to itself as follows:

 

(a) The Stockholder is the only record and a beneficial owner (within the meaning of Rule 13d-3 under the Exchange Act) of, and has good, valid and marketable title to, the Owned Shares, free and clear of Liens other than as created by this Agreement and Permitted Liens. As of the date hereof, other than the Owned Shares, the Stockholder does not own beneficially or of record any shares of capital stock of Ackrell (or any securities convertible into shares of capital stock of Ackrell).

 

(b) The Stockholder (i) except as provided in this Agreement, has full voting power, full power of disposition and full power to issue instructions with respect to the matters set forth herein, in each case, with respect to the Stockholder’s Covered Shares, (ii) has not entered into any voting agreement or voting trust with respect to any of the Stockholder’s Covered Shares that is inconsistent with the Stockholder’s obligations pursuant to this Agreement, (iii) has not granted a proxy or power of attorney with respect to any of the Stockholder’s Covered Shares that is inconsistent with the Stockholder’s obligations pursuant to this Agreement and (iv) has not entered into any agreement or undertaking that is otherwise inconsistent with, or would interfere with, or prohibit or prevent it from satisfying, its obligations pursuant to this Agreement.

 

(c) The Stockholder (i) if a legal entity, is duly organized, validly existing and, to the extent such concept is applicable, in good standing under the Laws of the jurisdiction of its organization and has all requisite corporate or other power and authority and has taken all corporate or other action necessary in order to, execute, deliver and perform its obligations under this Agreement and to consummate the transactions contemplated hereby or (ii) if an individual, has legal competence and capacity to enter into this Agreement and all necessary authority to execute, deliver and perform its obligations under this Agreement and to consummate the transactions contemplated hereby. This Agreement has been duly executed and delivered by the Stockholder and constitutes a valid and binding agreement of the Stockholder enforceable against the Stockholder in accordance with its terms, subject to the Remedies Exceptions.

 

 

(d) Other than the filings, notices and reports pursuant to, in compliance with or required to be made under the Exchange Act, and other than any pre-merger notification requirements under the HSR Act applicable to the Stockholder, no filings, notices, reports, consents, registrations, approvals, permits, waivers, expirations of waiting periods or authorizations are required to be obtained by the Stockholder from, or to be given by the Stockholder to, or be made by the Stockholder with, any Governmental Authority in connection with the execution, delivery and performance by the Stockholder of this Agreement, the consummation of the transactions contemplated hereby (including, for the avoidance of doubt, those covenants, agreements and obligations under this Agreement that relate to the provisions of the Business Combination Agreement).

 

(e) The execution, delivery and performance of this Agreement by the Stockholder do not, and the consummation of the transactions contemplated hereby (including, for the avoidance of doubt, those covenants, agreements and obligations under this Agreement that relate to the provisions of the Business Combination Agreement) will not, constitute or result in (i) if the Stockholder is a legal entity, a breach or violation of, or a default under, the certificate of incorporation, bylaws, limited liability company agreement or similar governing documents of the Stockholder, (ii) with or without notice, lapse of time or both, a breach or violation of, a termination (or right of termination) of or a default under, the loss of any benefit under, the creation, modification or acceleration of any obligations under or the creation of a Lien on the Covered Shares (other than Permitted Liens) pursuant to any contract binding upon the Stockholder or, assuming (solely with respect to performance of this Agreement and the transactions contemplated hereby), compliance with the matters referred to in Section 4(d), under any applicable Law to which the Stockholder is subject, or (iii) any change in the rights or obligations of any party under any contract legally binding upon the Stockholder, except, in the case of clause (ii) or (iii) directly above, for any such breach, violation, termination, default, creation, loss, acceleration, Lien or change that would not, individually or in the aggregate, reasonably be expected to prevent or materially delay or impair the Stockholder’s ability to perform its obligations hereunder or to consummate the transactions contemplated hereby (including, for the avoidance of doubt, those covenants, agreements and obligations under this Agreement that relate to the provisions of the Business Combination Agreement).

 

(f) As of the date of this Agreement, there is no action, proceeding or, to the Stockholder’s knowledge, investigation pending against the Stockholder or, to the knowledge of the Stockholder, threatened against the Stockholder that questions the beneficial or record ownership of the Stockholder’s Owned Shares, the validity of this Agreement or the performance by the Stockholder of its obligations under this Agreement.

 

(g) The Stockholder understands and acknowledges that the Company is entering into the Business Combination Agreement in reliance upon the execution and delivery of this Agreement by the Stockholder and the representations, warranties, covenants and other agreements of the Stockholder contained herein.

 

 

(h) No investment banker, broker, finder or other intermediary is entitled to any broker’s, finder’s, financial advisor’s or other similar fee or commission for which Ackrell, Merger Sub or the Company is or will be liable in connection with the transactions contemplated hereby based upon arrangements made by or, to the knowledge of the Stockholder, on behalf of the Stockholder, other than, for the avoidance of doubt, Ackrell’s engagement of any investment banker, broker, finder or other intermediary as set forth in the Ackrell Disclosure Schedule.

 

5. Certain Covenants of the Stockholder. Except in accordance with the terms of this Agreement, the Stockholder hereby covenants and agrees as follows:

 

(a) The Stockholder hereby agrees not to, directly or indirectly, prior to the Termination Date, except in connection with the consummation of the Merger, (i) sell, transfer, pledge, encumber, assign, hedge, swap, convert or otherwise dispose of (including by merger (including by conversion into securities or other consideration), by tendering into any tender or exchange offer, by operation of Law or otherwise), either voluntarily or involuntarily (collectively, “Transfer”), or enter into any contract or option with respect to the Transfer of any of the Stockholder’s Covered Shares, or (ii) take any action that would make any representation or warranty of the Stockholder contained herein untrue or incorrect or have the effect of preventing or materially delaying the Stockholder from or in performing its obligations under this Agreement; provided, however, that nothing herein shall prohibit a Transfer (A) to an Affiliate of the Stockholder, (B) occurring by will, testamentary document or intestate succession upon the death of a Stockholder who is an individual or (C) pursuant to community property laws or divorce decree (each, 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 Ackrell, to assume all of the obligations of the Stockholder under, and be bound by all of the terms of, this Agreement in respect of the Covered Shares so Transferred and any Covered Shares subsequently acquired; provided, further, that any Transfer permitted under this Section 5(b) shall not relieve the Stockholder of its obligations under this Agreement. Any Transfer in violation of this Section 5(b) with respect to the Stockholder’s Covered Shares shall be null and void. Nothing in this Agreement shall prohibit direct or indirect transfers of equity or other interests in a Stockholder.

 

(b) The Stockholder hereby authorizes Ackrell to maintain a copy of this Agreement at either the executive office or the registered office of Ackrell.

 

6. Further Assurances. From time to time, at Ackrell’s request and without further consideration, the Stockholder shall execute and deliver such additional documents and take all such further action as may be reasonably necessary or reasonably requested to effect the actions and consummate the transactions contemplated by this Agreement. The Stockholder further agrees not to commence or participate in, and to take all actions necessary to opt out of any class action with respect to, any action or claim, derivative or otherwise, against Ackrell, Newco or Merger Sub or their respective Affiliates, the Sponsor, the Company or any of their respective successors and assigns relating to the negotiation, execution or delivery of this Agreement, the Business Combination Agreement (including the Ackrell Stock Consideration and Cash Consideration) or the consummation of the transactions contemplated hereby and thereby.

 

 

7. Disclosure. The Stockholder hereby authorizes the Company, Newco and Ackrell to publish and disclose in any announcement or disclosure to the extent required by Law or by rule or regulation of the SEC or Nasdaq the Stockholder’s identity and ownership of the Covered Shares and the nature of the Stockholder’s obligations under this Agreement; provided, that prior to any such publication or disclosure, if permitted under such Law, rule or regulation, the Company, Newco and Ackrell have provided the Stockholder with a reasonable opportunity to review and comment upon such announcement or disclosure, which comments the Company, Newco and Ackrell will consider in good faith.

 

8. Changes in Capital Stock. In the event of a stock split, stock dividend or distribution, or any change in Ackrell’s capital stock by reason of any split-up, reverse stock split, recapitalization, combination, reclassification, exchange of shares or the like, the terms “Owned Shares” and “Covered Shares” shall be deemed to refer to and include such shares as well as all such stock dividends and distributions and any securities into which or for which any or all of such shares may be changed or exchanged or which are received in such transaction.

 

9. Amendment and Modification. This Agreement may not be amended, modified or supplemented in any manner, whether by course of conduct or otherwise, except by an instrument in writing signed by Ackrell, the Company and the Stockholder.

 

10. Waiver. Any party to this Agreement may, at any time prior to the Termination Date, waive any of the terms or conditions of this Agreement pursuant to an instrument in writing signed by the party or parties to be bound thereby, or agree to an amendment or modification to this Agreement in the manner contemplated by Section 9 and by an agreement in writing executed in the same manner (but not necessarily by the same Persons) as this Agreement.

 

11. Notices. All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be deemed to have been duly given (i) when delivered in Person, (ii) when delivered after posting in the United States mail having been sent registered or certified mail return receipt requested, postage prepaid, (iii) when delivered by FedEx or other nationally recognized overnight delivery service or (iv) when e-mailed during normal business hours (and otherwise as of the immediately following Business Day), in each case to the respective parties at the following addresses (or at such other address for a party as shall be specified in a notice given in accordance with this Section 11):

 

If to Ackrell, to it at:

 

Ackrell SPAC Partners I Co.
2093 Philadelphia Pike #1968
Claymont, DE 19703
Attention:
Email:

 

 

with a copy (which shall not constitute notice) to:

 

Ellenoff Grossman & Schole LLP

1345 Avenue of the Americas, 11th Floor

New York, NY 10105

Attention: Stuart Neuhauser and Matthew A. Gray

Email: [email protected] and [email protected]

 

If to the Company, to it at:

 

North Atlantic Imports, LLC
1073 W. 1700 N.
Logan, UT 84321
Attention: Roger Dahle, Chief Executive Officer
Email: [email protected]

 

with a copy (which shall not constitute notice) to:

 

O’Melveny & Myers LLP

2765 Sand Hill Road

Menlo Park, CA 94025

Attention: Warren Lazarow and Noah Kornblith

Email: [email protected] and [email protected]

 

If to the Stockholder, to such address indicated on Ackrell’s records with respect to the Stockholder or to such other address or addresses as the Stockholder may from time to time designate in writing.

 

12. No Ownership Interest. Nothing contained in this Agreement shall be deemed to vest in the Company any direct or indirect ownership or incidence of ownership of or with respect to the Covered Shares of the Stockholder. All rights, ownership and economic benefits of and relating to the Covered Shares of the Stockholder shall remain vested in and belong to the Stockholder, and the Company shall have no authority to manage, direct, restrict, regulate, govern or administer any of the policies or operations of Company or exercise any power or authority to direct the Stockholder in the voting or disposition of any of the Stockholder’s Covered Shares, except as otherwise provided herein.

 

13. Entire Agreement. This Agreement (including, for the avoidance of doubt, those covenants, agreements and obligations under this Agreement that relate to the provisions of the Business Combination Agreement) constitute the entire agreement among the parties relating to the subject matter hereof and supersede any other agreements, whether written or oral, that may have been made or entered into by or among any of the parties hereto or any of their respective Affiliates relating to the transactions contemplated hereby. No representations, warranties, covenants, understandings, agreements, oral or otherwise, relating to the matters contemplated by this Agreement exist between the parties except as expressly set forth or referenced in this Agreement (including, for the avoidance of doubt, those covenants, agreements and obligations under this Agreement that relate to the provisions of the Business Combination Agreement).

 

 

14. No Third-Party Beneficiaries. The Stockholder hereby agrees that its representations, warranties and covenants set forth herein are solely for the benefit of the Company in accordance with and subject to the terms of this Agreement, and this Agreement is not intended to, and does not, confer upon any Person other than the parties hereto any rights or remedies hereunder, including the right to rely upon the representations and warranties set forth herein, and the parties hereto hereby further agree that this Agreement may only be enforced against, and any Action that may be based upon, arise out of or relate to this Agreement, or the negotiation, execution or performance of this Agreement may only be made against, the Persons expressly named as parties hereto; provided, that Ackrell shall be an express third-party beneficiary with respect to Section 4, Section 5, Section 6 and Section 7 hereof.

 

15. Governing Law and Venue; Service of Process; Waiver of Jury Trial.

 

(a) 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 that would result in the application of any other jurisdiction’s Laws.

 

(b) Each of the parties irrevocably consents to the exclusive jurisdiction and venue of the Court of Chancery of the State of Delaware, provided, that if subject matter jurisdiction over the matter that is the subject of the legal proceeding is vested exclusively in the U.S. federal courts, such legal proceeding shall be heard in the U.S. District Court for the District of Delaware (together with the Court of Chancery of the State of Delaware “Chosen Courts”), in connection with any matter based upon or arising out of this Agreement. Each party hereby waives, and shall not assert as a defense in any legal dispute, that (i) such Person is not personally subject to the jurisdiction of the Chosen Courts for any reason, (ii) such legal proceeding may not be brought or is not maintainable in the Chosen Courts, (iii) such Person’s property is exempt or immune from execution, (iv) such legal proceeding is brought in an inconvenient forum or (v) the venue of such legal proceeding is improper. Each party hereby consents to service of process in any such proceeding in any manner permitted by Delaware law, further consents to service of process by nationally recognized overnight courier service guaranteeing overnight delivery, or by registered or certified mail, return receipt requested, at its address specified pursuant to Section 11, agrees that process may be served upon them in any manner authorized by the laws of the State of Delaware for such Persons and waives and covenants not to assert or plead any objection which they might otherwise have to such manner of service of process. Notwithstanding the foregoing in this Section 15, a party may commence any action, claim, cause of action or suit in a court other than the Chosen Courts solely for the purpose of enforcing an order or judgment issued by the Chosen Courts. TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAW WHICH CANNOT BE WAIVED, EACH OF THE PARTIES WAIVES ANY RIGHT TO TRIAL BY JURY ON ANY CLAIMS OR COUNTERCLAIMS ASSERTED IN ANY LEGAL DISPUTE RELATING TO THIS AGREEMENT WHETHER NOW EXISTING OR HEREAFTER ARISING. IF THE SUBJECT MATTER OF ANY SUCH LEGAL DISPUTE IS ONE IN WHICH THE WAIVER OF JURY TRIAL IS PROHIBITED, NO PARTY SHALL ASSERT IN SUCH LEGAL DISPUTE A NONCOMPULSORY COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT. FURTHERMORE, NO PARTY SHALL SEEK TO CONSOLIDATE ANY SUCH LEGAL DISPUTE WITH A SEPARATE ACTION OR OTHER LEGAL PROCEEDING IN WHICH A JURY TRIAL CANNOT BE WAIVED.

 

 

16. Assignment; Successors. No party hereto shall assign this Agreement or any part hereof without the prior written consent of the other parties. Subject to the foregoing, this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns. Any attempted assignment in violation of the terms of this Section 16 shall be null and void, ab initio.

 

17. Trust Account Waiver. Notwithstanding anything to the contrary set forth herein, the Stockholder acknowledges that it has read the Prospectus and understands that Ackrell has established the Trust Account containing the proceeds of IPO and the overallotment units acquired by its underwriters from certain private placements occurring simultaneously with the IPO (including interest accrued from time to time thereon for the benefit of the Public Stockholders, and that, except as otherwise described in the Prospectus, Ackrell may disburse monies from the Trust Account only: (a) to the Public Stockholders in the event they elect to redeem their subunits pursuant to the IPO in connection with the consummation of Ackrell’s initial business combination (as such term is used in the Prospectus) (the “Business Combination”), (b) to the Public Stockholders if Ackrell fails to consummate a Business Combination within twelve (12) months after the closing of the IPO, subject to extension by Ackrell’s board of directors, (c) with respect to any interest earned on the amounts held in the Trust Account, as necessary to pay any Taxes, or (d) to Ackrell after or concurrently with the consummation of a Business Combination. For and in consideration of the Company entering into this Agreement, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Stockholder hereby agrees on behalf of itself and its Affiliates that, notwithstanding anything to the contrary in this Agreement, neither the Stockholder nor any of its Affiliates do now or shall at any time hereafter have any right, title, interest or claim of any kind in or to any monies in the Trust Account or distributions therefrom, or make any claim against the Trust Account (including any distributions therefrom), regardless of whether such claim arises as a result of, in connection with or relating in any way to, this Agreement or other Transaction Documents or any proposed or actual business relationship between the Company and Ackrell or their respective Representatives, on the one hand, and the Stockholder or its Representatives, on the other hand, or any other matter, and regardless of whether such claim arises based on contract, tort, equity or any other theory of legal liability (any and all such claims are collectively referred to hereafter as the “Released Claims”). The Stockholder on behalf of itself and its Affiliates hereby irrevocably waives any Released Claims that the Stockholder or any of its Affiliates may have against the Trust Account (including any distributions therefrom) now or in the future as a result of, or arising out of, any negotiations or Contracts with Ackrell or its Representatives and will not seek recourse against the Trust Account (including any distributions therefrom) for any reason whatsoever (including for an alleged breach of this Agreement or any other agreement with Ackrell or its Affiliates). The Stockholder agrees and acknowledges that such irrevocable waiver is material to this Agreement and specifically relied upon by the Company and its Affiliates to induce the Company to enter in this Agreement, and the Stockholder further intends and understands such waiver to be valid, binding and enforceable against the Stockholder and each of its Affiliates under applicable Law. To the extent the Stockholder or any of its Affiliates commences any action or proceeding based upon, in connection with, relating to or arising out of any matter relating to Ackrell or its Representatives, which proceeding seeks, in whole or in part, monetary relief against Ackrell or its Representatives, the Stockholder hereby acknowledges and agrees that the Stockholder’s and its Affiliates’ sole remedy shall be against funds held outside of the Trust Account and that such claim shall not permit the Stockholder or its Affiliates (or any person claiming on any of their behalves or in lieu of any of them) to have any claim against the Trust Account (including any distributions therefrom) or any amounts contained therein. In the event the Stockholder or any of its Affiliates commences any action or proceeding based upon, in connection with, relating to or arising out of any matter relating to Ackrell or its Representatives, which proceeding seeks, in whole or in part, relief against the Trust Account (including any distributions therefrom) or the Public Stockholders, whether in the form of money damages or injunctive relief, Ackrell and its Representatives, as applicable, shall be entitled to recover from the Stockholder and its Affiliates the associated legal fees and costs in connection with any such action, in the event Ackrell or its Representatives, as applicable, prevails in such action or proceeding. Notwithstanding anything in this Agreement to the contrary, the provisions of this paragraph shall survive indefinitely with respect to the obligations set forth in this Agreement.

 

18. Non-Recourse. 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 entities that are expressly named as parties hereto, and then only with respect to the specific obligations set forth herein with respect to such party. Except to the extent a named party to this Agreement (and then only to the extent of the specific obligations undertaken by such named party in this Agreement), (a) no past, present or future director, officer, employee, incorporator, member, partner, stockholder, affiliate, agent, attorney, advisor or representative or affiliate of any named party to this Agreement and (b) no past, present or future director, officer, employee, incorporator, member, partner, stockholder, affiliate, agent, attorney, advisor or 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, Ackrell or the Stockholder under this Agreement of or for any claim based on, arising out of, or related to this Agreement or the transactions contemplated hereby.

 

 

19. Enforcement. The parties agree that irreparable damage for which monetary damages, even if available, would not be an adequate remedy, would occur in the event that the parties do not perform their obligations under the provisions of this Agreement in accordance with its specified terms or otherwise breach such provisions. The parties acknowledge and agree that (a) the parties shall be entitled to an injunction, specific performance, or other equitable relief, to prevent breaches of this Agreement and to enforce specifically the terms and provisions hereof, including the Stockholder’s obligations to vote its Covered Shares as provided in this Agreement, without proof of damages, this being in addition to any other remedy to which they are entitled under this Agreement, and (b) the right of specific enforcement is an integral part of the transactions contemplated by this Agreement and without that right, none of the parties would have entered into this Agreement. Each party agrees that it will not oppose the granting of specific performance and other equitable relief on the basis that the other parties have an adequate remedy at Law or that an award of specific performance is not an appropriate remedy for any reason at Law or equity. The parties acknowledge and agree that any party seeking an injunction to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement in accordance with this Section 19 shall not be required to provide any bond or other security in connection with any such injunction.

 

20. 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.

 

21. Counterparts. This Agreement may be executed 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. This Agreement shall become effective when each party shall have received a counterpart hereof signed by all of the other parties. Signatures delivered electronically or by facsimile shall be deemed to be original signatures.

 

22. Interpretation and Construction. The words “hereof,” “herein” and “hereunder” and words of like import used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement. The descriptive headings used herein are inserted for convenience of reference only and are not intended to be part of or to affect the meaning or interpretation of this Agreement. References to Sections are to Sections of this Agreement unless otherwise specified. Any singular term in this Agreement shall be deemed to include the plural, and any plural term the singular. The definitions contained in this Agreement are applicable to the masculine as well as to the feminine and neuter genders of such term. Whenever the words “include,” “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation,” whether or not they are in fact followed by those words or words of like import. “Writing,” “written” and comparable terms refer to printing, typing and other means of reproducing words (including electronic media) in a visible form. References to any statute shall be deemed to refer to such statute and to any rules or regulations promulgated thereunder. References to any Person include the successors and permitted assigns of that Person. References from or through any date mean, unless otherwise specified, from and including such date or through and including such date, respectively. In the event an ambiguity or question of intent or interpretation arises, this Agreement will be construed as if drafted jointly by the parties hereto, and no presumption or burden of proof will arise favoring or disfavoring any party by virtue of the authorship of any of the provisions of this Agreement.

 

23. Capacity as a Stockholder. Notwithstanding anything herein to the contrary, the Stockholder signs this Agreement solely in the Stockholder’s capacity as a stockholder of Ackrell, and not in any other capacity and this Agreement shall not limit or otherwise affect the actions or inactions of any affiliate, representative, employee or designee of the Stockholder or any of its affiliates in his or her capacity, if applicable, as an officer, director or fiduciary of Ackrell or any other Person.

 

24. Appraisal Rights. Stockholder hereby waives, and agrees not to exercise or assert, if applicable, any appraisal rights, dissenter’s rights or similar rights (whether under the DGCL or other applicable Law) in connection with the Merger.

 

[The remainder of this page is intentionally left blank.]

 

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed (where applicable, by their respective officers or other authorized Persons thereunto duly authorized) as of the date first written above.

 

	Ackrell SPAC Partners I Co.
	By:
	Name:
	Title:

 

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed (where applicable, by their respective officers or other authorized Persons thereunto duly authorized) as of the date first written above.

 

	North Atlantic Imports, LLC.
	By:
	Name:
	Title:

 

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed (where applicable, by their respective officers or other authorized Persons thereunto duly authorized) as of the date first written above.

 

	ACKRELL SPAC SPONSORS I LLC
	By:
		Name:
		Title:

 

	Ackrell Shares Held:
	Common Stock: ___________________

 

 

13

 

Exhibit 10.4

 

Subscription Agreement

 

This SUBSCRIPTION AGREEMENT (this “Subscription Agreement”) is entered into this 22nd day of December 2021, by and among Ackrell SPAC Partners I Co., a Delaware corporation (“SPAC”), Blackstone Products, Inc., a Delaware corporation (the “Issuer”), and the undersigned (“Subscriber” or “you”). Defined terms used but not otherwise defined herein shall have the respective meanings ascribed thereto in the Business Combination Agreement (as defined below).

 

WHEREAS, SPAC is a blank check company incorporated to effect a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses;

 

WHEREAS, the Issuer is a wholly-owned direct subsidiary of SPAC and was formed for the purpose of consummating the transactions contemplated by the Business Combination Agreement;

 

WHEREAS, Ackrell Merger Sub, Inc., a Delaware corporation (“Merger Sub”) is a newly formed, wholly-owned, direct subsidiary of the Issuer, and was formed for the sole purpose of the Merger (as defined below);

 

WHEREAS, the Issuer, SPAC, Merger Sub, North Atlantic Imports, LLC, a Utah limited liability company (the “Company”), Roger Dahle, an individual residing in Utah (“Dahle”), and North Atlantic Imports Inc., a business company formed under the laws of the British Virgin Islands (“NAI”), are, simultaneously with the execution of this Subscription Agreement, entering into that certain Business Combination Agreement, dated as of the date hereof, (as amended, modified, supplemented or waived from time to time in accordance with its terms, the “Business Combination Agreement”), pursuant to which, inter alia, (i) SPAC will be merged with and into Merger Sub, with SPAC surviving the Merger as a wholly-owned subsidiary of the Issuer (the “Merger”) (ii) each share of SPAC’s common stock, par value $0.0001 per share (“SPAC Common Stock”) issued and outstanding immediately prior to the Effective Time shall automatically be converted into and exchanged (the “Conversion”) for one validly issued, fully paid and nonassessable share of the Issuer’s common stock, par value $0.0001 per share (“Issuer Common Stock”), (iii) NAI will contribute (the “NAI Contribution”) 45 shares of common stock, par value $1.00 per share of Cowell International Inc., a Utah corporation (“Cowell Common Stock”) to the Issuer in exchange for Issuer Common Stock, and 33 shares of Cowell Common Stock to SPAC and Cowell will redeem 22 shares of Cowell Common Stock in exchange for the Cash Consideration, (iv) Dahle will contribute (the “Dahle Contribution”) all of his membership interests in the Company to the Issuer in exchange for shares of Issuer Common Stock, on the terms and subject to the conditions set forth therein and (v) as a result of clauses (iii) and (iv), the Company will become a wholly-owned subsidiary of the Issuer (collectively, the NAI Contribution, Dahle Contribution, Merger, Conversion and the other transactions contemplated by the Business Combination Agreement, the “Transactions”);

 

 

WHEREAS, in connection with the Transactions, Subscriber desires to subscribe for and purchase from the Issuer (a) newly issued convertible notes having the terms set forth in the Term Sheet attached hereto as Exhibit A (the “Term Sheet”) to be issued pursuant to an indenture (the “Indenture”) in an aggregate principal amount set forth on the signature page hereto (the “Convertible Notes”) for a purchase price equal to 100% of the principal amount of the Convertible Notes (the “Convertible Note Purchase Price”) and/or (b)(i) that number of shares of the Issuer Common Stock set forth on the signature page hereto (the “Common Shares” and together with the Convertible Notes, the “Issued Securities”) and (ii) one-half of one Warrant to Purchase Common Stock in pursuant to the form of warrant agreement attached hereto as Exhibit B for each Share of Issuer Common Stock acquired by Subscriber under this Subscription Agreement, which shall total in the aggregate the number of Warrants set forth on the signature page hereto (the “Warrants” and each Common Share and each one-half of a Warrant, collectively a “Unit”), for a purchase price of, in the case of each Unit, $10.00 (the “Per Unit Purchase Price”), or the aggregate purchase price for all Convertible Notes and Units set forth on Subscriber’s signature page hereto (the “Purchase Price”), and the Issuer desires to issue and sell to Subscriber the Convertible Notes and/or the Units, as applicable, in consideration of the payment of the Purchase Price therefor by or on behalf of Subscriber to the Issuer, all on the terms and conditions set forth herein;

 

WHEREAS, the parties intend that the Transactions together with the issuance by the Issuer of the Common Shares pursuant to this Subscription Agreement shall be treated as an exchange under Section 351 of Internal Revenue Code of 1986, as amended;

 

WHEREAS, in connection with the Transaction, each of Dahle, NAI and Ackrell SPAC Sponsors I LLC (“Sponsor” and together with Dahle and NAI, the “Transferors” and each a “Transferor”) have agreed to forfeit to the Issuer a number of shares of Issuer Common Stock equal to 217,391 in the aggregate (the “Forfeiture Shares”);

 

WHEREAS, in connection with the Transactions, and together with the issuance by the Issuer of the Convertible Notes, the Common Shares and the Warrants and the receipt by the Issuer of the Purchase Price, the Issuer will issue to Subscriber (only to the extent Subscriber has agreed to purchase Common Shares) a portion of the Forfeiture Shares equal to the number of shares of Issuer Common Stock set forth on the signature page hereto across from the heading “Transfer Shares” (the “Transfer Shares” and together with the Common Shares, the “Shares”); and

 

WHEREAS, in connection with the Transactions, certain other “qualified institutional buyers” (as defined in Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”)) and certain other “accredited investors” (as defined in Rule 501(a) under the Securities Act) have entered into separate subscription agreements with the Issuer and SPAC (the “Other Subscription Agreements”), contingent on the closing of the Transactions, substantially similar to this Subscription Agreement, pursuant to which such investors (the “Other Subscribers”) have agreed to subscribe for and purchase, and the Issuer has agreed to issue and sell to such Other Subscribers, Units for the Per Unit Purchase Price and Convertible Notes for the Convertible Note Purchase Price.

 

 

NOW, THEREFORE, in consideration of the foregoing and the mutual representations, warranties and covenants, and subject to the conditions, herein contained, and intending to be legally bound hereby, the parties hereto hereby agree as follows:

 

1. Subscription and Transfer.

 

1.1 Subject to the terms and conditions hereof, at the Closing (as defined below), Subscriber hereby agrees to subscribe for and purchase, and the Issuer hereby agrees to issue and sell to Subscriber, upon the payment of the Purchase Price, the Convertible Notes and/or the Units (with the number of Warrants to be issued rounded down to the nearest whole Warrant) (such subscription and issuance, the “Subscription”). For the avoidance of doubt, the parties hereto acknowledge and agree that the Common Share and the one-half of one Warrant that comprises the Unit may be detached for purposes of resale thereof by Subscriber.

 

1.2 Subject to the terms and conditions hereof (including the payment of the Purchase Price by Subscriber to the Issuer), at the Closing and concurrent with the consummation of the Subscription, the Issuer shall issue to Subscriber a number of shares of Issuer Common Stock equal to the number of Transfer Shares (the “Transfer”).

 

2. Make-Whole.

 

2.1 If (x) the Issuer VWAP is less than $10.00, but equal to or greater than $6.50, and (y) as of the date that is two business days after the end of the Measurement Period Subscriber continues to own, of record or in street name, any Common Shares or Transfer Shares acquired by Subscriber in the Subscription or the Transfer, respectively (such Common Shares and Transfer Shares then held by Subscriber, the “Held Shares”), then, on such second business day after the end of the Measurement Period, the Issuer shall cause the Escrow Agent to transfer to Subscriber from the Escrowed Shares a number of shares of Issuer Common Stock equal to (a) (i) $10.00 minus the Issuer VWAP multiplied by (ii) the number of Held Shares divided by (b) the Issuer VWAP, rounded down to the nearest whole share.

 

2.2 If (x) the Issuer VWAP is less than $6.50 and (y) as of the date that is two business days after the end of the Measurement Period Subscriber continues to own, of record or in street name, any Held Shares, then, on such second business day after the end of the Measurement Period, the Issuer shall cause the Escrow Agent to transfer to Subscriber from the Escrowed Shares a number of shares of Issuer Common Stock equal to (a) (i) $3.50 multiplied by (ii) the number of Held Shares divided by (b) $6.50, rounded down to the nearest whole share.

 

2.3 For the avoidance of doubt, if (a) the Issuer VWAP is equal to or greater than $10.00 or (b) as of the date that is two business days after the end of the Measurement Period, Subscriber does not own, of record or in street name, any Common Shares (excluding, for the avoidance of doubt, any shares of Issuer Common Stock beneficially owned through any Warrants, Convertible Notes or any other convertible or exercisable equity security of SPAC or the Issuer) acquired in the Subscription or any Transfer Shares acquired in the Transfer, in no event shall the Issuer instruct the Escrow Agent to transfer any Make-Whole Shares to Subscriber.

 

 

2.4 If any Make-Whole Shares are not transferred to Subscriber in accordance with Section 2.1 or Section 2.2 hereof (the “Remaining Shares”), then, within two (2) business days after the end of the Measurement Period, the Issuer shall cause the Escrow Agent to transfer to the Transferors the Remaining Shares in accordance with that certain Transferor Agreement, dated on or about the date hereof, by and among the Issuer and the Transferors (the “Transferor Agreement”).

 

2.5 While the Escrowed Shares are held in an escrow account with the Escrow Agent, the Subscriber hereby acknowledges and agrees that it shall be deemed the owner for tax purposes of that portion of the maximum number of the Escrowed Shares that Subscriber would be entitled to receive pursuant to Section 2.2.

 

2.6 Additional Make-Whole.

 

2.6.1 If (x) the Issuer VWAP is less than $10.00, but equal to or greater than $5.75, and (y) as of the date that is two business days after the end of the Measurement Period Subscriber continues to own, of record or in street name, any Held Shares, then, on such second business day after the end of the Measurement Period, the Issuer shall cause the Escrow Agent to transfer to Subscriber from the Additional Escrowed Shares a number of shares of Issuer Common Stock equal to (1) (a) (i) $10.00 minus the Issuer VWAP multiplied by (ii) the number of Held Shares divided by (b) the Issuer VWAP minus (2) the Make-Whole Shares, rounded down to the nearest whole share.

 

2.6.2 If (x) the Issuer VWAP is less than $5.75 and (y) as of the date that is two business days after the end of the Measurement Period Subscriber continues to own, of record or in street name, any Held Shares, then, on such second business day after the end of the Measurement Period, the Issuer shall cause the Escrow Agent to transfer to Subscriber from the Additional Escrowed Shares a number of shares of Issuer Common Stock equal to (1) (a) (i) $4.25 multiplied by (ii) the number of Held Shares divided by (b) $5.75 minus (2) the Make-Whole Shares, rounded down to the nearest whole share.

 

2.6.3 If any Additional Make-Whole Shares are not transferred to Subscriber in accordance with Section 2.6.1 or Section 2.6.2 hereof (the “Additional Remaining Shares”), then, within two (2) business days after the end of the Measurement Period, the Issuer shall cause the Escrow Agent to transfer to Sponsor the Additional Remaining Shares in accordance with the Transferor Agreement.

 

2.7 For purposes hereof:

 

2.7.1 “Additional Make-Whole Shares” means the shares of Issuer Common Stock (if any) to be transferred to Subscriber in accordance with Section 2.6.1 or Section 2.6.2.

 

 

2.7.2 “Additional Escrowed Shares” means a number of shares of Issuer Common Stock equal to 668,904.

 

2.7.3 “Escrow Agent” means an escrow agent determined by the Issuer, which must a reputable and sophisticated agent with requisite experience serving as an escrow agent.

 

2.7.4 “Escrowed Shares” means a number of shares of Issuer Common Stock equal to 1,794,892.

 

2.7.5 “Issuer VWAP” means the average of the daily volume-weighted average prices for the Issuer Common Stock on Nasdaq, as reported on Bloomberg Page “BLKS US<equity>AQR” for the period from the scheduled open of trading to the scheduled close of trading, or, if not reported thereby, as reported by any other authoritative source, for each of the ten (10) consecutive complete trading days starting with the second (2^nd) trading day following the Effectiveness Date and ending with the tenth (10^th) trading day thereafter (such period, the “Measurement Period”).

 

2.7.6 “Make-Whole Shares” means the shares of Issuer Common Stock (if any) to be transferred to Subscriber in accordance with Section 2.1 or Section 2.2.

 

3. Representations, Warranties and Agreements.

 

3.1 Subscriber’s Representations, Warranties and Agreements. To induce the Issuer to issue the Issued Securities and the Warrants to Subscriber and to induce the Issuer to agree to the other terms and provisions herein, Subscriber hereby represents and warrants to the Issuer and acknowledges and agrees with the Issuer as follows:

 

3.1.1 Subscriber has been duly formed or incorporated and is validly existing in good standing under the laws of its jurisdiction of incorporation or formation, with power and authority to enter into, deliver and perform its obligations under this Subscription Agreement.

 

3.1.2 This Subscription Agreement has been duly authorized, validly executed and delivered by Subscriber. This Subscription Agreement is enforceable against Subscriber in accordance with its terms, except as may be limited or otherwise affected by (i) bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or other laws relating to or affecting the rights of creditors generally, or (ii) principles of equity, whether considered at law or equity (the “Enforceability Exceptions”).

 

3.1.3 The execution, delivery and performance by Subscriber of this Subscription Agreement and the consummation of the transactions contemplated herein do not and will not (i) conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, or result in the creation or imposition of any lien, charge or encumbrance upon any of the property or assets of Subscriber or any of its subsidiaries pursuant to the terms of any indenture, mortgage, deed of trust, loan agreement, lease, license or other agreement or instrument to which Subscriber or any of its subsidiaries is a party or by which Subscriber or any of its subsidiaries is bound or to which any of the property or assets of Subscriber or any of its subsidiaries is subject, which would reasonably be expected to have a material adverse effect on the legal authority of Subscriber to enter into, or its ability to timely perform its obligations under, this Subscription Agreement (a “Subscriber Material Adverse Effect”), (ii) if Subscriber is not an individual, result in any violation of the provisions of the organizational documents of Subscriber or any of its subsidiaries or (iii) result in any violation of any statute or any judgment, order, rule or regulation of any court or governmental agency or body, domestic or foreign, having jurisdiction over Subscriber or any of its subsidiaries or any of their respective properties that would reasonably be expected to have a Subscriber Material Adverse Effect.

 

 

3.1.4 Subscriber (i) is an Institutional Account (as defined in FINRA Rule 4512(c)), (ii) is (x) a “qualified institutional buyer” (as defined in Rule 144A under the Securities Act) or (y) an “accredited investor” (within the meaning of Rule 501(a) under the Securities Act) satisfying the applicable requirements set forth on Schedule I, (iii) is acquiring the Convertible Notes, the Shares and the Warrants, as applicable, only for its own account and not for the account of others, or if Subscriber is subscribing for the Convertible Notes, the Shares and the Warrants as a fiduciary or agent for one or more investor accounts, each owner of such account is a qualified institutional buyer or an accredited investor and Subscriber has full investment discretion with respect to each such account, and the full power and authority to make the acknowledgements, representations, warranties and agreements herein on behalf of each owner of each such account and (iv) is not acquiring the Convertible Notes, the Shares or the Warrants with a view to, or for offer or sale in connection with, any distribution thereof in violation of the Securities Act (and shall provide the requested information on Schedule I following the signature page hereto). Subscriber is not an entity formed for the specific purpose of acquiring the Convertible Notes, the Shares or the Warrants.

 

3.1.5 Subscriber understands that the Convertible Notes, the Shares and the Warrants are being offered and transferred, as applicable, in a transaction not involving any public offering within the meaning of the Securities Act and that none of the Convertible Notes, the Shares or the Warrants have been registered under the Securities Act. Subscriber understands that Convertible Notes, the Shares and the Warrants may not be resold, transferred, pledged or otherwise disposed of by Subscriber absent an effective registration statement under the Securities Act, except (i) to the Issuer or a subsidiary thereof, (ii) to non-U.S. persons pursuant to offers and sales that occur solely outside the United States within the meaning of Regulation S under the Securities Act or (iii) pursuant to another applicable exemption from the registration requirements of the Securities Act, and in each of cases (i) and (iii), in accordance with any applicable securities laws of the states and other jurisdictions of the United States, and that any certificates representing the Convertible Notes, the Shares or the Warrants shall contain a legend (or book entries with respect to the Convertible Notes, the Shares or the Warrants shall contain a notation) to such effect. Subscriber understands and agrees that, as a result of the transfer restrictions described in this Section 3.1.5, Subscriber may not be able to readily resell the Convertible Notes, the Shares or the Warrants. Subscriber understands that it has been advised to consult legal counsel prior to making any offer, resale, pledge or transfer of any of the Convertible Notes, the Shares or the Warrants.

 

3.1.6 Subscriber understands that each book-entry for the Convertible Notes, the Shares and the Warrants shall contain a notation, and each certificate (if any) evidencing the Convertible Notes, the Shares or the Warrants shall be stamped or otherwise imprinted with a legend, in substantially the following form:

 

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION, AND MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM.

 

 

3.1.7 Subscriber understands and agrees that Subscriber is purchasing the Issued Securities and the Warrants directly from the Issuer, is acquiring the Transfer Shares from the Issuer and the Make-Whole Shares (if any) and the Additional Make-Whole Shares (if any) directly from the Escrow Agent. Subscriber further acknowledges that there have been no representations, warranties, covenants or agreements made to Subscriber by the Issuer, the Transferors, the SPAC, the Company or any of their respective agents, affiliates, officers or directors, expressly or by implication, other than those representations, warranties, covenants and agreements made by the Issuer and the SPAC expressly set forth in this Subscription Agreement, the Term Sheet, the Indenture and Subscriber is not relying on any representations, warranties, covenants or agreements other than those made by the Issuer and the SPAC expressly set forth in this Subscription Agreement, the Term Sheet and the Indenture.

 

3.1.8 Subscriber represents and warrants that its acquisition and holding of the Convertible Notes, the Shares and the Warrants, as applicable, will not constitute or result in a non-exempt prohibited transaction under Section 406 of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), Section 4975 of the Internal Revenue Code of 1986, as amended, or any applicable similar law.

 

3.1.9 In making its decision to subscribe for and purchase the Issued Securities and the Warrants and to acquire the Transfer Shares, the Make-Whole Shares (if any) and the Additional Make-Whole Shares (if any), Subscriber represents that it has relied solely upon independent investigation made by Subscriber; provided, however, that the foregoing does not limit or modify the representations or warranties of the Issuer and the SPAC in Section 3.2 of this Subscription Agreement or the other agreements of the SPAC and the Issuer set forth in this Subscription Agreement or the right of Subscriber to rely thereon. Without limiting the generality of the foregoing, Subscriber has not relied on any statements or other information provided by anyone other than the SPAC and the Issuer concerning the SPAC, the Issuer, the Issued Securities, the Transfer Shares, the Warrants, the Make-Whole Shares or the Additional Make-Whole Shares or the offer and sale of the Issued Securities or the Warrants or the transfer of the Transfer Shares, the Make-Whole Shares (if any) or the Additional Make-Whole Shares (if any), except, in the event that Subscriber is or was a stockholder of the Company as of the date hereof, for any information Subscriber has acquired in such capacity (but as to which information Subscriber acknowledges and agrees neither the Issuer, the Transferors, SPAC, the Company nor any other Person acting on behalf of the Issuer, SPAC or the Company makes or has made in this Subscription Agreement or in the Term Sheet any representation or warranty of any kind whatsoever, including as to the accuracy or completeness thereof, and Subscriber hereby disclaims reliance, and hereby represents that it will not rely, on any actual or purported representation or warranty in respect of such information by the Issuer, the Transferors, SPAC, the Company or any Person acting on behalf of the Issuer, SPAC or the Company). Subscriber acknowledges and agrees that Subscriber has received and has had an adequate opportunity to review such financial and other information as Subscriber deems necessary in order to make an investment decision with respect to the Convertible Notes, the Shares, the Warrants, the Make-Whole Shares (if any) and the Additional Make-Whole Shares (if any), including with respect to the Issuer, the Transferors, SPAC, the Company and the Transactions. Subscriber represents and agrees that Subscriber and Subscriber’s professional advisor(s), if any, have had the opportunity to ask such questions, receive such answers and obtain such information as Subscriber and Subscriber’s professional advisor(s), if any, have deemed necessary to make an investment decision with respect to the Convertible Notes, the Shares and the Warrants, as applicable.

 

3.1.10 (i) Subscriber became aware of this offering and transfer, as applicable, of the Convertible Notes, the Shares and the Warrants solely by means of direct contact between Subscriber, on the one hand, and (a) Nomura Securities International, Inc. (“Nomura”) and Barclays Capital Inc. (“Barclays,” and each of Nomura and Barclays, a “Placement Agent” and together the “Placement Agents”) or (b) the Issuer, the Transferors and SPAC, on the other hand, (ii) Subscriber has a pre-existing substantive relationship (as interpreted in guidance from the Securities and Exchange Commission (the “Commission”) under the Securities Act) with such Placement Agent or the Issuer, the Transferors and SPAC, as applicable, or its Representatives, and (iii) the Convertible Notes, the Shares and the Warrants were offered to Subscriber solely by direct contact between Subscriber and such Placement Agent or the Issuer, the Transferors and SPAC, as applicable. Subscriber did not become aware of this offering and transfer, as applicable, of the Convertible Notes, the Shares or the Warrants, nor were the Convertible Notes, the Shares or the Warrants offered to Subscriber, by any other means. Subscriber acknowledges that the Placement Agents have not acted as Subscriber’s financial advisor or fiduciary. Subscriber acknowledges that the Convertible Notes, the Shares and the Warrants (i) were not offered by any form of general solicitation or general advertising, including methods described in section 502(c) of Regulation D under the Securities Act and (ii) are not being offered in a manner involving a public offering under, or in a distribution in violation of, the Securities Act, or any state securities laws.

 

 

3.1.11 Subscriber acknowledges that it is aware that there are substantial risks incident to the purchase and ownership of the Convertible Notes, the Shares and the Warrants. Subscriber has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of an investment in the Convertible Notes, the Shares and the Warrants, and Subscriber has sought such accounting, legal and tax advice as Subscriber has considered necessary to make an informed investment decision.

 

3.1.12 Alone, or together with any professional advisor(s), Subscriber represents and acknowledges that Subscriber has adequately analyzed and fully considered the risks of an investment in the Convertible Notes, the Shares, the Warrants, the Make-Whole Shares (if any) and the Additional Make-Whole Shares (if any) and determined that the Convertible Notes, the Shares, the Warrants, the Make-Whole Shares (if any) and the Additional Make-Whole Shares (if any), as applicable, are a suitable investment for Subscriber and that Subscriber is able at this time and in the foreseeable future to bear the economic risk of a total loss of Subscriber’s investment in the Issuer. Subscriber acknowledges specifically that a possibility of total loss exists.

 

3.1.13 Subscriber understands and agrees that no federal or state agency has passed upon or endorsed the merits of the offering of the Convertible Notes, the Shares or the Warrants or made any findings or determination as to the fairness of an investment in the Convertible Notes, the Shares, the Warrants, the Make-Whole Shares (if any) or the Additional Make-Whole Shares (if any).

 

3.1.14 Subscriber represents and warrants that Subscriber is not (i) a person or entity named on the List of Specially Designated Nationals and Blocked Persons administered by the U.S. Treasury Department’s Office of Foreign Assets Control (“OFAC”) or in any Executive Order issued by the President of the United States and administered by OFAC (“OFAC List”), or a person or entity prohibited by any OFAC sanctions program, (ii) a Designated National as defined in the Cuban Assets Control Regulations, 31 C.F.R. Part 515 or (iii) a non-U.S. shell bank or providing banking services indirectly to a non-U.S. shell bank. Subscriber agrees to provide law enforcement agencies, if requested thereby, such records as required by applicable law, provided that Subscriber is permitted to do so under applicable law. Subscriber represents that if it is a financial institution subject to the Bank Secrecy Act (31 U.S.C. Section 5311 et seq.) (the “BSA”), as amended by the USA PATRIOT Act of 2001 (the “PATRIOT Act”), and, to the extent required, its implementing regulations (collectively, the “BSA/PATRIOT Act”), that Subscriber maintains policies and procedures reasonably designed to comply with applicable obligations under the BSA/PATRIOT Act. Subscriber also represents that, to the extent required, it maintains policies and procedures reasonably designed for the screening of its investors against the OFAC sanctions programs, including the OFAC List. Subscriber further represents and warrants that, to the extent required, it maintains policies and procedures reasonably designed to ensure that the funds held by Subscriber and used to purchase the Convertible Notes, the Shares and the Warrants, as applicable, were legally derived.

 

3.1.15 If Subscriber is an employee benefit plan that is subject to Title I of ERISA, a plan, an individual retirement account or other arrangement that is subject to section 4975 of the Code or an employee benefit plan that is a governmental plan (as defined in section 3(32) of ERISA), a church plan (as defined in section 3(33) of ERISA), a non-U.S. plan (as described in section 4(b)(4) of ERISA) or other plan that is not subject to the foregoing but may be subject to provisions under any other federal, state, local, non-U.S. or other laws or regulations that are similar to such provisions of ERISA or the Code (collectively, “Similar Laws”), or an entity whose underlying assets are considered to include “plan assets” of any such plan, account or arrangement (each, a “Plan”) subject to the fiduciary or prohibited transaction provisions of ERISA or section 4975 of the Code, Subscriber represents and warrants that neither Issuer, SPAC, the Company, nor any of their respective affiliates (the “Transaction Parties”) has acted as the Plan’s fiduciary, or has been relied on for advice, with respect to its decision to acquire and hold the Convertible Notes, the Shares and the Warrants, as applicable, and none of the Transaction Parties shall at any time be relied upon as the Plan’s fiduciary with respect to any decision to acquire, continue to hold or transfer the Convertible Notes, the Shares or the Warrants, as applicable.

 

 

3.1.16 [Reserved.]

 

3.1.17 Subscriber will have sufficient immediately available funds to pay the Purchase Price pursuant to Section 4.1 at the Closing.

 

3.1.18 No disclosure or offering document has been provided by the Placement Agents in connection with the offer and sale of the Convertible Notes, the Shares or the Warrants. Each Placement Agent and each of their respective Representatives have made no independent investigation with respect to the Issuer, SPAC, the Company, the Convertible Notes, the Shares or the Warrants or the accuracy, completeness or adequacy of any information supplied to Subscriber or by the Issuer, SPAC or the Company. In connection with the issuance and purchase of the Convertible Notes, the Shares and the Warrants, the Placement Agents and their respective Representatives have not acted in any capacity on Subscriber’s behalf, including without limitation as Subscriber’s financial advisor or fiduciary. Subscriber acknowledges that the Placement Agents and their respective Representatives shall have no liability or obligation to Subscriber in respect of this Subscription Agreement or the transactions contemplated hereby. For the avoidance of the doubt, Subscriber acknowledges that it is not relying upon, and has not relied upon, any statement, representation or warranty made by the Placement Agents in making an investment decision with respect to the Convertible Notes, the Shares and the Warrants. For purposes hereof, a “Representative” of a person means such person’s affiliates, and its and its affiliates respective directors, managers, officers, employees, contractors, advisors, agents, representatives and controlling persons.

 

3.1.19 Subscriber acknowledges and agrees that (a) each of Barclays and Nomura is acting solely as the Issuer’s placement agent in connection with the Transactions and is not acting as an underwriter or in any other capacity and is not and shall not be construed as a fiduciary for Subscriber, the Issuer, SPAC or any other person or entity in connection with the Transactions, (b) each of Barclays and Nomura has not made and will not make any representation or warranty, whether express or implied, of any kind or character and has not provided any advice or recommendation in connection with the Transactions, (c) each of Barclays and Nomura will have no responsibility with respect to (i) any representations, warranties or agreements made by any person or entity under or in connection with the Transactions or any of the documents furnished pursuant thereto or in connection therewith, or the execution, legality, validity or enforceability (with respect to any person) or any thereof, or (ii) the business, affairs, financial condition, operations, properties or prospects of, or any other matter concerning the Issuer, SPAC or the Transactions, and (d) each of Barclays and Nomura shall have no liability or obligation (including without limitation, for or with respect to any losses, claims, damages, obligations, penalties, judgments, awards, liabilities, costs, expenses or disbursements incurred by Subscriber, the Issuer, SPAC or any other person or entity), whether in contract, tort or otherwise, to Subscriber, or to any person claiming through Subscriber, in respect of the Transactions.

 

3.1.20 Subscriber acknowledges and agrees that SPAC and the Issuer continue to review (i) the “Staff Statement on Accounting and Reporting Considerations for Warrants Issued by Special Purpose Acquisition Companies” issued by the Commission staff on April 12, 2021 and (ii) the recent Commission staff guidance on the accounting or classification of a Special Purpose Acquisition Company’s outstanding redeemable shares as temporary, as opposed to permanent, equity, and in each case of clauses (i) and (ii) its implications, including on the financial statements and other information included in SPAC’s filings with the Commission, and Subscriber agrees that any actions taken by the Issuer in connection with, or as may be necessary or advisable to address the potential implications of, such Statement and guidance shall not be deemed to constitute a breach of any of the acknowledgements, understandings, agreements, representations, warranties or covenants set forth in this Subscription Agreement; provided, however, that any such actions may not materially and adversely affect the rights of Subscriber (in its capacity as such) under this Subscription Agreement. For the avoidance of doubt, any restatement, revision or other modification of such financial statements of the SPAC or the Issuer and any amendments to filings with the Commission relating to or arising from such review, any subsequent related agreements or any other guidance from the Staff of the Commission relating to non-cash accounting matters generally applicable to special purpose acquisition companies shall be deemed not material for purposes of this Subscription Agreement, unless it would materially and adversely affect the Subscriber (in its capacity as such) under this Subscription Agreement or it would cause an Issuer Material Adverse Effect, Company Material Adverse Effect or Ackrell Material Adverse Effect.

 

 

3.1.21 Subscriber agrees that the Placement Agents may rely upon the acknowledgments, understandings, agreements, representations and warranties made by Subscriber to the Issuer in this Subscription Agreement.

 

3.2 Issuer’s and SPAC’s Representations, Warranties and Agreements. To induce Subscriber to purchase the Issued Securities and the Warrants, each of the Issuer and SPAC hereby represents and warrants to Subscriber and agrees with Subscriber as follows:

 

3.2.1 Each of the Issuer and SPAC has been duly incorporated and is validly existing as a corporation in good standing under the General Corporation Law of the State of Delaware (“DGCL”), with corporate power and authority to own, lease and operate its properties and conduct its business as presently conducted and to enter into, deliver and perform its obligations under this Subscription Agreement. Each of the Issuer and SPAC is duly licensed or qualified to conduct its business and, if applicable, is in good standing under the laws of each jurisdiction (other than its jurisdiction of incorporation) in which the conduct of its business or the ownership of its properties or assets requires such license or qualification, except where the failure to be in good standing would not reasonably be expected to have an Issuer Material Adverse Effect (as defined below).

 

3.2.2 The Common Shares have been duly authorized and, when issued and delivered to Subscriber against full payment for the Common Shares in accordance with the terms of this Subscription Agreement and registered with the Issuer’s transfer agent, the Common Shares will be validly issued, fully paid and non-assessable and will not have been issued in violation of or subject to any preemptive or similar rights created under the Issuer’s amended and restated certificate of incorporation or under the DGCL and will have been issued free and clear of any liens or other restrictions (other than those arising under Subscription Agreement or state or federal securities laws). The Transfer Shares have been duly authorized and, when issued and delivered to Subscriber against full payment for the Common Shares in accordance with the terms of this Subscription Agreement and registered with the Issuer’s transfer agent, the Transfer Shares will be validly issued, fully paid and non-assessable and will not have been issued in violation of or subject to any preemptive or similar rights created under the Issuer’s amended and restated certificate of incorporation or under the DGCL and will have been issued free and clear of any liens or other restrictions (other than those arising under Subscription Agreement or state or federal securities laws). All of the Make-Whole Shares have been duly authorized and, when issued and delivered to the Escrow Agent in connection with the Closing and registered with the Issuer’s transfer agent, the Make-Whole Shares will be validly issued, fully paid and non-assessable and will not have been issued in violation of or subject to any preemptive or similar rights created under the Issuer’s amended and restated certificate of incorporation or under the DGCL and will have been issued free and clear of any liens or other restrictions (other than those arising under Subscription Agreement or state or federal securities laws). All of the Additional Make-Whole Shares have been duly authorized and, when issued and delivered to the Escrow Agent in connection with the Closing and registered with the Issuer’s transfer agent, the Additional Make-Whole Shares will be validly issued, fully paid and non-assessable and will not have been issued in violation of or subject to any preemptive or similar rights created under the Issuer’s amended and restated certificate of incorporation or under the DGCL and will have been issued free and clear of any liens or other restrictions (other than those arising under Subscription Agreement or state or federal securities laws). The Warrants have been duly authorized and, when issued and delivered to Subscriber against full payment for the Common Shares in accordance with the terms of this Subscription Agreement, the Warrants will be validly issued, fully paid and non-assessable and will not have been issued in violation of or subject to any preemptive or similar rights created under the Issuer’s amended and restated certificate of incorporation or under the DGCL and will have been issued free and clear of any liens or other restrictions (other than those arising under this Subscription Agreement or state or federal securities laws. All shares of Issuer Common Stock issuable upon the proper exercise of the Warrant in conformity with the Warrant shall be validly issued, fully paid and nonassessable and will not have been issued in violation of or subject to any preemptive or similar rights created under the Issuer’s amended and restated certificate of incorporation or under the DGCL and will have been issued free and clear of any liens or other restrictions (other than those arising under Subscription Agreement or state or federal securities laws). The shares of Issuer Common Stock issuable upon conversion of the Convertible Notes have been duly authorized and reserved for issuance and, when issued upon conversion of the Convertible Notes in accordance with the terms of this Subscription Agreement and the Indenture, the shares of Issuer Common Stock issuable upon conversion of the Convertible Notes will be validly issued, fully paid and non-assessable and will not have been issued in violation of or subject to any preemptive or similar rights created under the Issuer’s amended and restated certificate of incorporation or under the DGCL and will have been issued free and clear of any liens or other restrictions (other than those arising under the Indenture, this Subscription Agreement or state or federal securities laws).

 

 

3.2.3 This Subscription Agreement has been duly authorized, executed and delivered by each of the Issuer and SPAC and is enforceable against each of the Issuer and SPAC in accordance with its terms, except as may be limited or otherwise affected by the Enforceability Exceptions. The Convertible Notes have been duly authorized by all necessary corporate action of the Issuer, and, on the Closing Date, the Indenture (including any guarantees thereunder) will be duly authorized, executed and delivered by the Issuer and any guarantors thereunder and will constitute a legal, valid and binding obligation of the Issuer and such guarantors, and, assuming due execution by all other parties thereto, enforceable in accordance with their terms, except as may be limited or otherwise affected by the Enforceability Exceptions. When issued (and authenticated by the trustee under the Indenture) and sold against receipt of the consideration therefor, the Convertible Notes will be valid and legally binding obligations of the Issuer, enforceable in accordance with their terms, except as may be limited or otherwise affected by the Enforceability Exceptions.

 

3.2.4 The execution, delivery and performance of this Subscription Agreement (including compliance by each of the Issuer and SPAC with all of the provisions hereof) and the Indenture, the issuance and sale of the Convertible Notes, the Shares and the Warrants and the consummation of the certain other transactions contemplated herein will be done in accordance with Nasdaq rules (or the rules of the New York Stock Exchange (“NYSE”), if applicable) and will not (i) conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, or result in the creation or imposition of any lien, charge or encumbrance upon any of the property or assets of the Issuer or SPAC (other than as set forth in the Indenture) pursuant to the terms of any indenture, mortgage, deed of trust, loan agreement, lease, license or other agreement or instrument to which the Issuer or SPAC is a party or by which the Issuer or SPAC is bound or to which any of the property or assets of the Issuer or SPAC is subject, which, individually or in the aggregate with all other effects, (a) is or would reasonably be expected to be materially adverse to the business, properties, financial condition, stockholders’ equity or results of operations of the Issuer, the SPAC and their respective subsidiaries, taken as a whole, and including the combined company after giving effect to the Transactions; or (b) reasonably be expected to prevent, materially delay or materially impede the performance by the Issuer, the SPAC or their respective subsidiaries of their respective obligations under this Subscription Agreement, the Indenture, the Convertible Notes, the Business Combination Agreement or the consummation of the Transactions (clauses (a) and (b) are referred to as an “Issuer Material Adverse Effect”), (ii) result in any violation of the provisions of the organizational documents of the Issuer or SPAC or (iii) result in any violation of any statute or any judgment, order, rule or regulation of any court or governmental agency or body, domestic or foreign, having jurisdiction over the Issuer, SPAC or any of their respective properties that would reasonably be expected to have an Issuer Material Adverse Effect.

 

3.2.5 No consent, waiver, authorization, approval, filing with or notification to any court or other federal, state, local or other governmental authority is required on the part of the Issuer or SPAC with respect to the execution, delivery or performance by the Issuer or SPAC of this Subscription Agreement (including without limitation the issuance of the Convertible Notes, the Shares and the Warrants pursuant to this Subscription Agreement), other than (i) the filings required by applicable state securities Laws and the filing of the registration statement to register the re-sale of the Shares required by this Subscription Agreement, (ii) the filings required by Nasdaq (or the NYSE, if applicable), or (iii) those consents, waivers, authorizations, approvals, filings or notifications the failure of which to give, make or obtain would not reasonably be expected to an Issuer Material Adverse Effect or have a material adverse effect on the Company’s ability to consummate the transactions contemplated hereby, including the issuance and sale of the Convertible Notes..

 

 

3.2.6 The authorized capital shares of SPAC as of the date hereof and immediately prior to the Closing consists of (i) 100,000,000 shares of SPAC Common Stock (“Existing SPAC Common Shares”); and (ii) 1,000,000 shares of preferred stock, par value $0.0001 per share (“Existing SPAC Preferred Shares”). As of the date hereof: (i) no Existing SPAC Preferred Shares are issued and outstanding; (ii) 18,169,000 Existing SPAC Common Shares are issued and outstanding; and (iii) 14,339,000 warrants to purchase 14,339,000 Existing SPAC Common Shares, subject to adjustments set forth in Section 4 of the warrant agreement, dated as of December 21, 2020, by and among the SPAC and Continental Stock Transfer & Trust Company (the “Warrant Agreement”), each exercisable to purchase a whole share of Issuer Common Stock at $11.50 per full share (the “SPAC Warrants”), are outstanding of which 539,000 are private placement warrants. The authorized capital shares of the Issuer as of the date hereof and immediately prior to the Closing consists of (i) 1,000 shares of Issuer Common Stock (“Existing Issuer Common Shares”); and (ii) no shares of preferred stock of Issuer. As of the date hereof: 1,000 Existing Issuer Common Shares are issued and outstanding. As of the Closing Date (and immediately after the consummation of the Transactions), the entire authorized capital stock of the Issuer will consist of (i) 220,000,000 shares of Issuer Common Stock and (ii) 5,000,000 shares of preferred stock of the Issuer. All (A) Existing SPAC Common Shares have been duly authorized and validly issued, are fully paid and are non-assessable and are not subject to preemptive rights and (B) outstanding SPAC Warrants and warrants issued by SPAC to the Sponsor have been duly authorized and constitute the valid and legally binding obligations of the SPAC, enforceable against the SPAC in accordance with their terms, subject to the Enforceability Exceptions. All (A) issued and outstanding shares of Issuer Common Stock have been duly authorized and validly issued, are fully paid and are non-assessable and are not subject to preemptive rights and (B) outstanding private placement warrants and public warrants of the Issuer issued in connection with the Transactions will have been duly authorized and constitute the valid and legally binding obligations of the Issuer, enforceable against the Issuer in accordance with their terms, subject to the Enforceability Exceptions. Except as set forth above and pursuant to the Other Subscription Agreements, the Business Combination Agreement and any other agreement expressly contemplated by the Business Combination Agreement, there are no outstanding options, warrants or other rights to subscribe for, purchase or acquire from the SPAC or the Issuer any SPAC Common Stock, Issuer Common Stock or any other equity interests of the SPAC or the Issuer, or securities convertible into or exchangeable or exercisable for such equity interests. As of the date hereof, neither the SPAC, nor the Issuer have long-term indebtedness and will not have any long-term indebtedness immediately prior to the Closing. The Issuer and its subsidiaries’ pro forma long-term indebtedness after giving effect to the Transactions will be as described in the Company’s filings with the Commission. No SPAC Warrants or Issuer Warrants are exercisable prior to Closing. As of the date hereof, the SPAC has no subsidiaries (other than the Issuer and Merger Sub) and does not own, directly or indirectly, interests or investments (whether equity or debt) in any person, whether incorporated or unincorporated (other than the Issuer and Merger Sub). There are no stockholder agreements, voting trusts or other agreements or understandings to which the SPAC or the Issuer is a party or by which it is bound relating to the voting or registration of any equity interests, other than this Subscription Agreement, the Ackrell Stockholder Support Agreement, the Registration Rights Agreement and that certain letter agreement, dated December 21, 2020, among the SPAC, its officers and directors named therein, and Sponsor. Other than the provisions set forth in Section 4 of the Warrant Agreement, as of the date hereof, there are no securities or instruments issued by or to which the Company is a party containing anti-dilution or similar provisions that will be triggered by the issuance of (i) the Convertible Notes (including those to be issued under any Other Subscription Agreement), (ii) any shares of Issuer Common Stock upon conversion of any of the Convertible Notes (including those to be issued under any Other Subscription Agreement), (iii) the Issued Securities and (iv) the Warrants or the Shares underlying the Warrants.

 

3.2.7 Assuming the accuracy of Subscriber’s representations and warranties set forth in Section 3.1 of this Subscription Agreement, no registration under the Securities Act is required for the offer and sale of the Convertible Notes and the issuance of shares of Issuer Common Stock upon conversion of the Convertible Notes, the Shares, the Warrants or the issuance of shares of Issuer Common Stock upon exercise of the Warrants, as applicable, by the Issuer to Subscriber.

 

3.2.8 The SPAC and the Issuer have made available to Subscriber (including via the Commission’s EDGAR system) a true, correct and complete copy of each form, report, statement, schedule, prospectus, proxy, registration statement and other documents filed or furnished by the SPAC and/or the Issuer, as applicable, with the Commission prior to the date of this Subscription Agreement (the “SEC Documents”). As of their respective dates, the SEC Documents complied in all material respects with the requirements of the Securities Act and the Exchange Act, and the rules and regulations of the Commission promulgated thereunder and none of the SEC Documents contained, when filed or, if amended prior to the date of this Subscription Agreement, as of the date of such amendment with respect to those disclosures that are amended, any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. The SPAC and the Issuer have timely filed each report, statement, schedule, prospectus, and registration statement that the Issuer was required to file with the Commission since its inception and through the date hereof. As of the date hereof, there are no material outstanding or unresolved comments in comment letters from the Commission staff with respect to any of the SEC Documents.

 

 

3.2.9 Other than the Other Subscription Agreements, subscription agreements that may be entered into among the Issuer, SPAC and other potential investors on substantially the same terms as included herein (provided that, for the avoidance of doubt, (i) the terms of this Subscription Agreement, the Convertible Notes and the Indenture shall be amended or modified to reflect any terms in such Future Subscription Agreements that are more advantageous in any respect than the terms of this Subscription Agreement, unless otherwise waived by Subscriber, and (ii) the consent of the Subscriber shall be required if any such Future Subscription Agreement would have an adverse effect on the Issued Securities or the Issuer Common Shares into which the Convertible Notes are convertible (it being understood that the dilution of such Issued Securities or Issuer Common Shares (subject to customary anti-dilution protections for the Issued Securities and the Issuer Common Shares into which the Convertible Notes are convertible) shall not constitute an adverse effect and that adverse effects shall be limited to those terms and provisions the benefit of which would not reasonably be expected to be directly realized by such Subscriber in its capacity as such (e.g., a benefit to an investor relating to a business (non-investment) relationship between such investor and the Issuer)) (“Future Subscription Agreements”), the engagement letter with FS Global Credit Opportunities Fund (the “Anchor Investor”) dated December 13, 2021 (as amended on December 22, 2021 and as may be further amended, the “FS Engagement Letter”), any forward purchase agreement (or other similar agreement for a purchase price per share of Issuer Common Stock of not less than the Purchase Price minus the per share value of the Transfer Shares on terms to be agreed by the Issuer or the SPAC) (in each case on otherwise substantially the same terms as included herein and, for the avoidance of doubt, (i) the terms of this Subscription Agreement, the Convertible Notes and the Indenture shall be amended or modified to reflect any terms in such FPA that are more advantageous in any respect than the terms of this Subscription Agreement (other than the Agreed FPA Terms), unless otherwise waived by Subscriber, and (ii) the consent of the Subscriber shall be required if any such FPA would have an adverse effect on the Issued Securities or the Issuer Common Shares into which Convertible Notes are convertible (it being understood that the dilution of such Issued Securities or Issuer Common Shares (subject to customary anti-dilution protections for the Issued Securities and the Issuer Common Shares into which the Convertible Notes are convertible) shall not constitute an adverse effect and that adverse effects shall be limited to those terms and provisions the benefit of which would not reasonably be expected to be directly realized by such Subscriber in its capacity as such (e.g., a benefit to an investor relating to a business (non-investment) relationship between such investor and the Issuer)) (each such agreement, an “FPA”), the Business Combination Agreement and any other agreement expressly disclosed in the Business Combination Agreement (as the Business Combination Agreement exists on the date hereof), the Issuer has not entered into any subscription agreement, side letter or similar agreement or other agreement or understanding (including written summaries of any oral understandings) with any Other Subscriber or any other investor or potential investor in connection with such Other Subscriber’s or investor’s or potential investor’s direct or indirect investment in the Issuer. No Other Subscription Agreement, Future Subscription Agreement, FPA (other than the Agreed FPA Terms), side letter or similar agreement or legally binding understanding includes terms and conditions that are materially more advantageous to any Other Subscriber, investor or potential investor than Subscriber hereunder, and such Other Subscription Agreements, Future Subscription Agreement, FPA, side letter and similar agreements and legally binding arrangements have not been and will not be on or prior to the Closing amended or modified in any material respect following the date of this Subscription Agreement. For purposes hereof, the “Agreed FPA Terms” shall mean: (a) the purchase of Issuer Common Stock (the “FPA Shares”) from the Issuer or certain direct or indirect holders of equity interests of the Company (the “Grantors”) at a purchase price per share for the FPA Shares of at least $10.00 (the “FPA Purchase Price”), which shall be deposited into an escrow account to secure the payment of the Put Option (the amount of such purchase price so deposited, the “Escrow Fund”); (b) the granting of a put option (the “Put Option”) by the Grantors allowing the purchaser to require the Grantors to repurchase FPA Shares at a purchase price of no greater than FPA Purchase Price; (c) the releasing of funds from the Escrow Fund to the Grantors in the event that the purchaser sells FPA Shares prior to the put option date set forth therein or if the Put Option expires; and (d) requiring such purchaser to use commercially reasonable efforts to sell or transfer the FPA Shares at a price per share in excess of the FPA Purchase Price.

 

3.2.10 The Convertible Notes are not, and following the Closing, will not be, subject to any Transfer Restriction. The term “Transfer Restriction” means any condition to or restriction on the ability of the undersigned or any other holder of the Convertible Notes to pledge, sell, assign or otherwise transfer the Convertible Notes under any organizational document, policy or agreement of, by or with the Issuer, but excluding the restrictions on transfer described in the Indenture and Section 3.1.5 of this Subscription Agreement with respect to the status of the Convertible Notes as “restricted securities” pending their registration for resale under the Securities Act , in accordance with the terms of this Subscription Agreement.

 

 

3.2.11 Each of the Issuer and SPAC agree that the Placement Agents may rely upon the acknowledgements, understandings, agreements, representations and warranties made by each of the Issuer and SPAC to Subscriber in this Subscription Agreement.

 

3.2.12 Except for such matters as have not had and would not be reasonably expected to have an Issuer Material Adverse Effect, the Issuer and the SPAC are, and have been since their inception, in compliance with all state and federal laws applicable to the conduct of its business. Neither the SPAC nor the Issuer has received any written, or to its knowledge, other communication from a governmental entity that alleges that either is not in compliance with or is in default or violation of any applicable law, except where such non-compliance, default or violation would not be reasonably expected to have, individually or in the aggregate, an Issuer Material Adverse Effect. Except for such matters as have not had and would not be reasonably expected to have an Issuer Material Adverse Effect or have a material adverse effect on the Company’s ability to consummate the transactions contemplated hereby, including the issuance and sale of the Convertible Notes, the Issued Securities, the Transfer Shares, the Make-Whole Shares (if any), the Additional Make-Whole Shares (if any) and the Warrants, as of the date hereof, there is no (i) suit, action, proceeding or arbitration before a governmental authority or arbitrator pending, or, to the knowledge of either the SPAC or the Issuer, threatened in writing against either party or (ii) judgment, decree, injunction, ruling or order of any governmental authority or arbitrator outstanding against the SPAC or the Issuer.

 

3.2.13 The issued and outstanding shares of SPAC Common Stock are registered pursuant to Section 12(b) of the Exchange Act and are listed for trading on Nasdaq under the symbol “ACKI”. The SPAC is in compliance in all material respects with the rules of Nasdaq and there is no suit, action proceeding or investigation pending or, to the knowledge of either the SPAC or the Issuer, threatened against the SPAC by Nasdaq or, if applicable, the NYSE, or the Commission with respect to any intention by such entity to deregister the shares of SPAC Common Stock or prohibit or terminate the listing of the shares of SPAC Common Stock on Nasdaq or, if applicable, the NYSE. Prior to Closing, the Issuer will register the Issuer Common Stock pursuant to Section 12(b) of the Exchange Act and list it for trading on Nasdaq or, if applicable, the NYSE, and file a listing application with Nasdaq, or if applicable, the NYSE, for the Issuer Common Stock underlying the Convertible Notes and such application, prior to Closing will be, approved by Nasdaq, or, if applicable, the NYSE, subject only to official notice of issuance. None of the SPAC or its affiliates has taken any action in an attempt to terminate the listing of the SPAC Common Stock on Nasdaq or the registration of the SPAC Common Stock under the Exchange Act except as contemplated by the Business Combination Agreement. The SPAC has not received any notice from Nasdaq or the Commission regarding the revocation of such listing or otherwise regarding the delisting of the SPAC Common Stock from Nasdaq or the Commission.

 

3.2.14 Neither the SPAC, the Issuer nor any person acting on their behalf has engaged or will engage in any form of general solicitation or general advertising (within the meaning of Regulation D) in connection with any offer or sale of the Convertible Notes, the shares of Issuer Common Stock issuable upon conversion of the Convertible Notes, the Issued Securities, the Transfer Shares, the Make-Whole Shares (if any), the Additional Make-Whole Shares (if any) and the Warrants.

 

3.2.15 The Company has not in the past nor will it hereafter take any action to sell, offer for sale or solicit offers to buy any securities of the Company that would reasonably be expected to result in the initial sale of the Convertible Notes, the shares of Issuer Common Stock into which such Convertible Notes may be converted, the Issued Securities, the Transfer Shares, the Make-Whole Shares (if any), the Additional Make-Whole Shares (if any), the Warrants or the shares of Issuer Common Stock issuable upon exercise of the Warrants not being exempt from the registration requirements of Section 5 of the Securities Act. Neither the SPAC nor the Issuer has entered into any agreement or arrangement entitling any agent, broker, investment banker, financial advisor or other person to any broker’s or finder’s fee or any other commission or similar fee in connection with the transactions contemplated by this Subscription Agreement for which Subscriber would reasonably be expected to become liable.

 

 

3.2.16 The Issuer is not, and immediately after receipt of payment for the Convertible Notes, the Issued Securities, the Transfer Shares, the Make-Whole Shares (if any), the Additional Make-Whole Shares (if any) and the Warrants will not be, an “investment company” within the meaning of the Investment Company Act of 1940, as amended (the “Investment Company Act”).

 

3.2.17 The operations of the SPAC and the Issuer and their respective subsidiaries are and have been conducted at all times in material compliance with all applicable financial recordkeeping and reporting requirements, including those of the Currency and Foreign Transactions Reporting Act of 1970, as amended, the applicable anti-money laundering statutes of all jurisdictions where the SPAC and the Issuer or any of their respective subsidiaries conduct business, the rules and regulations thereunder and any related or similar rules, regulations or guidelines issued, administered or enforced by any governmental agency (collectively, the “Anti-Money Laundering Laws”); and no action, suit or proceeding by or before any court or governmental agency, authority or body or any arbitrator involving the SPAC, the Issuer or any of their respective subsidiaries with respect to the Anti-Money Laundering Laws is pending or, to the knowledge of the SPAC or the Issuer, threatened.

 

3.2.18 Neither the SPAC, the Issuer nor any of their respective subsidiaries nor, to the knowledge of the SPAC or the Issuer, any director, officer, agent, employee or affiliate of the SPAC or the Issuer or any of their respective subsidiaries is an individual or entity (a “Person”) that is, or is majority-owned or controlled by a Person that is, currently the subject or target of any sanctions administered or enforced by the U.S. government (including, without limitation, the OFAC or the U.S. Department of State and including, without limitation, the designation as a “specially designated national” or “blocked person”), the United Nations Security Council, the European Union, Her Majesty’s Treasury, or other relevant sanctions authority (collectively, “Sanctions”), nor is the SPAC, the Issuer or any of their respective subsidiaries located, organized or resident in a country or territory that is the subject or the target of Sanctions, including, without limitation, Cuba, Iran, North Korea, Syria and Crimea (each, a “Sanctioned Country”). Since the SPAC and the Issuer’s inception, the SPAC, the Issuer and their respective subsidiaries have not knowingly engaged in and are not now knowingly engaged in any dealings or transactions with any Person that at the time of the dealing or transaction is or was the subject or the target of Sanctions or with any Sanctioned Country.

 

3.2.19 The SPAC and the Issuer acknowledge and agree that, notwithstanding anything herein to the contrary, but subject to the restrictions set forth in Section 4.4, the Convertible Notes, the shares of Issuer Common Stock issuable upon conversion of the Convertible Notes, the Issued Securities, the Transfer Shares, the Make-Whole Shares (if any), the Additional Make-Whole Shares (if any) and the Warrants may be pledged by the Subscriber in connection with a bona fide margin agreement, which shall not be deemed to be a transfer, sale or assignment of the Convertible Notes, the shares of Issuer Common Stock issuable upon conversion of the Convertible Notes, the Issued Securities, the Transfer Shares, the Make-Whole Shares (if any), the Additional Make-Whole Shares (if any) and the Warrants hereunder, and the Subscriber effecting a pledge of Convertible Notes, the shares of Issuer Common Stock issuable upon conversion of the Convertible Notes, the Issued Securities, the Transfer Shares, the Make-Whole Shares (if any), the Additional Make-Whole Shares (if any) and the Warrants shall not be required to provide the SPAC or the Issuer with any notice thereof or otherwise make any delivery to the SPAC or the Issuer pursuant to this Subscription Agreement; provided that such pledge shall be pursuant to an available exemption from the registration requirements of the Securities Act.

 

 

3.2.20 Each of the Issuer and the SPAC is classified as a domestic corporation for U.S. federal income tax purposes.

 

3.2.21 Each of the Issuer and the SPAC (i) has duly and timely filed (taking into account any extension of time within which to file) all tax returns required to be filed by any of them as of the date hereof and all such filed tax returns are complete and accurate in all material respects; (ii) has timely paid all taxes that are shown as due on such filed tax returns and any other taxes that the Issuer or the SPAC are otherwise obligated to pay, except with respect to taxes not yet due and payable that are being contested in good faith and with respect to which adequate reserves have been made in accordance with GAAP, and no material penalties or charges are due with respect to the late filing of any tax return required to be filed by or with respect to any of them on or before the Closing Date; (iii) have not waived any statute of limitations with respect to taxes or agreed to any extension of time with respect to a tax assessment or deficiency; and (iv) do not have any deficiency, audit, examination, investigation or other proceeding in respect of taxes or Tax matters pending or proposed or threatened in writing, for a tax period which the statute of limitations for assessments remains open.

 

4. Settlement Date and Delivery; Certain Other Matters.

 

4.1 Closing. The closing of the Subscription and the Transfer contemplated hereby (the “Closing”) shall occur on the date of, and concurrently with, the consummation of the Transactions (the “Closing Date”); provided, that the Transfer shall be deemed to occur immediately following the consummation of the Transactions. Upon written notice from (or on behalf of) the Issuer to Subscriber (the “Closing Notice”) at least five (5) business days prior to the date that the Issuer reasonably expects all conditions to the closing of the Transactions to be satisfied, Subscriber shall deliver to the Issuer, within three (3) business days after receiving the Closing Notice, the Purchase Price for the Convertible Notes, the Shares and the Warrants, as applicable, by wire transfer of United States dollars in immediately available funds to the account specified by the Issuer in the Closing Notice, such funds to be held by the Issuer in an escrow account until the Closing, such account to be established by the Issuer with a third party financial institution pursuant to an escrow agreement reasonably satisfactory to the Subscriber. At the Closing, upon satisfaction (or, if applicable, waiver in writing) of the conditions set forth in this Section 4, the Issuer shall deliver to Subscriber the Issued Securities, the Warrants and the Transfer Shares, in each case, in certificated or book entry form (at the Issuer’s election), in the name of Subscriber (or its nominee in accordance with its delivery instructions) or to a custodian designated by Subscriber, as applicable, free and clear of any liens or other restrictions (other than those arising under the Indenture, this Subscription Agreement or state or federal securities laws). Reasonably promptly following the closing, the Issuer shall provide evidence of such issuance from the Issuer’s transfer agent showing Subscriber as the owner of the Issued Securities, the Warrants and the Transfer Shares, to the extent issued in book entry form, on and as of the Closing Date. In the event that the Closing Date does not occur within three (3) business days after the anticipated Closing Date specified in the Closing Notice, unless otherwise agreed to in writing by the Issuer and Subscriber, the Issuer shall promptly (but not later than two (2) business days after the anticipated Closing Date specified in the Closing Notice) return the funds so delivered by Subscriber to the Issuer by wire transfer in immediately available funds to the account specified by Subscriber without any deduction for or on account of any tax withholding, charges or set-off; provided that, unless this Subscription Agreement has been terminated pursuant to Section 6 hereof, such return of funds shall not terminate this Subscription Agreement or relieve Subscriber of its obligation to purchase the Convertible Notes, the Shares and the Warrants, as applicable, at the Closing.

 

 

4.2 Conditions to Closing of the Issuer.

 

The Issuer’s obligations to sell and issue the Issued Securities, the Warrants and the Transfer Shares, at the Closing are subject to the fulfillment or (to the extent permitted by applicable law) written waiver, on or prior to the Closing Date, of the following conditions:

 

4.2.1 Representations and Warranties Correct. The representations and warranties made by Subscriber in Section 3.1 hereof shall be true and correct in all material respects on and as of the Closing Date (unless they specifically speak as of another date in which case they shall be true and correct in all material respects as of such date) (other than representations and warranties that are qualified as to materiality or Subscriber Material Adverse Effect, which representations and warranties shall be true and correct in all respects) with the same force and effect as if they had been made on and as of said date, but in each case without giving effect to consummation of the Transactions.

 

4.2.2 Compliance with Covenants. Subscriber shall have performed, satisfied and complied in all material respects with all covenants, agreements and conditions required by this Subscription Agreement to be performed, satisfied or complied with by it at or prior to Closing.

 

4.2.3 Closing of the Transactions. The Transactions set forth in the Business Combination Agreement shall have been or will be consummated substantially concurrently with the Closing.

 

4.2.4 Legality. There shall not be in force any order, judgment, injunction, decree, writ, stipulation, determination or award, in each case, entered by or with any governmental authority, statute, rule or regulation enjoining or prohibiting the consummation of the Subscription or, only with respect to the Subscription of the Common Shares, the Transfer.

 

4.2.5 Indenture. Prior to or concurrent with the Closing, the Indenture shall have been executed by the applicable parties thereto (other than the Issuer).

 

 

4.3 Conditions to Closing of Subscriber.

 

Subscriber’s obligation to purchase the Issued Securities and the Warrants, as applicable, and acquire the Transfer Shares at the Closing is subject to the fulfillment or (to the extent permitted by applicable law) written waiver by Subscriber, on or prior to the Closing Date, of each of the following conditions:

 

4.3.1 Representations and Warranties Correct. The representations and warranties made by the Issuer and SPAC in Section 3.2 hereof shall be true and correct in all material respects when made (other than representations and warranties that are qualified as to materiality or Issuer Material Adverse Effect, which representations and warranties shall be true and correct in all respects) and, shall be true and correct in all material respects on and as of the Closing Date (unless they specifically speak as of another date in which case they shall be true and correct in all material respects as of such date) (other than representations and warranties that are qualified as to materiality or Issuer Material Adverse Effect, which representations and warranties shall be true and correct in all respects) with the same force and effect as if they had been made on and as of said date, and consummation of the Closing shall constitute a reaffirmation by the Issuer and the SPAC of each of the representations and warranties of the Issuer and the SPAC contained in this Subscription Agreement as of the Closing.

 

4.3.2 Compliance with Covenants. Each of the Issuer and SPAC shall have performed, satisfied and complied in all material respects with all covenants, agreements and conditions required by this Subscription Agreement to be performed, satisfied or complied with by it at or prior to Closing.

 

4.3.3 Closing of the Transactions. All conditions precedent to the closing of the Transaction set forth in the Business Combination Agreement, including the approval of the Company’s stockholders, shall have been satisfied (as the Business Combination Agreement exists on the date of this Subscription Agreement without giving effect to any amendments or waivers thereto), other than those conditions which, by their terms, are to be satisfied at the Closing (which such conditions shall be satisfied as of the Closing without giving effect to any amendments or waivers thereto). The Transactions set forth in the Business Combination Agreement shall have been or will be consummated substantially concurrently with the Closing, and there shall have been no amendment, waiver or modification to the Business Combination Agreement (as the same exists on the date of this Subscription Agreement) that would reasonably be expected to materially and adversely affect the Subscriber, the Issuer or the Company, without having received Subscriber’s prior written consent.

 

4.3.4 Legality. There shall not be in force any order, judgment, injunction, decree, writ, stipulation, determination or award, in each case, entered by or with any governmental authority, statute, rule or regulation enjoining or prohibiting the consummation of the Subscription, the Transfer or the Transactions; and no such governmental authority shall have instituted or threatened in writing a proceeding seeking to impose any such restraint or prohibition.

 

 

4.3.5 Exchange Listing. The Issued Securities (including the shares of Issuer Common Stock that may be issuable upon the conversion of the Convertible Notes and the shares of Issuer Common Stock issuable upon the exercise of the Warrants), the Transfer Shares, the Make-Whole Shares and the Additional Make-Whole Shares shall have been approved for listing on Nasdaq (or, at the election of the Issuer, the NYSE), subject to official notice of issuance. No suspension of the qualification of any of the SPAC Common Stock or Issuer Common Stock for sale or trading on the Nasdaq Stock Market (“Nasdaq”) or the NYSE, if applicable, or, to the SPAC and Issuer’s knowledge, initiation or threatening of any proceedings for any of such purposes or de-listing, shall have occurred.

 

4.3.6 Other Subscription Agreements and Investments. The Issuer, the SPAC and the Company shall not have entered into any other subscription agreement, including through amendment, waiver or modification to any Other Subscription Agreements, Future Subscription Agreements or FPAs (unless such Future Subscription Agreements or FPAs were entered into in compliance with Section 3.2.9) with a lower purchase price per $1,000 principal amount of the Convertible Notes or Per Unit Purchase Price for Units or other terms (economic or otherwise) more advantageous to such other subscriber or investor than as set forth in this Subscription Agreement unless Subscriber has been offered the same terms or benefits.

 

4.3.7 Indenture and Related Documentation. Prior to or concurrent with the Closing, the Indenture shall have been executed by the applicable parties thereto. The Indenture and other documentation related thereto shall be in conformity with the Term Sheet and otherwise in form and substance reasonably acceptable to the Subscriber.

 

4.3.8 Minimum Cash. (a) After giving effect to the Transactions, the Issuer will have at least $40,000,000 of unrestricted cash on its balance sheet (without giving effect to any proceeds received from an FPA or any other indebtedness permitted under Section 4.3.11 of this Subscription Agreement, other than any existing receivables factoring facilities (Walmart and Loews) to the extent used in the ordinary course of business consistent w/ past practice allowed by clause (x) of Permitted Indebtedness (as defined in the ABL Facility as it exists on the date hereof), and provided that the ABL Facility has minimum availability of at least $25.0 million at Closing) (such unrestricted cash, the “Unrestricted Closing Cash”); and (b) the Closing Newco Cash shall equal or exceed $40,000,000. For purposes hereof, “Closing Newco Cash” means, without duplication, an amount equal to (i) the net proceeds to the Issuer from the Trust Account after giving effect to redemptions (and without giving effect to the proceeds from the issuance and sale of any Convertible Notes or any shares of Issuer Common Stock or warrants pursuant to this Subscription Agreement, Other Subscription Agreements, Future Subscription Agreements, FPAs or any other agreement, including any proceeds counted under subclause (ii) of this definition); plus (ii) the aggregate amount of cash actually funded to purchase shares of Issuer Common Stock and Convertible Notes pursuant to this Subscription Agreement and the Other Subscription Agreements entered into prior to the Closing in connection with such agreements; plus (iii) the aggregate amount of cash actually funded to purchase shares of Issuer Common Stock and Convertible Notes pursuant to any Future Subscription Agreements entered into prior to the Closing, minus (iv) the payment of all fees and expenses required to be paid by Issuer, SPAC and the Company in connection with the consummation of the Transactions (including any deferred underwriting fees) and the transactions contemplated by this Subscription Agreement, Other Subscription Agreements, Future Subscription Agreements, FPAs or any other agreement related thereto; minus (v) the Transaction Cash Consideration (as defined in the Business Combination Agreement as it exists on the date hereof).

 

 

4.3.9 Equity Issuances. The Issuer shall have received (i) cash proceeds from the issuance and sale of the Common Shares and Warrants pursuant to this Subscription Agreement and the Other Subscription Agreements and Future Subscription Agreements in an aggregate amount of not less than $30,667,000 and (ii) net proceeds from the Trust Account after giving effect to redemptions and the payment of all fees and expenses required to be paid by Issuer, SPAC and the Company in connection with the consummation of the Transactions (including any deferred underwriting fees) and the transactions contemplated by this Subscription Agreement, Other Subscription Agreements, Future Subscription Agreements, FPAs or any other agreement related thereto (and without giving effect to the proceeds from the issuance and sale of any Convertible Notes or any shares of Issuer Common Stock or warrants pursuant to this Subscription Agreement, Other Subscription Agreements or Future Subscription Agreements) plus cash from the issuance and sale of the Common Shares and Warrants pursuant to this Subscription Agreement, the Other Subscription Agreements and Future Subscription Agreements of not less than $40,000,000; provided that no proceeds from any repurchase agreements, forward purchase agreements, including FPAs, or other similar arrangements shall be taken into account for purposes of this Section 4.3.9.

 

4.3.10 Distributions. No distributions payable in cash, equity interests, property or otherwise shall have been made by the SPAC, the Issuer, the Company or their respective Affiliates to any of their respective stockholders in connection with the consummation of the Transactions (other than a distribution or payment from the Company to Cowell (the “First Distribution”) pursuant to the terms of the Company Redemption Agreement (to be entered into on the terms set forth in the Business Combination Agreement as the Business Combination Agreement exists on the date of this Subscription Agreement) which shall occur immediately prior to the Closing of the Transactions and a distribution or payment from Cowell to NAI pursuant to Section 3.04(b) of the Business Combination Agreement (as the Business Combination Agreement exists on the date of this Subscription Agreement without giving effect to any amendments or waivers thereto) and which shall occur immediately after First Distribution but still prior to the Closing of the Transactions) exceeding an amount equal to (i) the net proceeds to the Issuer from the Trust Account after giving effect to redemptions (and without giving effect to the proceeds from the issuance and sale of any Convertible Notes or any shares of Issuer Common Stock or warrants pursuant to this Subscription Agreement, Other Subscription Agreements, Future Subscription Agreements, FPAs or any other agreement, including any proceeds counted under the following subclause (ii)); plus (ii) the aggregate amount of cash actually funded to purchase shares of Issuer Common Stock and Convertible Notes pursuant to this Subscription Agreement and the Other Subscription Agreements entered into prior to the Closing in connection with the PIPE Investment; plus (iii) the aggregate amount of cash actually funded to purchase shares of Issuer Common Stock and Convertible Notes pursuant to any Future Subscription Agreements entered into prior to the Closing, minus (iv) the payment of all fees and expenses required to be paid by Issuer, SPAC and the Company in connection with the consummation of the Transactions (including any deferred underwriting fees) and the transactions contemplated by this Subscription Agreement, Other Subscription Agreements, Future Subscription Agreements, FPAs or any other agreement related thereto; minus (v) Unrestricted Closing Cash.

 

 

4.3.11 Selection of Trustee for Convertible Notes. The trustee for the Convertible Notes will be selected prior to Closing by the Company with the consent, not to be unreasonably conditioned, delayed or withheld, of the Subscribers of the Convertible Notes of not less than a majority in aggregate principal amount of the Convertible Notes committed to be purchased pursuant to this Subscription Agreement, the Other Subscription Agreements and any Future Subscription Agreements (the “Requisite Majority”).

 

4.3.12 Indebtedness. Immediately after Closing, the Issuer and its subsidiaries shall have no other indebtedness for borrowed money other than (a) the Convertible Notes in an aggregate principal amount equal to no more than $111,333,000, (b) indebtedness outstanding under that certain Loan Agreement, dated as of October 15, 2021 (the “Loan Agreement”), among the Company, Holdings (as defined therein), the several financial institutions from time to time party to such agreement as lenders and White Oak Global Advisors, LLC, as Administrative Agent, as in effect on the date of this Subscription Agreement (excluding any incremental debt thereunder), and any Permitted Refinancing (as defined below) thereof (provided that, for the avoidance of doubt, any such refinancing shall be subject to the right of first refusal set forth in Section 3 in the FS Engagement Letter), (c) borrowings outstanding or available to be drawn under the Credit Agreement, by and among Wells Fargo Bank, National Association, as agent, the lenders party thereto, the Company, as Administrative Borrower, and the other loan parties party thereto from time to time, as in effect on the date of this Subscription Agreement, and any Permitted Refinancing (the “ABL Facility”), (d) Permitted Indebtedness (as defined in the ABL Facility as it exists on the date hereof) in the ordinary course of the Company’s business in an amount not to exceed $2,500,000 in the aggregate; provided, that such cap shall not apply to any existing receivables factoring facilities (Walmart and Loews) to the extent used in ordinary course of business consistent with past practice permitted by clause (x) of Permitted Indebtedness (as defined in the ABL Facility as it exists on the date hereof), (e) indebtedness incurred by the SPAC in an amount not to exceed $2,000,000 in the aggregate (not taking into account indebtedness incurred pursuant to the immediately succeeding clause (f)) and (f) indebtedness incurred by the SPAC in connection with payments made in accordance with the SPAC’s certificate of incorporation to extend the time available to complete a business combination transaction in an amount not to exceed $2,760,000 in the aggregate, unless, in each case, otherwise consented to by the Anchor Investor. For purposes hereof, “Permitted Refinancing” means a refinancing of the Loan Agreement or the ABL Facility, as applicable so long as: (a) such refinancing does not result in an increase in the principal amount above the Loan Agreement or the ABL Facility, as applicable, (b) such refinancing does not result in an increase in the interest rate or effective yield above the Loan Agreement or the ABL Facility, as applicable, (c) such refinancing does not result in a shortening of the average weighted maturity of the Loan Agreement, provide for any new or expanded mandatory prepayment events, nor contain terms that, taken as a whole, are materially more burdensome or restrictive to any Loan Party (or equivalent concept under the ABL Facility), (d) the new indebtedness is not recourse to any Person other than Persons which were similarly obligated with respect to the Loan Agreement or the ABL Facility, as applicable, and (e) the new indebtedness is not secured by any assets other than those that secured the Loan Agreement or the ABL Facility, as applicable.

 

 

4.3.13 MAE. Between the date of this Subscription Agreement and the Closing (including, for the avoidance of doubt, on the Closing Date), there has not occurred any Issuer Material Adverse Effect (as defined in this Subscription Agreement), any Company Material Adverse Effect (as defined in the Business Combination Agreement) or any Ackrell Material Adverse effect.

 

4.3.14 Default or Event of Default. (x) There shall be no Default or Event of Default (each as defined in the Indenture) under the Indenture as of the Closing Date on a pro forma basis after giving effect to the Transactions, (y) a waiver, amendment and/or consent for the Loan Agreement shall have been obtained to permit the incurrence of the Convertible Notes and as of the Closing Date there shall be no Default or Event of Default (each as defined in the Loan Agreement) under the Loan Agreement (as it exists on the date of this Subscription Agreement without giving effect to any amendment, modification or waiver thereto) on a pro forma basis after giving effect to the Transactions and (z) a waiver, amendment and/or consent for the ABL Facility shall have been obtained to permit the incurrence of the Convertible Notes and as of the Closing Date there shall be no Default or Event of Default (each as defined in the ABL Facility) under the ABL Facility (as it exists on the date of this Subscription Agreement without giving effect to any amendment, modification or waiver thereto) on a pro forma basis after giving effect to the Transactions.

 

4.3.15 Conduct Prior to the Closing Date. Except as expressly contemplated by the Business Combination Agreement (as it exists on the date of this Subscription Agreement without giving effect to any amendment, modification or waiver thereto) (excluding any exceptions set forth in the Disclosure Schedules thereto or distributions permitted under Section 9.01(b)(iv) thereto) or any Ancillary Agreement (as it exists on the date of this Subscription Agreement without giving effect to any amendment, modification or waiver thereto) and except as required by applicable Law, during the period from the date of this Subscription Agreement and continuing until the Closing (including, for the avoidance of doubt, on the Closing Date), without the consent of the Anchor Investor, the Company and its subsidiaries:

 

(i) shall have (i) carried on their respective businesses in the ordinary course of business and in a manner consistent with past practice and (ii) used reasonable best efforts to preserve substantially intact their business organization, to keep available the services of the current officers, key employees and consultants of the Company and to preserve the current relationships of the Company with customers, suppliers and other Persons with which the Company has significant business relations;

 

 

(ii) (a) shall not have declared, set aside, made or paid any dividend or other distribution (other than Tax distributions pursuant to the Amended and Restated Operating Agreement of the Company, dated as of July 13, 2017, as amended, permitted under the Loan Agreement and the ABL Facility (the “Tax Distributions”)), payable in cash, equity interests, property or otherwise, with respect to any of its membership interests (or comparable equity interest); and (b) shall not sell, lease, exclusively license, transfer, exchange or swap, mortgage or otherwise pledge or encumber (including securitizations), or otherwise dispose of any material portion of its properties, assets or rights, other than in the ordinary course of business consistent with past practice;

 

(iii) (a) shall not have entered into any agreement with an affiliate or a Material Contract (as such term is defined in the Business Combination Agreement on the date of this Subscription Agreement without giving effect to any amendments or waivers thereto unless such amendment or waiver is more advantageous to the Subscriber), other than Contracts with suppliers and customers entered into in the ordinary course of business; (b) shall not have waived, released or assigned any material rights or claims under any contract with an affiliate or a Material Contract (as such term is defined in the Business Combination Agreement on the date of this Subscription Agreement without giving effect to any amendments or waivers thereto unless such amendment or waiver is more advantageous to the Subscriber and, for the avoidance of doubt, including any Material Contracts entered into or effected after the date of this Subscription Agreement); (c) shall not have modified, amended or terminated in a manner that is adverse to such entity any affiliate contract or Material Contract (as such term is defined in the Business Combination Agreement on the date of this Subscription Agreement without giving effect to any amendments or waivers thereto unless such amendment or waiver is more advantageous to the Subscriber and, for the avoidance of doubt, including any Material Contracts entered into or effected after the date of this Subscription Agreement); and (d) shall not have made any capital expenditures (or commitment to make any capital expenditures) that exceed $1,500,000 in the aggregate, other than any (A) capital expenditure (or series of related capital expenditures) consistent in all material respects with the Company’s annual capital expenditure budget for periods following the date hereof, which has been made available to the Subscriber on the date of this Subscription Agreement;

 

(v) shall not have closed or materially reduced its business activities or have engaged in any new line of business;

 

(vi) shall not have (i) permitted any material item of Company IP (as such term is defined in the Business Combination Agreement on the date of this Subscription Agreement without giving effect to any amendments or waivers thereto unless such amendment or waiver is more advantageous to the Subscriber) to lapse or to be abandoned, invalidated, dedicated to the public, canceled, or disclaimed, or otherwise become unenforceable or fail to perform or make any applicable filings, recordings or other similar actions or filings, or failed to pay all required fees and Taxes required or advisable to maintain and protect its interest in each and every material item of Company IP, or (ii) transferred, sold, assigned, licensed, sublicensed, encumbered, impaired or otherwise disposed of any right, title or interest in any Company IP (as such term is defined in the Business Combination Agreement on the date of this Subscription Agreement without giving effect to any amendments or waivers thereto unless such amendment or waiver is more advantageous to the Subscriber) (excluding non-exclusive licenses of Company IP in the ordinary course of business consistent with past practice);

 

 

(vii) shall not have amended or otherwise modified any of its or its subsidiaries organizational documents;

 

(viii) shall not have adopted or effected a plan of complete or partial liquidation, dissolution, restructuring, recapitalization or other reorganization;

 

(ix) shall not have granted or otherwise created or consented to the creation of any lien or other encumbrance on any of its assets;

 

(x) shall not have acquired (including by merger, consolidation, or acquisition of stock or substantially all of the assets or any other business combination) any corporation, partnership, other business organization or any division thereof or purchase a material portion of the assets (other than in the ordinary course of business) or equity of, any corporation, partnership, other business organization or any division thereof;

 

(xi) shall not have made any material change to any of the cash management practices, including materially deviating from or materially altering any of its practices, policies or procedures in paying accounts payable or collecting accounts receivable;

 

(xii) except in the ordinary course of business and except for the Tax Distributions, shall not have entered into or amended any agreement with, or paid or distributed or advanced any assets or property to, any of its officers, directors, members, stockholders or other affiliates;

 

(xiii) shall not have caused the condition set forth in Section 4.3.11(d) not to be satisfied; and

 

(xiv) shall not have agreed to, authorized or committed in writing to do any of the foregoing.

 

 

4.3.16 Opinion. The Subscriber shall have received one or more opinions of counsel, dated the Closing Date and addressed to the Subscriber, in the applicable counsel’s standard form and subject to customary assumptions and exceptions, and otherwise in form and substance reasonably satisfactory to Subscriber and its counsel, with respect to:

 

(i) due authorization, execution, delivery and enforceability of the Indenture (including any guarantees), the Convertible Notes, the subordination agreement and any Intercreditor Agreement (assuming for such purposes that they are governed by NY law) (collectively, the “Opinion Documents”) by each of the Issuer and the guarantors of any of the foregoing (each, an “Opinion Party” and collectively, the “Opinion Parties”);

 

(ii) the execution and delivery by each Opinion Party of the Opinion Documents to which such Opinion Party is a party and the performance by the Opinion Parties of the Indenture will not breach or result in a breach of any such party’s organizational documents or a default under any material agreement to which the Issuer or any of its subsidiaries is a party at the time of issuance;

 

(iii) the absence of defaults or violations of New York law, the Delaware General Corporation Law (the “DGCL”) or federal law or regulation, or any order known to such counsel issued by any court or governmental authority acting pursuant to federal or New York statute or the DGCL, resulting from the execution and delivery of the Opinion Documents by each Opinion Party and the issuance of the Convertible Notes by the Issuer and the guarantees by the guarantors in accordance with the terms of the Indenture;

 

(iv) the absence of required consents, approvals, authorizations, orders, filings, registrations or qualifications of or with any federal, New York State or Delaware governmental agency or body in connection with the execution and delivery by the Issuer of the Indenture and the guarantors of the guarantees thereunder, the issuance of the Convertible Notes by the Issuer and the guarantees by the guarantors, in accordance with the terms of the Indenture or the performance by the Issuer of its payment obligations under the Indenture;

 

(v) the Issuer is not an “investment company” within the meaning of, and subject to regulation under, the Investment Company Act; and

 

(vi) assuming compliance by the Subscriber and the Other Subscribers with the provisions of this Agreement and the Other Subscription Agreements, respectively, and the accuracy of their respective representations and warranties contained herein and therein, (A) the exemption from registration of the offer and sale of the Convertible Notes (including the common stock underlying such Convertible Notes) under the Securities Act, as contemplated by this Agreement, and (B) the exemption from qualification of the Indenture under the Trust Indenture Act.

 

4.3.17 Business Performance. During the calendar quarter for the three months ended March 31, 2022, the net revenue of the Company shall be at least $111,700,000 and the gross margin of the Company during such three-month period shall be at least 20%. For the purposes hereof, “net revenue” and “gross margin” shall be calculated in a manner consistent with the calculation of such metrics by the Company in the financial statements of the Company for the year ended December 31, 2021, which shall be set forth in the unaudited financial statements of the Company for such three month period ended March 31, 2022 and shall include line items having similar import.

 

 

4.3.18 Officers’ Certificate. The Subscriber shall have received a certificate or certificates signed by an executive officer of the Issuer, dated the Closing Date, in which such officer shall state that the conditions set forth in Section 4.3.1, Section 4.3.2, 4.3.8, 4.3.9, 4.3.11, 4.3.12, 4.3.13 and 4.3.14 are satisfied as of the Closing Date. The Subscriber shall have received a certificate signed by the chief financial officer of the Issuer, dated the Closing Date, certifying that the Issuer and its subsidiaries, on a consolidated basis, after giving effect to the Transactions, are solvent. The Subscriber shall have received a certificate signed by an executive officer of the Issuer and the chief executive officer of the Company, in which each such officer shall state that the conditions set forth in Section 4.3.13 are satisfied as of the Closing Date.

 

4.3.19 DTC. The Convertible Notes shall be eligible for clearance and settlement through DTC.

 

4.4 Transfer Restrictions. During the period beginning at the Closing and ending on the later of (i) the date that the Escrowed Shares and the Additional Escrowed Shares are transferred to the Subscriber and the Other Subscribers and (ii) the Remaining Shares and the Additional Remaining Shares are transferred to the Transferors, in each case pursuant to the applicable provisions of Section 2 of this Subscription Agreement and the Other Subscription Agreements (the “Restriction Period”), with respect to any shares of Issuer Common Stock or Convertible Notes issued to the Subscriber under this Subscription Agreement only, Subscriber agrees not to, directly or indirectly, (x) offer, sell, contract to sell, pledge, grant any option to purchase, make any short sale or otherwise dispose of any shares of Issuer Common Stock issued to the Subscriber in connection with this Subscription Agreement, together with any (a) securities paid as dividends or distributions with respect to such securities or (b) securities that are exchangeable or convertible into shares of Issuer Common Stock issued to the Subscriber in connection with this Subscription Agreement, owned directly by Subscriber (including holding as a custodian) or with respect to which Subscriber has beneficial ownership within the rules and regulations of the Commission (collectively, the “Covered Securities”), in each case as a result of the issuance to the Subscriber of the Issuer Common Stock hereunder only and, (y) notwithstanding the terms of the Indenture, convert the Convertible Notes into shares of Issuer Common Stock during such period. The foregoing restriction is expressly agreed to preclude Subscriber from engaging in any hedging or other transaction which is designed to or which reasonably could be expected to lead to or result in a sale or disposition of the Covered Securities even if such Covered Securities would be disposed of by someone other than Subscriber. Such prohibited hedging or other transactions would include, without limitation, any short sale or any purchase, sale or grant of any right (including, without limitation, any put or call option) with respect to any of the Covered Securities or with respect to any security that includes, relates to, or derives any significant part of its value from such Covered Securities; provided, that, if consented to in writing by the Issuer (such consent not to be unreasonably withheld, with it being understood that it shall be reasonable for Issuer to withhold consent if (1) such hedging transaction would reasonable be expected to result in the Merger, the PIPE Investment (with respect to the acquisition of Issuer Common Stock only), the NAI Contribution or the Dahle Contribution not qualifying as an exchange pursuant to Section 351 of the Code or (2) such hedging transaction would reasonably be expected to have other adverse tax consequences to any Transferor), this Section 4 shall not prohibit any such consented to hedging transaction. Notwithstanding the foregoing, to the extent any Other Subscriber or other investor pursuant to an Other Subscription Agreement, Future Subscription Agreement, FPA or any other similar agreement is not bound by the terms of this Section 4.4, such Section 4.4 shall cease to apply to the Subscriber. The Issuer shall promptly after the end of the Restriction Period (and in any event no later than one (1) business day thereafter) notify each Subscriber in writing that the Restriction Period has terminated.

 

 

4.5 Form of Warrant Agreement. The warrant agreement substantially in the form attached hereto as Exhibit B (other than changes to such form that are not material and adverse to Subscriber) shall be executed by the Issuer and the warrant agent to be party thereto on or before the Closing Date.

 

5. Registration Statement.

 

5.1 The Issuer agrees that:

 

5.1.1 it will file with the SEC (at the Issuer’s sole cost and expense) a registration statement registering the resale of the Common Shares issued in the Subscription, the Transfer Shares transferred in the Transfer, the shares of Issuer Common Stock issuable upon the conversion of the Convertible Notes and the shares of Issuer Common Stock issuable upon the exercise of the Warrants and the Warrants (collectively, the “Registrable Securities” and such registration statement, the “Registration Statement”) (a) if permitted by the Commission, as promptly as practicable after the filing of the first amendment to the Registration Statement (solely for this purpose, as such term is defined in the Business Combination Agreement) following receipt of the first round of comments thereon from the Commission or (b) if the Commission does not permit the filing of the Registration Statement prior to the Closing, within 15 days following the Closing (as applicable, the “Filing Date”), and the Issuer shall use its reasonable best efforts to have the Registration Statement declared effective as soon as practicable after the filing thereof, but no later than the earlier of (i) the 60th calendar day (or 90^th calendar day if the Commission notifies the Issuer that it will “review” the Registration Statement) following the Filing Date and (ii) the 7th business day after the date the Issuer is notified (orally or in writing, whichever is earlier) by the Commission that the Registration Statement will not be “reviewed” or will not be subject to further review (such earlier date, the “Effectiveness Date”); provided, however, that the Issuer’s obligations to include the Registrable Securities in the Registration Statement are contingent upon Subscriber furnishing in writing to the Issuer such information regarding Subscriber, the securities of the Issuer held by Subscriber and the intended method of disposition of the Registrable Securities as shall be reasonably requested by the Issuer to effect the registration of the Registrable Securities, and Subscriber shall execute such documents in connection with such registration as the Issuer may reasonably request that are customary of a selling stockholder in similar situations, including providing that the Issuer shall be entitled to postpone and suspend the effectiveness or use of the Registration Statement as permitted hereunder (provided, however, that Subscriber shall not in connection with the foregoing be required to execute any lock-up or similar agreement or otherwise be subject to any contractual restriction on the ability to transfer the Convertible Notes or any Registrable Securities); provided, further, however, the Issuer is not obligated to cause the Registration Statement to be declared effective prior to the Closing Date. The Issuer will provide a draft of the Registration Statement to the Subscriber for review at least seven (7) Business Days in advance of filing the Registration Statement. Unless otherwise agreed to in writing by Subscriber, Subscriber shall not be identified as a statutory underwriter in the Registration Statement unless requested by the Commission or another applicable regulatory agency; provided, that if the Commission or another applicable regulatory agency requests that Subscriber be identified as a statutory underwriter in the Registration Statement, Subscriber will have the opportunity to withdraw from the Registration Statement upon its prompt written request to the Issuer. Notwithstanding the foregoing, if the Commission prevents the Issuer from including any or all of the shares of Issuer Common Stock, including any Registrable Securities, proposed to be registered under the Registration Statement due to limitations on the use of Rule 415 under the Securities Act for the resale of the shares of Issuer Common Stock, including the Registrable Securities, held by Subscriber or any Other Subscriber or otherwise, (and notwithstanding that the Issuer used diligent efforts to advocate with the staff of the Commission for the registration of all or a greater part of the Registrable Securities) such Registration Statement shall register for resale such number of shares of Issuer Common Stock, including Registrable Securities, which is equal to the maximum number of shares of Issuer Common Stock as is permitted by the Commission. In such event, the number of shares of Issuer Common Stock, including Registrable Securities, to be registered for each selling shareholder named in the Registration Statement shall be reduced pro rata among all such selling shareholders. In the event the Commission informs the Issuer that all of such shares of Issuer Common Stock, including Registrable Securities, cannot, as a result of the application of Rule 415, be registered for resale on the Registration Statement, the Issuer agrees to promptly inform Subscriber thereof and use its reasonable best efforts to file amendments to the Registration Statement or new Registration Statements as required by the Commission, covering the maximum number of shares of Issuer Common Stock, including Registrable Securities, permitted to be registered by the Commission, on Form S-1 or such other form available to register for resale such shares and causing such Registration Statements or amendments to go effective as promptly as practicable and to take all such actions as may be necessary, including filing new registration statements, to register any remaining Registrable Securities previously not registered as a result of the foregoing. “Registrable Securities” shall include the Registrable Securities acquired pursuant to this Subscription Agreement and any other equity security of the Issuer issued or issuable with respect to the Convertible Notes or Registrable Securities by way of share split, dividend, distribution, recapitalization, merger, exchange, replacement or similar event or otherwise, but not, for the avoidance of doubt, any other equity security of the Issuer owned or acquired by Subscriber. For purposes of clarification, any failure by the Issuer to file the Registration Statement by the Filing Date or to cause such Registration Statement to be declared effective by the Effectiveness Date shall not otherwise relieve the Issuer of its obligations to file or effect the Registration Statement as set forth above in this Section 5.

 

 

5.1.2 if any Make-Whole Shares or any Additional Make-Whole Shares become transferable by the Escrow Agent to the Subscriber pursuant to Section 2.1 or Section 2.2, it will file with the Commission (at the Issuer’s sole cost and expense) a registration statement registering the transfer of the Make-Whole Shares and the Additional Make-Whole Shares from the Escrow Agent to the Subscriber (the “Make-Whole Registration Statement”) (a) if permitted by the Commission, as promptly as practicable after the filing of the first amendment to the Registration Statement (solely for this purpose, as such term is defined in the Business Combination Agreement) following receipt of the first round of comments thereon from the Commission or (b) if the Commission does not permit the filing of the Registration Statement prior to the Closing, within 15 days following the Closing (as applicable, the “Make-Whole Filing Date”), and the Issuer shall use its commercially reasonable efforts to have the Make-Whole Registration Statement declared effective as soon as practicable after the filing thereof, but no later than the earlier of (i) the 60th calendar day (or 90th calendar day if the Commission notifies the Issuer that it will “review” the Make-Whole Registration Statement) following the Make-Whole Filing Date and (ii) the 7th business day after the date the Issuer is notified (orally or in writing, whichever is earlier) by the Commission that the Make-Whole Registration Statement will not be “reviewed” or will not be subject to further review; provided, however, that the Issuer’s obligations to include the Make-Whole Shares and the Additional Make-Whole Shares in the Registration Statement are contingent upon Subscriber furnishing in writing to the Issuer such information regarding Subscriber and the securities of the Issuer held by Subscriber as shall be reasonably requested by the Issuer to effect the registration of the transfer of the Make-Whole Shares and the Additional Make-Whole Shares, and Subscriber shall execute such documents in connection with such registration as the Issuer may reasonably request that are customary of a selling stockholder in similar situations.

 

5.2 In the case of the registration effected by the Issuer pursuant to this Subscription Agreement, the Issuer shall, upon reasonable request, inform Subscriber as to the status of such registration. At its expense, the Issuer shall:

 

5.2.1 except for such times as the Issuer is permitted hereunder to suspend the use of the prospectus forming part of a Registration Statement, use its reasonable best efforts to keep such registration, and any qualification, exemption or compliance under state securities laws which the Issuer determines to obtain, continuously effective with respect to Subscriber, and to keep the applicable Registration Statement or any subsequent shelf registration statement free of any material misstatements or omissions, until the earlier of the following: (i) Subscriber ceases to hold any Registrable Securities, (ii) the date all Registrable Securities held by Subscriber may be sold without any volume and manner of sale restrictions which may be applicable to affiliates under Rule 144 and without the requirement for the Issuer to be in compliance with the current public information required under Rule 144(c)(1) (or Rule 144(i)(2), if applicable) and (iii) six (6) years from the Effectiveness Date of the Registration Statement. If Registrable Securities can be transferred, whether because they are registered under the Securities Act or pursuant to Rule 144 or another exemption under the Securities Act, if requested by Subscriber, the Issuer shall use its commercially reasonable efforts to (i) promptly cause the removal of the restrictive legends from any Registrable Securities being sold under the Registration Statement, pursuant to Rule 144 or such other exemption and (ii) cause its legal counsel to deliver an opinion, if necessary, (such opinion being a blanket opinion with respect to Registrable Securities being sold (y) under the Registration Statement or (z) pursuant to Rule 144, if applicable) to the transfer agent in connection with the instruction under subclause (i) to the effect that the removal of such restrictive legends in such circumstances may be effected under the Securities Act (with or without a sale of such Registrable Securities, as applicable), in each case upon the receipt of customary representations, certificates and other documentation from the Holder as reasonably requested by the Issuer, its counsel or the transfer agent, establishing that restrictive legends are no longer required. From and after such time as the benefits of Rule 144 or any other similar rule or regulation of the Commission that may allow Subscriber to sell securities of the Issuer to the public without registration are available to holders of the Issuer’s common stock for so long as Subscriber holds Registrable Securities, the Issuer shall, at its expense, make and keep public information available, as those terms are understood and defined in Rule 144; use commercially reasonable efforts to file with the Commission in a timely manner all reports and other documents required of the Issuer under the Securities Act and the Exchange Act so long as the Issuer remains subject to such requirements and such reports and other documents are required for the applicable provisions of Rule 144 to enable Subscriber to sell the Registrable Securities (if any) under Rule 144 for so long as Subscriber holds any Registrable Securities or Convertible Notes; and furnish to Subscriber, promptly upon Subscriber’s reasonable request, (i) a written statement by the Issuer, if true, that it has complied with the reporting requirements of Rule 144, the Securities Act, and the Exchange Act, (ii) a copy of the most recent annual or quarterly report of the Issuer and such other reports and documents so filed by the Issuer, and (iii) such other information as may be reasonably requested to permit Subscriber to sell such securities pursuant to Rule 144 without registration;

 

 

5.2.2 advise Subscriber promptly, and in no event later than within three (3) business days:

 

(a) when a Registration Statement or any post-effective amendment thereto has become effective;

 

(b) of the issuance by the Commission of any stop order suspending the effectiveness of any Registration Statement or the initiation of any proceedings for such purpose;

 

(c) of the receipt by the Issuer of any notification with respect to the suspension of the qualification of the Registrable Securities included therein for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose; and

 

(d) subject to the provisions in this Subscription Agreement, of the occurrence of any event that requires the making of any changes in any Registration Statement or prospectus so that, as of such date, the statements therein are not misleading and do not omit to state a material fact required to be stated therein or necessary to make the statements therein (in the case of a prospectus, in the light of the circumstances under which they were made) not misleading.

 

Notwithstanding anything to the contrary set forth herein, without the prior written consent of Subscriber, the Issuer shall not, when so advising Subscriber of such events, provide Subscriber with any material, nonpublic information regarding the Issuer other than to the extent that providing notice to Subscriber of the occurrence of the events listed in (a) through (d) above constitutes material, nonpublic information regarding the Issuer;

 

 

5.2.3 use its reasonable best efforts to obtain the withdrawal of any order suspending the effectiveness of any Registration Statement as soon as reasonably practicable;

 

5.2.4 upon the occurrence of any event contemplated in Section 5.2.2(d), except for such times as the Issuer is permitted hereunder to suspend, and has suspended, the use of a prospectus forming part of a Registration Statement, the Issuer shall use its commercially reasonable efforts to as soon as reasonably practicable prepare a post-effective amendment to such Registration Statement or a supplement to the related prospectus, or file any other required document so that, as thereafter delivered to purchasers of the Registrable Securities included therein, such prospectus will not include any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; and

 

5.2.5 use its reasonable best efforts to cause all Registrable Securities to be listed on each securities exchange or market, if any, on which the Issuer Common Stock is then listed.

 

5.3 Notwithstanding anything to the contrary in this Subscription Agreement, the Issuer shall be entitled to delay or postpone the effectiveness of the Registration Statement, and from time to time to require Subscriber not to sell under the Registration Statement or to suspend the effectiveness thereof, if the negotiation or consummation of a bona fide transaction by the Issuer or its subsidiaries is pending or an event has occurred, which negotiation, consummation or event the Issuer’s board of directors reasonably believes, upon the advice of legal counsel (which may be in-house counsel), would require additional disclosure by the Issuer in the Registration Statement of material information that the Issuer has a bona fide business purpose for keeping confidential and the non-disclosure of which in the Registration Statement would be expected, in the reasonable determination of the Issuer’s board of directors, upon the advice of legal counsel (which may be in-house counsel), to cause the Registration Statement to be misleading or to omit to state a material fact required to be stated therein or necessary to make the statements therein (in the case of a prospectus, in the light of the circumstances under which they were made) not misleading (each such circumstance, a “Suspension Event”); provided, however, that the Issuer may not delay or suspend the Registration Statement on more than two occasions or for more than forty-five (45) consecutive calendar days (or a total of 90 days), in each case during any twelve-month period and the Issuer shall make such Registration Statement available for the sale by Subscriber of such securities promptly upon the termination of such Suspension Event. Upon receipt of any written notice from the Issuer of the occurrence of any Suspension Event during the period that any Registration Statement is effective or if as a result of a Suspension Event any Registration Statement or related prospectus contains any untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made (in the case of the prospectus) not misleading, Subscriber agrees that (i) it will immediately discontinue offers and sales of the Registrable Securities under the Registration Statement until Subscriber receives copies of a supplemental or amended prospectus (which the Issuer agrees to promptly prepare) that corrects the misstatement(s) or omission(s) referred to above and receives notice that any post-effective amendment has become effective or unless otherwise notified by the Issuer that it may resume such offers and sales, and (ii) it will maintain the confidentiality of any information included in such written notice delivered by the Issuer unless otherwise required by law or subpoena; provided that no material non-public information shall be provided to the Subscriber in connection with any such notice. Subscriber may deliver written notice (including via email in accordance with this Subscription Agreement) (an “Opt-Out Notice”) to the Issuer requesting that Subscriber not receive notices from the Issuer otherwise required by this Section 5; provided, however, that Subscriber may later revoke any such Opt-Out Notice in writing. Following receipt of an Opt-Out Notice from Subscriber (unless subsequently revoked), (i) the Issuer shall not deliver any such notices to Subscriber and Subscriber shall no longer be entitled to the rights associated with any such notice and (ii) each time prior to Subscriber’s intended use of an effective Registration Statement, Subscriber will notify the Issuer in writing at least two (2) business days in advance of such intended use, and if a notice of a Suspension Event was previously delivered (or would have been delivered but for the provisions of this Section 5.3) and the related suspension period remains in effect, the Issuer will so notify Subscriber, within one (1) business day of Subscriber’s notification to the Issuer, by delivering to Subscriber a copy of such previous notice of Suspension Event, and thereafter will provide Subscriber with the related notice of the conclusion of such Suspension Event immediately upon its availability (which notices shall not contain material non-public information and which notice shall not be subject Subscriber to any duty of confidentiality).

 

 

5.4 The Issuer shall indemnify and hold harmless Subscriber (to the extent it is included as a seller under the Registration Statement), its officers, directors, employees, advisers and agents, and each person who controls the Subscriber or any such Person (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act) and each affiliate of the Subscriber (within the meaning of Rule 405 under the Securities Act) to the fullest extent permitted by applicable Law, from and against any and all losses, claims, damages, liabilities, costs (including, without limitation, reasonable attorneys’ fees and expenses incurred in connection with defending or investigating any such action or claim) and expenses (collectively, “Losses”), as incurred, that arise out of or are based upon any untrue or alleged untrue statement of a material fact contained in the Registration Statement, any prospectus included in the Registration Statement or any form of prospectus or in any amendment or supplement thereto or in any preliminary prospectus, or arising out of or relating to any omission or alleged omission to state a material fact required to be stated therein or necessary to make the statements therein (in the case of any prospectus or form of prospectus or supplement thereto, in light of the circumstances under which they were made) not misleading, except to the extent that such untrue statements or alleged untrue statements, omissions or alleged omissions are based upon information regarding a Subscriber furnished in writing to the Issuer by a Subscriber expressly for use therein or a Subscriber has omitted a material fact from such information or otherwise violated the Securities Act, Exchange Act or any state securities law or any rule or regulation thereunder. Notwithstanding the forgoing, the Issuer’s indemnification obligations shall not apply to amounts paid in settlement of any Losses if such settlement is effected without the prior written consent of the Issuer (which consent shall not be unreasonably withheld, delayed or conditioned), nor shall the Issuer be liable for any Losses to the extent they arise out of or are based upon a violation which occurs (A) in connection with any failure of Subscriber to deliver or cause to be delivered a prospectus made available by the Issuer in a timely manner, (B) as a result of offers or sales effected by or on behalf of any person by means of a free writing prospectus (as defined in Rule 405) that was not authorized in writing by the Issuer, or (C) in connection with any offers or sales effected by or on behalf of a Subscriber in violation of Section 5.3 hereof.

 

5.5 If any of the following events shall occur as a result of the Issuer’s failure to satisfy its obligations under this Section 5 (each, a “Registration Default”), then the Issuer shall accrue additional interest on the Convertible Notes (“Additional Interest”) to the Subscriber as follows:

 

(i) if the Registration Statement has not been declared effective on or prior to the date required in Section 5.1.1 (“Additional Interest Date”), then commencing on the Additional Interest Date, Additional Interest shall accrue on the aggregate outstanding principal amount of the Convertible Notes at a rate of 0.25% per annum for the first ninety (90) days from and including the Additional Interest Date and 0.50% per annum thereafter;

 

(ii) if the Issuer through its omission fails to name the Subscriber as a selling securityholder and such Subscriber had complied timely with its obligations hereunder in a manner to entitle such Subscriber to be so named in (i) the Registration Statement at the time it first became effective or (ii) any prospectus at the later of time of filing thereof or the time the Registration Statement of which such prospectus forms a part becomes effective, then Additional Interest shall accrue, on the aggregate outstanding principal amount of the Convertible Notes held by such Subscriber, at a rate of 0.25% per annum for the first ninety (90) days from and including the effective date of such Registration Statement or the time of filing of such prospectus, as the case may be, and 0.50% per annum thereafter, until such selling securityholder is so named; or

 

(iii) if the Registration Statement has been declared or becomes effective but ceases on or after the Additional Interest Date to be effective or usable for the offer and sale of the Registrable Securities issuable upon conversion of the Convertible Notes, other than due to a Suspension Event as set forth herein or as a result of a requirement to file a post-effective amendment for purposes of Section 10(a)(3) of the Securities Act or to file a post-effective amendment or supplement to a prospectus to make changes to the information regarding selling securityholders or the plan of distribution provided for therein, at any time following the Effectiveness Date that the Company does not cure the lapse of effectiveness or usability within ten (10) Business Days, then Additional Interest shall accrue on the aggregate outstanding principal amount of the Convertible Notes at a rate of 0.25% per annum for the first ninety (90) days from and including the day following such tenth (10th) Business Day and 0.50% per annum thereafter.

 

 

(iv) If a Registration Default occurs, the Additional Interest will accrue on the Convertible Note of the Subscriber from, and including, the date set forth in clauses (i) – (iii), respectively, for such Registration Default, until the earlier of (1) the day on which such Registration Default is cured and (2) the date on which the Registration Statement is no longer required to be kept effective. Any amounts of Additional Interest due pursuant to this Section 5 will be payable in cash on the date for payment of the stated interest on the Convertible Note to the Subscriber who is a holder of the Convertible Note of record as of the close of business on the relevant record dates for the payment of stated interest.

 

(v) The Additional Interest rate on any Convertible Note shall not accrue on any day at a combined rate in excess of 0.50% per annum and shall not accrue under more than one clause above for any given period of time, except that if Additional Interest would accrue because of more than one Registration Default, but at a rate of 0.25% per annum under one Registration Default and at a rate of 0.50% per annum under the other, then the Additional Interest rate shall be the higher rate of 0.50% per annum.

 

For the avoidance of doubt, payment in cash of Additional Interest on the Convertible Notes shall be subject to the terms of the Indenture and the subordination agreement related thereto, the Loan Agreement and the ABL Facility.

 

5.6 Piggyback Registration Rights for Underwritten Offerings.

 

(i) If (but without any obligation to do so) the Issuer proposes to register any of its Common Stock under the Securities Act in connection with an underwritten offering of such securities solely for cash, then the Issuer shall give written notice of such proposed offering to the Subscriber as soon as practicable but not less than ten (10) days before the anticipated filing date of the “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 and the name of the proposed managing underwriter or underwriters in such offering, and (B) offer to the Subscriber the opportunity to include in such underwritten offering such number of Registrable Securities as the Subscriber may request in writing within five (5) days after receipt of such written notice (such registered offering, a “Piggyback Registration”). Subject to clause (ii) of this Section 5.6, the Issuer shall, in good faith, cause such Registrable Securities to be included in such Piggyback Registration and 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 Subscriber pursuant to this clause (i) to be included therein on the same terms and conditions as any similar securities of the Issuer included in such registered offering and to permit the sale of such Registrable Securities in accordance with the intended method of distribution thereof. The inclusion of any of the Subscriber’s Registrable Securities in a Piggyback Registration shall be subject to Subscriber agreeing to enter into an underwriting agreement and, if required by the Underwriters and entered into by the Company and all other selling stockholders thereunder, a lock-up in customary form with the underwriter(s) selected for such underwritten offering (provided that such lock-up shall not exceed 90 days and if any stockholders are released from such lock-up, the holders of Registrable Securities shall also be released).

 

 

(ii) If the total amount of securities, including Registrable Securities of the Subscriber, requested to be included in such offering exceeds the amount of securities that the underwriters determine in their reasonable discretion is compatible with the success of the offering, then the Issuer shall be required to include in the offering only that number of such securities, including Registrable Securities, which the underwriters determine in their reasonable discretion will not jeopardize the success of the offering (the securities so included to be apportioned pro rata among the selling security holders according to the total amount of securities entitled to be included therein owned by each selling security holder or in such other proportions as shall mutually be agreed to by such selling security holders).

 

(iii) Subscriber shall have the right to withdraw from a Piggyback Registration for any or no reason whatsoever upon written notification to the Issuer and the underwriter or underwriters (if any) of its intention to withdraw from such Piggyback Registration prior to the filing of the applicable “red herring” prospectus or prospectus supplement with respect to such Piggyback Registration used for marketing such transaction. The Issuer (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 or otherwise abandon such offering. Notwithstanding anything to the contrary in this Subscription Agreement, the Issuer shall be responsible for all registration and filing fees, national securities exchange fees, blue sky fees and expenses, printing expenses and fees and disbursement of the Issuer’s counsel and accountants incurred in connection with the Piggyback Registration prior to its withdrawal under this clause (iii).

 

(iv) Subscriber shall have the right to irrevocably waive its rights under this Section 5.6 (without prejudicing or altering its other rights under this Section 5) by providing written notice to the Issuer in accordance with this Subscription Agreement, in which case the Issuer will not provide any notice contemplated by this Section 5.6.

 

5.7 Subscriber, severally and not jointly with any Other Subscriber, selling shareholder or person, shall indemnify and hold harmless the Issuer, its directors, officers, agents and employees, and each person who controls the Issuer (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), to the fullest extent permitted by applicable Law, from and against all Losses, as incurred, arising out of or are based upon any untrue or alleged untrue statement of a material fact contained in any Registration Statement or the Make-Whole Registration Statement, any prospectus included in the Registration Statement or the Make-Whole Registration Statement, or any form of prospectus, or in any amendment or supplement thereto or in any preliminary prospectus, or arising out of or relating to any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein (in the case of any prospectus, or any form of prospectus or supplement thereto, in light of the circumstances under which they were made) not misleading to the extent, but only to the extent, that such untrue statements or omissions are based upon information regarding Subscriber furnished in writing to the Issuer by Subscriber expressly for use therein. In no event shall the liability of Subscriber be greater in amount than the dollar amount of the net proceeds received by Subscriber upon the sale of the Registrable Securities giving rise to such indemnification obligation. Subscriber shall notify the Issuer promptly of the institution, threat or assertion of any action arising from or in connection with the transactions contemplated by this Section 5.5 of which Subscriber is aware. Notwithstanding the forgoing, Subscriber’s indemnification obligations shall not apply to amounts paid in settlement of any Losses if such settlement is effected without the prior written consent of Subscriber (which consent shall not be unreasonably withheld, delayed or conditioned).

 

 

6. Termination. This Subscription Agreement shall terminate and be void and of no further force and effect, and all rights and obligations of the parties hereunder shall terminate without any further liability on the part of any party in respect thereof, subject, however, to the last sentence of this Section 6, upon the earliest to occur of (i) such date and time as the Business Combination Agreement is terminated in accordance with its terms, (ii) upon the mutual written agreement of each of the parties hereto to terminate this Subscription Agreement or (iii) at the election of the Subscriber, if the Closing is not consummated on or prior to the Outside Date, other than as a result of a breach of Subscriber’s obligations hereunder; provided that nothing herein will relieve any party from liability for any willful breach hereof prior to the time of termination, and each party will be entitled to any remedies at law or in equity to recover losses, liabilities or damages arising from such breach. The Issuer shall promptly notify Subscriber of the termination of the Business Combination Agreement promptly after the termination of such agreement. Upon the termination of this Subscription Agreement in accordance with this Section 6, any monies paid by Subscriber to the Issuer for the Purchase Price hereunder shall be promptly (and in no event later than two (2) Business Days) be returned to Subscriber without any deductions for or on account of any tax, withholding, charges or set-off. For purposes hereof, the “Outside Date” shall mean March 23, 2022; provided, however, that in the event of an extension of the time for SPAC to complete a Business Combination in accordance with the terms and procedures set forth in Article 6F of the Ackrell Certificate of Incorporation, the Outside Date shall automatically be extended to June 23, 2022.

 

7. Miscellaneous.

 

7.1 Further Assurances. At the Closing, the parties hereto shall execute and deliver such additional documents and take such additional actions as the parties reasonably may deem to be practical and necessary in order to consummate the Subscription and the Transfer as contemplated by this Subscription Agreement.

 

 

7.1.1 Subscriber acknowledges that the Issuer, SPAC, and the Placement Agents will rely on the acknowledgments, understandings, agreements, representations and warranties of Subscriber contained in this Subscription Agreement. Each of the Issuer and SPAC acknowledges that the Placement Agents and the Subscriber will rely on the acknowledgments, understandings, agreements, representations and warranties of the Issuer and SPAC contained in this Subscription Agreement. Prior to the Closing, Subscriber agrees to promptly notify the Issuer and the Placement Agents if any of the acknowledgments, understandings, agreements, representations and warranties set forth herein are no longer accurate such that the conditions set forth in Sections 4.2.1 and 4.2.2 would not be satisfied as of the Closing. Prior to the Closing, each of the Issuer and SPAC agrees to promptly notify the Placement Agents and the Subscriber if any of the acknowledgments, understandings, agreements, representations and warranties set forth herein are no longer accurate such that the conditions set forth in Sections 4.3.1 and 4.3.2 would not be satisfied as of the Closing.

 

7.1.2 Each of the Issuer, SPAC, Subscriber and each Placement Agent is entitled to rely upon this Subscription Agreement and is irrevocably authorized to produce this Subscription Agreement or a copy hereof to any interested party in any administrative or legal proceeding or official inquiry with respect to the matters covered hereby.

 

7.1.3 The Issuer may request from Subscriber such additional information as the Issuer deems reasonably necessary to evaluate the eligibility of Subscriber to acquire the Convertible Notes, the Shares, the Warrants, the Make-Whole Shares (if any) or the Additional Make-Whole Shares (if any), and Subscriber shall provide such information as may be reasonably requested.

 

7.1.4 Expenses. The parties hereto shall pay all of their own expenses in connection with the transactions contemplated hereby.

 

7.1.5 Each of Subscriber, the Issuer and SPAC shall take, or cause to be taken, all actions and do, or cause to be done, all things reasonably necessary, proper or advisable to consummate the transactions contemplated by this Subscription Agreement on the terms and conditions described therein no later than immediately prior to the consummation of the Transactions.

 

7.2 Notices. Any notice or communication required or permitted hereunder shall be in writing and either delivered personally, emailed or sent by overnight mail via a reputable overnight carrier, or sent by certified or registered mail, postage prepaid, and shall be deemed to be given and received (i) when so delivered personally, (ii) when sent, with no mail undeliverable or other rejection notice, if sent by email, or (iii) three (3) business days after the date of mailing to the address below or to such other address or addresses as such person may hereafter designate by notice given hereunder:

 

(i) if to Subscriber, to such address or addresses set forth on the signature page hereto;

 

(ii) if to the Issuer, SPAC or Sponsor to:

 

Ackrell SPAC Partners I Co.

 

 

2093 Philadelphia Pike #1968

Claymont, DE 19703

Attn: Stephen Cannon

Email: [email protected]

 

with a required copy (which copy shall not constitute notice) to:

 

Ellenoff Grossman & Schole LLP

1345 Avenue of the Americas, 11th Floor

New York, NY 10105

Attention: Matthew A. Gray, Esq.

Email:[email protected]

 

(iii) if to the Company, Dahle or NAI, to:

 

North Atlantic Imports, LLC

1073 W. 1700

N. Logan, UT 84321

Attention: Roger Dahle 

Email: [email protected]

 

with a required copy (which copy shall not constitute notice) to: 

 

O’Melveny & Myers LLP 

2765 Sand Hill Road 

Menlo Park, CA 94025 

Attention: Warren T. Lazarow, Esq. and Noah Kornblith 

Email: [email protected] and [email protected]

 

7.3 Entire Agreement. This Subscription Agreement constitutes the entire agreement, and supersedes all other prior agreements, understandings, representations and warranties, both written and oral, among the parties, with respect to the subject matter hereof, including any commitment letter entered into relating to the subject matter hereof (but excluding any confidentiality agreement entered into by Subscriber and any of SPAC, the Issuer or the Company in connection with the offering contemplated hereby and the FS Engagement Letter).

 

7.4 Modifications and Amendments. This Subscription Agreement may not be amended, modified, supplemented or waived without the prior written consent of the parties hereto. Notwithstanding anything to the contrary herein, the rights, preferences or privileges of any Placement Agent hereunder may not be modified, waived or terminated in a manner that is adverse to such Placement Agent, without the prior written consent of such Placement Agent.

 

7.5 Assignment. Neither this Subscription Agreement nor any rights, interests or obligations that may accrue to the parties hereunder (including Subscriber’s rights to purchase the Convertible Notes, the Shares and the Warrants) may be transferred or assigned without the prior written consent of each of the other parties hereto (other than the Convertible Notes, Shares or Warrants acquired hereunder, if any, and then only in accordance with this Subscription Agreement or, with respect to the Convertible Notes, the Indenture), and any purported transfer or assignment without such consent shall be null and void ab initio. Notwithstanding the foregoing, but subject to Section 4.4, the Subscriber may assign all or a portion of Subscriber’s rights and obligations under this Subscription Agreement to one or more affiliates (including other investment funds or accounts managed or advised by the investment manager who acts on behalf of such Subscriber) or, with the Issuer’s prior written consent (such consent not to be unreasonably withheld, conditioned or delayed), to another person, subject to, if such transfer or assignment is prior to the Closing, such transferee or assignee, as applicable, executing a joinder to this Subscription Agreement or a separate subscription agreement in substantially the same form as this Subscription Agreement, provided, that, in the case of any such transfer or assignment, the initial party to this Subscription Agreement shall remain bound by its obligations under this Subscription Agreement in the event that the transferee or assignee, as applicable, does not comply with its obligations to consummate the Subscription, including, as applicable, the purchase of the Shares and the purchase of the Convertible Notes (and the payment of the purchase price therefor) contemplated thereby, unless the Issuer has given its prior written consent to the relief of such obligations, and such assignee agrees in writing to be bound by the terms of this Subscription Agreement.

 

 

7.6 Benefit. Except as otherwise provided herein, this Subscription Agreement shall be binding upon, and inure to the benefit of the parties hereto and their heirs, executors, administrators, successors, legal representatives, and permitted assigns, and the agreements, representations, warranties, covenants and acknowledgments contained herein shall be deemed to be made by, and be binding upon, such heirs, executors, administrators, successors, legal representatives and permitted assigns. This Subscription Agreement shall not confer rights or remedies upon any person other than the parties hereto and their respective successors and assigns.

 

7.7 Governing Law. This Subscription Agreement, and any claim or cause of action hereunder based upon, arising out of or related to this Subscription Agreement (whether based on law, in equity, in contract, in tort or any other theory) or the negotiation, execution, performance or enforcement of this Subscription Agreement, shall be governed by and construed in accordance with the Laws of the State of Delaware, without giving effect to the principles of conflicts of law thereof that would result in the application of any other jurisdiction’s laws.

 

7.8 Consent to Jurisdiction; Waiver of Jury Trial. Each of the parties irrevocably consents to the exclusive jurisdiction and venue of the Court of Chancery of the State of Delaware, provided that if subject matter jurisdiction over the matter that is the subject of the legal proceeding is vested exclusively in the U.S. federal courts, such legal proceeding shall be heard in the U.S. District Court for the District of Delaware (together with the Court of Chancery of the State of Delaware and any appellate courts of the foregoing courts, “Chosen Courts”), in connection with any matter based upon or arising out of this Subscription Agreement. Each party hereby waives, and shall not assert as a defense in any legal dispute, that (i) such person is not personally subject to the jurisdiction of the Chosen Courts for any reason, (ii) such legal proceeding may not be brought or is not maintainable in the Chosen Courts, (iii) such person’s property is exempt or immune from execution, (iv) such legal proceeding is brought in an inconvenient forum or (v) the venue of such legal proceeding is improper. Each party hereto hereby consents to service of process in any such proceeding in any manner permitted by Delaware law, further consents to service of process by nationally recognized overnight courier service guaranteeing overnight delivery, or by registered or certified mail, return receipt requested, at its address specified pursuant to Section 7.2 and waives and covenants not to assert or plead any objection which they might otherwise have to such manner of service of process. Notwithstanding the foregoing in this Section 7.8, a party may commence any action, claim, cause of action or suit in a court other than the Chosen Courts solely for the purpose of enforcing an order or judgment issued by the Chosen Courts. TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAW WHICH CANNOT BE WAIVED, EACH OF THE PARTIES WAIVES ANY RIGHT TO TRIAL BY JURY ON ANY CLAIMS OR COUNTERCLAIMS ASSERTED IN ANY LEGAL DISPUTE RELATING TO THIS SUBSCRIPTION AGREEMENT WHETHER NOW EXISTING OR HEREAFTER ARISING. NO PARTY SHALL SEEK TO CONSOLIDATE ANY SUCH LEGAL DISPUTE WITH A SEPARATE ACTION OR OTHER LEGAL PROCEEDING IN WHICH A JURY TRIAL CANNOT BE WAIVED.

 

 

7.9 Severability. If any provision of this Subscription Agreement shall be invalid, illegal or unenforceable, the validity, legality or enforceability of the remaining provisions of this Subscription Agreement shall not in any way be affected or impaired thereby and shall continue in full force and effect. Upon such determination that any provision is invalid, illegal or unenforceable, the parties will substitute for any invalid, illegal or unenforceable provision a suitable and equitable provision that carries out so far as may be valid, legal and enforceable, the intent and purpose of such invalid, illegal or unenforceable provision.

 

7.10 No Waiver of Rights, Powers and Remedies. No failure or delay by a party hereto in exercising any right, power or remedy under this Subscription Agreement, and no course of dealing between the parties hereto, shall operate as a waiver of any such right, power or remedy of such party. No single or partial exercise of any right, power or remedy under this Subscription Agreement by a party hereto, nor any abandonment or discontinuance of steps to enforce any such right, power or remedy, shall preclude such party from any other or further exercise thereof or the exercise of any other right, power or remedy hereunder. The election of any remedy by a party hereto shall not constitute a waiver of the right of such party to pursue other available remedies. No notice to or demand on a party not expressly required under this Subscription Agreement shall entitle the party receiving such notice or demand to any other or further notice or demand in similar or other circumstances or constitute a waiver of the rights of the party giving such notice or demand to any other or further action in any circumstances without such notice or demand.

 

7.11 Remedies.

 

7.11.1 The parties agree that irreparable damage would occur if this Subscription Agreement was not performed or the Closing is not consummated in accordance with its specific terms or was otherwise breached and that money damages or other legal remedies would not be an adequate remedy for any such damage. It is accordingly agreed that the parties hereto shall be entitled to equitable relief, including in the form of an injunction or injunctions, to prevent breaches or threatened breaches of this Subscription Agreement and to enforce specifically the terms and provisions of this Subscription Agreement in an appropriate court of competent jurisdiction as set forth in Section 7.8, this being in addition to any other remedy to which any party is entitled at law or in equity, including money damages. The right to specific enforcement shall include the right to cause the transactions contemplated hereby to be consummated on the terms and subject to the conditions and limitations set forth in this Subscription Agreement. The parties hereto further agree (i) to waive any requirement for the security or posting of any bond in connection with any such equitable remedy, (ii) not to assert that a remedy of specific enforcement pursuant to this Section 7.11 is unenforceable, invalid, contrary to applicable law or inequitable for any reason and (iii) to waive any defenses in any action for specific performance, including the defense that a remedy at law would be adequate.

 

 

7.11.2 The parties acknowledge and agree that this Section 7.11 is an integral part of the transactions contemplated hereby and without that right, the parties hereto would not have entered into this Subscription Agreement.

 

7.11.3 In any dispute arising out of or related to this Subscription Agreement, or any other agreement, document, instrument or certificate contemplated hereby, or any transactions contemplated hereby or thereby, the applicable adjudicating body shall award to the prevailing party, if any, the costs and attorneys’ fees reasonably incurred by the prevailing party in connection with the dispute and the enforcement of its rights under this Subscription Agreement or any other agreement, document, instrument or certificate contemplated hereby and, if the adjudicating body determines a party to be the prevailing party under circumstances where the prevailing party won on some but not all of the claims and counterclaims, the adjudicating body may award the prevailing party an appropriate percentage of the costs and attorneys’ fees reasonably incurred by the prevailing party in connection with the adjudication and the enforcement of its rights under this Subscription Agreement or any other agreement, document, instrument or certificate contemplated hereby or thereby.

 

7.12 Survival of Representations and Warranties. All representations and warranties made by parties hereto in this Subscription Agreement shall survive for twelve (12) months following the Closing Date. For the avoidance of doubt, if for any reason the Closing does not occur prior to the consummation of the Transactions, all representations, warranties, covenants and agreements of Subscriber hereunder shall survive the consummation of the Transactions and remain in full force and effect.

 

7.13 No Broker or Finder. Other than the Placement Agents (which have been engaged by SPAC in connection with this Subscription and whose fees and expenses shall be borne by the SPAC), each of the Issuer, SPAC and Subscriber represents and warrants to the other parties hereto that no broker, finder or other financial consultant has acted on its behalf in connection with this Subscription Agreement or the transactions contemplated hereby in such a way as to create any liability on any other party hereto. Each of the Issuer, SPAC and Subscriber agrees to indemnify and save the other parties hereto harmless from any claim or demand for commission or other compensation by any broker, finder, financial consultant or similar agent claiming to have been employed by or on behalf of such party and to bear the cost of legal expenses incurred in defending against any such claim.

 

 

7.14 Headings and Captions. The headings and captions of the various subdivisions of this Subscription Agreement are for convenience of reference only and shall in no way modify or affect the meaning or construction of any of the terms or provisions hereof.

 

7.15 Counterparts. This Subscription Agreement may be executed and delivered in one or more counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other parties, it being understood that the parties need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission or any other form of electronic delivery (including pdf or any electronic signature complying with the U.S. federal ESIGN Act of 2000, e.g., www.docusign.com or www.echosign.com), such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such signature page were an original thereof.

 

7.16 Construction. The words “include,” “includes,” and “including” will be deemed to be followed by “without limitation.” Pronouns in masculine, feminine, and neuter genders will be construed to include any other gender, and words in the singular form will be construed to include the plural and vice versa, unless the context otherwise requires. The words “this Subscription Agreement,” “herein,” “hereof,” “hereby,” “hereunder,” and words of similar import refer to this Subscription Agreement as a whole and not to any particular subdivision unless expressly so limited. The parties hereto intend that each representation, warranty, and covenant contained herein will have independent significance. If any party hereto has breached any representation, warranty, or covenant contained herein in any respect, the fact that there exists another representation, warranty or covenant relating to the same subject matter (regardless of the relative levels of specificity) which such party hereto has not breached will not detract from or mitigate the fact that such party hereto is in breach of the first representation, warranty, or covenant. All references in this Subscription Agreement to numbers of shares, per share amounts and purchase prices shall be appropriately adjusted to reflect any stock split, stock dividend, stock combination, recapitalization or the like occurring after the date hereof. As used in this Subscription Agreement, the term: (x) “business day” shall mean any day other than a Saturday, Sunday or a legal holiday on which commercial banking institutions in New York, New York are authorized to close for business (excluding as a result of “stay at home”, “shelter-in-place”, “non-essential employee” or any other similar orders or restrictions or the closure of any physical branch locations at the direction of any governmental authority so long as the electronic funds transfer systems, including for wire transfers, of commercially banking institutions in New York, New York are generally open for use by customers on such day); (y) “person” shall refer to any individual, corporation, partnership, trust, limited liability company or other entity or association, including any governmental or regulatory body, whether acting in an individual, fiduciary or any other capacity; and (z) “affiliate” shall mean, with respect to any specified person, any other person or group of persons acting together that, directly or indirectly, through one or more intermediaries controls, is controlled by or is under common control with such specified person (where the term “control” (and any correlative terms) means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of such person, whether through the ownership of voting securities, by contract or otherwise). For the avoidance of doubt, any reference in this Subscription Agreement to an affiliate of the SPAC prior to the Transactions will include the Sponsor.

 

 

7.17 Mutual Drafting. This Subscription Agreement is the joint product of the parties hereto and each provision hereof has been subject to the mutual consultation, negotiation and agreement of the parties and shall not be construed for or against any party hereto.

 

8. Disclosures.

 

8.1 Consent to Disclosure. Subscriber hereby consents to the publication and disclosure in any press release issued by the Issuer, SPAC or the Company or Form 8-K filed by the Issuer with the Commission in connection with the execution and delivery of the Business Combination Agreement and the proxy statement to be filed by the Issuer in connection with the approval of the Transactions by the stockholders of the Issuer (and, as and to the extent otherwise required by the federal securities laws or the Commission or any other securities authorities, any other documents or communications provided by the Issuer, SPAC or the Company to any Governmental Authority or to securityholders of the Issuer, SPAC or the Company) of Subscriber’s identity and beneficial ownership of Issuer Common Stock and the nature of Subscriber’s commitments, arrangements and understandings under and relating to this Subscription Agreement and, if deemed appropriate by the Issuer, SPAC or the Company, a copy of this Subscription Agreement; provided that, in the case of such disclosures by the Issuer, SPAC or the Company, the Issuer, SPAC or Company, as applicable, shall provide Subscriber with written notice at least two (2) Business Days prior to their release (including by e-mail) of such permitted disclosure, and shall reasonably consult with Subscriber regarding such disclosure, in each case, to the extent such disclosure specifically names Subscriber. Subscriber shall have the right to approve such disclosure (such approval not to be unreasonably withhold or delayed); provided that none of the Issuer, SPAC or the Company shall name Subscriber in any press release without Subscriber’s prior consent (in Subscriber’s sole discretion). Subscriber will promptly provide any information reasonably requested by the Issuer or the Company for any regulatory application or filing made or approval sought in connection with the Transactions (including filings with the Commission).

 

8.2 Public Disclosure. The Issuer and/or the SPAC shall, by 9:00 a.m., eastern time, on the first (1st) business day immediately following the date of this Subscription Agreement, issue one or more press releases or file with the Commission a Current Report on Form 8-K disclosing, to the extent not previously publicly disclosed, all material terms of the transactions contemplated hereby, by the Business Combination Agreement and by any Other Subscription Agreements executed and delivered at such time and the Transactions and set forth in the presentation materials (which is commonly referred to as the PIPE deck) prepared by the Issuer, SPAC and the Company for the benefit of the Subscribers. For the avoidance of doubt, nothing contained in this Section 8.2 shall require the disclosure of any information that was shared with any investor in the PIPE Investment that executed (or any of its affiliates executed) a written confidentiality agreement with the Issuer, SPAC or the Company but was not shared with any such investors that did not execute such a written confidentiality agreement.

 

 

9. Claims Against Trust Account. Reference is made to the final prospectus of SPAC, dated as of December 21, 2020 and filed with the SEC (Registration No. 333-251060) on December 22, 2020 (the “Prospectus”). Subscriber hereby represents and warrants that it has read the Prospectus and understands that SPAC has established the Trust Account containing the proceeds of its initial public offering (the “IPO”) and the overallotment units acquired by its underwriters and from certain private placements occurring simultaneously with the IPO (including interest accrued from time to time thereon) for the benefit of SPAC’s public stockholders (including overallotment units acquired by SPAC’s underwriters, the “Public Stockholders”), and that, except as otherwise described in the Prospectus, SPAC may disburse monies from the Trust Account only: (a) to the Public Stockholders in the event they elect to redeem their subunits in connection with the consummation of SPAC’s initial business combination (as such term is used in the Prospectus) (the “Business Combination”), (b) to the Public Stockholders if the SPAC fails to consummate a Business Combination within twelve (12) months after the closing of the IPO (subject to extension for up to 18 months), and subject to further extension by an amendment to SPAC’s organizational documents, (c) with respect to any interest earned on the amounts held in the Trust Account, as necessary to pay any taxes and up to $100,000 in dissolution expenses, or (d) to the SPAC after or concurrently with the consummation of a Business Combination. For and in consideration of the Issuer and SPAC entering into this Subscription Agreement, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, Subscriber hereby agrees on behalf of itself and its Affiliates that, notwithstanding anything to the contrary in this Subscription Agreement, neither Subscriber nor any of its Affiliates do now or shall at any time hereafter have any right, title, interest or claim of any kind in or to any monies in the Trust Account or distributions therefrom, or make any claim against the Trust Account (including any distributions therefrom), in connection with or relating in any way to, this Subscription Agreement and regardless of whether such claim arises based on contract, tort, equity or any other theory of legal liability (any and all such claims are collectively referred to hereafter as the “Released Claims”). Subscriber on behalf of itself and its Affiliates hereby irrevocably waives any Released Claims that Subscriber or any of its Affiliates may have against the Trust Account (including any distributions therefrom) now or in the future as a result of, or arising out of, any negotiations or Contracts with the Issuer, SPAC or their respective Representatives in connection with or relating in any way to this Subscription Agreement and will not seek recourse against the Trust Account (including any distributions therefrom) for any reason whatsoever in connection with or relating to this Subscription Agreement. Subscriber agrees and acknowledges that such irrevocable waiver is material to this Subscription Agreement and specifically relied upon by the Issuer, SPAC and their respective Affiliates to induce the Issuer and SPAC to enter in this Subscription Agreement, and Subscriber further intends and understands such waiver to be valid, binding and enforceable against Subscriber and each of its Affiliates under applicable law. To the extent Subscriber or any of its Affiliates commences any action or proceeding based upon, in connection with, relating to or arising out of any matter relating to the Issuer, SPAC or their respective Representatives in connection with this Subscription Agreement, which proceeding seeks, in whole or in part, monetary relief against the Issuer, SPAC or their respective Representatives, Subscriber hereby acknowledges and agrees that Subscriber’s and its Affiliates’ sole remedy shall be against funds held outside of the Trust Account and that such claim shall not permit Subscriber or its Affiliates (or any person claiming on any of their behalves or in lieu of any of them) to have any claim against the Trust Account (including any distributions therefrom) or any amounts contained therein. Notwithstanding the foregoing, this Section 9 shall not affect any rights of Subscriber or its affiliates to receive distributions from the Trust Account in their capacities as Public Stockholders upon the redemption of their SPAC shares or the liquidation of SPAC if it does not consummate a Business Combination prior to its deadline to do so. Notwithstanding the foregoing, nothing herein will serve to limit or prohibit (x) the Subscriber’s right to pursue a claim against the SPAC, its sponsor or the Issuer for legal relief against monies or other assets held outside the Trust Account (including any funds that have been released to the SPAC sponsor from the Trust Account in connection with a Business Combination, but excluding any distributions to Public Stockholders), for specific performance or other equitable relief or (y) any claims that the Subscriber may have in the future against the SPAC or the Issuer’s assets or funds that are not held in the Trust Account (including any funds that have been released from the Trust Account to the SPAC or the Issuer and any assets that have been purchased or acquired with any such funds, but excluding any distributions to Public Stockholders). Notwithstanding anything in this Subscription Agreement to the contrary, the provisions of this paragraph shall survive indefinitely with respect to the obligations set forth in this Subscription Agreement.

 

 

10. [Forward Purchase Agreement. On or prior to the Closing Date, Subscriber agrees to enter into an FPA with the Grantors for the purchase of FPA Shares effective as of the Closing that will contain, inter alia, the following terms:

 

10.1 The purchase price per share of Issuer Common Stock shall be $10.00.

 

10.2 The aggregate purchase price paid for such Issuer Common Stock under such FPA shall be deposited into the Escrow Fund to secure the payment of the put option described in Section 10.4.

 

10.3 The FPA Shares shall be deposited into an escrow account; provided that the sale or disposition of such FPA Shares may be directed in the sole discretion of the Subscriber subject to the pro rata release of the Escrow Fund in connection with any such sale or disposition as set forth in Section 10.5.

 

10.4 The FPA shall provide that the Subscriber shall be a Put Option exercisable during the 10-day period (the “Option Period”) commencing on the one year anniversary of the later of (i) the date on which all the Make-Whole Shares are transferred to the Subscribers and (ii) the date on which the Remaining Shares are transferred to the Transferors, in each case, in accordance with Section 2 hereof; provided that if Subscriber fails to exercise the Put Option by the end of the Option Period, any amounts remaining in the Escrow Fund shall be released to the applicable Grantors. The Put Option may be exercised in whole or in part at price per share equal to $10.00 which shall be paid from the Escrow Fund. Issuer shall provide 5 Business Days advance notice of the commencement of the Option Period.

 

10.5 In the event that Subscriber sells or transfers any FPA Shares prior to the Put Date, a portion of the Escrow Fund shall be released to the applicable Grantors in an amount equal to $10.00 multiplied by the number of FPA Shares sold or transferred.

 

10.6 Subscriber shall use commercially reasonable efforts to sell or transfer the FPA Shares at a price per share in excess of the $10.00.

 

10.7 Subscriber shall have registration rights in connection with the FPA Shares that shall be substantially similar to those provided is Section 5 of this Subscription Agreement.

 

10.8 Notwithstanding anything contained herein to the contrary, the FPA Shares shall be subject to the same transfer restrictions contained in Section 4.4 of this Subscription Agreement.]

 

11. [Waiver of Sovereign Immunity. With respect to the liability of Subscriber to perform its obligations under this Subscription Agreement, with respect to itself or its property, Subscriber:

 

11.1 agrees that, for purposes of the doctrine of sovereign immunity, the execution, delivery and performance by it of this Subscription Agreement constitutes private and commercial acts done for private and commercial purposes;

 

11.2 agrees that, should any proceedings be brought against it or its assets in any jurisdiction in relation to this Subscription Agreement or any transaction contemplated by this Subscription Agreement in accordance with the terms hereof, Subscriber is not entitled to any immunity on the basis of sovereignty in respect of its obligations under this Subscription Agreement, and no immunity from such proceedings (including, without limitation, immunity from service of process from suit, from the jurisdiction of any court, from an order or injunction of such court or the enforcement of same against its assets) shall be claimed by or on behalf of such party or with respect to its assets;

 

11.3 waives, in any such proceedings, to the fullest extent permitted by law, any right of immunity which it or any of its assets now has or may acquire in the future in any jurisdiction;

 

11.4 subject to the terms and conditions hereof, consents generally in respect of the enforcement of any judgment or award against it in any such proceedings to the giving of any relief or the issue of any process in any jurisdiction in connection with such proceedings (including, without limitation, pre-judgment attachment, post-judgment attachment, the making, enforcement or execution against or in respect of any assets whatsoever irrespective of their use or intended use of any order or judgment that may be made or given in connection therewith); and

 

 

11.5 specifies that, for the purposes of this provision, “assets” shall be taken as excluding “premises of the mission” as defined in the Vienna Convention on Diplomatic Relations signed at Vienna, April 18, 1961, “consular premises” as defined in the Vienna Convention on Consular Relations signed in 1963, and military property or military assets or property of the Investor.]¹

 

12. Non-Reliance. Subscriber acknowledges that it is not relying upon, and has not relied upon, any statement, representation or warranty made by any person, firm or corporation (including, without limitation, the Company, any of its affiliates or any of its or their respective control persons, officers, directors or employees), other than the representations and warranties of the Issuer and SPAC expressly set forth in this Subscription Agreement, in making its investment or decision to invest in the Issuer. Subscriber agrees that neither (i) any Other Subscriber pursuant to any Other Subscription Agreement or any other agreement related to the private placement of shares of the Issuer’s debt securities, capital stock or warrants (including the controlling persons, officers, directors, partners, agents or employees of any such Subscriber) nor (ii) the Company, its affiliates or any of its or their respective affiliates’ control persons, officers, directors, partners, agents or employees, shall be liable for Subscriber’s obligations hereunder. The parties hereto agree that (i) the Issuer will enter into separate Other Subscription Agreements with respect to each Other Subscriber and (ii) the Subscriber listed on the signature page hereto shall not have any liability under this Subscription Agreement or any Other Subscription Agreement for the obligations of any Other Subscriber under any Other Subscription Agreement. Nothing contained herein or in any Other Subscription Agreement, and no action taken by the Subscriber, any Other Subscriber or investor pursuant hereto or thereto, shall be deemed to constitute the formation by or existence among, Subscriber and Other Subscribers or any other investors, of a partnership, an association, a joint venture or any other kind of entity, or create a presumption that Subscriber and Other Subscribers or any other investors are in any way acting in concert or as a group with respect to such obligations or the transactions contemplated by this Subscription Agreement and the Other Subscription Agreements. Subscriber acknowledges that no Other Subscriber has acted as agent for Subscriber in connection with making its investment hereunder and no Other Subscriber will be acting as agent of Subscriber in connection with monitoring its investment in the Subscribed Notes or enforcing its rights under this Subscription Agreement. Subscriber shall be entitled to independently protect and enforce its rights, including the rights arising out of this Subscription Agreement, and it shall not be necessary for any Other Subscriber or investor to be joined as an additional party in any proceeding for such purpose.

 

1

Note to Draft: To be included for all sovereign wealth or similar investors. For avoidance of doubt this Section to be deleted from final version entered into with any Subscriber that is not a sovereign wealth or similar investor.

 

[Signature Page Follows]

 

 

IN WITNESS WHEREOF, each of the Issuer, SPAC and Subscriber has executed or caused this Subscription Agreement to be executed by its duly authorized representative as of the date first set forth above.

 

	BLACKSTONE PRODUCTS, INC.
	By:
	Name:
	Title:
	ACKRELL SPAC PARTNERS I CO.
	By:
	Name:
	Title:

 

 

Accepted and agreed this [●] day of [●], 2021.
SUBSCRIBER:
Signature of Subscriber:			Signature of Joint Subscriber, if applicable:
By:			By:
Name:			Name:
Title:			Title:
Date:     [●], 2021
Name of Subscriber:			Name of Joint Subscriber, if applicable:
(Please print.  Please indicate name and capacity of person signing above)			(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 Shares and/or Convertible Notes subscribed for:
Convertible Notes:
Issuer Common Stock:
Warrants:
Transfer Shares:
Aggregate Purchase Price: $ ____________.

 

You must pay the Purchase Price by wire transfer of U.S. dollars in immediately available funds, to be held in escrow until the Closing, to the account specified by the Issuer in the Closing Notice.

 

 

Schedule I

ELIGIBILITY REPRESENTATIONS OF SUBSCRIBER

 

A.

QUALIFIED INSTITUTIONAL BUYER STATUS (Please check the applicable subparagraphs):

 

☐

1. We are a “qualified institutional buyer” (as defined in Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”) (a “QIB”)).

 

☐

2. We are subscribing for the Convertible Notes and/or the Shares as a fiduciary or agent for one or more investor accounts, and each owner of such account is a QIB.

 

*** OR ***

B.

INSTITUTIONAL ACCREDITED INVESTOR STATUS (Please check the applicable subparagraphs):

 

☐

1. We are an “accredited investor” (within the meaning of Rule 501(a) under the Securities Act) or an entity in which all of the equity holders are accredited investors within the meaning of Rule 501(a) under the Securities Act, and have marked and initialed the appropriate box on the following page indicating the provision under which we qualify as an “accredited investor.”

 

☐

2. We are not a natural person.

 

*** AND ***

C.

AFFILIATE STATUS (Please check the applicable box) SUBSCRIBER:

 

☐

is

☐

is not

 

an “affiliate” (as defined in Rule 144 under the Securities Act) of the Issuer or acting on behalf of an affiliate of the Issuer.

 

This page should be completed by Subscriber
and constitutes a part of the Subscription Agreement.

 

 

Rule 501(a) under the Securities Act, 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(es) below, the provision(s) below which apply to Subscriber and under which Subscriber accordingly qualifies as an “accredited investor.”

 

☐

1. Any 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 its individual or fiduciary capacity;

 

☐

2. Any broker or dealer registered pursuant to section 15 of the Securities Exchange Act of 1934, as amended;

 

☐

3. Any investment adviser registered pursuant to section 203 of the Investment Advisers Act of 1940, as amended (the “Investment Advisors Act”) or registered pursuant to the laws of a state;

 

☐

4. Any investment adviser relying on the exemption from registering with the Securities and Exchange Commission (the “Commission”) under section 203(l) or (m) of the Investment Advisers Act;

 

☐

5. Any insurance company as defined in section 2(a)(13) of the Securities Act;

 

☐

6. Any investment company registered under the Investment Company Act of 1940, as amended (the “Investment Company Act”) or a business development company as defined in section 2(a)(48) of the Investment Company Act;

 

☐

7. Any Small Business Investment Company licensed by the U.S. Small Business Administration under section 301(c) or (d) of the Small Business Investment Act of 1958, as amended;

 

☐

8. Any Rural Business Investment Company as defined in section 384A of the Consolidated Farm and Rural Development Act;

 

☐

9. 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;

 

☐

10. Any employee benefit plan within the meaning of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), if (i) the investment decision is made by a plan fiduciary, as defined in section 3(21) of ERISA, which is either a bank, a savings and loan association, an insurance company, or a registered investment adviser, (ii) the employee benefit plan has total assets in excess of $5,000,000 or, (iii) such plan is a self-directed plan, with investment decisions made solely by persons that are “accredited investors”;

 

 

☐

11. Any private business development company as defined in section 202(a)(22) of the Investment Advisers Act;

 

☐

12. Any (i) corporation, limited liability company or partnership, (ii) Massachusetts or similar business trust, or (iii) organization described in section 501(c)(3) of the Internal Revenue Code of 1986, as amended, not formed for the specific purpose of acquiring the securities offered, and with total assets in excess of $5,000,000;

 

☐

13. 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;

 

☐

14. 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: (a) the person’s primary residence shall not be included as an asset; (b) 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 (c) 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;

 

☐

15. 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;

 

☐

16. 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 as described in Section 230.506(b)(2)(ii) of Regulation D;

 

☐

17. Any entity in which all of the equity owners are “accredited investors”;

 

☐

18. Any entity, of a type not listed in Items 1 through 12, 16 or 17 above, not formed for the specific purpose of acquiring the securities offered, owning investments (as defined in rule 2a51-1(b) under the Investment Company Act) in excess of $5,000,000;

 

☐

19. Any natural person holding in good standing one or more of the following professional certifications or designations: the General Securities Representative license (Series 7), the Private Securities Offering Representative license (Series 82) and the Licensed Investment Adviser Representative (Series 65).

 

 

☐

20. Any natural person who is a “knowledgeable employee,” as defined in rule 3c-5(a)(4) under the Investment Company Act, of the issuer of the securities being offered or sold where the issuer would be an investment company, as defined in section 3 of the Investment Company Act, but for the exclusion provided by either section 3(c)(1) or section 3(c)(7) of the Investment Company Act;

 

☐

21. Any “family office,” as defined in rule 202(a)(11)(G)-1 under the Investment Advisers Act: (a) With assets under management in excess of $5,000,000, (b) That is not formed for the specific purpose of acquiring the securities offered, and (c) Whose prospective investment is directed by a person who has such knowledge and experience in financial and business matters that such family office is capable of evaluating the merits and risks of the prospective investment; and

 

☐

22. Any “family client,” as defined in rule 202(a)(11)(G)-1 under the Investment Advisers Act, of a family office meeting the requirements in Item 21 above and whose prospective investment in the issuer is directed by such family office pursuant to Item 21 (c) above.

 

EXHIBIT A

 

Form of Convertible Notes Term Sheet

 

[See attached]

 

 

TERM SHEET

 

Convertible Senior Notes due 2027

Summary of Principal Terms and Conditions

 

Capitalized terms used but not defined herein shall have the meanings ascribed thereto in the Subscription Agreement to which this Term Sheet is attached (the “Subscription Agreement”).

 

Issuer:		Blackstone Products, Inc., a direct subsidiary of Ackrell SPAC Partners I Co. (NASDAQ: ACKI, ACKIU, ACKIT, ACKIW) (the “SPAC”), the entity which survives as the public parent (the “Company”) resulting from the de-SPAC transaction (the “De-SPAC”) among the SPAC, North Atlantic Imports, LLC (the “Target”), Roger Dahle, North Atlantic Imports Inc. and Ackrell Merger Sub, Inc.
Guarantors:		The Convertible Senior Notes due 2027 of the Issuer (the “Notes”) and all obligations under the Indenture (as defined below) shall be unconditionally guaranteed, on a joint and several basis, by all obligors of any credit facility or capital markets debt of the Company and its subsidiaries (after giving effect to the De-SPAC).
Trustee:		To be selected by the Company with the consent of the Subscribers of the Notes of not less than a majority in aggregate principal amount of the Notes.
Indenture:		The Notes shall be issued pursuant to an indenture that is customary for a financing of this type, reflecting the terms of this Term Sheet and otherwise in form and substance reasonably acceptable to the holders of the Notes and the Company (the “Indenture”).
Ranking:		Senior Notes, to be expressly subordinated to (i) that certain Loan Agreement, dated as of October 15, 2021, among the Target, Holdings (as defined therein), the several financial institutions from time to time party to such agreement as lenders and White Oak Global Advisors, LLC, as Administrative Agent (the “WO Facility”) and (ii) that certain Credit Agreement, dated as of October 15, 2021, by and among Wells Fargo Bank, National Association, as agent, the lenders that are parties thereto, the Target, as administrative borrower, and the other loan parties party thereto from time to time (the “ABL Facility”), pursuant to a customary subordination agreement and to remain subordinated to any debt that refinances the WO Facility or the ABL Facility, if required in order to consummate such refinancing; provided, that such refinancing does not result in an increase in the total commitment above the WO Facility or the ABL Facility, as applicable.
Collateral:		None.
Maturity Date:		April 15, 2027 (the “Maturity Date”).
Issue Amount:		$111,333,000 to be funded at the closing of the De-SPAC.
Issue Price:		100.00%
Interest Rate:		9.875% per annum, payable semi-annually. Prior to the second anniversary following the closing date of the Notes offering (the “Closing”), 50% of the interest will be paid in cash with the remaining 50% to be “paid-in-kind” (“PIK”) or, at the Company’s option, cash. On and after the second anniversary of the Closing, all interest will be paid in cash. Notwithstanding the foregoing, if any such amount of cash interest is not permitted by the WO Facility or the ABL Facility, the amount of permitted interest shall be paid in cash, the remaining amount of interest due shall be paid in PIK, and, in addition, such remaining amount of interest that would otherwise have been paid in cash to the holders of the Notes but is being paid in PIK as a result of this provision must be used to repay the WO Facility, subject to such prepayment not being prohibited by the WO Facility or the ABL Facility. The amount of amortization of the WO Facility will be the greater of the maximum amount of amortization under the WO Facility and the amount as calculated by this provision.

 

 

Default Interest:		Upon the occurrence and during the continuation of an event of default, interest on the Notes shall accrue at the stated rate plus an additional 2.0% per annum.
Amortization / Sinking Fund:		None.
Minimum Cash Condition to Funding:		(i) Minimum unrestricted cash on Company balance sheet at Closing will be at least $40.0 million (without giving effect to the proceeds from any forward purchase agreement or any other debt permitted by Section 4.3.11 of the Subscription Agreement, other than certain existing receivables factoring facilities (Walmart and Loews) in ordinary course of business consistent w/ past practice, and provided that the ABL Facility and the Letter of Credit can’t be drawn upon to meet the condition in this clause (i) and minimum availability under the ABL Facility will be at least $25.0 million at Closing); and (ii) net proceeds from trust account after giving effect to redemptions plus Notes plus the Subscription of Issuer Common Stock pursuant to the Subscription Agreement, the Other Subscription Agreements and Future Subscription Agreements (collectively, the “Equity PIPE”) minus transaction fees and expenses minus Transaction Cash Consideration (as defined in the Business Combination Agreement) will be equal to or greater than $40.0 million, which is reflected in the terms of the Subscription Agreement.
Minimum Equity Condition to Funding:		Minimum proceeds from (i) Equity PIPE of at least $30.0 million and (ii) Equity PIPE plus net proceeds from trust account after giving effect to redemptions will be equal to or greater than $40.0 million, provided that neither clause (i) nor clause (ii), shall include proceeds from any repurchase agreements, forward purchase agreements or other similar arrangements, which is reflected in the terms of the Subscription Agreement.
Conversion Price:		The initial conversion price will be the lesser of (i) $11.50 and (ii) a 15% premium to the lowest per share price at which any equity of the Company is issued on or prior to the Closing Date; provided that in the event that any shares of Issuer Common Stock or other equity are issued on or prior to the Closing Date at a lower price per share than that set forth in the Subscription Agreement to which this Term Sheet is attached (for the avoidance of doubt and notwithstanding the Transfer Shares, the Warrants and the Escrowed Shares, such price per share in the Subscription Agreement is deemed to be $10.00), the conversion price will be based off of such lower price per share; provided further that  the conversion price will be subject to adjustments that are usual and customary for financings of this type, including, without limitation, upon the occurrence of standard “Fundamental Change” events, for dividends and distributions, spin-offs, stock splits, below-market rights offerings to all holders, above-market tender offers to all holders and similar dilutive transactions (but for the avoidance of doubt, not for transactions that occur on the Issue Date in connection with the Transactions as provided for in the Business Combination Agreement).  The initial conversion price, as so adjusted, being referred to herein as, the “Conversion Price.”

 

 

Optional Conversion:		Each Holder may from time to time elect to convert all or a portion of such Holder’s aggregate principal amount of the Notes (plus any accrued and unpaid interest thereon) at the Conversion Price into Class A Common Stock of the Company (the “Common Stock”).
Mandatory Conversion Feature:		At the Company’s option (upon a reasonable notice period to be mutually agreed by the Company and the holders of the Notes in the Indenture (e.g., 15-45 days), a portion of the Notes may be converted after April 15, 2025, if the closing price of the Common Stock on Nasdaq, or, if applicable, the NYSE is greater than $18 and has been greater than $18 for at least twenty (20) out of thirty (30) consecutive trading days; provided that the aggregate principal amount of Notes that can be converted in any 45 trading-day period, at the Company’s option, will be limited to an amount equal to 10% of the last 30 days’ trading volume; provided, further, that the shares underlying the Notes must be freely tradeable by non-affiliates pursuant to an exemption under the Securities’ Act (including for the avoidance of doubt, without the requirement for the Issuer to be in compliance with the current public information required under Rule 144(c)(1) (or Rule 144(i)(2), if applicable) or there must be an and effective registration statement covering the resale of such underlying shares. Upon any early repayment or mandatory conversion of the Notes, the Company shall pay in cash all interest that otherwise would have been due through the Maturity Date (using a discount rate of T+50). Subject to the repurchase provision expressly set forth herein, the Company may not otherwise redeem the notes.
Repurchase Upon Fundamental Change:		Each Holder will have the right to cause the Company to repurchase for cash all or from time to time a portion of the Notes held by such Holder at any time upon the occurrence of a “Fundamental Change” (change of control or de-listing), at 100% pursuant to a high-yield change of control offer plus all interest that otherwise would have been due through the Maturity Date (using a discount rate of T+50).
Adjustment to Conversion Price:		In the event of a conversion in connection with a Fundamental Change, the Conversion Price will be adjusted by a usual and customary Fundamental Change Make-Whole Table.
Settlement Upon Conversion:		Common Stock.

 

 

Covenants:

The Convertible Note Documents shall contain affirmative and negative covenants similar to WO Facility and otherwise of the type that are usual and customary for convertible note offerings and non-convertible high-yield note financings (to be set at a cushion of [10]% to the WO Facility) to be reasonably agreed upon by the Company and the holders of the Notes, including, without limitation:

 

●

Debt incurrences, which shall not be permitted by the Company or its subsidiaries unless (a) the pro forma ratio of debt to EBITDA is less than [ ] (to be 1.5x less than leverage at closing), the Company is paying (and permitted to continue to pay) 100% cash interest at such time and (c) the subordination of the Notes to the WO Facility, or any refinancing thereof, has terminated (provided that the WO facility may be increased by up to 10% (of the initial funding amount) without being subject to the foregoing, and refinancing of the WO facility is permitted). Incremental debt must be pari in all respects with an existing tranche.

 

●

Other covenants to include: limitations on liens, restricted payments/investments, affiliate transactions, asset sales, dividend and other payment restrictions on subsidiaries, transfers of IP and mergers/consolidations.

 

●

The Indenture will not permit the designation or maintenance of unrestricted subsidiaries.

 

●

The Indenture will restrict any repurchase or exchange of Notes in an aggregate principal amount of more than $10,000,000 unless such repurchase or exchange is offered to each Holder of the Notes on substantially the same terms.

 

Certain Voting Provisions		The terms and provisions of the Indenture may be amended or waived with the consent of the holders a majority in principal amount of the Notes; provided, however, that any amendments to or waivers of the restrictive covenants, payment terms and certain other terms and conditions to be agreed to in the Indenture shall require the consent of all holders of Notes.
Events of Default:		The Indenture shall contain defaults and events of default, and remedies in respect thereof, that are of the type usual and customary for convertible note financings and high yield note financings, including cross-acceleration to any credit facility.
Consent Fee:		The Company will not directly or indirectly, pay or cause to be paid any consideration to or for the benefit of any holder of notes for or as an inducement to any consent, waiver or amendment of any of the terms or provisions of the indenture or the notes unless such consideration is offered to be paid and is paid to all holders of the notes that consent, waive or agree to amend in the time frame set forth in the solicitation documents relating to such consent, waiver or agreement.
Form of Notes:		The Notes shall be issued in the form of one or more global notes in definitive, fully registered, book-entry form and deposited with or on behalf of The Depository Trust Company. The global notes will be issued in denominations of $2,000 and integral multiple of $1,000 in excess of $2,000 principal amount.
Subordination Agreement:		Notes to be expressly subordinated to the WO Facility and the ABL Facility via a customary subordination agreement, which will include a 180-day standstill on remedies and a buy-out right at par (including any applicable call premium).
Reporting:		Annual Reports and 144A Reporting customary for similar Notes issuances.
Registration Rights:		Shares underlying Notes to be registered promptly (in no event later than the registration of any PIPE shares). Holders to have piggyback rights with respect to the shares underlying the Notes.
Governing Law:		New York.

 

 

EXHIBIT B

 

Form of Warrant

 

[See attached]

 

 

WARRANT AGREEMENT

 

This agreement is made as of [__], 2022 (the “Issuance Date”) between Blackstone Products, Inc., a Delaware corporation (“Company”), with offices at 1073 W. 1700, N. Logan, Utah 84321 and [WARRANT AGENT], a [__] corporation, with offices at [__] (“Warrant Agent”).

 

WHEREAS, the Company, Ackrell SPAC Partners I Co., a Delaware corporation (“SPAC”), Ackrell Merger Sub, Inc., a Delaware corporation (“Merger Sub”), North Atlantic Imports, LLC, a Utah limited liability company (the “NAI LLC”), Roger Dahle, an individual residing in Utah (“Dahle”), and North Atlantic Imports Inc., a business company formed under the laws of the British Virgin Islands (“NAI BVI”), have entering into that certain Business Combination Agreement, dated as of December [•], 2021 (as amended, modified, supplemented or waived from time to time in accordance with its terms, the “Business Combination Agreement”), pursuant to which on the date hereof, inter alia, (i) Merger Sub will be merged with and into SPAC, with SPAC surviving the Merger as a wholly-owned subsidiary of the Company (the “Merger”) (ii) each share of SPAC’s common stock, par value $0.0001 per share issued and outstanding immediately prior to the Effective Time shall automatically be converted into and exchanged (the “Conversion”) for one validly issued, fully paid and nonassessable share of the Company’s common stock, par value $0.0001 per share (“Common Stock”), (iii) NAI BVI will contribute (the “NAI Contribution”) 45 shares of common stock, par value $1.00 per share of Cowell International Inc., a Utah corporation (“Cowell Common Stock”) to the Company in exchange for Common Stock, and 33 shares of Cowell Common Stock to SPAC and Cowell will redeem 22 shares of Cowell Common Stock in exchange for the Cash Consideration, (iv) Dahle will contribute (the “Dahle Contribution”) all of his membership interests in NAI LLC to the Company in exchange for shares of Common Stock, on the terms and subject to the conditions set forth therein and (v) as a result of clauses (iii) and (iv), the Company will become a wholly-owned subsidiary of the Company (collectively, the NAI Contribution, Dahle Contribution, Merger, Conversion and the other transactions contemplated by the Business Combination Agreement, the “Transactions”). Capitalized terms used herein but not otherwise defined shall have the meanings set forth in the Business Combination Agreement;

 

WHEREAS, in connection with the Transactions, the Company and the SPAC have entered into Subscription Agreements with the subscribers signatory thereto (the “Subscribers”) pursuant to which certain Subscribers agreed to purchase from the Company Units (each, a “Unit”) consisting of one share of Common Stock and one-half of a Warrant to purchase Common Stock (“Warrant”) (each of which are detached from the other) for a purchase equal to $10.00 per Unit where each whole Warrant entitles the holder to purchase one share of Common Stock at a price of $11.50 per share, subject to adjustment as described herein;

 

WHEREAS, the Company desires the Warrant Agent to act on behalf of the Company, and the Warrant Agent is willing to so act, in connection with the issuance, registration, transfer, exchange, redemption, and exercise of the Warrants;

 

WHEREAS, the Company desires to provide for the form and provisions of the Warrants, the terms upon which they shall be issued and exercised, and the respective rights, limitation of rights, and immunities of the Company, the Warrant Agent, and the holders of the Warrants; and

 

WHEREAS, all acts and things have been done and performed which are necessary to make the Warrants, when executed on behalf of the Company and countersigned by or on behalf of the Warrant Agent, as provided herein, the valid, binding, and legal obligations of the Company, and to authorize the execution and delivery of this Agreement.

 

 

NOW, THEREFORE, in consideration of the mutual agreements herein contained, the parties hereto agree as follows:

 

1. Appointment of Warrant Agent. The Company hereby appoints the Warrant Agent to act as agent for the Company for the warrants, and the Warrant Agent hereby accepts such appointment and agrees to perform the same in accordance with the terms and conditions set forth in this agreement.

 

2. Warrants.

 

2.1 Form of Warrant. Each Warrant shall be issued in registered form only, shall be in substantially the form of Exhibit A hereto, the provisions of which are incorporated herein and shall be signed by, or bear the facsimile signature of, the Chairman of the Board of Directors, Chief Executive Officer or other principal officer of the Company and shall bear a facsimile of the Company’s seal. In the event the person whose facsimile signature has been placed upon any Warrant shall have ceased to serve in the capacity in which such person signed the Warrant before such Warrant is issued, it may be issued with the same effect as if he or she had not ceased to be such at the date of issuance.

 

2.2 Uncertificated Warrants. Notwithstanding anything herein to the contrary, any Warrant may be issued in uncertificated or book-entry form through the Warrant Agent and/or the facilities of The Depository Trust Company (the “Depositary”) or other book-entry depositary system, in each case as determined by the Board of Directors of the Company or by an authorized committee thereof. Any Warrant so issued shall have the same terms, force and effect as a certificated Warrant that has been duly countersigned by the Warrant Agent in accordance with the terms of this Agreement.

 

2.3 Effect of Countersignature. Except with respect to uncertificated Warrants as described above, unless and until countersigned by the Warrant Agent pursuant to this Agreement, a Warrant shall be invalid and of no effect and may not be exercised by the holder thereof.

 

2.4 Registration.

 

2.4.1 Warrant Register. The Warrant Agent shall maintain books (“Warrant Register”) for the registration of original issuance and the registration of transfer of the Warrants. Upon the initial issuance of the Warrants, the Warrant Agent shall issue and register the Warrants in the names of the respective holders thereof in such denominations and otherwise in accordance with instructions delivered to the Warrant Agent by the Company.

 

2.4.2 Registered Holder. Prior to due presentment for registration of transfer of any Warrant, the Company and the Warrant Agent may deem and treat the person in whose name such Warrant is then registered in the Warrant Register (“registered holder”) as the absolute owner of such Warrant and of each Warrant represented thereby (notwithstanding any notation of ownership or other writing on the Warrant certificate made by anyone other than the Company or the Warrant Agent), for the purpose of any exercise thereof, and for all other purposes, and neither the Company nor the Warrant Agent shall be affected by any notice to the contrary.

 

 

2.4.3 Fractional Warrants. The Company shall not issue fractional Warrants other than as part of the Units, each of which is comprised of one share of Common Stock and one-half of one whole Warrant. Any fractional Warrants shall be rounded down to the nearest whole Warrant.

 

3. Terms and Exercise of Warrants

 

3.1 Warrant Price. Each whole Warrant shall, when countersigned by the Warrant Agent (except with respect to uncertificated Warrants), entitle the registered holder thereof, subject to the provisions of such Warrant and of this Agreement, to purchase from the Company the number of shares of Common Stock stated therein, at the price of $11.50 per share, subject to the adjustments provided in Section 4 hereof. The term “Warrant Price” as used in this Agreement refers to the price per share at which the shares of Common Stock may be purchased at the time a Warrant is exercised.

 

3.2 Duration of Warrants. A Warrant may be exercised only during the period commencing on the Issuance Date and ending on the earlier to occur of (i) the five year anniversary of the Issuance Date, (ii) the Redemption Date as provided in Section 6.2 of this Warrant Agreement and (iii) the liquidation of the Company (“Expiration Date”). The period of time from the Issuance Date until the expiration of this Warrant shall hereafter be referred to as the “Exercise Period.” Except with respect to the right to receive the Redemption Price (as set forth in Section 6 hereunder), as applicable, if this Warrant is not exercised on or before the Expiration Date, it shall become void, and all rights hereunder shall cease at the close of business on the Expiration Date. The Company in its sole discretion may extend the duration of this Warrant by delaying the Expiration Date; provided, however, that the Company will provide at least twenty (20) days’ prior written notice of any such extension to the Holder and, provided further that any such extension shall be applied consistently to all of the Warrants.

 

3.3 Exercise of Warrants.

 

3.3.1 Payment. Subject to the provisions of the Warrant and this Agreement, a Warrant, when countersigned by the Warrant Agent, may be exercised by the registered holder thereof by surrendering it, at the office of the Warrant Agent, or at the office of its successor as Warrant Agent, in the Borough of Manhattan, City and State of New York, with the subscription form, as set forth in the Warrant, duly executed, and by paying in full the Warrant Price for each share of Common Stock as to which the Warrant is exercised and any and all applicable taxes due in connection with the exercise of the Warrant, as follows:

 

(a)

by good certified check or good bank draft payable to the order of the Warrant Agent or wire transfer; or

 

(b)

in the event of redemption pursuant to Section 6 hereof in which the Company’s management has elected to force all holders of Warrants to exercise such Warrants on a “cashless basis,” by surrendering the Warrants for that number of shares of Common Stock equal to the quotient obtained by dividing (x) the product of the number of shares of Common Stock underlying the Warrants, multiplied by the difference between the Warrant Price and the “Fair Market Value” (defined below) by (y) the Fair Market Value. Solely for purposes of this Section 3.3.1(b), the “Fair Market Value” shall mean the average last reported sale price of the Common Stock for the five (5) trading days ending on the third trading day prior to the date on which the notice of redemption is sent to holders of the Warrants pursuant to Section 6 hereof; or

 

 

(c)

in the event the registration statement required by Section 5 of the Subscription Agreement is not effective and current and subject to Section 3.3.2, by surrendering this Warrant for that number of shares of Common Stock equal to the quotient obtained by dividing (x) the product of the number of shares of Common Stock underlying the Warrants, multiplied by the difference between the exercise price of the Warrants and the “Fair Market Value” by (y) the Fair Market Value; provided, however, that no cashless exercise shall be permitted unless the Fair Market Value is equal to or higher than the exercise price. Solely for purposes of this Section 3.3.1(c), the “Fair Market Value” shall mean the average reported last sale price of the Common Stock for the five (5) trading days ending on the trading day prior to the date of exercise.

 

3.3.2 Issuance of Shares of Common Stock. As soon as practicable after the exercise of any Warrant and the clearance of the funds in payment of the Warrant Price (if any), the Company shall issue to the registered holder of such Warrant a certificate or certificates, or book entry position, for the number of shares of Common Stock to which he, she or it is entitled, registered in such name or names as may be directed by him, her or it, and if such Warrant shall not have been exercised in full, a new countersigned Warrant, or book entry position, for the number of shares as to which such Warrant shall not have been exercised. Notwithstanding the foregoing, in no event will the Company be required to net cash settle the Warrant exercise. No Warrant shall be exercisable for cash and the Company shall not be obligated to issue shares of Common Stock upon exercise of a Warrant unless the Common Stock issuable upon such Warrant exercise has been registered, qualified or deemed to be exempt under the securities laws of the state of residence of the registered holder of the Warrants. In the event that the condition in the immediately preceding sentence is not satisfied with respect to a Warrant, the holder of such Warrant shall not be entitled to exercise such Warrant for cash and such Warrant may have no value and expire worthless.

 

3.3.3 Valid Issuance. All shares of Common Stock issued upon the proper exercise of a Warrant in conformity with this Agreement shall be validly issued, fully paid and nonassessable.

 

3.3.4 Date of Issuance. Each person in whose name any book entry position or certificate for shares of Common Stock is issued shall for all purposes be deemed to have become the holder of record of such shares on the date on which the Warrant, or book entry position representing such Warrant, was surrendered and payment of the Warrant Price was made, irrespective of the date of delivery of such certificate, except that, if the date of such surrender and payment is a date when the share transfer books of the Company or book entry system of the Warrant Agent are closed, such person shall be deemed to have become the holder of such shares at the close of business on the next succeeding date on which the share transfer books or book entry system are open.

 

3.3.5 Maximum Percentage. A holder of a Warrant may notify the Company in writing in the event it elects to be subject to the provisions contained in this Section 3.3.5; provided, however, no holder of a Warrant shall be subject to this Section 3.3.5 unless he, she or it makes such election. If the election is made by a holder, the Warrant Agent shall not effect the exercise of the holder’s Warrant, and such holder shall not have the right to exercise such 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% (the “Maximum Percentage”) of the shares of Common Stock outstanding immediately after giving effect to such exercise. For purposes of the foregoing sentence, the aggregate number of shares of Common Stock beneficially owned by such person and its affiliates shall include the number of shares of Common Stock issuable upon exercise of the Warrant with respect to which the determination of such sentence is being made, but shall exclude shares of Common Stock that would be issuable upon (x) exercise of the remaining, unexercised portion of the Warrant beneficially owned by such person and its affiliates and (y) exercise or conversion of the unexercised or unconverted portion of any other securities of the Company beneficially owned by such person and its affiliates (including, without limitation, any convertible notes or convertible preferred stock or warrants) subject to a limitation on conversion or exercise analogous to the limitation contained herein. Except as set forth in the preceding sentence, for purposes of this paragraph, beneficial ownership shall be calculated in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). For purposes of the Warrant, in determining the number of outstanding shares of Common Stock, the holder may rely on the number of outstanding shares of Common Stock as reflected in (1) the Company’s most recent annual report on Form 10-K, quarterly report on Form 10-Q, current report on Form 8-K or other public filing with the SEC as the case may be, (2) a more recent public announcement by the Company or (3) any other notice by the Company or the Warrant Agent setting forth the number of shares of Common Stock outstanding. For any reason at any time, upon the written request of the holder of the Warrant, the Company shall, within two (2) Business Days, confirm orally and in writing to such holder the number of shares of Common Stock then outstanding. In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise of equity securities of the Company by the holder and its affiliates since the date as of which such number of outstanding shares of Common Stock was reported. By written notice to the Company, the holder of a Warrant may from time to time increase or decrease the Maximum Percentage applicable to such holder to any other percentage specified in such notice; provided, however, that any such increase shall not be effective until the sixty-first (61st) day after such notice is delivered to the Company.

 

 

4. Adjustments.

 

4.1 Stock Dividends; Split Ups. If after the date hereof, and subject to the provisions of Section 4.6 below, the number of outstanding shares of Common Stock is increased by a stock dividend payable in shares of Common Stock, or by a split up of shares of Common Stock, or other similar event, then, on the effective date of such stock dividend, split up or similar event, the number of shares of Common Stock issuable on exercise of each Warrant shall be increased in proportion to such increase in outstanding shares of Common Stock.

 

4.2 Aggregation of Shares. If after the date hereof, the number of outstanding shares of Common Stock is decreased by a consolidation, combination, reverse stock split or reclassification of shares of Common Stock or other similar event, then, on the effective date of such consolidation, combination, reverse stock split, reclassification or similar event, the number of shares of Common Stock issuable on exercise of each Warrant shall be decreased in proportion to such decrease in outstanding shares of Common Stock.

 

4.3 Extraordinary Dividends. If the Company, at any time while the Warrants are outstanding and unexpired, shall pay a dividend or make a distribution in cash, securities or other assets to the holders of the shares of Common Stock or other shares of the Company’s capital stock into which the Warrants are convertible (an “Extraordinary Dividend”), then the Warrant Price shall be decreased, effective immediately after the effective date of such Extraordinary Dividend, by the amount of cash and the fair market value (as determined by the Company’s Board of Directors, in good faith) of any securities or other assets paid in respect of such Extraordinary Dividend divided by all outstanding shares of the Company at such time (whether or not any shareholders waived their right to receive such dividend); provided, however, that none of the following shall be deemed an Extraordinary Dividend for purposes of this provision: (a) any adjustment described in Section 4.1 above or (b) 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 Common Stock during the 365-day period ending on the date of declaration of such dividend or distribution does not exceed $0.50 per share (taking into account all of the outstanding shares of the Company at such time (whether or not any shareholders waived their right to receive such dividend) and as adjusted to appropriately reflect any of the events referred to in other subsections of this Section 4 and excluding cash dividends or cash distributions that resulted in an adjustment to the Warrant Price or to the number of shares of Common Stock issuable on exercise of each Warrant) but only with respect to the amount of the aggregate cash dividends or cash distributions equal to or less than $0.50.

 

 

4.4 Adjustments in Exercise Price. Whenever the number of shares of Common Stock purchasable upon the exercise of the Warrants is adjusted, as provided in Sections 4.1 and 4.2 above, the Warrant Price shall be adjusted (to the nearest cent) by multiplying such Warrant Price immediately prior to such adjustment by a fraction (x) the numerator of which shall be the number of shares of Common Stock purchasable upon the exercise of the Warrants immediately prior to such adjustment, and (y) the denominator of which shall be the number of shares of Common Stock so purchasable immediately thereafter.

 

4.5 Replacement of Securities upon Reorganization, etc. In case of any reclassification or reorganization of the outstanding shares of Common Stock (other than a change covered by Section 4.1, 4.2 or 4.3 hereof or that solely affects the par value of the Common Stock), or in the case of any merger or consolidation of the Company with or into another corporation (other than a consolidation or merger in which the Company is the continuing corporation and that does not result in any reclassification or reorganization of the outstanding Common Stock), or in the case of any sale or conveyance to another corporation or entity of the assets or other property of the Company as an entirety or substantially as an entirety in connection with which the Company is dissolved, the Warrant holders shall thereafter have the right to purchase and receive, upon the basis and upon the terms and conditions specified in the Warrants and in lieu of the shares of Common Stock of the Company immediately theretofore purchasable and receivable upon the exercise of the rights represented thereby, the kind and amount of shares of stock or other 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 Warrant holder would have received if such Warrant holder had exercised his, her or its Warrant(s) immediately prior to such event. If any reclassification also results in a change in the Common Stock covered by Section 4.1, 4.2 or 4.3, then such adjustment shall be made pursuant to Sections 4.1, 4.2, 4.3, 4.4 and this Section 4.5. The provisions of this Section 4.5 shall similarly apply to successive reclassifications, reorganizations, mergers or consolidations, sales or other transfers. In no event will the Warrant Price be reduced to less than the par value per share issuable upon exercise of the Warrant.

 

4.6 Requirement to Make Adjustments; Notices of Changes in Warrant. The Company shall have an affirmative duty to make the adjustments set forth in Sections 4.1, 4.2 and 4.3. Upon every adjustment of the Warrant Price or the number of shares issuable upon exercise of a Warrant, the Company shall give written notice thereof to the Warrant Agent, which notice shall state the Warrant Price resulting from such adjustment and the increase or decrease, if any, in the number of shares purchasable at such price upon the exercise of a Warrant, setting forth in reasonable detail the method of calculation and the facts upon which such calculation is based. Upon the occurrence of any event specified in Sections 4.1, 4.2, 4.3, 4.4, 4.5, or 4.6, then, in any such event, the Company shall give written notice to each Warrant holder, at the last address set forth for such holder in the Warrant Register, of the record date or the effective date of the event. Failure to give such notice, or any defect therein, shall not affect the legality or validity of such event.

 

 

4.7 No Fractional Shares. Notwithstanding any provision contained in this Agreement to the contrary, the Company shall not issue fractional shares of Common Stock upon an exercise of Warrants. If, by reason of any adjustment made pursuant to this Section 4, the holder of any Warrant would be entitled, upon the exercise of such Warrant, to receive a fractional interest in a share, the Company shall, upon such exercise, round down to the nearest whole number of the number of shares of Common Stock to be issued to such holder.

 

4.8 Form of Warrant. The form of Warrant need not be changed because of any adjustment pursuant to this Section 4, and Warrants issued after such adjustment may state the same Warrant Price and the same number of shares as is stated in the Warrants initially issued pursuant to this Agreement. However, the Company may at any time in its sole discretion make any change in the form of Warrant that the Company may deem appropriate and that does not affect the substance thereof, and any Warrant thereafter issued or countersigned, whether in exchange or substitution for an outstanding Warrant or otherwise, may be in the form as so changed.

 

4.9 Other Events. In case any event shall occur affecting the Company as to which none of the provisions of preceding subsections of this Section 4 are strictly applicable, but which would require an adjustment to the terms of the Warrants in order to (i) avoid an adverse impact on the Warrants and (ii) effectuate the intent and purpose of this Section 4, then, in each such case, the Company shall appoint a firm of independent public accountants, investment banking or other appraisal firm of recognized national standing, which shall give its opinion as to whether or not any adjustment to the rights represented by the Warrants is necessary to effectuate the intent and purpose of this Section 4 and, if they determine that an adjustment is necessary, the terms of such adjustment. The Company shall adjust the terms of the Warrants in a manner that is consistent with any adjustment recommended in such opinion.

 

5. Transfer and Exchange of Warrants.

 

5.1 Registration of Transfer. The Warrant Agent shall register the transfer, from time to time, of any outstanding Warrant upon the Warrant Register, upon surrender of such Warrant for transfer, properly endorsed with signatures, in the case of certificated Warrants, properly guaranteed and accompanied by appropriate instructions for transfer. Upon any such transfer, a new Warrant representing an equal aggregate number of Warrants shall be issued and the old Warrant shall be cancelled by the Warrant Agent. In the case of certificated Warrants, the Warrants so cancelled shall be delivered by the Warrant Agent to the Company from time to time upon request.

 

5.2 Procedure for Surrender of Warrants. Warrants may be surrendered to the Warrant Agent, either in certificated form or in book entry position, together with a written request for exchange or transfer, and thereupon the Warrant Agent shall issue in exchange therefor one or more new Warrants, or book entry positions, as requested by the registered holder of the Warrants so surrendered, representing an equal aggregate number of Warrants; provided, however, that in the event that a Warrant surrendered for transfer bears a restrictive legend, the Warrant Agent shall not cancel such Warrant and issue new Warrants in exchange therefor until the Warrant Agent has received an opinion of counsel for the Company stating that such transfer may be made and indicating whether the new Warrants must also bear a restrictive legend.

 

 

5.3 Service Charges. No service charge shall be made for any exchange or registration of transfer of Warrants.

 

5.4 Warrant Execution and Countersignature. The Warrant Agent is hereby authorized to countersign and to deliver, in accordance with the terms of this Agreement, the Warrants required to be issued pursuant to the provisions of this Section 5, and the Company, whenever required by the Warrant Agent, will supply the Warrant Agent with Warrants duly executed on behalf of the Company for such purpose.

 

6. Redemption.

 

6.1 Redemption. Not less than all of the outstanding Warrants may be redeemed, at the option of the Company, at any time during the Exercise Period, at the office of the Warrant Agent, upon the notice referred to in Section 6.2, at the price of $0.01 per Warrant (“Redemption Price”), provided that the last sales price of the Common Stock equals or exceeds $18.00 per share (subject to adjustment in accordance with Section 4 hereof), on each of twenty (20) trading days within any thirty (30) trading day period commencing after the Warrants become exercisable and ending on the third trading day prior to the date on which notice of redemption is given and provided that there is an effective registration statement covering the shares of Common Stock issuable upon exercise of the Warrants, and a current prospectus relating thereto, available throughout the 30-day redemption or the Company has elected to require the exercise of the Warrants on a “cashless basis” pursuant to Section 3.3.1(b); provided, however, that if and when the Warrants become redeemable by the Company, the Company may exercise such redemption right if, and only if, there is a current registration statement in effect with respect to the Shares underlying the Warrants commencing five business days prior to the 30-day trading period and continuing each day thereafter until the date of redemption

 

6.2 Date Fixed for, and Notice of, Redemption. In the event the Company shall elect to redeem all of the Warrants that are subject to redemption, the Company shall fix a date for the redemption (the “Redemption Date”). Notice of redemption shall be mailed by first class mail, postage prepaid, by the Company not less than thirty (30) days prior to the Redemption Date to the registered holders of the Warrants to be redeemed at their last addresses as they shall appear on the registration books. Any notice mailed in the manner herein provided shall be conclusively presumed to have been duly given whether or not the registered holder received such notice.

 

6.3 Exercise After Notice of Redemption. The Warrants may be exercised, for cash (or on a “cashless basis” in accordance with Section 3 of this Agreement) at any time after notice of redemption shall have been given by the Company pursuant to Section 6.2 hereof and prior to the Redemption Date. In the event the Company determines to require all holders of Warrants to exercise their Warrants on a “cashless basis” pursuant to Section 3.3.1(b), the notice of redemption will contain the information necessary to calculate the number of shares of Common Stock to be received upon exercise of the Warrants, including the “Fair Market Value” in such case. On and after the Redemption Date, the record holder of the Warrants shall have no further rights except to receive, upon surrender of the Warrants, the Redemption Price.

 

 

7. Other Provisions Relating to Rights of Holders of Warrants.

 

7.1 No Rights as Stockholder. A Warrant does not entitle the registered holder thereof to any of the rights of a stockholder of the Company, including, without limitation, the right to receive dividends, or other distributions, exercise any preemptive rights to vote or to consent or to receive notice as stockholders in respect of the meetings of stockholders or the election of directors of the Company or any other matter.

 

7.2 Lost, Stolen, Mutilated, or Destroyed Warrants. If any Warrant is lost, stolen, mutilated, or destroyed, the Company and the Warrant Agent may on such terms as to indemnity or otherwise as they may in their discretion impose (which shall, in the case of a mutilated Warrant, include the surrender thereof), issue a new Warrant of like denomination, tenor, and date as the Warrant so lost, stolen, mutilated, or destroyed. Any such new Warrant shall constitute a substitute contractual obligation of the Company, whether or not the allegedly lost, stolen, mutilated, or destroyed Warrant shall be at any time enforceable by anyone.

 

7.3 Reservation of Shares of Common Stock. The Company shall at all times reserve and keep available a number of its authorized but unissued shares of Common Stock that will be sufficient to permit the exercise in full of all outstanding Warrants issued pursuant to this Agreement.

 

7.4 Registration of Shares of Common Stock. The Company has agreed to provide certain registration rights with respect to the shares of Common Stock issuable upon exercise of this Warrant in the Subscription Agreement.

 

8. Concerning the Warrant Agent and Other Matters.

 

8.1 Payment of Taxes. The Company will from time to time promptly pay all taxes and charges that may be imposed upon the Company or the Warrant Agent in respect of the issuance or delivery of shares of Common Stock upon the exercise of Warrants, but the Company shall not be obligated to pay any transfer taxes in respect of the Warrants or such shares.

 

8.2 Resignation, Consolidation, or Merger of Warrant Agent.

 

8.2.1 Appointment of Successor Warrant Agent. The Warrant Agent, or any successor to it hereafter appointed, may resign its duties and be discharged from all further duties and liabilities hereunder after giving sixty (60) days’ notice in writing to the Company. If the office of the Warrant Agent becomes vacant by resignation or incapacity to act or otherwise, the Company shall appoint in writing a successor Warrant Agent in place of the Warrant Agent. If the Company shall fail to make such appointment within a period of thirty (30) days after it has been notified in writing of such resignation or incapacity by the Warrant Agent or by the holder of the Warrant (who shall, with such notice, submit his Warrant for inspection by the Company), then the holder of any Warrant may apply to the Supreme Court of the State of New York for the County of New York for the appointment of a successor Warrant Agent at the Company’s cost. Any successor Warrant Agent, whether appointed by the Company or by such court, shall be a corporation organized and existing under the laws of the State of New York, in good standing and having its principal office in the Borough of Manhattan, City and State of New York, and authorized under such laws to exercise corporate trust powers and subject to supervision or examination by federal or state authority. After appointment, any successor Warrant Agent shall be vested with all the authority, powers, rights, immunities, duties, and obligations of its predecessor Warrant Agent with like effect as if originally named as Warrant Agent hereunder, without any further act or deed; but if for any reason it becomes necessary or appropriate, the predecessor Warrant Agent shall execute and deliver, at the expense of the Company, an instrument transferring to such successor Warrant Agent all the authority, powers, and rights of such predecessor Warrant Agent hereunder; and upon request of any successor Warrant Agent the Company shall make, execute, acknowledge, and deliver any and all instruments in writing for more fully and effectually vesting in and confirming to such successor Warrant Agent all such authority, powers, rights, immunities, duties, and obligations.

 

 

8.2.2 Notice of Successor Warrant Agent. In the event a successor Warrant Agent shall be appointed, the Company shall give notice thereof to the predecessor Warrant Agent and the transfer agent for the shares of Common Stock not later than the effective date of any such appointment.

 

8.2.3 Merger or Consolidation of Warrant Agent. Any corporation into which the Warrant Agent may be merged or with which it may be consolidated or any corporation resulting from any merger or consolidation to which the Warrant Agent shall be a party shall be the successor Warrant Agent under this Agreement without any further act.

 

8.3 Fees and Expenses of Warrant Agent.

 

8.3.1 Remuneration. The Company agrees to pay the Warrant Agent reasonable remuneration for its services as such Warrant Agent hereunder and will reimburse the Warrant Agent upon demand for all expenditures that the Warrant Agent may reasonably incur in the execution of its duties hereunder.

 

8.3.2 Further Assurances. The Company agrees to perform, execute, acknowledge, and deliver or cause to be performed, executed, acknowledged, and delivered all such further and other acts, instruments, and assurances as may reasonably be required by the Warrant Agent for the carrying out or performing of the provisions of this Agreement.

 

8.4 Liability of Warrant Agent.

 

8.4.1 Reliance on Company Statement. Whenever in the performance of its duties under this Agreement, the Warrant Agent shall deem it necessary or desirable that any fact or matter be proved or established by the Company prior to taking or suffering any action hereunder, such fact or matter (unless other evidence in respect thereof be herein specifically prescribed) may be deemed to be conclusively proved and established by a statement signed by the Chief Executive Officer or Chairman of the Board of Directors of the Company and delivered to the Warrant Agent. The Warrant Agent may rely upon such statement for any action taken or suffered in good faith by it pursuant to the provisions of this Agreement.

 

8.4.2 Indemnity. The Warrant Agent shall be liable hereunder only for its own fraud, gross negligence, willful misconduct or bad faith. The Company agrees to indemnify the Warrant Agent and save it harmless against any and all liabilities, including judgments, costs and reasonable counsel fees, for anything done or omitted by the Warrant Agent in the execution of this Agreement except as a result of the Warrant Agent’s fraud, gross negligence, willful misconduct, or bad faith.

 

8.4.3 Exclusions. The Warrant Agent shall have no responsibility with respect to the validity of this Agreement or with respect to the validity or execution of any Warrant (except its countersignature thereof); nor shall it be responsible for any breach by the Company of any covenant or condition contained in this Agreement or in any Warrant; nor shall it be responsible to make any adjustments required under the provisions of Section 4 hereof or responsible for the manner, method, or amount of any such adjustment or the ascertaining of the existence of facts that would require any such adjustment; nor shall it by any act hereunder be deemed to make any representation or warranty as to the authorization or reservation of any shares of Common Stock to be issued pursuant to this Agreement or any Warrant or as to whether any shares of Common Stock will, when issued, be valid and fully paid and nonassessable.

 

 

8.4.4  Acceptance of Agency. The Warrant Agent hereby accepts the agency established by this Agreement and agrees to perform the same upon the terms and conditions herein set forth and among other things, shall account promptly to the Company with respect to Warrants exercised and concurrently account for, and pay to the Company, all monies received by the Warrant Agent for the purchase of shares of Common Stock through the exercise of Warrants.

 

9. Miscellaneous Provisions.

 

9.1 Successors. All the covenants and provisions of this Agreement by or for the benefit of the Company or the Warrant Agent shall bind and inure to the benefit of their respective successors and assigns.

 

9.2 Notices. Any notice, statement or demand authorized by this Agreement to be given or made by the Warrant Agent or by the holder of any Warrant to or on the Company shall be sufficiently given when so delivered if by hand or overnight delivery or if sent by certified mail or private courier service within five (5) days after deposit of such notice, postage prepaid, addressed (until another address is filed in writing by the Company with the Warrant Agent), as follows:

 

Blackstone Products, Inc.

1073 W. 1700

N. Logan, UT 84321

Attention: Roger Dahle

Email: [email protected]

 

with a required copy (which copy shall not constitute notice) to:

 

O’Melveny & Myers LLP

2765 Sand Hill Road

Menlo Park, CA 94025

Attention: Warren T. Lazarow, Esq. and Noah Kornblith 

Email: [email protected] and [email protected]

 

Any notice, statement or demand authorized by this Agreement to be given or made by the holder of any Warrant or by the Company to or on the Warrant Agent shall be sufficiently given when so delivered if by hand or overnight delivery or if sent by certified mail or private courier service within five days after deposit of such notice, postage prepaid, addressed (until another address is filed in writing by the Warrant Agent with the Company), as follows:

 

[WARRANT AGENT]

[ADDRESS]

[ADDRESS]

Attn: [___]

 

with a copy in each case to:

 

[___]

[___]

[___]

Attn: [___]

 

 

9.3 Applicable Law; Exclusive Forum. The validity, interpretation, and performance of this Agreement and of the Warrants shall be governed in all respects by the laws of the State of New York, without giving effect to conflicts of law principles that would result in the application of the substantive laws of another jurisdiction. The Company hereby agrees that any action, proceeding or claim against it arising out of or relating in any way to this Agreement shall 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 irrevocably submits to such jurisdiction, which jurisdiction shall be the exclusive forum for any such action, proceeding or claim. The Company hereby waives any objection to such exclusive jurisdiction and that such courts represent an inconvenient forum. Any such process or summons to be served upon the Company may be served by transmitting a copy thereof by registered or certified mail, return receipt requested, postage prepaid, addressed to it at the address set forth in Section 9.2 hereof. Such mailing shall be deemed personal service and shall be legal and binding upon the Company in any action, proceeding or claim. Notwithstanding the foregoing, the provisions of this paragraph will not apply to suits brought to enforce any liability or duty created by the Exchange Act or any other claim for which the federal district courts of the United States of America are the sole and exclusive forum. Any person or entity purchasing or otherwise acquiring any interest in the Warrants shall be deemed to have notice of and to have consented to the forum provisions in this Section 9.3. If any action, the subject matter of which is within the scope the forum provisions above, is filed in a court other than a court located within the State of New York or the United States District Court for the Southern District of New York (a “Foreign Action”) in the name of any warrant holder, such warrant holder shall be deemed to have consented to: (x) the personal jurisdiction of the state and federal courts located within the State of New York or the United States District Court for the Southern District of New York in connection with any action brought in any such court to enforce the forum provisions (an “Enforcement Action”), and (y) having service of process made upon such warrant holder in any Enforcement Action by service upon such warrant holder’s counsel in the Foreign Action as agent for such warrant holder.

 

9.4 Persons Having Rights under this Agreement. Nothing in this Agreement expressed and nothing that may be implied from any of the provisions hereof is intended, or shall be construed, to confer upon, or give to, any person or corporation other than the parties hereto and the registered holders of the Warrants, any right, remedy, or claim under or by reason of this Warrant Agreement or of any covenant, condition, stipulation, promise, or agreement hereof. All covenants, conditions, stipulations, promises, and agreements contained in this Warrant Agreement shall be for the sole and exclusive benefit of the parties hereto and their successors and assigns and of the registered holders of the Warrants.

 

9.5 Examination of the Warrant Agreement. A copy of this Agreement shall be available at all reasonable times at the office of the Warrant Agent in the Borough of Manhattan, City and State of New York, for inspection by the registered holder of any Warrant. The Warrant Agent may require any such holder to submit his Warrant for inspection by it.

 

 

9.6 Counterparts. This Agreement may be executed in any number of original or facsimile counterparts and each of such counterparts shall for all purposes be deemed to be an original, and all such counterparts shall together constitute but one and the same instrument.

 

9.7 Effect of Headings. The section headings herein are for convenience only and are not part of this Agreement and shall not affect the interpretation thereof.

 

9.8 Amendments. This Agreement may be amended by the parties hereto without the consent of any registered holder for the purpose of curing any ambiguity, or of curing, correcting or supplementing any defective provision contained herein or adding or changing any other provisions with respect to matters or questions arising under this Agreement as the parties may deem necessary or desirable and that the parties deem shall not adversely affect the interest of the registered holders. All other modifications or amendments, including any amendment to increase the Warrant Price or shorten the Exercise Period, shall require the written consent or vote of the registered holders of a majority of the then outstanding Warrants. Notwithstanding the foregoing, the Company may extend the duration of the Exercise Period pursuant to Section 3.2 without the consent of the registered holders. Notwithstanding anything contained herein to the contrary, any amendment that materially and disproportionately affects the rights of less than all of the holders shall require the consent of the affected holders.

 

9.9 Severability. This Agreement shall be deemed severable, and the invalidity or unenforceability of any term or provision hereof shall not affect the validity or enforceability of this Agreement or of any other term or provision hereof. Furthermore, in lieu of any such invalid or unenforceable term or provision, the parties hereto intend that there shall be added as a part of this Agreement a provision as similar in terms to such invalid or unenforceable provision as may be possible and be valid and enforceable.

 

[signature page follows]

 

 

IN WITNESS WHEREOF, this Agreement has been duly executed by the parties hereto as of the day and year first above written.

 

	BLACKSTONE PRODUCTS, INC
	By:
		Name:
		Title:

 

	[WARRANT AGENT]
	By:
		Name:
		Title:

 

[Signature page to Warrant Agreement]

 

 

EXHIBIT A

 

Form of Warrant

 

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR ANY STATE SECURITIES LAWS, AND MAY NOT BE OFFERED, SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS REGISTERED UNDER THE ACT, AND ANY APPLICABLE STATE SECURITIES LAWS OR AN EXEMPTION FROM REGISTRATION IS AVAILABLE. THE SHARES OF COMMON STOCK OF BLACKSTONE PRODUCTS, INC., A DELAWARE CORPORATION (THE “COMPANY”) ISSUED UPON EXERCISE OF THIS CERTIFICATE SHALL BE ENTITLED TO REGISTRATION RIGHTS UNDER THE TERMS OF THE SUBSCRIPTION AGREEMENT EXECUTED BY THE COMPANY.

 

[ADDITIONAL LEGENDS AS REQUIRED BY LAW OR TERMS OF AGREEMENTS]

 

NUMBER W-_______-

_______WARRANTS

 

THIS WARRANT WILL BE VOID IF NOT EXERCISED PRIOR TO THE EXPIRATION DATE (DEFINED BELOW)

 

BLACKSTONE PRODUCTS, INC.

 

CUSIP [_____]

 

WARRANT

 

THIS CERTIFIES THAT, for value received ______, is the registered holder of a warrant or warrants (the “Warrant(s)”) of Blackstone Products, Inc., a Delaware corporation (the “Company”), expiring at 5:00 p.m., New York City time, on the on the earlier to occur of (i) the five year anniversary of the issuance date of this Warrant, (ii) the date fixed for redemption of this Warrant as provided below and (iii) the liquidation of the Company (the “Expiration Date”), to purchase one fully paid and non-assessable share of common stock, par value $0.0001 per share (“Shares”), of the Company for each Warrant evidenced by this Warrant Certificate. The Warrant entitles the holder thereof to purchase Shares from the Company, commencing on the Issuance Date upon surrender of this Warrant Certificate and payment of the Warrant Price at the office or agency of [WARRANT AGENT] (the “Warrant Agent”), but only subject to the conditions set forth herein and in the Warrant Agreement between the Company and [WARRANT AGENT] (the “Warrant Agreement”). In no event will the Company be required to net cash settle any warrant exercise. The term “Warrant Price” as used in this Warrant Certificate refers to the price per Share at which Shares may be purchased at the time the Warrant is exercised. The initial Warrant Price per Share is equal to $11.50 per share. The Warrant Agreement provides that upon the occurrence of certain events the Warrant Price, the Redemption Trigger Price (defined below) and the number of Shares purchasable hereunder, set forth on the face hereof, may, subject to certain conditions, be adjusted.

 

No fraction of a Share will be issued upon any exercise of a Warrant. If the holder of a Warrant would be entitled to receive a fraction of a Share upon any exercise of a Warrant, the Company shall, upon such exercise, round up to the nearest whole number the number of Shares to be issued to such holder.

 

Upon any exercise of the Warrant for less than the total number of full Shares provided for herein, there shall be issued to the registered holder hereof or the registered holder’s assignee a new Warrant Certificate covering the number of Shares for which the Warrant has not been exercised.

 

Warrant Certificates, when surrendered at the office or agency of the Warrant Agent by the registered holder in person or by attorney duly authorized in writing, may be exchanged in the manner and subject to the limitations provided in the Warrant Agreement, but without payment of any service charge, for another Warrant Certificate or Warrant Certificates of like tenor and evidencing in the aggregate a like number of Warrants.

 

 

Upon due presentment for registration of transfer of the Warrant Certificate at the office or agency of the Warrant Agent, a new Warrant Certificate or Warrant Certificates of like tenor and evidencing in the aggregate a like number of Warrants shall be issued to the transferee in exchange for this Warrant Certificate, subject to the limitations provided in the Warrant Agreement, without charge except for any applicable tax or other governmental charge.

 

The Company and the Warrant Agent may deem and treat the registered holder as the absolute owner of this Warrant Certificate (notwithstanding any notation of ownership or other writing hereon made by anyone), for the purpose of any exercise hereof, of any distribution to the registered holder, and for all other purposes, and neither the Company nor the Warrant Agent shall be affected by any notice to the contrary.

 

This Warrant does not entitle the registered holder to any of the rights of a stockholder of the Company.

 

The Company reserves the right to call the Warrant at any time prior to its exercise with a notice of call in writing to the holders of record of the Warrant, giving at least 30 days’ notice of such call, at any time while the Warrant is exercisable, if the last sale price of the Shares has been at least $18.00 per share (subject to adjustment in accordance with Section 4 of the Warrant Agreement) (the “Redemption Trigger Price”) on each of 20 trading days within any 30 trading day period (the “30-day trading period”) commencing after the Warrants become exercisable and ending on the third business day prior to the date on which notice of such call is given and if, and only if, there is a current registration statement in effect with respect to the Shares underlying the Warrants commencing five business days prior to the 30-day trading period and continuing each day thereafter until the date of redemption. The call price of the Warrants is to be $0.01 per Warrant. Any Warrant either not exercised or tendered back to the Company by the end of the date specified in the notice of call shall be canceled on the books of the Company and have no further value except for the $0.01 call price.

 

By:
	President			Secretary
	Secretary

 

 

SUBSCRIPTION FORM

 

To Be Executed by the Registered Holder in Order to Exercise Warrants

 

The undersigned Registered Holder irrevocably elects to exercise ______________ Warrants represented by this Warrant Certificate, and to purchase the Common Stock issuable upon the exercise of such Warrants, and requests that Certificates for such shares shall be issued in the name of

 

 

(PLEASE TYPE OR PRINT NAME AND ADDRESS)

(SOCIAL SECURITY OR TAX IDENTIFICATION NUMBER)

 

and be delivered to
	(PLEASE PRINT OR TYPE NAME AND ADDRESS)

 

and, if such number of Warrants shall not be all the Warrants evidenced by this Warrant Certificate, that a new Warrant Certificate for the balance of such Warrants be registered in the name of, and delivered to, the Registered Holder at the address stated below:

 

Dated: _________________

 

	(SIGNATURE)
	(ADDRESS)
	(tax identification number)

 

 

ASSIGNMENT

 

To Be Executed by the Registered Holder in Order to Assign Warrants

 

For Value Received, _______________________ hereby sell, assign, and transfer unto

 

(PLEASE TYPE OR PRINT NAME AND ADDRESS)

(SOCIAL SECURITY OR TAX IDENTIFICATION NUMBER)

 

and be delivered to
	(PLEASE PRINT OR TYPE NAME AND ADDRESS)

 

______________________ of the Warrants represented by this Warrant Certificate, and hereby irrevocably constitute and appoint _________________________________ Attorney to transfer this Warrant Certificate on the books of the Company, with full power of substitution in the premises.

 

Dated: ______________

 

	(Signature)

 

The signature to the assignment of the Subscription Form must correspond to the name written upon the face of this Warrant Certificate in every particular, without alteration or enlargement or any change whatsoever, and must be guaranteed by a commercial bank or trust company or a member firm of the NYSE American, Nasdaq, New York Stock Exchange, Pacific Stock Exchange, or Chicago Stock Exchange.

 

 

75

 

Exhibit 10.5

 

Execution Version

TRANSFEROR Agreement

 

This TRANSFEROR AGREEMENT (this “Agreement”) is entered into this 22^nd day of December 2021, by and among Blackstone Products, Inc., a Delaware corporation (the “Issuer”), on the one hand, and Roger Dahle, an individual residing in Utah (“Dahle”), North Atlantic Imports Inc., a business company formed under the laws of the British Virgin Islands (“NAI”), and Ackrell SPAC Sponsors I LLC, a Delaware limited liability company (“Sponsor” and together with Dahle and NAI, the “Transferors”), on the other hand. Capitalized terms used but not otherwise defined herein shall have the respective meanings ascribed thereto in the Business Combination Agreement (as defined below).

 

WHEREAS, Ackrell SPAC Partners I Co., a Delaware corporation (“SPAC”), is a blank check company incorporated to effect a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses;

 

WHEREAS, the Issuer is a wholly-owned direct subsidiary of SPAC and was formed for the purpose of consummating the transactions contemplated by the Business Combination Agreement;

 

WHEREAS, Ackrell Merger Sub, Inc., a Delaware corporation (“Merger Sub”) is a newly formed, wholly-owned, direct subsidiary of the Issuer, and was formed for the sole purpose of the Merger (as defined below); and

 

WHEREAS, the Issuer, SPAC, Merger Sub, North Atlantic Imports, LLC, a Utah limited liability company (the “Company”), Dahle, a holder of certain membership interests in the Company and (“NAI”) will, substantially concurrently with the execution of this Agreement, enter into that certain Business Combination Agreement, dated as of the date hereof (as amended, modified, supplemented or waived from time to time in accordance with its terms, the “Business Combination Agreement”), pursuant to which, inter alia, (i) Merger Sub will be merged with and into SPAC, with SPAC surviving the Merger as a wholly-owned subsidiary of the Issuer (the “Merger”) (ii) each share of SPAC’s common stock, par value $0.0001 per share (“SPAC Common Stock”) issued and outstanding immediately prior to the Effective Time shall automatically be converted into and exchanged (the “Conversion”) for one validly issued, fully paid and nonassessable share of the Issuer’s common stock, par value $0.0001 per share (“Issuer Common Stock”), (iii) NAI will contribute (the “NAI Contribution”) 45 shares of common stock, par value $1.00 per share of Cowell International Inc. (“Cowell”), a Utah corporation (“Cowell Common Stock”) to the Issuer in exchange for Issuer Common Stock, and 33 shares of Cowell Common Stock to SPAC and Cowell will redeem 22 shares of Cowell Common Stock in exchange for the Cash Consideration, and (iv) Dahle will contribute (the “Dahle Contribution”) all of his membership interests in the Company to the Issuer in exchange for shares of Issuer Common Stock, on the terms and subject to the conditions set forth therein (collectively, the NAI Contribution, Dahle Contribution, Merger, Conversion and the other transactions contemplated by the Business Combination Agreement, the “Transactions”).

 

 

NOW, THEREFORE, in consideration of the foregoing and the mutual representations, warranties and covenants, and subject to the conditions, herein contained, and intending to be legally bound hereby, the parties hereto hereby agree as follows:

 

1. Transfer Shares.

 

1.1 Notwithstanding Section 3.05 of the Business Combination Agreement, Dahle hereby acknowledges and agrees that 134,217 shares of Issuer Common Stock that constitute a portion of the Dahle Stock Consideration issuable to Dahle pursuant to Section 3.05 of the Business Combination Agreement (the “Dahle Transfer Shares”) shall not be issued to Dahle in accordance with Section 3.05 of the Business Combination Agreement and instead shall be issued by Issuer to certain of the Investors in accordance with Section 1.2 of the Subscription Agreements and Dahle shall have no right to the Dahle Transfer Shares

 

1.2 Notwithstanding Section 3.03 of the Business Combination Agreement, NAI hereby acknowledges and agrees that 77,390 shares of Issuer Common Stock that constitute a portion of the NAI Stock Consideration issuable to NAI pursuant to Section 3.03 of the Business Combination Agreement (the “NAI Transfer Shares”) shall not be issued to NAI in accordance with Section 3.03 of the Business Combination Agreement and instead shall be issued by Issuer to certain of the Investors in accordance with Section 1.2 of the Subscription Agreements and NAI shall have no right to the NAI Transfer Shares.

 

1.3 Notwithstanding Section 4.01 of the Business Combination Agreement, Sponsor hereby acknowledges and agrees that 55,063 shares of Issuer Common Stock that constitute a portion of the Ackrell Per Share Consideration issuable to Sponsor pursuant to Section 4.01 of the Business Combination Agreement (the “Sponsor Transfer Shares”) shall not be issued to Sponsor in accordance with Section 4.01 of the Business Combination Agreement and instead shall be issued by Issuer to certain of the Investors in accordance with Section 1.2 of the Subscription Agreements and Sponsor shall have no right to the Sponsor Transfer Shares.

 

2. Investor Make-Whole Shares.

 

2.1 Dahle hereby directs that Issuer deposit 903,382 shares of Issuer Common Stock that constitute a portion of the Dahle Stock Consideration issuable to Dahle pursuant to Section 3.05 of the Business Combination Agreement with the Escrow Agent (the “Dahle Escrowed Shares”), which shall constitute a portion of the Escrowed Shares under the Subscription Agreements. Dahle acknowledges and agrees that the Dahle Escrowed Shares shall be distributed only in accordance with the terms and provisions of the Subscription Agreement, this Agreement and the Escrow Agreement (as defined below).

 

 

2.2 NAI hereby directs that Issuer deposit 520,896 shares of Issuer Common Stock that constitute a portion of the NAI Stock Consideration issuable to NAI pursuant to Section 3.03 of the Business Combination Agreement with the Escrow Agent (the “NAI Escrowed Shares”), which shall constitute a portion of the Escrowed Shares under the Subscription Agreements. NAI acknowledges and agrees that the NAI Escrowed Shares shall be distributed only in accordance with the terms and provisions of the Subscription Agreement, this Agreement and the Escrow Agreement.

 

2.3 Sponsor hereby directs that Issuer deposit 370,614 shares of Issuer Common Stock that constitute a portion of the Ackrell Per Share Consideration issuable to Sponsor pursuant to Section 4.01 of the Business Combination Agreement with the Escrow Agent (the “Sponsor Escrowed Shares” and together with the Dahle Escrowed Shares and the NAI Escrowed Shares, the “Escrowed Shares”), which shall constitute a portion of the Escrowed Shares under the Subscription Agreements. Sponsor acknowledges and agrees that the Sponsor Escrowed Shares shall be distributed only in accordance with the terms and provisions of the Subscription Agreement, this Agreement and the Escrow Agreement.

 

2.4 Prior to the Closing, the Issuer shall enter into an escrow agreement (the “Escrow Agreement”), in a form reasonably acceptable to each Transferor, which shall be consistent with the terms and provisions hereof and of the Subscription Agreements. Each of the Transferors and the Issuer hereby acknowledges and agrees that if there are any Remaining Shares (as defined in the Subscription Agreements), the Issuer shall promptly cause the Escrow Agent to release to each Transferor such Transferor’s Pro Rata Share of the Remaining Shares. For purposes hereof, “Pro Rata Share” means: (a) with respect to Dahle, 50.33%; (b) with respect to NAI, 29.02%; and (c) with respect to Sponsor, 20.65%.

 

2.5 Sponsor hereby directs that Issuer deposit 668,904 shares of Issuer Common Stock that constitute a portion of the Ackrell Per Share Consideration issuable to Sponsor pursuant to Section 4.01 of the Business Combination Agreement with the Escrow Agent (the “Further Escrowed Shares”), which shall constitute the Additional Escrowed Shares under the Subscription Agreements. Sponsor acknowledges and agrees that the Further Escrowed Shares shall be distributed only in accordance with the terms and provisions of the Subscription Agreement, this Agreement and the Escrow Agreement. If there are any Additional Remaining Shares (as defined in the Subscription Agreements), the Issuer shall promptly cause the Escrow Agent to release to Sponsor the Additional Remaining Shares.

 

3. Public Shareholder Make-Whole Agreement. If requested by the Issuer prior to the date that is fifteen (15) Business Days prior to the Closing, each of the Transferors shall execute and deliver to the Issuer (as promptly as practicable after such request by the Issuer, but in no event more than ten (10) Business Days thereafter) a make-whole agreement, in a form reasonably acceptable to each such Transferor, whereby each Transferor shall, based on such Transferor’s Pro Rata Share, agree to make-whole certain stockholders of the Issuer (as reasonably determined by the Issuer, which, for the avoidance of doubt, shall not include any of the Transferors or any of the Investors with respect to the number of shares of Issuer Common Stock acquired pursuant to Subscription Agreements) pursuant to terms and provisions substantially similar to those set forth in Section 2 of the Subscription Agreements; provided, that in no event shall a Transferor be required to agree to any such terms or provisions that would reasonably be expected to (a) result in the Merger, the PIPE Investment (with respect to the acquisition of Newco Common Stock only), the NAI Contribution or the Dahle Contribution not qualifying as an exchange pursuant to Section 351 of the Code or (b) have other adverse tax consequences to such Transferor.

 

 

4. Representations, Warranties and Agreements.

 

4.1 Transferors’ Representations, Warranties and Agreements. Each Transferor, on a several and not joint basis, hereby represents and warrants to the Issuer and acknowledges and agrees with the Issuer as follows:

 

4.1.1 This Agreement has been duly authorized, validly executed and delivered by such Transferor. This Agreement is enforceable against such Transferor in accordance with its terms, except as may be limited or otherwise affected by (i) bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or other laws relating to or affecting the rights of creditors generally, and (ii) principles of equity, whether considered at law or equity.

 

4.1.2 The execution, delivery and performance by such Transferor of this Agreement and the consummation of the transactions contemplated by this Agreement do not and will not (a) conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, or result in the creation or imposition of any lien, charge or encumbrance upon any of the property or assets of such Transferor pursuant to the terms of any indenture, mortgage, deed of trust, loan agreement, lease, license or other agreement or instrument to which such Transferor is a party or by which such Transferor is bound or to which any of the property or assets of such Transferor is subject, which would reasonably be expected to have a material adverse effect on the legal authority of Transferor to enter into and timely perform his, her or its obligations under this Agreement (a “Transferor Material Adverse Effect”), (ii) if such Transferor is not an individual, result in any violation of the provisions of the organizational documents of such Transferor or (iii) result in any violation of any statute or any judgment, order, rule or regulation of any court or governmental agency or body, domestic or foreign, having jurisdiction over such Transferor or any of its properties that would reasonably be expected to have a Transferor Material Adverse Effect.

 

4.2 Issuer’s Representations, Warranties and Agreements. The Issuer hereby represents and warrants to Transferors and agrees with Transferors as follows:

 

4.2.1 The Issuer has been duly incorporated and is validly existing as a corporation in good standing under the General Corporation Law of the State of Delaware (“DGCL”), with corporate power and authority to own, lease and operate its properties and conduct its business as presently conducted and to enter into, deliver and perform its obligations under this Agreement.

 

 

4.2.2 This Agreement has been duly authorized, executed and delivered by the Issuer and is enforceable against the Issuer in accordance with its terms, except as may be limited or otherwise affected by (i) bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or other laws relating to or affecting the rights of creditors generally and (ii) principles of equity, whether considered at law or equity.

 

4.2.3 The execution, delivery and performance of this Agreement (including compliance by the Issuer with all of the provisions hereof), will be done in accordance with Nasdaq rules and will not (i) conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, or result in the creation or imposition of any lien, charge or encumbrance upon any of the property or assets of the Issuer pursuant to the terms of any indenture, mortgage, deed of trust, loan agreement, lease, license or other agreement or instrument to which the Issuer is a party or by which the Issuer is bound or to which any of the property or assets of the Issuer is subject, which would reasonably be expected to have a material adverse effect on the legal authority of the Issuer to enter into and perform its obligations under this Agreement (an “Issuer Material Adverse Effect”), (ii) result in any violation of the provisions of the organizational documents of the Issuer or (iii) result in any violation of any statute or any judgment, order, rule or regulation of any court or governmental agency or body, domestic or foreign, having jurisdiction over the Issuer or any of its properties that would reasonably be expected to have an Issuer Material Adverse Effect.

 

5. Termination. This Agreement and the Escrow Agreement shall terminate and be void and of no further force and effect, and all rights and obligations of the parties hereunder shall terminate without any further liability on the part of any party in respect thereof, upon the earlier to occur of (i) such date and time as the Business Combination Agreement is validly terminated in accordance with its terms and (ii) upon the mutual written agreement of each of the parties hereto to terminate this Agreement; provided that nothing herein will relieve any party from liability for any willful breach hereof prior to the time of termination, and each party will be entitled to any remedies at law or in equity to recover losses, liabilities or damages arising from such breach. The Issuer shall promptly notify Transferors of the termination of the Business Combination Agreement promptly after the termination of such agreement.

 

6. Miscellaneous.

 

6.1 Further Assurances. The parties hereto shall execute and deliver such additional documents and take such additional actions as the parties reasonably may deem to be practical and necessary in order to consummate the transactions contemplated hereby.

 

 

6.2 Notices. Any notice or communication required or permitted hereunder shall be in writing and either delivered personally, emailed or sent by overnight mail via a reputable overnight carrier, or sent by certified or registered mail, postage prepaid, and shall be deemed to be given and received (i) when so delivered personally, (ii) when sent, with no mail undeliverable or other rejection notice, if sent by email, or (iii) three (3) Business Days after the date of mailing to the address below or to such other address or addresses as such person may hereafter designate by notice given hereunder:

 

(i)

if to the Issuer (prior to the Closing), to:

 

Ackrell SPAC Partners I Co.

2093 Philadelphia Pike #1968

Claymont, DE 19703

Attn: William Lamkin

Email: [email protected]

with a required copy (which copy shall not constitute notice) to:

 

Ellenoff Grossman & Schole LLP

1345 Avenue of the Americas, 11th Floor

New York, NY 10105

Attention: Matthew A. Gray, Esq.

Email: [email protected]

 

(ii)

if to the Sponsor, to:

Ackrell SPAC Sponsors I LLC

2093 Philadelphia Pike #1968

Claymont, DE 19703

Attention: Stephen N. Cannon

Email: [email protected]

 

with a required copy (which copy shall not constitute notice) to:

 

Ellenoff Grossman & Schole LLP

1345 Avenue of the Americas, 11th Floor

New York, NY 10105

Attention: Matthew A. Gray, Esq.

Email: [email protected]

 

(iii)

if to Dahle, NAI or the Issuer (after the Closing), to:

 

North Atlantic Imports, LLC

1073 W. 1700

N. Logan, UT 84321

Attention: Roger Dahle

Email: [email protected]

 

 

with a required copy (which copy shall not constitute notice) to:

 

O’Melveny & Myers LLP

2765 Sand Hill Road

Menlo Park, CA 94025

Attention: Warren T. Lazarow, Esq. and Noah Kornblith

Email: [email protected] and [email protected]

 

6.3 Entire Agreement. This Agreement constitutes the entire agreement, and supersedes all other prior agreements, understandings, representations and warranties, both written and oral, among the parties, with respect to the subject matter hereof, including any commitment letter entered into relating to the subject matter hereof.

 

6.4 Modifications and Amendments. This Agreement may not be amended, modified, supplemented or waived (i) except by an instrument in writing signed by the party against whom enforcement of such amendment, modification, supplement or waiver is sought and (ii) without the prior written consent of the Issuer and the Company.

 

6.5 Assignment. Neither this Agreement nor any rights, interests or obligations that may accrue to the parties hereunder may be transferred or assigned without the prior written consent of each of the other parties hereto.

 

6.6 Benefit.

 

6.6.1 Except as otherwise provided herein, this Agreement shall be binding upon, and inure to the benefit of the parties hereto and their heirs, executors, administrators, successors, legal representatives, and permitted assigns, and the agreements, representations, warranties, covenants and acknowledgments contained herein shall be deemed to be made by, and be binding upon, such heirs, executors, administrators, successors, legal representatives and permitted assigns. This Agreement shall not confer rights or remedies upon any person other than the parties hereto and their respective successors and assigns and other than the Company, which shall be an intended third party beneficiary hereof.

 

6.6.2 Each of the Issuer, SPAC and Transferors acknowledges and agrees that (a) this Agreement is being entered into in order to induce the Company to execute and deliver the Business Combination Agreement and without the representations, warranties, covenants and agreements of the Issuer and the Transferors hereunder, the Company would not enter into the Business Combination Agreement, (b) each representation, warranty, covenant and agreement of the Issuer and the Transferors hereunder is being made also for the benefit of the Company, and (c) the Company may directly enforce (including by an action for specific performance, injunctive relief or other equitable relief) each of the covenants and agreements of each of the Issuer and Transferors under this Agreement.

 

 

6.7 Governing Law. This Agreement, and any claim or cause of action hereunder based upon, arising out of or related to this Agreement (whether based on law, in equity, in contract, in tort or any other theory) or the negotiation, execution, performance or enforcement of this Agreement, shall be governed by and construed in accordance with the Laws of the State of Delaware, without giving effect to the principles of conflicts of law thereof that would result in the application of any other jurisdiction’s laws.

 

6.8 Consent to Jurisdiction; Waiver of Jury Trial. Each of the parties irrevocably consents to the exclusive jurisdiction and venue of the Court of Chancery of the State of Delaware, provided that if subject matter jurisdiction over the matter that is the subject of the legal proceeding is vested exclusively in the U.S. federal courts, such legal proceeding shall be heard in the U.S. District Court for the District of Delaware (together with the Court of Chancery of the State of Delaware, “Chosen Courts”), in connection with any matter based upon or arising out of this Agreement. Each party hereby waives, and shall not assert as a defense in any legal dispute, that (i) such person is not personally subject to the jurisdiction of the Chosen Courts for any reason, (ii) such legal proceeding may not be brought or is not maintainable in the Chosen Courts, (iii) such person’s property is exempt or immune from execution, (iv) such legal proceeding is brought in an inconvenient forum or (v) the venue of such legal proceeding is improper. Each party hereto hereby consents to service of process in any such proceeding in any manner permitted by Delaware law, further consents to service of process by nationally recognized overnight courier service guaranteeing overnight delivery, or by registered or certified mail, return receipt requested, at its address specified pursuant to Section 5.2 and waives and covenants not to assert or plead any objection which they might otherwise have to such manner of service of process. Notwithstanding the foregoing in this Section 5.8, a party may commence any action, claim, cause of action or suit in a court other than the Chosen Courts solely for the purpose of enforcing an order or judgment issued by the Chosen Courts. TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAW WHICH CANNOT BE WAIVED, EACH OF THE PARTIES WAIVES ANY RIGHT TO TRIAL BY JURY ON ANY CLAIMS OR COUNTERCLAIMS ASSERTED IN ANY LEGAL DISPUTE RELATING TO THIS AGREEMENT WHETHER NOW EXISTING OR HEREAFTER ARISING. IF THE SUBJECT MATTER OF ANY SUCH LEGAL DISPUTE IS ONE IN WHICH THE WAIVER OF JURY TRIAL IS PROHIBITED, NO PARTY SHALL ASSERT IN SUCH LEGAL DISPUTE A NONCOMPULSORY COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT. FURTHERMORE, NO PARTY SHALL SEEK TO CONSOLIDATE ANY SUCH LEGAL DISPUTE WITH A SEPARATE ACTION OR OTHER LEGAL PROCEEDING IN WHICH A JURY TRIAL CANNOT BE WAIVED.

 

 

6.9 Severability. If any provision of this Agreement shall be invalid, illegal or unenforceable, the validity, legality or enforceability of the remaining provisions of this Agreement shall not in any way be affected or impaired thereby and shall continue in full force and effect.

 

6.10 No Waiver of Rights, Powers and Remedies. No failure or delay by a party hereto in exercising any right, power or remedy under this Agreement, and no course of dealing between the parties hereto, shall operate as a waiver of any such right, power or remedy of such party. No single or partial exercise of any right, power or remedy under this Agreement by a party hereto, nor any abandonment or discontinuance of steps to enforce any such right, power or remedy, shall preclude such party from any other or further exercise thereof or the exercise of any other right, power or remedy hereunder. The election of any remedy by a party hereto shall not constitute a waiver of the right of such party to pursue other available remedies. No notice to or demand on a party not expressly required under this Agreement shall entitle the party receiving such notice or demand to any other or further notice or demand in similar or other circumstances or constitute a waiver of the rights of the party giving such notice or demand to any other or further action in any circumstances without such notice or demand.

 

6.11 Remedies. The parties agree that the Issuer, the Company and the Transferors would suffer irreparable damage if this Agreement was not performed in accordance with its specific terms or was otherwise breached and that money damages or other legal remedies would not be an adequate remedy for any such damage. It is accordingly agreed that the Issuer, the Transferors and the Company shall be entitled to equitable relief, including in the form of an injunction or injunctions, to prevent breaches or threatened breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement in an appropriate court of competent jurisdiction as set forth in Section 5.8, this being in addition to any other remedy to which any party is entitled at law or in equity, including money damages. The parties hereto further agree (i) to waive any requirement for the security or posting of any bond in connection with any such equitable remedy, (ii) not to assert that a remedy of specific enforcement pursuant to this Section 5.11 is unenforceable, invalid, contrary to applicable law or inequitable for any reason and (iii) to waive any defenses in any action for specific performance, including the defense that a remedy at law would be adequate.

 

6.12 Headings and Captions. The headings and captions of the various subdivisions of this Agreement are for convenience of reference only and shall in no way modify or affect the meaning or construction of any of the terms or provisions hereof.

 

6.13 Counterparts. This Agreement may be executed in one or more counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other parties, it being understood that the parties need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission or any other form of electronic delivery, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such signature page were an original thereof.

 

 

6.14 Construction. The words “include,” “includes,” and “including” will be deemed to be followed by “without limitation.” Pronouns in masculine, feminine, and neuter genders will be construed to include any other gender, and words in the singular form will be construed to include the plural and vice versa, unless the context otherwise requires. The words “this Agreement,” “herein,” “hereof,” “hereby,” “hereunder,” and words of similar import refer to this Agreement as a whole and not to any particular subdivision unless expressly so limited. The parties hereto intend that each representation, warranty, and covenant contained herein will have independent significance. If any party hereto has breached any representation, warranty, or covenant contained herein in any respect, the fact that there exists another representation, warranty or covenant relating to the same subject matter (regardless of the relative levels of specificity) which such party hereto has not breached will not detract from or mitigate the fact that such party hereto is in breach of the first representation, warranty, or covenant. All references in this Agreement to numbers of shares, per share amounts and purchase prices shall be appropriately adjusted to reflect any stock split, stock dividend, stock combination, recapitalization or the like occurring after the date hereof.

 

6.15 Mutual Drafting. This Agreement is the joint product of the parties hereto and each provision hereof has been subject to the mutual consultation, negotiation and agreement of the parties and shall not be construed for or against any party hereto.

 

7. Consent to Disclosure. The Transferors hereby consent to the publication and disclosure in any press release issued by the Issuer, SPAC or the Company or Form 8-K filed by the Issuer with the Commission in connection with the execution and delivery of the Business Combination Agreement and the Proxy Statement (and, as and to the extent otherwise required by the federal securities laws or the Commission or any other securities authorities, any other documents or communications provided by the Issuer, SPAC or the Company to any Governmental Authority or to securityholders of the Issuer, SPAC) of each such Transferor’s identity and beneficial ownership of Issuer Common Stock and the nature of such Transferor’s commitments, arrangements and understandings under and relating to this Agreement and, if deemed appropriate by the Issuer, SPAC or the Company, a copy of this Agreement; provided that, in the case of such disclosures by the Issuer, SPAC or the Company, the Issuer, SPAC or Company, as applicable, shall provide Transferor with prior written notice (including by e-mail) of such permitted disclosure, and shall reasonably consult with Transferor regarding such disclosure, in each case, to the extent such disclosure specifically names Transferor. Transferor will promptly provide any information reasonably requested by the Issuer or the Company for any regulatory application or filing made or approval sought in connection with the Transactions (including filings with the Commission).

 

8. Non-Reliance. With respect to each Public Stockholder, by acceptance of any Make-Whole Shares, such Public Stockholder acknowledges that it is not relying upon, and has not relied upon, any statement, representation or warranty made by any person, firm or corporation (including, without limitation, the Company or the Transferors, any of their respective affiliates or any of its or their respective control persons, officers, directors or employees), in connection with the receipt of any Make-Whole Shares.

 

[Signature Page Follows]

 

 

IN WITNESS WHEREOF, each of the Issuer and the Transferors has executed or caused this Agreement to be executed by its duly authorized representative as of the date first set forth above.

 

	BLACKSTONE PRODUCTS, INC.
	By:
	Name:	Daniel L. Sheehan
	Title:	President and Secretary
	TRANSFERORS:
	By:
	Name:	Roger Dahle
	North Atlantic Imports Inc.
	By:
	Name:
	Title:
	Ackrell SPAC Sponsors I LLC
	By:
	Name:	Stephen N. Cannon
	Title:	Managing Member

 

 

- 11 -

 

Exhibit 99.1

 

Blackstone Products, the Market Leader in Outdoor Griddles, to Become a Publicly Traded Company through a Business Combination with Ackrell SPAC Partners

 

●

Blackstone Products, the innovative griddle company that is redefining the outdoor cooking experience led by Founder and Chairman Roger Dahle, has entered into a definitive business combination agreement with Ackrell SPAC Partners I Co. (Nasdaq: ACKIU), led by Chairman Michael Ackrell

 

●

The transaction implies a combined company pro forma enterprise value of $900 million

 

●

Proven track record of profitable growth, with a 72% net revenue CAGR from 2016 through 2020 and over $450 million in revenue estimated for 2021 which is expected to grow to over $600 million in 2022

 

●

Blackstone is revolutionizing the traditional outdoor cooking market while simultaneously expanding the griddle category, which is expected to grow at two times the rate of the total outdoor category through 2023

 

●

Blackstone expects to receive up to $281 million in estimated gross transaction proceeds assuming no redemptions, which includes a PIPE of $31 million of common stock and $111 million of convertible notes due 2027 from several institutional investors led by FS Investments

 

●

The transaction is expected to close in the second quarter of 2022 and Blackstone is expected to be listed on the Nasdaq under the new ticker symbol “BLKS”

 

LOGAN, UT AND NEW YORK, NY – December 23, 2021 ― Blackstone Products (“Blackstone” or the “Company”), an innovative and design-driven company that is redefining the outdoor cooking experience with griddle cooking appliances and accessories, and Ackrell SPAC Partners I Co. (“Ackrell”) (Nasdaq: ACKIU), a publicly-traded special purpose acquisition company, announced today that they have entered into a definitive business combination agreement that will result, subject to the satisfaction or waiver of certain closing conditions, in Blackstone becoming a public company. Upon closing of the transaction, the combined company will be renamed Blackstone Products, Inc. and expects to apply to be listed on the Nasdaq under the new ticker symbol “BLKS.” The combined company is expected to be led by Roger Dahle, Founder and Chief Executive Officer of Blackstone.

 

Griddle cooking is redefining the rapidly expanding outdoor cooking market by providing consumers with a faster, more convenient, and versatile cooking experience as opposed to the more traditional cooking methods offered by charcoal, gas, and pellet grills. Since launching its first griddle design in 2008 with its core 36-inch griddle, Blackstone products have been empowering home chefs of all skill levels to cook outdoors for breakfast, lunch, and dinner. By allowing consumers to cook outdoors more often and for more meal occasions, griddling has higher customer engagement than other outdoor cooking styles allowing Blackstone to rapidly penetrate the traditional outdoor cooking market and to expand the overall category.

 

 

Investment Highlights

 

●

Dominant Position in the Rapidly Growing Griddle Category – Blackstone created the market of at-home outdoor griddle cooking, commanding 80% of the U.S. market share with strong category growth.

 

●

Lifestyle Brand with Passionate and Engaged Consumer Community – Blackstone is an enthusiast brand with a passionate and engaged customer base featuring one of the largest social media communities in the industry.

 

●

Driver of New Product Development – Blackstone is continuously driving category innovation with a strong pipeline of products and features. Blackstone has 24 patents (31 pending) and five new product lines in development.

 

●

Proven Go-to-Market Strategy – Blackstone has deep long-term relationships with key retailers, including Walmart, Lowe’s and Amazon. Retail channels are complemented with direct-to-consumer sales.

 

●

Strong Historical Financial Performance – Blackstone has strong historical top-line growth with a 72% revenue CAGR from 2016 to 2020 generating 98% free cash flow conversion in 2020.

 

●

Significant White Space for Growth – Blackstone has attractive future growth prospects driven by strategic initiatives, such as increasing market penetration and expanding internationally.

 

●

Founder-led Management Team – Blackstone has a dedicated management team led by founder Roger Dahle.

 

Management Commentary

 

“Blackstone is a pioneer in the emerging and explosive griddle category within the outdoor cooking space,” said Roger Dahle. “Our market-leading griddle product portfolio is complemented by a broad range of higher-margin branded accessories and consumables. As we continue to expand our product line and increase our premium offerings, we expect to continue to gain market share and expand the outdoor cooking category. We have ignited a massive social media movement supported by our loyal customers that will further propel our brand awareness. This transaction with the Ackrell team will be transformative for our business, providing capital to fuel our marketing efforts, enhance new product development and expand our presence in the U.S. while expanding into international markets. There is a massive whitespace opportunity for griddles and we believe Ackrell is the perfect partner to help us achieve our mission – to make outdoor cooking accessible to all, for every meal.”

 

Stephen Cannon, Chief Operating Officer and President of Ackrell, said, “Blackstone has established, transformed and accelerated an entirely new category in the outdoor cooking market and its products have clearly resonated with consumers of all demographics. As we were evaluating potential partners, we were seeking a high-growth company, with robust revenue growth, branded products with a compelling distribution strategy and a management team with strong integrity and public company capability. After a lengthy due diligence process, we found that Roger and the Blackstone team not only met all of those requirements – they exceeded them. We are thrilled to partner with Blackstone on this exciting journey as they become a publicly-traded company.”

 

 

Transaction Overview

 

The business combination implies a pro forma enterprise valuation for Blackstone of $900 million, or approximately 11.1x 2022 estimated adjusted EBITDA. The transaction will provide approximately $95 million in estimated gross proceeds to the Company, assuming no redemption by Ackrell shareholders, including a PIPE of $31 million common stock at $10.00 per share and $111 million of convertible notes due 2027 (the “Notes”), subject to applicable discounts and the terms and conditions of sale, including certain minimum cash and business performance requirements. The Notes will be subordinated unsecured obligations of the Company, and interest will be payable semi-annually in arrears, beginning six months following the closing of the transaction, at a rate of 9.875% per year. The Notes will mature on April 15, 2027, unless earlier repurchased, redeemed, or converted in accordance with their terms. The initial conversion price of $11.50 represents a premium of 15% to the issue price of the common stock. The Notes will be convertible into shares of common stock at the option of investors at any time. The Company will have the option to redeem all or any portion of the Notes after April 15, 2025, if certain stock price and liquidity conditions are satisfied.

 

The transaction is expected to close in the second quarter of 2022, subject to, among other things, the approval by Ackrell shareholders, satisfaction or waiver of the conditions stated in the business combination agreement, and other customary closing conditions, including a registration statement being declared effective by the U.S. Securities and Exchange Commission (the “SEC”) and approval by The Nasdaq Stock Market to list the securities of the combined company.

 

In connection with the transaction, Ackrell has deposited an extension payment of $1,380,000 into the trust account for its public stockholders enabling Ackrell to extend the period of time it has to consummate its initial business combination by three months from December 23, 2021 to March 23, 2022. Ackrell SPAC Sponsors I LLC, a Delaware limited liability company and the sponsor of Ackrell, loaned the extension payment to Ackrell using funds received under a third party loan from Blackstone.

 

Additional information about the proposed transaction, including a copy of the business combination agreement, investor presentation and transcript of management commentary, will be provided in a Current Report on Form 8-K to be filed by Ackrell with the SEC and will be available at www.sec.gov.

 

Advisors

 

Nomura Securities International, Inc. (“Nomura”) is acting as sole financial advisor to Ackrell. Nomura and Barclays Capital Inc. (“Barclays”) are acting as Capital Markets Advisors to Ackrell and as placement agents for the PIPE financing. Ackrell Capital, LLC is acting as financial advisor to Blackstone.

 

O’Melveny & Myers LLP is acting as legal advisor to the Company. Ellenoff Grossman & Schole LLP is acting as legal advisor to Ackrell. Sidley Austin LLP is acting as legal advisor to the placement agents.

 

About Blackstone Products

 

Blackstone Products, headquartered in Logan, UT, is fundamentally redefining how people cook outdoors. The company specializes in outdoor griddles which allow users to cook a wider variety of foods faster and more often. Blackstone’s robust product line features innovative and easy-to-use griddles, accessories and consumables that enhance outdoor cooking and make it more enjoyable and accessible to all for every meal. Blackstone believes in helping people create an experience with food that brings family and friends together.

 

 

About Ackrell SPAC Partners I Co.

 

Ackrell is a blank check company formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses. While Ackrell may pursue an acquisition in any business industry or sector, it intends to concentrate its efforts on identifying businesses in the branded fast-moving consumer goods industry.

 

Ackrell is led by Chairman Michael Ackrell, Vice Chairman Shannon Soqui, Chief Executive Officer Jason Roth, Chief Operating Officer and President Stephen Cannon, and Chief Financial Officer Long Long.

 

About FS Investments

 

FS Investments is a leading asset manager dedicated to helping individuals, financial professionals and institutions design better portfolios. The firm provides access to alternative sources of income and growth, and focuses on setting industry standards for investor protection, education and transparency. FS Investments is headquartered in Philadelphia, PA with offices in New York, NY, Orlando, FL and Leawood, KS. Visit http://www.fsinvestments.com to learn more.

 

Additional Information and Where to Find It

 

Ackrell intends to file with the SEC a registration statement on Form S-4 with a proxy statement containing information about the proposed transaction and the respective businesses of Blackstone and Ackrell. Ackrell will mail a final prospectus and definitive proxy statement and other relevant documents after the SEC completes its review. Ackrell shareholders are urged to read the preliminary prospectus and proxy statement and any amendments thereto and the final prospectus and definitive proxy statement in connection with the solicitation of proxies for the special meeting to be held to approve the proposed transaction, because these documents will contain important information about Ackrell, Blackstone, and the proposed transaction. The final prospectus and definitive proxy statement will be mailed to stockholders of Ackrell as of a record date to be established for voting on the proposed transaction. Shareholders of Ackrell will also be able to obtain a free copy of the proxy statement, as well as other filings containing information about Ackrell, without charge, at the SEC’s website (www.sec.gov) or by calling 1-800-SEC-0330. Copies of the proxy statement and Ackrell’s other filings with the SEC can also be obtained, without charge, by directing a request to: [email protected] or Ackrell SPAC Partners I Co., 2093 Philadelphia Pike #1968, Claymont, DE 19703. Additionally, all documents filed with the SEC can be found on Ackrell’s website, www.ackrellspac.com. The information contained in, or that can be accessed through, Ackrell’s or the Company’s website is not incorporated by reference in, and is not part of, this press release.

 

 

No Offer or Solicitation

 

This press release does not constitute (i) a solicitation of a proxy, consent, or authorization with respect to any securities or in respect of the proposed business combination, or (ii) an offer to sell or the solicitation of an offer to buy any securities, or a solicitation of any vote or approval, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation, or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offering of securities shall be made except by means of a prospectus meeting the requirements of the U.S. Securities Act.

 

Participants in the Solicitation

 

Blackstone and Ackrell and their respective directors and officers and other members of management and employees may be deemed participants in the solicitation of proxies in connection with the proposed business combination. Ackrell stockholders and other interested persons may obtain, without charge, more detailed information regarding directors and officers of Ackrell in Ackrell’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020, which was filed with the SEC on March 31, 2021. Information regarding the persons who may, under SEC rules, be deemed participants in the solicitation of proxies from Ackrell’s shareholders in connection with the proposed business combination will be included in the definitely proxy statement/prospectus the Ackrell intends to file with the SEC.

 

Caution Concerning Forward-Looking Statements

 

Certain statements herein are “forward-looking statements” made pursuant to the safe harbor provisions of the United States Private Securities Litigation Reform Act of 1995. Actual results may differ from their expectations, estimates, and projections and, consequently, you should not rely on these forward-looking statements as predictions of future events. For example, projections of future net revenue, gross profit, gross margin, Adjusted EBITDA and other metrics are forward-looking statements. In some cases, you can identify forward-looking statements through the use of words or phrases such as “may”, “should”, “could”, “predict”, “potential”, “believe”, “will likely result”, “expect”, “continue”, “will”, “anticipate”, “seek”, “estimate”, “intend”, “plan”, “projection”, “would” and “outlook”, or the negative version of those words or phrases or other comparable words or phrases of a future or forward-looking nature, but the absence of such words does not mean that a statement is not forward-looking. These forward-looking statements are not historical facts and are based upon estimates and assumptions that, while considered reasonable by Ackrell and its management, and the Company and its management, as the case may be, are inherently uncertain. Factors that may cause actual results to differ materially from current expectations include, but are not limited to: (1) the occurrence of any event, change or other circumstances that could give rise to the termination of negotiations and any subsequent definitive agreements with respect to the proposed business combination; (2) the outcome of any legal proceedings that may be instituted against Ackrell, the Company, the combined company or other following the announcement of the proposed business combination and any definitive agreements with respect thereto; (3) the inability to complete the proposed business combination due to the failure to obtain approval of the shareholders of Ackrell, to obtain financing to complete the proposed business combination or to satisfy other conditions to closing; (4) changes to the proposed structure of the proposed business combination that may be required or appropriate as a result of applicable laws or regulations or as a condition to obtaining regulatory approval of the proposed business combination; (5) the ability to meet stock exchange listing standards following the consummation of the proposed business combination; (6) the risk that the proposed business combination disrupts current plans and operations of Ackrell or the Company as a result of the announcement and consummation of the proposed business combination; (7) the ability to recognize the anticipated benefits of the proposed business combination, which may be affected by, among other things, competition and the ability of the combined company to grow and manage growth profitably, maintain relationships with customers and retain its management and key employees; (8) costs related to the proposed business combination; (9) changes in applicable laws or regulations and delays in obtaining, adverse conditions contained in, or the inability to obtain regulatory approvals required to complete the proposed business combination; (10) the Company’s estimates of expenses and profitability and underlying assumptions with respect to stockholder redemptions and purchase price and other adjustments; (11) the Company’s inability to increase outdoor cooking market penetration or expand the categories for outdoor cooking; (12) the addressable market the Company intends to target does not grow as expected; (13) increased regulatory costs and compliance requirements in connection with any international or product line expansion; (14) the Company’s inability to expand and diversify its supply chain; (15) the loss of any key executives; (16) the loss of any relationships with key retailers; (17) the loss of any relationships with key suppliers; (18) the inability to protect the Company’s patents and other intellectual property; (19) lower than expected attachment rate and cross-selling capabilities for new products; (20) new technologies that compete with the Company in the griddle market and other outdoor cooking markets; (21) the inability to increase engagement with end-users via social media or other digital channels; (22) fluctuations in sales of the Company’s major customers; (23) the Company’s ability to execute its business plans and strategy; (24) the Company’s ability to maintain sufficient inventory and meet customer demand; (25) the Company’s inability to deliver expected cost and manufacturing efficiencies; and (26) other risks and uncertainties indicated from time to time in other documents filed or to be filed with the SEC by Ackrell. See “Risk Considerations” in the investor presentation, which will be provided in a Current Report on Form 8-K to be filed by Ackrell with the SEC and available at www.sec.gov.

 

MEDIA AND INVESTOR CONTACT

ICR

[email protected]

 

 

5

 

Exhibit 99.2

 

Proposed Business Combination with Ackrell SPAC Partners I Co. (NASDAQ: ACKIU) DECEMBER 2021 INVESTOR PRESENTATION PROPRIETARY AND CONFIDENTIAL

Disclosures – This presentation is being provided for informational purposes only and has been prepared to assist interested parties in making their own evaluation with respect to a potential business combination (the “proposed business combination”) between North Atlantic Imports, LLC d/b/a Blackstone Products (the “Company”) and Ackrell SPAC Partners I Co . (“Ackrell”) . Neither this presentation, nor any of the information contained herein, is intended to be used by the recipient for any other purpose or distributed to any third party without the express written consent of the Company . The information contained herein does not purport to be all - inclusive and none of Ackrell, the Company or their respective affiliates or representatives makes any representation or warranty, express or implied, as to the accuracy, completeness or reliability of the information contained in this presentation . The contents herein are not to be construed as legal, business or tax advice, and the recipient should consult its own attorney, business advisor and tax advisor as to legal, business and tax advice . Forward - Looking Statements – This presentation contains “forward - looking statements” within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995 . Actual results may differ from their expectations, estimates and projections and, consequently, you should not rely on these forward - looking statements as predictions of future events . For example, projections of future net revenue, gross profit, gross margin, Adjusted EBITDA and other metrics are forward - looking statements . In some cases, you can identify forward - looking statements through the use of words or phrases such as “may”, “should”, “could”, “predict”, “potential”, “believe”, “will likely result”, “expect”, “continue”, “will”, “anticipate”, “seek”, “estimate”, “intend”, “plan”, “projection”, “would” and “outlook”, or the negative version of those words or phrases or other comparable words or phrases of a future or forward - looking nature, but the absence of such words does not mean that a statement is not forward - looking . These forward - looking statements are not historical facts and are based upon estimates and assumptions that, while considered reasonable by Ackrell and its management, and the Company and its management, as the case may be, are inherently uncertain . Factors that may cause actual results to differ materially from current expectations include, but are not limited to those listed in Appendix A : ( 1 ) the occurrence of any event, change or other circumstances that could give rise to the termination of negotiations and any subsequent definitive agreements with respect to the proposed business combination ; ( 2 ) the outcome of any legal proceedings that may be instituted against Ackrell, the Company, the combined company or other following the announcement of the proposed business combination and any definitive agreements with respect thereto ; ( 3 ) the inability to complete the proposed business combination due to the failure to obtain approval of the shareholders of Ackrell, to obtain financing to complete the proposed business combination or to satisfy other conditions to closing ; ( 4 ) changes to the proposed structure of the proposed business combination that may be required or appropriate as a result of applicable laws or regulations or as a condition to obtaining regulatory approval of the proposed business combination ; ( 5 ) the ability to meet stock exchange listing standards following the consummation of the proposed business combination ; ( 6 ) the risk that the proposed business combination disrupts current plans and operations of Ackrell or the Company as a result of the announcement and consummation of the proposed business combination ; ( 7 ) the ability to recognize the anticipated benefits of the proposed business combination, which may be affected by, among other things, competition and the ability of the combined company to grow and manage growth profitably, maintain relationships with customers and retain its management and key employees ; ( 8 ) costs related to the proposed business combination ; ( 9 ) changes in applicable laws or regulations and delays in obtaining, adverse conditions contained in, or the inability to obtain regulatory approvals required to complete the proposed business combination ; ( 10 ) the Company’s estimates of expenses and profitability and underlying assumptions with respect to stockholder redemptions and purchase price and other adjustments ; ( 11 ) the Company's inability to increase outdoor cooking market penetration or expand the categories for outdoor cooking ; ( 12 ) the addressable market the Company intends to target does not grow as expected ; ( 13 ) increased regulatory costs and compliance requirements in connection with any international or product line expansion ; ( 14 ) the Company's inability to expand and diversify its supply chain ; ( 15 ) the loss of any key executives ; ( 16 ) the loss of any relationships with key retailers ; ( 17 ) the loss of any relationships with key suppliers ; ( 18 ) the inability to protect the Company's patents and other intellectual property ; ( 19 ) lower than expected attachment rate and cross - selling capabilities for new products ; ( 20 ) new technologies that compete with the Company in the griddle market and other outdoor cooking markets ; ( 21 ) the inability to increase engagement with end - users via social media or other digital channels ; ( 22 ) fluctuations in sales of the Company’s major customers ; ( 23 ) the Company’s ability to execute its business plans and strategy ; ( 24 ) the Company’s ability to maintain sufficient inventory and meet customer demand ; ( 25 ) the Company’s inability to deliver expected cost and manufacturing efficiencies ; and ( 26 ) other risks and uncertainties indicated from time to time in other documents filed or to be filed with the SEC by Ackrell . You are cautioned not to place undue reliance upon any forward - looking statements, which speak only as of the date on which they are made, and neither Ackrell nor the Company undertakes any obligation to publicly update or revise any forward - looking statement, whether as a result of new information, future developments or otherwise, except as required by law . Financial Data and Use of Projections ; Non - GAAP Financial Measures – The historical financial data included in this presentation does not conform to Regulation S - X . In addition, the historical financial information included herein (i) may not include all adjustments required by the generally accepted accounting principles in the United States (“GAAP”) under the Public Company Accounting Oversight Board (“PCAOB”) standard, and (ii) is preliminary and subject to change, including in connection with the audit of the Company’s financial statements under the PCAOB standard for its fiscal years ended December 31 , 2018 , 2019 and 2020 , which has not been completed . The Company’s independent registered public accounting firm, Marcum LLP, has not audited or reviewed, and does not express an opinion with respect to, any of the financial information or data included in this presentation . Such information and data may not be included in, may be adjusted in or may be presented differently in any proxy statement, registration statement or prospectus to be filed with the SEC . This presentation contains projected financial information for the Company with respect to certain financial metrics for the Company . Neither Ackrell’s nor the Company’s independent auditors have audited, studied, reviewed, compiled or performed any procedures with respect to the projections for the purpose of their inclusion in this presentation, and, accordingly, they did not express an opinion or provide any other form of assurance with respect thereto for the purpose of this presentation . These projections are forward - looking statements and should not be relied upon as being necessarily indicative of future results . The assumptions and estimates underlying such projections are inherently uncertain and subject to a wide variety of significant business, economic, competitive and other risks and uncertainties . See “Forward - Looking Statements” above . Actual results may differ materially from the results contemplated by the projections contained in this presentation, and the inclusion of such information in this presentation should not be regarded as a representation by any person that the results reflected in such projections will be achieved . Since the financial projections cover multiple years, such information by its nature becomes less reliable with each successive year . In addition, this presentation includes references to non - GAAP financial measures, including but not limited to EBITDA and Adjusted EBITDA . Such non - GAAP measures should be considered only as supplemental to, and not as superior to, financial measures prepared in accordance with GAAP . Additionally, to the extent that forward - looking non - GAAP financial measures are provided, they are presented on a non - GAAP basis without reconciliations of such forward - looking non - GAAP measures due to the inherent difficulty in forecasting and quantifying certain amounts that are necessary for such reconciliation . DISCLAIMER 2

Financial Data and Use of Projections ; Non - GAAP Financial Measures (continued ) – The Company believes that these non - GAAP financial measures provide useful information to management and investors regarding certain financial and business trends relating to the Company's financial condition and results of operations . The Company believes that the use of these non - GAAP financial measures provides an additional tool for investors to use in evaluating actual and projected operating results and trends in and in comparing the Company's financial measures with other similar companies, many of which present similar non - GAAP financial measures to investors . The principal limitation of these non - GAAP financial measures is that they exclude significant expenses and other amounts that are required by GAAP to be recorded in the Company's financial statements . In addition, they are subject to inherent limitations as they reflect the exercise of judgments by management about which expense and other amounts are excluded or included in determining these non - GAAP financial measures . You should review the Company's audited financial statements, which will be included in the registration statement relating to the proposed business combination . Industry and Market Data – Unless otherwise indicated, information contained in this presentation concerning the Company’s industry, competitive position and the markets in which it operates is based on information from 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 the Company’s internal research, and are based on assumptions made by the Company upon reviewing such data, and the Company’s experience in, and knowledge of, such industry and markets, which the Company believes to be reasonable . While the Company believes that such third - party information is reliable, the Company has not independently verified, and makes no representation as to the accuracy or completeness of, such third - party information . In addition, projections, assumptions and estimates of the future performance of the industry in which the Company operates and the Company’s or the combined entity’s future performance are necessarily subject to uncertainty and risk due to a variety of factors, including those described above . These and other factors could cause results to differ materially from those expressed in the estimates made by independent parties and by the Company . Trademarks – The trademarks, service marks, trade names and copyrights included herein are the property of the owners thereof and are used for reference purposes only . Such use should not be construed as an endorsement of the products or services of the Company or Ackrell . No Offer or Solicitation – This presentation does not constitute (i) a solicitation of a proxy, consent or authorization with respect to any securities or in respect of the proposed business combination, or (ii) an offer to sell or the solicitation of an offer to buy any securities, or a solicitation of any vote or approval, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction . No offering of securities shall be made except by means of a prospectus meeting the requirements of the U . S . Securities Act . Important Information for Investors and Stockholders – In connection with the proposed business combination, Ackrell intends to file with the SEC a registration statement on Form S - 4 , which will include a proxy statement to be distributed to Ackrell stockholders in connection with Ackrell’s solicitation of proxies for the vote by Ackrell’s stockholders with respect to the proposed business combination and other matters to be described therein, as well as the prospectus relating to the offer of the securities to be issued to the Company’s stockholders in connection with the completion of the proposed business combination . This presentation does not contain all the information that should be considered in the proposed business combination . It is not intended to form any basis of any investment decision or any other decision in respect to the proposed business combination . Ackrell stockholders and other interested persons are advised to read the definitive proxy statement/prospectus and any amendments thereto, when available, in connection with Ackrell’s solicitation of proxies for the special meeting to be held to approve the transaction contemplated by the proposed business combination because the materials will contain important information about the Company, Ackrell, and the proposed transactions . The definitive proxy statement/prospectus will be mailed to Ackrell stockholders as of a record date to be established for voting on the proposed business combination when it becomes available . Stockholders will also be able to obtain a copy of the proxy statement/prospectus, including any amendments thereto, once they are available, without charge, at the SEC’s website at www . sec . gov or by directing a request to Ackrell at 2093 Philadelphia Pike # 1968 Claymont, DE 19703 . Additionally, all documents filed with the SEC can be found on Ackrell’s website, www . ackrellspac . com . Participants in the Solicitation – The Company and Ackrell and their respective directors and officers and other members of management and employees may be deemed participants in the solicitation of proxies in connection with the proposed business combination . Ackrell stockholders and other interested persons may obtain, without charge, more detailed information regarding directors and officers of Ackrell in Ackrell’s Annual Report on Form 10 - K for the fiscal year ended December 31 , 2020 , which was filed with the SEC on March 31 , 2021 . Information regarding the persons who may, under SEC rules, be deemed participants in the solicitation of proxies from Ackrell’s stockholders in connection with the proposed business combination will be included in the definitely proxy statement/prospectus the Ackrell intends to file with the SEC . Risk Factors – For a non - exhaustive description of the risks relating to an investment in the proposed business combination, please review “Risk Considerations” in Appendix A . The distribution of this presentation may also be restricted by law and persons into whose possession this presentation comes should inform themselves about and observe any such restrictions . The recipient acknowledges that it is (a) aware that the United States securities laws prohibit any person who has material, non - public information concerning a company from purchasing or selling securities of such company or from communicating such information to any other person under circumstances in which it is reasonably foreseeable that such person is likely to purchase or sell such securities, and (b) familiar with the Securities Exchange Act of 1934 , as amended, and the rules and regulations promulgated thereunder (collectively, the “Exchange Act”), and that the recipient will neither use, nor cause any third party to use, this presentation or any information contained herein in contravention of the Exchange Act, including, without limitation, Rule 10 b - 5 thereunder . Neither the SEC nor any securities commission or other regulatory authority of any other U . S . or non - U . S . jurisdiction has approved or disapproved of the proposed business combination contemplated hereby or determined that this presentation is truthful or complete . Any representation to the contrary is a criminal offense . DISCLAIMER – CONTINUED 3

TABLE OF CONTENTS 1 Executive Summary 2 Business Overview 3 Financials 4 Transaction Overview 5 Closing Remarks 6 Appendix

TODAY’S PRESENTERS Roger Dahle Founder & Chief Executive Officer James McCormick Chief Financial Officer 5 Scott Stevenson Vice President, Marketing Jonathan Leong Advisor Blackstone Products Ackrell SPAC Partners I Co.

Source: Company information. | (1) EBITDA (earnings before interest, taxes, depreciation and amortization) and Adjusted EBITDA are non - GAAP metrics. Adjusted EBITDA is calculated as EBITDA adjusted for certain items, including non - cash compensation expense, fees related to customer account receivable finance programs and one - time or other non - recurring expenses (such as legal expenses and other fees and expenses related to the proposed business combination). These metrics are not meant as an alternative for net income (loss) or any other items calculated in accordance with GAAP; (2) Per FactSet as of December 17, 2021; (3) Pro forma ownership (i) includes approximately 17.6 million RSUs expected to be awarded to Roger Dahle with annual cliff vesting over a 7 year period commencing on the third anniversary of the consummation of the proposed business combination, and (ii) assumes downsid e p rotection feature is not triggered, see p.39 for further details and assumptions; (4) Assumes no redemptions, see p.39 for further details and assumptions. PROPOSED TRANSACTION SUMMARY Transaction ▪ Ackrell has proposed to enter into a business combination with North Atlantic Imports, LLC d/b/a Blackstone Products (“Blackstone” or the “Company”), a leading producer of griddles and accessories for outdoor cooking use, headquartered in Logan, UT ▪ Transaction is expected to close in Q2 2022 ▪ Post - closing, the Company will retain the Blackstone name ▪ Company is expected to trade under the ticker “BLKS” Valuation ▪ Transaction implies a pro forma enterprise value of $900 M ▪ 11.1x 2022E adjusted EBITDA 1 of $81M ▪ Implies ~28% discount to Traeger’s current valuation and ~37% discount to Traeger’s valuation at IPO 2 ▪ Existing Blackstone shareholders will receive 71% of the pro forma equity 3 Capital Structure ▪ Transaction will be funded by a combination of Ackrell cash held in trust, equity roll - over from existing Blackstone ownership and proceeds from the PIPE and convertible offering ▪ Transaction expected to result in ~$95M 4 net proceeds to Blackstone to be used to invest in further marketing efforts, new product development and international expansion ▪ Strong balance sheet with positive working capital and ~$120M 4 net debt post - closing 6 Ackrell SPAC Partners Overview Transaction Summary ▪ Ackrell SPAC Partners I Co. (“Ackrell”) is a Nasdaq - listed SPAC formed to complete a combination with a branded consumer goods business ▪ Public since December 21, 2020 under the ticker “ACKIU” ▪ Has $139M in cash in trust, which can be used by the merger partner as growth capital, to repay debt or for shareholder payments ▪ Seeking a privately - held, high - growth merger partner with an enterprise value of $500M - $1B+ ▪ Stable and / or growing revenue ▪ Branded products and / or a strong distribution platform ▪ Management team with strong integrity, character and ethics, with the skill to operate a public company and with a commitment to long - term value creation ▪ Shareholders that want to stay invested in the company and participate in future growth

1 EXECUTIVE SUMMARY

8 Make outdoor cooking ACCESSIBLE to all, for EVERY MEAL Create an EXPERIENCE ,not just sell a product Bringfamilies and communities TOGETHER DEFINE and lead the griddle category Deliver unbeatable QUALITY to our customers Unlock food VARIETY

BLACKSTONE AT A GLANCE Source: Company information. | ( 1 ) Derived from the Company’s financial statements audited pursuant to GAAP in accordance with private company audit standards. The Company is in process of completing an audit of its financial statements in accordance with PCAOB audit standards for its fiscal years ended December 31, 2018, 2019 and 2020 ; (2) NPS of 78 across customers and 76 for broader market; (3) Per Burshek Research & Consulting; (4) EBITDA and Adjusted EBITDA are non - GAAP metrics. Adjusted EBITDA is calculated as EBITDA adjusted for certain items, including non - cash compensation expense, fees related to customer account receivable finance programs and one - time or other non - recurring expenses (such as legal expenses and other fees and expenses related to the propose d business combination). These metrics are not meant as an alternative for net income (loss) or any other items calculated in a cco rdance with GAAP; (5 ) Per competitors’ filings . Blackstone by the Numbers Key Retailer Categories Major Outdoor Cooking Market Retailers Independent & Club Retailers Specialist Retailers & Others Griddles Branded Accessories 9 $458M 2021E Net Revenue $58M 2021E Adjusted EBITDA 4 72% | 37% ’16 - ’20 1 | ’21E - ’24E Net Revenue CAGR 78 2,3 Net Promoter Score (vs. 60 - 70 for Competitors) 5 6.7M Griddles Sold 2016 - 2021E (Including 2.5M Griddles in 2021E) 24 Registered Patents With Additional 31 Pending $608M 2022E Net Revenue $81M 2022E Adjusted EBITDA 4 Branded Consumables 21% of 2021E Net Revenue 75% of 2021E Net Revenue 4 % of 2021E Net Revenue 80% Griddle Market Share 3

REDEFINING OUTDOOR COOKING Source: Company information. Blackstone griddles are both penetrating the traditional outdoor cooking market and expanding the category 10 Increase Outdoor Cooking Market Penetration Expand the Category Expand the Category Increase Outdoor Cooking Market Penetration MARKET POSITIONING Increase awareness of the advantages of the Blackstone griddle vs. alternative outdoor cooking methods, e.g., variety, convenience, speed BRAND AWARENESS Enhance awareness of the Blackstone brand and the aspirational qualities it inspires PRODUCT EXPANSION Enhance the customer experience to penetrate adjacent categories such as branded accessories and consumables WINNING MORE MEALS Expand beyond traditional grill food to inspire consumers and further integrate Blackstone into their lives – 3 meals/day , 365 days/year = 1,095 m eals! NEW PRODUCTS AND USERS Drive innovation to unlock food variety and attract new households and demographics to the category, e.g ., families, women, additional cultures NEW MARKETS Leverage cross - cultural appeal of the griddle to expand internationally

MARKET OPPORTUNITY Source: Company information, Burshek Research & Consulting and U.S. Census Data. | (1) Estimated based on census data and survey analysis; (2) The percentage of current TAM and SAM that Blackstone has reached with its products is based on an installed base of approximately 4.1M Blackstone griddles sold in the U.S. from 2016 to 2020; (3) Based on U.S. TAM and a 793 non - customer survey in 2020 in which 80 % of respondents expressed moderate to high likelihood of purchasing a Blackstone product; (4) Derived from top - down analysis of 2019 revenue of leading outdoor cooking companies. Large and underpenetrated U.S. and international addressable market Addressable market expected to continue to grow, driven by Blackstone’s unique customer proposition 11 TAM Total Addressable Market: U.S. households that own an outdoor appliance and use it at least once a year SAM Serviceable Addressable Market : U.S. households that use an outdoor appliance at least once a year with interest in purchasing a Blackstone product 140M Blackstone Penetration 2 : 3% 83M Blackstone Penetration 2 : 5% United States 1 Global $5,700M TAM 66M 3 Blackstone Penetration 2 : 6% Total U.S. Households Reflects estimate that the $2,850M U.S. total addressable market 4 represents 50% of the global market $458M Griddle expected to double share of U.S. outdoor cooking market from 8% in 2019 to 16% by 2023E Griddle expected to expand traditional outdoor cooking industry Increasing awareness of the griddle and the Blackstone brand U.S. population expected to grow by 2.0M people per year through 2060E Key Trends

KEY INVESTMENT HIGHLIGHTS Source: Company information and Burshek Research & Consulting. | (1) Company estimate; (2) Derived from the Company’s financial statements audited pursuant to GAAP in accordance with private company audit standards. The Company is in process of completing an audit of its financial statements in accordance with PCAOB audit standards for its fiscal years ended December 31, 2018, 2019 and 2020; (3) Calculated as (Adjusted EBITDA – CapEx) / Adjusted EBITDA; (4) EBITDA and Adjusted EBITDA are non - GAAP metrics. Adjusted EBITDA is calculated as EBITDA adjusted for certain items, including non - cash compensation expense, fees related to customer acc ount receivable finance programs and one - time or other non - recurring expenses (such as legal expenses and other fees and expense s related to the proposed business combination). These metrics are not meant as an alternative for net income (loss) or any oth er items calculated in accordance with GAAP; ( 5 ) Pro forma ownership (i) includes approximately 17.6 million RSUs expected to be awarded to Roger Dahle with annual cliff vesting over a 7 year period commencing on the third anniversary of the consummation of the proposed business co mbi nation, and (ii) assumes downside protection feature is not triggered, see p.39 for further details and assumptions. 1 2 3 4 5 6 7 Created the category of at - home outdoor griddle cooking that is expected to continue to grow rapidly Blackstone is an enthusiast brand that the Company believes is synonymous with the griddle category Leading category innovation with strong future pipeline of new products and features Deep relationships with key retailers across channels Strong historical top - line growth and high cash generation Attractive future growth prospects driven by strategic initiatives, such as increasing market penetration and expanding internationally Dedicated management team led by founder Roger Dahle 12 76% Of customers (and aware non - customers) have positive brand impression 80% Of U.S. griddle market share 24 Patents and 31 additional patents pending 87% Of 2020 net revenue from customers of >5 years 72% 2016 – 2020 net revenue CAGR 2 37% 2021E – 2024E n et r evenue CAGR 13 Years spent by Roger Dahle at the helm 620K + Followers across major social media platforms 2x Growth of griddle market share of total outdoor cooking category 2019 – 2023E 5 New product lines in development, with enhancements planned for numerous existing lines 50%+ Of Walmart outdoor cooking category shelf - space 1 98% 2020 cash conversion 2,3,4 ~17% 2024E adjusted EBITDA margin 4 45% Roger Dahle pro forma ownership 5 Dominant Position in Rapidly Growing Griddle Category Lifestyle Brand with Passionate and Engaged Consumer Community Driver of New Product Development Proven Go - to - Market Strategy Strong Historical Financial Performance Significant White Space for Growth Founder - Led Management Team

2 BUSINESS OVERVIEW

MEET BLACKSTONE The leading griddle brand that is redefining the outdoor cooking experience 14

Source: Company information. | ( 1 ) Projected attachment rate in 2022E. We believe that Blackstone has a m arket leading griddle portfolio complemented by a broad range of higher - margin branded accessories and consumables BROAD AND HIGH QUALITY PRODUCT PORTFOLIO 15 75% of 2021E Net Revenue Gross Margin: ~17% Gross Margin: ~31% Gross Margin: ~22% 4 % of 2021E Net Revenue 21% of 2021E Net Revenue $343M 2021E Net Revenue $96M 2021E Net Revenue $19M 2021E Net Revenue

2008+ 2018 2018 2019 2020 2020 2021 16 Source: Company information . | Note: OTG, RV / Camp and Culinary Pro product lines not shown. GROWING PREMIUMIZATION OF PRODUCT PORTFOLIO The original, classic line of Blackstone griddles designed for the outdoor lifestyle indulgent The on - the - go, portable and travel - light version, ready for anything, anywhere; built for the outdoors and beyond Designed as the perfect home base companion to the world traveler and enthusiast The family - friendly edition, with a little something for everybody and versatile use across your food Built for the culinary artiste, with a bevvy of additional features for the full chef experience For the adventurous, family - oriented millennial who needs both a quick weekday meal and a weekend BBQ Age : ~50 Yearly Income: $50k Family Size: ~4 TARGET CUSTOMER Age : ~35 Yearly Income: $60k Family Size: ~3 Age : ~60 Yearly Income: $100k Family Size: ~6+ Age : ~40 Yearly Income: $70k Family Size: ~4 Age : ~ 55 Yearly Income: $85k Family Size: ~4 Age : ~40 Yearly Income: $80k Family Size: ~3 PRICE RANGE Created to bring the outdoor griddle cooking style inside Age: ~45 Yearly Income: $85k Family Size: ~5 $149 - $447 $79 - $199 $379 - $597 $329 - $815 $ 139 - $699 $699 - $999 $149 - $ 259 Expanding griddle portfolio with increasing premium offering and broadening customer base KEY RETAILERS

Source: Company information. Original content, live events, branded channels, social media – all working together to create excitement and community around a fresh cooking experience A NEW COOKING PLATFORM THAT’S IGNITING A MEDIA MOVEMENT 17 Original Content For a fun new way to cook Branded Channels Expanding digital distribution to go directly to our audience Live Events Building excitement while creating community Social Media An energized digital community hungry for content > 1.5 million Griddle g roup members > 140 thousand Blackstone followers > 4 9 0 million #blackstone views > 100 thousand Blackstone subscribers

FAVORABLE BRAND EQUITY POSITIONING Source: Company information and Burshek Research & Consulting . | (1) Based on the survey question to Blackstone’s core target market: “Rate each of the following brands for how distinct they are in the outdoor cooking appliance category ”; (2) Based on the survey question to Blackstone’s core target market: “Rate each of the following brands for how much they define the outdoor cooking appliance category.” Enthusiast brand with high distinctiveness and centrality versus peers 2021 Brand Perception Key Brands in the Category Category Portability Power / Heat Griddle Portable + Fixed Gas, Electric Smoker Fixed Electric Grill, Smoker Portable Gas, Charcoal Griddle, Smoker Portable Gas, Electric Griddle Ultra - Portable Gas Grill, Smoker Fixed Gas, Charcoal, Electric Griddle, Grill, Smoker Portable Gas, Charcoal, Electric Centrality 2 18 Weber Coleman Traeger Pit Boss NexGrill Camp Chef “Unconventional” “Aspirational” “Peripheral” “Mainstream” Distinctiveness 1

Product Ease of Use Speed of Cook Meals Breakfast Lunch Dinner GRIDDLE x x x GAS GRILL - x x CHARCOAL GRILL - x x SMOKER - - x Source: Company information. | Note: Illustrative comparative assessment. WHY THE GRIDDLE? x Convenient and easy to use x Fast and fun x Simple to clean, fewer dishes x Cooks the largest variety of food x Versatile (3 meals/day , 365 days/year = 1,095 meals) x Communal x Portable 19 = hardest / longest = easiest / fastest

$67 $109 $153 $293 $262 $292 6 $363 $546 n.a. $704 $715 $881 2017 2018 2019 2020 DISRUPTIVE GRILLING METHODS EXPECTED TO DRIVE MARKET GROWTH Source: Company information, broker research, filings and Burshek Research & Consulting. | (1) Reflects 2018 to 2020 net revenue CAGR ; (2) Per Weber S - 1 filing, represents Weber U.S. market share of outdoor cooking market; (3) Includes Americas net sales only; (4) Net revenue for respective fiscal years ended September 30; (5) Per Burshek Research & Consulting studies. For Traeger, represent s e stimated market share of U.S. pellet grill category. For Blackstone, represents estimated market share of U.S. griddle catego ry; (6) Per Wall Street research; (7) Derived from the Company’s financial statements audited pursuant to GAAP in accordance with private co mpany audit standards. The Company is in process of completing an audit of its financial statements in accordance with PCAOB aud it standards for its fiscal years ended December 31, 2018, 2019 and 2020. Evolution of U.S. Outdoor Cooking Market Key Peers Net Revenue Evolution ($M) Early market dominated by traditional gas and charcoal grills Increasing penetration of new outdoor cooking methods: first pellet grills, now griddles 20 23% 50% 92% Griddle market following similar trajectory to pellets, with Blackstone driving the growth 60% 50% 43% 30% 20% 15% 10% 7% 6% 15% 20% 8% 16% 2005 - 2014 2019 2023E 23% 2 54% 5 80% 5 Griddle Pellet Grill Other Charcoal Grill Gas Grill Weber 3,4 Traeger Blackstone 7 12% 1 28% 63%

Source: Company information. Defensible market position driven by first mover advantage and intellectual property portfolio TECHNOLOGY MEETS INNOVATION Blackstone holds 24 registered patents with a further 31 pending (which the Company believes is by far the most in the griddle category ) Blackstone believes that its dedicated in - house product development team continues to drive category innovation, with a long pipeline of new products and features Demonstrated First Mover Advantage Blackstone believes that it created the griddle market and continues to lead on innovation 21 Rear Grease Management System Gas & Electric Air Fryers Side Shelf Cutout

Ongoing innovation focused on product premiumization and increasing average ticket size CURRENT INNOVATION PIPELINE 22 Multiple additional products and features in early stages of development Existing Product Innovation New Product Introductions Adjacent Product Innovation Market Expansion Enhance existing portfolio with new technology, functionality and aesthetics Expand product portfolio into premium, higher price products Supplement griddles with range of products to drive recurring revenue and higher margins Leverage market leading griddle technology and experience to expand product range into alternative uses Design Updates Pizza Ovens E - Series Consumables Commercial / Food Service Accessories Technology Source: Company information.

DEEP CUSTOMER RELATIONSHIPS ACROSS MULTIPLE CHANNELS Long - standing relationships with the key retailers Penetration of Largest Retailers Unique Access to the Broader Channel Set Major Outdoor Cooking Market Retailers Independent & Club Retailers Specialist Retailers & Others (% of 2020 Net Revenue) 23 (% of 2020 Net Revenue by Customer Tenure) ~75% of Net Revenue ~15% of Net Revenue ~10% of Net Revenue 5+ years 2 5+ 5+ 4 5+ 3 4 5+ 5+ 2 5+ 4 5+ 2 2 5+ 2 5+ 5+ 3 4 3 4 5+ (# Years Relationship) Top Customer 57% Top 2 - 5 Customers 23% DTC 5% Other 15% <5 Years 13% >5 Years 87% Source: Company information.

Identified and actionable opportunities to grow domestically and internationally PILLARS OF GROWTH STRATEGY Further Market Penetration ▪ Continue to grow awareness of griddle cooking and the Blackstone brand ▪ Further penetrate the addressable market International Expansion ▪ Expand into new international markets across Europe, Asia and Latin America ▪ Leverage broad multi - cultural appeal of griddle cooking ▪ Build on demonstrated demand 24 New Product Development Exclusive Lines Product Segments Premium Lines Customer Segments Mobile Lines ▪ Extend product line based on new technologies and designs ▪ Develop higher ticket and / or margin products, such as pizza ovens and additional accessories and consumables ▪ Leverage digital customer engagement to increase proportion of DTC sales ▪ Further own and deepen relationships with the end - user Direct - To - Consumer

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Broilmaster Dyna Glo Camp Chef Blue Rhino Broil King Green Egg BBQ Pro CharGriller Traeger Pit Boss Cuisinart Coleman Char-Broil Weber Own Now Owned in past Aware, never used Never heard of it 25 Source: Company information and Burshek Research & Consulting. Significant scope to increase market penetration due to relatively low brand awareness but high buying propensity FURTHER MARKET PENETRATION Building market awareness is critical to future growth 65 % of “aware” non - owners express very high buying propensity vs. only 23% of “unaware” non - owners

0.0 0.5 1.0 1.5 2.0 2019 2020 2021 0.0 0.2 0.4 0.6 0.8 2019 2020 2021 53% of consumers search Amazon first when purchasing products digitally 2 Blackstone users gather in larger numbers than comparable online communities Blackstone’s social following is growing at a rapid pace SCALE, MOMENTUM AND ENGAGEMENT Source: Dynata, Helium10, Rival IQ and Facebook. | (1) Rival IQ Follower Growth Combined for Twitter , Facebook, Instagram, YouTube and TikTok from August 5, 2019 to September 2, 2021; (2) ChannelAdvisor as cited in company blog conducted by Dynata, October 9, 2020; (3) Helium10 Data Estimated Monthly Amazon Search Volume for Blackstone, Blackstone Griddle, Traeger, Traeger Grill, Traeger Smoker, Weber and Weber Grill from August 28, 2020 to August 27, 2021; (4) Combined Top 10 organically created Facebook user group members per brand as of September 6, 2021. Blackstone is an enthusiast brand with highly engaged user communities 26 Search Volume Illustrates Potential Demand Strong Social Media Growth 1 Highly Active & Engaged Social Communities Amazon Searches 3 1,528,000 505,000 323,000 Organic User Group Members 4

Source: Company information, Weber S - 1 filing and Traeger S - 1 filing. | (1) Europe, Middle East and Africa; (2) Asia - Pacific. We believe that the griddle has greater international compatibility and consumer awareness than other outdoor cooking methods INTERNATIONAL EXPANSION 27 Griddling seen as natural method of cooking for large groups and entertainment Americas 58% EMEA 1 and APAC 2 42% North America 97% International 3% North America >99% International <1% North America ~75% International ~25% 2021E Target EMEA 1 APAC 2 Mexico South America

INTRODUCTION TO XIAMEN COWELL Source: Company information. | (1) Pro forma ownership (i) includes approximately 17.6 million RSUs expected to be awarded to Roger Dahle with annual cliff vesting over a 7 year period commencing on the third anniversary of the consummation of the proposed business combination, and (ii) assumes downside protection feature is not triggered, see p.39 for further details and assumptions. Long - standing relationship with key supplier 28 Fugang Fugang Facility Map

SUPPLY CHAIN EVOLUTION 29 2021 Future KEY ACTIONS We plan to further diversify our supplier base geographically, including further manufacturing in the U.S. Other Other KEY OBJECTIVES x Reduce supplier costs / increase margins x Reduce tariffs / geopolitical risk x Increase production capacity x Increase supplier diversification Source: Company information.

FOUNDER - LED MANAGEMENT TEAM Passionate management team that is invested in the Company’s long - term future ROGER DAHLE Founder & CEO MIKE MOSER Vice President, Operations PERRY JENSEN Vice President, Sales SCOTT STEVENSON Vice President, Marketing 30 JAMES MCCORMICK Chief Financial Officer Other Key Management Department Count Accounting and Finance 12 Administrative Services 3 Customer Service and HR 20 Executive 10 Information Technology 3 Operations 73 Research and Development 24 Sales and Marketing 34 Total 179 Full - time (165) and Part - time (14) Employees Source: Company information.

Note: Expected Board of Directors to become effective at the closing of the proposed business combination . | (1) Janet Lamkin is the spouse of William Lamkin, a member of the Board of Directors of Ackrell SPAC Partners I Co. SIGNIFICANT INDUSTRY, FINANCIAL & PUBLIC COMPANY BOARD EXPERIENCE ROGER DAHLE 31 BRADLEY JOHNSON FRED BECK Founder & CEO of Blackstone Products Has led Blackstone from founding to net revenue of over $400M. Previous positions include CEO of Cache Sales, VP of Sales for Icon Health & Fitness (now iFIT) and National Sales Manager for Johnson & Johnson. Significant leadership experience at prominent outdoor and retail companies Previous positions include CFO & CAO at Recreational Equipment Inc. (REI), CFO at Cornerstone Brands, CFO & CAO at Lands’ End and CFO, Controller & VP Operations at Wilsons The Leather Experts Over 30 years experience as a CFO Former CFO & Treasurer at ICON Health & Fitness (now iFIT), leading the business from a domestic wholesale company to an international leader with approximately $700M revenue MIKE ACKRELL Founder of Ackrell Capital Chairman at Ackrell SPAC Partners I Co. Previous positions include Sr. Managing Director, U.S. Tech Investment Banking at ABN AMRO, Head of Investment Banking at WR Hambrecht+Co and Senior VP at Donaldson, Lufkin & Jenrette. JANET LAMKIN 1 Extensive senior executive experience leading cross - functional teams Senior VP, Market and Community Innovation at United Airlines. Previous positions include President, California at United Airlines, President, California at Bank of America and CEO at the California Bankers Association. DENISE GARNER Significant experience in the consumer products industry, leading global R&D and innovation for a Fortune 500 company More than a 25 year career at The Clorox Company. Currently Senior VP, Chief Innovation Officer. Past management positions across R&D, product supply and product c ommercialization and across various product categories. SHAWN LEE President of Cowell Group President of Cowell Group since 2015 . Substantial supply chain experience and has led Cowell in significantly growing its production capacity for outdoor cooking products and fitness equipment. Board member of North Atlantic Imports, LLC.

3 FINANCIALS

97% 93% 76% 98% 89% 2016 2017 2018 2019 2020 LTM $33 $67 $109 $153 $293 $455 2016 2017 2018 2019 2020 LTM HISTORICAL FINANCIAL PROFILE Proven track record of net revenue growth and cash generation, with a 72% net revenue CAGR 2016 – 2020 33 Net Revenue ($M) and % YoY Growth 1 Gross Profit ($M) and % Margin 1 Adjusted EBITDA 4 ($M) and % Margin 1 Free Cash Flow Conversion 1,4,5 (%) 92% 103% 62% 40% 92% 24% 29% % % 20% 14% 16% NM % 11% Average 6 : 91% % 12% 2016 – 2020 CAGR: 65% 2016 – 2020 CAGR: 72% 2016 – 2020 CAGR: 65% Source: Company information. | (1) Except LTM, derived from the Company’s financial statements audited pursuant to GAAP in accordance with pr iva te company audit standards. The Company is in process of completing an audit of its financial statements in accordance with PCAOB audit standards for its fiscal years ended December 31, 2018, 2019 and 2020; (2) Cost of goods sold in 2018 and 2019 in clu des approximately $9.6M and $3.7M , respectively, related to extraordinary supplier price increases implemented in Q1 2018. Cost of goods sold in 2019 also includes approximately $ 1.0M related to non - recurring freight fees; (3) As of November 30, 2021; (4) EBITDA and Adjusted EBITDA are non - GAAP metrics. Adjusted EBITDA is calculated as EBITDA adjusted for certain item s, including non - cash compensation expense, fees related to customer account receivable finance programs and one - time or other non - recurring expenses (such as legal expenses and other fees and expenses related to the proposed business combination). These metrics are not meant as an alternative for net income (loss) or any other items calculated in accordance with GAAP. EBITDA and Adjusted EBIT DA in 2018 and 2019 are not adjusted for approximately $9.6M and $3.7M , respectively, related to extraordinary supplier price increases implemented in Q1 2018. See p.56 for reconciliation from Net Income to Adjusted EBITDA; (5) Calculated as (Adjusted EBITDA – CapEx) / Adjusted EBITDA; (6) Excludes 2018. NM $5 $11 ($2) $4 $33 $55 2016 2017 2018 2019 2020 LTM $8 $20 $11 $25 $60 $91 2016 2017 2018 2019 2020 LTM

$49 $87 $88 $69 $100 $139 $102 $117 Q1 Q2 Q3 Q4 Source: Company information. | Note: Fiscal year ended December of each respective year. (1) Total net revenue includes 2020 act ual and 2021 actual or budget as presented. Blackstone has demonstrated strong momentum in 2021 with net revenue up 62% year on year through November 30 th Limited sales seasonality as Blackstone griddles have extended the traditional outdoor cooking season STRONG MOMENTUM IN 2021 34 20% 30% 25% 25% % Total Net Revenue 1 : Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec - - - National Griddle Week Memorial Day Father’s Day 4 th of July - Labor Day - Black Friday Christmas 2020 Actual 2021 Actual 2021 Budget +105% +60 % +16 % +69 % YoY Growth:

$458 $608 $839 $1,168 2021E 2022E 2023E 2024E $92 $132 $208 $307 2021E 2022E 2023E 2024E $58 $81 $131 $196 2021E 2022E 2023E 2024E Net Revenue ($M) and % YoY Growth PROJECTED FINANCIAL PROFILE Source: Company information. | (1 ) EBITDA and Adjusted EBITDA are non - GAAP metrics. Adjusted EBITDA is calculated as EBITDA adjusted for certain items, including non - cash compensation expense, fees related to customer account recei vable finance programs and one - time or other non - recurring expenses (such as legal expenses and other fees and expenses related to the proposed business combination). These metrics are not meant as an alternative for net income (loss) or any other items calculated in accordance with GAAP. 35 56 % 33 % 38 % 39 % 20 % 22 % 25 % 26 % 13% 13 % 16% 17 % 2021E – 2024E CAGR: 37% Gross Profit ($M) and % Margin Adjusted EBITDA 1 ($M) and % Margin By 2024E, net revenue expected to be $1B + with adjusted EBITDA 1 approaching $200M 2021E – 2024E CAGR: 49% 2021E – 2024E CAGR: 50%

13% 13% 17% 8% 10% 12% 14% 16% 18% 2021E 2022E 2024E PATH TO MARGIN EXPANSION Source: Company information. | (1) EBITDA and Adjusted EBITDA are non - GAAP metrics. Adjusted EBITDA is calculated as EBITDA adjusted for certain items, including non - cash compensation expense, fees related to customer account recei vable finance programs and one - time or other non - recurring expenses (such as legal expenses and other fees and expenses related to the proposed business combination). These metrics are not meant as an alternative for net income (loss) or any other items calculated in accordance with GAAP. Adjusted EBITDA 1 margin expected to reach ~17% by 2024E 36 Adjusted EBITDA 1 Margin Evolution Gross Margin Expansion Operating Leverage

Source: Company information. | (1 ) EBITDA and Adjusted EBITDA are non - GAAP metrics. Adjusted EBITDA is calculated as EBITDA adjusted for certain items, including non - cash compensation expense, fees related to customer account recei vable finance programs and one - time or other non - recurring expenses (such as legal expenses and other fees and expenses related to the proposed busines s combination). These metrics are not meant as an alternative for net income (loss) or any other items calculated in accordance with GAAP . Vision to be a leading outdoor cooking company with a brand that resonates around the world THE BLACKSTONE OF TOMORROW TARGET 2021E Net Revenue ($M) $458M $2,000M+ Gross Margin (%) 20% ~35% Adjusted EBITDA 1 Margin (%) 13% ~22% International Sales (% of Net Revenue) <1% ~25% Direct - to - Consumer (% of Net Revenue) <5% ~10% Accessories & Consumables (% of Net Revenue) 25% ~30% Total Cooking Units Sold per Year 2.5M 10M+ Average Revenue / Cooking Unit Sold $139 $180+ 37

Public Shareholders 18% Sponsor Founders & Others 4 7% PIPE 4% Cowell 26% Roger Dahle 45% TRANSACTION OVERVIEW Source: Company information. | Note: Ackrell Capital, LLC (“Ackrell Capital”) is acting as sellside advisor and Nomura Securities International, Inc. (“Nomura”) is acting as buyside advisor in the proposed business combination. Nomura and Barclays Capital Inc. are acting as co - lead placement agents on the PIPE transaction . Michael K. Ackrell is the Chairman of Ackrell SPAC Partners I Co. and the founder and Chief Executive Officer of Ackrell Ca pit al. Does not include warrants. Assumes no redemptions . Includes transfer of 0.267 million shares from the SPAC Sponsor and existing Blackstone shareholders to PIPE investors. Up to 2.464 million common shares (1.040 million shares from the SPAC Sponsor and 1.424 million shares from the shares being issued as merger consideration to Blackstone’s existing shareholders) shall be held in escrow and used to provide a limited guarantee of the post - closing stock price to certain PIPE investors who sign an extended anti - hedging anti - shorting agreement and are still holding their shares at the end of the ap plicable guarantee period if the stock price is below $10.00 at such time (which we refer to as the “downside protection feature”). For the avoidance of doubt, no new shares wi ll be issued, and such limited guarantee will cause no change to the Company’s pro forma share count. Final amount of PIPE Investment and Convertible Note subject to change. ( 1 ) EBITDA and Adjusted EBITDA are non - GAAP metrics. Adjusted EBITDA is calculated as EBITDA adjusted for certain items, including non - cash compensation expense, fees related to customer account receivable finance programs and one - time or other non - recurring expenses (such as legal expenses and other fees and expenses related to the proposed business combination). These metrics are not meant as an alternative for net income (loss) or any other items calculated in accordance with GAAP; (2) Excludes option pool and warrants; (3) Pro forma ownership (i) includes approximately 17.6 million RSUs expected to be awarded to Roger Dahle with annual cliff vesting over a 7 year period commencing on the third anniversary of the consummation of the proposed business combination, and (ii) assumes downside protection feature is not triggered; (4) Includes Sponsor Founders, Private Units, Underwriter Rep Shares and Ackrell Capital Shares. Transaction Summary Estimated Sources & Uses ($M) Pro Forma Valuation 1 ($ M, Except Per Share Data) Illustrative Pro Forma Ownership at $10.00 per Share 2,3 39 Sources of Funds SPAC Cash in Trust $139 PIPE Investment 31 Convertible Note 111 Total Proceeds Available 281 Blackstone SHs Rollover Equity 559 Other Equity Roll 4 56 Total Sources $896 Uses of Funds Cash to Cowell International $150 Blackstone SHs Rollover Equity 559 Total Value to Blackstone SHs 709 Other Equity Roll 4 56 Cash to Balance Sheet 95 Fees & Expenses 37 Total Uses $896 Pro Forma Shares Outstanding (M) 78.3 Illustrative Share Price $10.00 Pro Forma Equity Value $783 Estimated Cash on Balance Sheet at Closing (95) Estimated Debt on Balance Sheet at Closing 211 Implied Pro Forma Enterprise Value $900 Pro Forma EV / 2022E Revenue 1.5x Pro Forma EV / 2023E Revenue 1.1x Pro Forma EV / 2022E Adjusted EBITDA 11.1x Pro Forma EV / 2023E Adjusted EBITDA 6.9x Total Debt / 2021E Adjusted EBITDA 3.6x Net Debt / 2021E Adjusted EBITDA 2.0x

6.9x 12.7x 12.9x 11.2x 10.0x 10.8x 11.0x 61.2x 22.4x 19.7x 19.2x 15.9x 14.0x 11.1x 17.6x 14.4x 13.5x 15.3x 12.1x 13.1x n.m. 2 26.3x 22.4x 21.2x 21.0x 18.5x PUBLIC COMPARABLES – VALUATION BENCHMARKING Source: Company information and Factset as of December 17, 2021. | Note : Financials calendarized to December year end . ( 1 ) EBITDA and Adjusted EBITDA are non - GAAP metrics. Adjusted EBITDA for Blackstone is calculated as EBITDA adjusted for certain items, including non - cash compensation expense, fees related to customer account receivable finance programs and one - time or other non - recurring expenses (such as legal expenses and other fees and expenses related to the proposed business combination). These metrics are not meant as an alternative for net income (loss) or any other items calculated in accordance with GAAP ; (2) Negative adjusted EBITDA in 2022E; (3) Capitalization and financials shown on an IFRS 16 basis. EV / 2022E Adjusted EBITDA 1 (x) EV / 2023E Adjusted EBITDA 1 (x) Consumer Enthusiast Goods Core Outdoor Cooking BLACKSTONE DISCOUNT: n.m. 2 ( 51 %) ( 48 %) (47%) (40%) Core Outdoor Cooking BLACKSTONE DISCOUNT: ( 89 %) ( 65 %) (64 %) ( 57 %) ( 5 1 %) Current At IPO Current At IPO ( 37 %) ( 28 %) ( 23 %) ( 8 %) (18 %) ( 46 %) ( 32 %) ( 39 %) MEDIAN: 19.4x MEDIAN: 21.2x ( 47 %) ( 36 %) ( 58 %) ( 69 %) Consumer Enthusiast Goods 3 3 40 (16 %) ( 38 %)

16% 17% 17% 25% 4% 10% 22% 24% 26% 24% 13% 14% 16% 31% (3%) 8% 21% 23% 25% 25% 35% 24% 6% 34% 22% 24% 11% 15% 17% 5% 73% 46% 22% n.a . 87% 41% 31% 24% 24% 21% PUBLIC COMPARABLES – OPERATIONAL BENCHMARKING Source: Company information and Factset as of December 17, 2021. | Note : Financials calendarized to December year end. (1 ) EBITDA and Adjusted EBITDA are non - GAAP metrics. Adjusted EBITDA for Blackstone is calculated as EBITDA adjusted for certain items, including non - cash compensation expense, fees related to customer account receivable finance programs and one - time or other non - recurring expenses (such as legal expenses and other fees and expenses related to the proposed business combination). These metrics are not meant as an alternative for net income (loss) or any other items calculated in accordance with GAAP; (2) C apitalization and financials shown on an IFRS 16 basis. Net Revenue CAGR (%) 2019 – 2021E Net Revenue CAGR 2021E – 2023E Net Revenue CAGR 2021E Adjusted EBITDA 1 Margin Core Outdoor Cooking Consumer Enthusiast Goods 2023E Adjusted EBITDA 1 Margin MEDIAN: 16% Adjusted EBITDA 1 Margin (%) MEDIAN: 24% MEDIAN: 28% MEDIAN: 33% MEDIAN: 16% MEDIAN: 22% MEDIAN: 17% MEDIAN: 23% 2 41

SIGNIFICANT POTENTIAL UPSIDE BASED ON PEER VALUATIONS Source: Company information. | (1 ) EBITDA and Adjusted EBITDA are non - GAAP metrics. Adjusted EBITDA is calculated as EBITDA adjusted for certain items, including non - cash compensation expense, fees related to customer account recei vable finance programs and one - time or other non - recurring expenses (such as legal expenses and other fees and expenses related to the proposed business combination). These metrics are not meant as an alternative for net income (loss) or any other items calculated in accordance with GAAP. Implied Future EV Based on Peer Multiples ($M) Summary of Approach Sensitivity Analysis – 2023E Adjusted EBITDA 1 ($M) ▪ Applies an EV / Adjusted EBITDA 1 multiple of 13.5x to 21.0x to Blackstone 2023E a djusted EBITDA 1 to calculate an implied future enterprise value as of December 2022 ▪ Future enterprise value discounted back to December 2021 to estimate the present value ▪ Applied range of multiples is based on comparable company analysis Core Outdoor Cooking Peers Consumer Enthusiast Peers 42 71% Upside 122% Upside 1 66% Upside $900 $1,541 $1,998 $2,397 Initial Transaction Value (11.1x 2022E Adjusted EBITDA) PV of Future EV (13.5x) PV of Future EV (17.5x) PV of Future EV (21.0x) 2022E Adjusted EBITDA 1 $81 Transaction Multiple 11.1x Transaction Enterprise Value $900 2023E Adjusted EBITDA 1 $131 Illustrative Forward Multiple 13.5x Future Enterprise Value (@ Dec. '22) $1,772 % Total Return (Through Dec. '22) 97% Illustrative Discount Rate 15.0% PV of Future Enterprise Value (@ Dec. '21) $1,541 % Upside to Original Transaction 71%

01 Dominant Position in Rapidly Growing Griddle Category 02 Lifestyle Brand with Passionate and Engaged Consumer Community 03 Driver of New Product Development 04 Proven Go - to - Market Strategy 05 Strong Historical Financial Performance 06 Significant White Space for Growth 07 Founder - Led Management Team 44

6 APPENDIX A

46 RISK CONSIDERATIONS All references to the “Company,” “we,” “us” or “our” refer to the business of North Atlantic Imports, LLC d/b/a Blackstone Pr odu cts. The risks presented below are certain of the general risks related to the business of the Company, and such list is not exh austive. Additional risks not presently known to us or that we currently believe are not material may also significantly affect our bu sin ess, financial condition, results of operations or reputation. Our business could be harmed by any of these risks. The list b elo w has been prepared solely for purposes of the private placement transaction, and solely for potential private placement investors, and not for any other purpose. You should carefully consider these risks and uncertainties, and should carry out your own diligence a nd consult with your own financial and legal advisors concerning the risks and suitability of an investment in this offering before making an in vestment decision. Risks relating to the business of the Company will be disclosed in future documents filed or furnished by the Company and/or Ackrell SPAC Partners I Co. (“Ackrell”) with the United States Securities and Exchange Commission (“SEC”), including t he documents filed or furnished in connection with the proposed transactions between the Company and Ackrell. The risks presente d i n such filings will be consistent with those that would be required for a public company in their SEC filings, including with r esp ect to the business and securities of the Company and Ackrell and the proposed transactions between the Company and Ackrell, and may differ significantly from, and be more extensive than, those presented below. Risks Related to Our Operations and Industry ▪ Our business depends on maintaining and strengthening our brand and our reputation as a producer of high - quality goods in order to maintain and generate ongoing demand for our products, and any harm to our brand or reputation could result in a significa nt reduction in such demand which could have a material adverse effect on our business, financial condition and results of opera tio ns. ▪ Our ability to understand consumer preferences and to timely identify, develop, manufacture, market and sell products that me et customer demand significantly affects our business. ▪ Our results of operations could be materially harmed if we are unable to accurately forecast demand for our products and mana ge product inventory in an effective and efficient manner. ▪ We may be unable to execute our business objectives and growth strategies successfully or sustain our growth and, as a result , t his could have a material adverse effect on our operating results. ▪ Our growth depends, in part, on our continued penetration of the outdoor cooking market and expansion into additional markets , a nd we may not be successful in doing so. ▪ The outdoor cooking market is highly competitive, subject to pricing pressure and includes numerous other brands and retailer s t hat offer a wide variety of competitive products; if we fail to compete effectively, we could lose our market position. ▪ If our trademarks and trade names are not adequately protected, maintained and enforced, we may not be able to build and main tai n name recognition in our markets of interest and our competitive position may be harmed. ▪ Our business may fluctuate as a result of seasonality and changes in weather conditions. ▪ Our recent growth rates may not be sustainable or indicative of future growth and we expect our growth rate to slow. ▪ Although we experienced increased demand for our products during the COVID - 19 pandemic, we also experienced interruptions to our supply chain, which negatively impacted our ability to meet this increased demand, and there can be no assurance that this increased demand will continue in the future. ▪ Our net sales and profitability depend on the level of consumer spending for our products, which is sensitive to general econ omi c conditions and other factors that affect global markets; during a downturn in the economy, consumer purchases of discretion ary items are affected, which could have a material adverse effect on our business, financial condition and results of operations . ▪ If we fail to cost - effectively attract new customers or retain our existing customers, we may not be able to increase sales. ▪ Our business could be adversely affected if we fail to maintain product quality and product performance at an acceptable cost . ▪ Our estimated addressable market is subject to inherent challenges and uncertainties. If we have overestimated the size of ou r a ddressable market, our future growth opportunities may be limited. ▪ We may engage in merger and acquisition activities, which could require significant management attention, disrupt our busines s, dilute stockholder value and adversely affect our results of operations. ▪ Increases in labor costs, potential labor disputes and work stoppages or an inability to hire skilled sales, manufacturing an d o ther personnel could adversely affect our business. ▪ We rely on information technology systems to support our business operations. A significant disruption or breach of our techn olo gical infrastructure, or the technological infrastructure of our vendors or others with which we do business or rely on, coul d h ave a material adverse effect on our business, financial condition and results of operations. In addition, failure to maintain the sec urity of proprietary, personal, sensitive or confidential information could damage our reputation and expose us to litigation .

47 RISK CONSIDERATIONS – CONTINUED Risks Related to the Manufacturing, Supply and Distribution of Our Products ▪ A significant portion of our sales are to large, multi - national retail partners. If these retail partners cease to carry our cur rent products, choose not to carry new products that we develop or cease operations altogether, this could have a material ad ver se effect on our brand as well as our business, financial condition and results of operations. In addition, we depend on these retail part ner s to display and present our products to consumers, and our failure to maintain and further develop our relationships with ou r r etail partners could harm our business. ▪ We are exposed to concentration risk of heavy reliance on our major supplier for the supply of our products, and any shortage of , or delay in, the supply may significantly impact our business and results of operations. We depend on suppliers, including sin gle - source suppliers and, in a few cases, sole - source suppliers, to consistently supply us with finished goods, raw materials and co mponents for our products, and any failure to procure such finished goods, raw materials and components could have a material adverse effect on our business, product inventories, sales and profit margins. ▪ If our independent suppliers and manufacturing partners do not comply with ethical business practices or with applicable laws an d r egulations, our reputation, business and results of operations could be harmed. ▪ Because we rely on foreign suppliers and we intend to sell products in foreign markets, we are susceptible to numerous intern ati onal business risks that could increase our costs or disrupt the supply of our products. ▪ Fluctuations in the cost and availability of raw materials, equipment, labor and transportation could cause manufacturing del ays or increase our costs. ▪ Product manufacturing disruptions, particularly at the facilities of our primary supplier, including as a result of catastrop hic and other events beyond our control, could cause us to be unable to meet customer demand or increase our costs. ▪ Disruptions in our supply chain and other logistical factors affecting the distribution of our products could have a material ad verse effect on our business. ▪ Insolvency, credit problems or other financial difficulties that could confront our customers and retail partners could expos e u s to financial risk. ▪ We are subject to risks related to online payment methods. ▪ Social media platforms present risks and challenges that could cause damage to our brand and reputation as well as to our res ult s of operations. Risks Related to Government Regulation, Litigation and Intellectual Property Matters ▪ We may be negatively impacted by litigation and other claims, including intellectual property, product liability or warranty cla ims, and health and safety concerns, including product recalls, any of which could negatively impact our sales and expose us to litigation. ▪ If we are unable to obtain, maintain and enforce intellectual property protection for our products or if the scope of our int ell ectual property protection is not sufficiently broad, others may be able to develop and commercialize products substantially sim ilar to ours, and our ability to successfully commercialize our products may be compromised. ▪ We may become involved in lawsuits to protect or enforce our intellectual property rights, which could be expensive, time - consum ing and unsuccessful. ▪ Sales of counterfeit versions of our products, as well as unauthorized sales of our products, may adversely affect our reputa tio n, business, financial condition, results of operations and cash flows. ▪ Any claim of infringement, misappropriation or violation of another party’s intellectual property rights could cause us to in cur significant costs and to cease the commercialization of our products and services, which could have a material and adverse ef fe ct on our business, financial condition and results of operations. ▪ If we cannot license rights to use technologies on reasonable terms, we may not be able to commercialize new products in the fut ure. ▪ We may not be able to enforce our intellectual property rights throughout the world. ▪ If we are unable to protect the confidentiality of our trade secrets, this could have a material adverse effect on our busine ss, financial condition and results of operations. ▪ We may be subject to claims that our employees, consultants, advisors or independent contractors have wrongfully used or disc los ed alleged trade secrets or other confidential information of their current or former employers or other third parties or cla ims asserting ownership of what we regard as our own intellectual property or proprietary rights. ▪ Some of our products and services contain open source software, which may pose particular risks to our proprietary software, pro ducts and services in a manner that could have a material and adverse effect on our business, financial condition and results of operations. ▪ Our proprietary software may not operate properly, which could damage our reputation, give rise to claims against us or diver t a pplication of our resources from other purposes, any of which could harm our business. ▪ If we fail to comply with our obligations under license or technology agreements with third parties, we may be required to pa y d amages and we could lose license rights that are critical to our business. ▪ We collect, store, process and use personal and payment information and other customer data, which subjects us to regulation and other legal obligations related to privacy, information security and data protection. ▪ If we fail to comply with anti - corruption or economic sanction regulations, we could be subject to substantial fines or other pe nalties . ▪ We are subject to environmental, health and safety and consumer product laws and regulations, which could subject us to liabi lit ies, increase our costs or restrict our operations in the future. ▪ Climate change legislation, regulatory initiatives and litigation could result in increased operating costs or, in some insta nce s, adversely impact demand for our products .

48 RISK CONSIDERATIONS – CONTINUED General Risk Factors ▪ Our future success depends on the continuing efforts of our management team and key employees, and on our ability to attract and retain highly skilled personnel and senior management. ▪ We are subject to many hazards and operational risks that can disrupt our business, some of which may not be insured or fully co vered by insurance. ▪ We have a significant stockholder, which may limit our ability to influence corporate matters and may give rise to conflicts of interest. ▪ Our business could be adversely affected by an accident, a safety incident or a workforce disruption. ▪ Provisions in certain of the agreements governing our financing arrangements may result in cross - triggers in the warrant agreeme nt entered into between Ackrell and Continental Stock Transfer & Trust Company, including adjustments to the exercise price a nd redemption trigger price of the warrants that may discourage investments in our securities. Risks Related to Newco and Newco Common Stock Following the Business Combination ▪ The Ackrell Charter and the Newco A/R Charter requires, to the fullest extent permitted by law, that derivative actions broug ht in Ackrell’s or Newco’s name, as applicable, against their respective directors, officers, other employees or stockholders fo r b reach of fiduciary duty and other similar actions may be brought only in the Court of Chancery in the State of Delaware, which may hav e t he effect of discouraging lawsuits against Ackrell’s or Newco’s directors, officers, other employees or stockholders, as appl ica ble. ▪ Newco will incur increased costs as a result of operating as a public company, and its management will devote substantial time to c om pliance with its public company responsibilities and corporate governance practices. ▪ Anti - takeover provisions contained in the Newco A/R Charter and the Newco A/R Bylaws, as well as provisions of Delaware law, cou ld impair a takeover attempt. ▪ Claims for indemnification by Newco’s directors and officers may reduce Newco’s available funds to satisfy successful third - part y claims against Newco and may reduce the amount of money available to Newco. ▪ Future issuances of debt securities and equity securities may adversely affect us, including the market price of the Newco co mmo n stock and may be dilutive to existing stockholders. ▪ An active market for Newco’s securities may not develop, which would adversely affect the liquidity and price of Newco’s secu rit ies. ▪ Future sales, or the perception of future sales, by Newco or its stockholders in the public market following the Business Com bin ation could cause the market price for Newco common stock to decline. ▪ Newco’s failure to meet the continued listing requirements of Nasdaq could result in a delisting of its securities. ▪ Newco will qualify as an “emerging growth company” as well as a smaller reporting company within the meaning of the Securitie s A ct, and if Newco takes advantage of certain exemptions from disclosure requirements available to emerging growth companies or smaller reporting companies, this could make Newco’s securities less attractive to investors and may make it more difficult t o c ompare Newco’s performance with other public companies. ▪ Transfers of Newco’s securities utilizing Rule 144 of the Securities Act may be limited as a result of the Transaction involv ing a shell company, other than a business combination related shell company . Risks Relating to Newco’s Capital Requirements and Capital Structure ▪ Newco’s Convertible Notes to be issued and outstanding after consummation of the Business Combination may have a material adverse eff ec t on Newco’s financial results, result in the dilution of Newco’s stockholders and create downward pressure on the price of Newco common stock. ▪ Newco may not have the ability to raise the funds necessary to repurchase the Convertible Notes upon a fundamental change or repay th e Convertible Notes in cash at their maturity, and Newco’s future debt may contain limitations on our ability to pay cash upon conversion, redemption or repurchase of the Convertible Notes. ▪ Subject to the significant restrictions in Newco’s current debt agreements, Newco may still incur substantially more debt or take other actions that would diminish Newco’s ability to make payments on the Convertible Notes when due. ▪ Newco’s significant level of indebtedness could limit cash flow available for its operations, adversely affect its financial health a nd prevent it from fulfilling its obligations under the debt agreements. ▪ Newco’s Convertible Notes are subordinated to Newco’s senior indebtedness, including its ABL revolver and term loan. ▪ The documents governing Newco’s indebtedness, including the Convertible Notes, contain restrictive covenants that could have a material adverse effect on our b usiness operations by limiting Newco’s flexibility. ▪ To service Newco’s indebtedness, it will require a significant amount of cash, and if it is unable to meet its debt obligations through the cash f low generated by its operations, or, if necessary, future borrowing, Newco may not be able to make payments on its indebtedness.

49 RISK CONSIDERATIONS – CONTINUED Risks Relating to Ackrell, the Business Combination and Redemption ▪ The Sponsor, directors and officers of Ackrell have conflicts of interest in determining to pursue the business combination w ith the Company, since certain of their interests, and certain interests of their affiliates and associates, are different from o r in addition to (and which may conflict with) the interests of Ackrell’s stockholders. ▪ If the Business Combination’s benefits do not meet the expectations of investors, stockholders or financial analysts, the mar ket price of Newco’s securities may decline. ▪ Since Ackrell’s Sponsor, officers, directors and their respective affiliates will lose their entire investment in Ackrell if the Business Combination is not completed, they may have had a conflict of interest in identifying and selecting the Company for Ac krell’s initial business combination in order to close the Business Combination. ▪ The ability to execute Newco’s strategic plan could be negatively impacted to the extent a significant number of stockholders ch oose to redeem their subunits in connection with the Business Combination .

6 APPENDIX B

51 Source: Lowe’s press release dated October 12, 2021. “… Blackstone, Mechanix Wear, Stanley Black & Decker and Spyder were recognized as innovation partners of the year in the hardlines category.” Blackstone has been named one of the innovation partners of the year by Lowe’s BRAND RECOGNITION

52 Source: Company information. | (1) EBITDA and Adjusted EBITDA are non - GAAP metrics. These metrics are not meant as an alternative for net income (loss) or any othe r items calculated in accordance with GAAP. Significant beat expected to prior 2021E forecast based on continued strong demand and increased supply UPDATED FORECAST $422 $47 Net Revenue Adjusted EBITDA Prior Forecast as of Sept. 2021 Current Forecast $458 $58 Net Revenue Adjusted EBITDA $580 $75 Net Revenue Adjusted EBITDA $608 $81 Net Revenue Adjusted EBITDA 11.0% 12.9% 12.7% 13.3% ($ in millions) 2021E Budget 2022E Forecast 8.5% 24.9% 4.8% 8.1% % Increase vs. Prior Forecast

$20 $29 $40 Nov. 2020 Actual Nov. 2021 Budget Nov. 2021 Actual 53 Source: Company information . Blackstone’s net revenue in November came in significantly higher than budget and last year’s results NOVEMBER NET REVENUE SNAPSHOT + 97 % +35%

54 Source: Company information. | (1) EBITDA and Adjusted EBITDA are non - GAAP metrics. These metrics are not meant as an alternative for net income (loss) or any othe r items calculated in accordance with GAAP. Blackstone meaningfully outperformed its prior year results for November – and recorded its highest Adjusted EBITDA 1 month ever NOVEMBER FINANCIAL SNAPSHOT ($ in millions, unaudited) 2021 2020 Amount % Net Revenue $40 $20 $19 97% $455 Gross Profit $11 $2 $9 392% $91 Gross Margin 28.3% 11.3% 20.1% Adjusted EBITDA 1 $9 ($0) $9 NM $55 Adjusted EBITDA Margin 1 21.8% (0.8%) 12.0% Month Ended Nov. 30, YoY Increase LTM as of Nov. 30, 2021

55 Source: Company information. | Note: The Company files federal and state income tax returns as a Limited Liability Company where by the tax attributes of income, gains, losses, deductions and credits are passed through to the Company’s members in proportion to their individual capital accounts. As such, no provision for income taxes or deferred income taxes are presente d i n the historical financials ; LTM financials include 2020 audit adjustments. (1) EBITDA and Adjusted EBITDA are non - GAAP metrics. These metrics are not meant as an alternative for net income (loss) or any other items calculated in accordance with GA AP; (2) Includes legal and professional services fees related to the proposed business combination. NOVEMBER ADJUSTED EBITDA RECONCILIATION ($ in '000s, unaudited) 2021 2020 Net Income $7,601 ($1,280) $50,570 Net Interest Expense 752 148 1,658 Depreciation and Amortization 99 40 1,013 EBITDA 1 $8,452 ($1,092) $53,242 Adjustments: Business Transformation Fees 2 124 18 1,939 One-Time Termination Cost - - 225 Non-Operating (Income)/Expenses 44 919 (647) Adjusted EBITDA 1 $8,620 ($155) $54,758 Adjusted EBITDA Margin 1 21.8% (0.8%) 12.0% Month Ended Nov. 30, LTM as of Nov. 30, 2021

56 Source: Company information. | Note: The Company files federal and state income tax returns as a Limited Liability Company whereby the tax attributes of income, g ain s, losses, deductions and credits are passed through to the Company’s members in proportion to their individual capital accounts. As such, no provision for income taxes or deferred income taxes are presented in the historical financials. (1 ) As of November 30, 2021, includes 2020 audit adjustments; (2) Except LTM, derived from the Company’s financial statements audited pursuant to GAAP in accordance with private company audit standards. The Company is in process of completing an audit of its financial st atements in accordance with PCAOB audit standards for its fiscal years ended December 31, 2018, 2019 and 2020; (3) EBITDA and Adjusted EBITDA are non - GAAP metrics. These metrics are not meant as an alternative for net income (loss) or any other items calculated in accordance with GAAP; (4) Includes legal and professional services fees related to the proposed business combination; (5 ) EBITDA and Adjusted EBITDA in 2018 and 2019 are not adjusted for approximately $9.6M and $3.7M , respectively, related to extraordinary supplier price increases implemented in Q1 2018; (6) Calculated as (Adjusted EBITDA – CapEx) / Adjusted EBITDA. HISTORICAL ADJUSTED EBITDA RECONCILIATION ($ in 000s) 2016 2017 2018 2019 2020 LTM1 Net Income2 $4,481 $10,800 ($3,936) $1,075 $31,038 $50,570 Net Interest Expense - 106 956 1,404 1,577 1,658 Depreciation and Amortization 47 67 197 358 727 1,013 EBITDA3 $4,528 $10,972 ($2,783) $2,836 $33,341 $53,242 Adjustments: Business Transformation Fees4 - - - - 398 1,939 One-Time Termination Cost - - - - 225 225 Non-Recurring Legal Expenses - 42 394 - - - Non-Operating (Income)/Expenses (0) (2) (74) 134 (568) (647) Non-Recurring Freight Fees - - - 1,039 - - Adjusted EBITDA3,5 $4,528 $11,012 ($2,463) $4,009 $33,395 $54,758 Adjusted EBITDA Margin3 13.7% 16.4% NM 2.6% 11.4% 12.0% CapEx (127) (763) (457) (944) (723) (5,843) Free Cash Flow $4,401 $10,249 ($2,921) $3,065 $32,673 $48,916 Free Cash Flow Conversion6 97% 93% NM 76% 98% 89%

$17 $23 $43 $384 $422 Oct. 2020 Actual Oct. 2021 Budget Oct. 2021 Actual YTD Oct. 2021 Actual 2021 Full Year Budget 57 Source: Company information. | Note: (1) Budget as of November 14, 2021. Blackstone’s net revenue in October came in significantly higher than budget and last year’s results OCTOBER NET REVENUE SNAPSHOT +148% +85% (1)

58 Source: Company information. | (1) EBITDA and Adjusted EBITDA are non - GAAP metrics. These metrics are not meant as an alternative for net income (loss) or any othe r items calculated in accordance with GAAP. Blackstone meaningfully outperformed its prior year results for October OCTOBER FINANCIAL SNAPSHOT ($ in millions, unaudited) 2021 2020 Amount % Net Revenue $43 $17 $26 148% $436 Gross Profit $9 $4 $5 131% $82 Gross Margin 20.3% 21.8% 18.9% Adjusted EBITDA 1 $6 $1 $4 314% $46 Adjusted EBITDA Margin 1 13.2% 7.9% 10.6% Month Ended Oct. 31, YoY Increase LTM as of Oct. 31, 2021

59 Source: Company information. | Note: The Company files federal and state income tax returns as a Limited Liability Company where by the tax attributes of income, gains, losses, deductions and credits are passed through to the Company’s members in proportion to their individual capital accounts. As such, no provision for income taxes or deferred income taxes are presente d i n the historical financials ; LTM financials include 2020 audit adjustments . (1) EBITDA and Adjusted EBITDA are non - GAAP metrics. These metrics are not meant as an alternative for net income (loss) or any other items calculated in accordance with GA AP; (2) Includes legal and professional services fees related to the proposed business combination. OCTOBER ADJUSTED EBITDA RECONCILIATION ($ in '000s, unaudited) 2021 2020 Net Income $4,633 $1,758 $41,690 Net Interest Expense 403 127 1,054 Depreciation and Amortization 75 (17) 954 EBITDA 1 $5,111 $1,867 $43,698 Adjustments: Business Transformation Fees 2 511 29 1,833 One-Time Termination Cost - - 225 Non-Operating (Income)/Expenses 24 (533) 228 Adjusted EBITDA 1 $5,646 $1,363 $45,983 Adjusted EBITDA Margin 1 13.2% 7.9% 10.6% Month Ended Oct. 31, LTM as of Oct. 31, 2021

60 Source: Company information. | Note : Fiscal year ends December 31, 2021. (1) Unaudited; (2) Budget as of October 18, 2021. Blackstone’s net revenue in Q3 came in higher than budget Q3 NET REVENUE SNAPSHOT $100 $83 $422 $100 $139 $102 Q1 Q2 Q3 Q4 2021B Actual Budget (1) (1) (1,2) (2) (2)

61 Source: Company information. | (1) EBITDA and Adjusted EBITDA are non - GAAP metrics. These metrics are not meant as an alternative for net income (loss) or any othe r items calculated in accordance with GAAP. Blackstone meaningfully outperformed its prior year results for the respective 9 month period Q3 FINANCIAL SNAPSHOT ($ in millions, unaudited) 2021 2020 Amount % Net Revenue $341 $224 $117 52% $410 Gross Profit $66 $48 $18 36% $78 Gross Margin 19.3% 21.6% 18.9% Adjusted EBITDA 1 $40 $31 $8 27% $42 Adjusted EBITDA Margin 1 11.6% 14.0% 10.2% Nine Months Ended Sept. 30, YoY Increase LTM as of Sept. 30, 2021

62 Source: Company information. | Note: The Company files federal and state income tax returns as a Limited Liability Company where by the tax attributes of income, gains, losses, deductions and credits are passed through to the Company’s members in proportion to their individual capital accounts. As such, no provision for income taxes or deferred income taxes are presente d i n the historical financials; LTM financials include 2020 audit adjustments. (1) EBITDA and Adjusted EBITDA are non - GAAP metrics. These metrics are not meant as an alternative for net income (loss) or any other items calculated in accordance with GA AP; (2) Includes legal and professional services fees related to the proposed business combination. Q3 ADJUSTED EBITDA RECONCILIATION ($ in '000s, unaudited) 2021 2020 Net Income $38,776 $30,999 $38,815 Net Interest Expense 386 1,184 778 Depreciation and Amortization 523 388 861 EBITDA1 $39,684 $32,571 $40,454 Adjustments: Business Transformation Fees2 1,192 239 1,350 One-Time Termination Cost - - 225 Non-Operating (Income)/Expenses (1,271) (1,510) (329) Adjusted EBITDA1 $39,605 $31,300 $41,700 Adjusted EBITDA Margin1 11.6% 14.0% 10.2% Nine Months Ended Sept. 30, LTM as of Sept. 30, 2021

63 Source: Company information, Traeger, Inc. 10 - Q. | Note: Financials are unaudited. (1 ) Includes R&D for Blackstone; (2) Includes non - routine legal expenses, non - routine acquisition expenses, and offering related e xpenses . (3) EBITDA and Adjusted EBITDA are non - GAAP metrics. These metrics are not meant as an alternative for net income (loss) or any other items calculated in accor dance with GAAP. Q3 RESULTS VS. TRAEGER Income Statement 2020 2021 Increase / (Decrease) % Change 2020 2021 Increase / (Decrease) % Change Revenue $87,504 $101,722 $14,218 16% $145,071 $162,018 $16,947 12% Cost of revenue 69,020 82,147 13,127 19% 79,294 107,696 28,402 36% Gross Profit $18,484 $19,575 $1,091 6% $65,777 $54,322 ($11,455) (17%) Gross Margin (%) 21% 19% (188bps) 45% 34% (1,181bps) Sales and marketing $2,777 $3,079 $302 11% $26,635 $48,519 $21,884 82% General and administrative 1 3,737 5,991 2,254 60% 17,327 75,824 58,497 338% Amortization of intangible assets - - - - 8,135 8,889 - - Change in fair value of contingent consideration - - - - - 2,900 - - Total operating expense 6,514 9,070 2,556 39% 52,097 136,132 84,035 161% Income from operations $11,970 $10,505 ($1,465) (12%) $13,680 ($81,810) ($95,490) (698%) Interest expense (420) (92) 328 (78%) (8,061) (5,704) 2,357 (29%) Loss on extinguishment of debt - - - - - (3,228) - - Other income (expense) 37 838 801 2,151% 2,647 (426) (3,073) (116%) Total other expense, net (383) 746 1,129 (295%) (5,414) (9,358) (3,944) 73% Income (loss) before provision for income taxes $11,587 $11,251 ($336) (3%) $8,266 ($91,168) ($99,434) (1,203%) Provision for income taxes - - - - 150 (1,983) - - Net income (loss) $11,587 $11,251 ($336) (3%) $8,116 ($89,185) ($97,301) (1,199%) Net Income Margin (%) 13% 11% (218bps) 6% (55%) (6,064bps) Net income (loss) $11,587 $11,251 ($336) (3%) $8,116 ($89,185) ($97,301) (1,199%) Adjusted to exclude the following: Business transformation fees 152 1,106 955 629% - - - - Provision for income taxes - - - - 150 (1,983) (2,133) (1,422%) Other (income) expense (37) (838) (801) 2,151% (2,324) 3,977 6,301 (271%) Interest expense 420 92 (328) (78%) 8,061 5,704 (2,357) (29%) Depreciation and amortization 117 211 93 79% 10,446 13,076 2,630 25% Equity-based compensation - - - - 9,806 59,210 49,404 504% Non-routine start-up costs - - - - - 2,883 2,883 - Offering related expenses 2 - - - - 104 6,544 6,440 6,192% Change in fair value of contingent consideration - - - - - 2,900 2,900 - Other adjustment items - - - - - 972 972 Adjusted EBITDA 3 $12,239 $11,822 ($417) (3%) $34,359 $4,098 ($30,261) (88%) Adjusted EBITDA Margin (%) 14% 12% (236bps) 24% 3% (2,115bps) Three Months Ended September 30, Three Months Ended September 30, Blackstone Traeger A B C D A B C D

64 DRIVERS OF MARGIN EXPANSION Source: Company information. | (1) EBITDA and Adjusted EBITDA are non - GAAP metrics. Adjusted EBITDA is calculated as EBITDA adjusted for certain items, including non - cash compensation expense, fees related to customer account receivable finance programs and one - time or other non - recurring expenses (such as legal expenses and other fees and expenses related to the proposed business combin ation). These metrics are not meant as an alternative for net income (loss) or any other items calculated in accordance with GAA P. 20% 26% 6% 1% (0%) (1%) 2021E Gross Margin Product Costs Ocean Freight Costs Tariffs Storage, Duty, Warehouse and Other Costs 2024E Gross Margin 13% 17% 6% 1% (3%) (1%) 2021E Adj. EBITDA Margin Gross Margin General & Administrative Sales & Marketing Research & Development 2024E Adj. EBITDA Margin

65 Blackstone successfully completed a debt financing with Wells Fargo and White Oak on October 15, 2021 SUCCESSFUL COMPLETION OF DEBT FINANCING ABL Revolver + Term Loan Borrower North Atlantic Imports, LLC (d/b/a Blackstone Products) ABL Revolver Agent / Lender Wells Fargo Term Loan Agent / Lender White Oak Global Advisors, LLC Collateral ABL Priority Collateral : A perfected first priority interest in Cash, A/R, and Inventory Term Loan Priority Collateral : A perfected first priority interest in all non - ABL Priority Collateral ABL Revolver Facility $50,000,000 (the “ Maximum Revolver Amount ” ) Term Loan Facility $75,000,000 of initial term loan facilities plus $20,000,000 of uncommitted incremental facilities Tenor 5 Years ABL Revolver Drawn Pricing LIBOR + 161.5 – 211.5bps grid based on average availability Term Loan Drawn Pricing LIBOR + 750bps LIBOR Floor ABL Revolver : 0% Term Loan : 50bps Unused Line Fee 25 – 37.5bps; grid based on average revolver usage

66 SUCCESSFUL COMPLETION OF DEBT FINANCING – CONTINUED ABL Revolver + Term Loan Prepayment Penalty ABL Revolver : None Term Loan : 3% in year 1; 2% in year 2; 1% in year 3; none thereafter. Subject to 12 month yield maintenance Revolver Borrowing Base The sum of: (i) 85% of eligible A/R, plus (ii) Lesser of (a) 70% of LCM of eligible finished goods inventory and (b) 85% of appraised net orderly liquidation value (“NOLV”) of eligible finished goods inventory, plus (iii) Least of (a) $3,000,000, (b) 70% of LCM of eligible in - transit inventory, and (c) 85% of appraised NOLV of eligible in - transit i nventory; less (iv) Applicable reserves Amortization ABL Revolver : N/A Term Loan : 10% per annum with payments quarterly Excess Cash Flow Sweep ABL Revolver : N/A Term Loan : 50% with step - downs to 25% if leverage thresholds are below 1.0x for the fiscal year Collateral Reporting Monthly, springing to weekly reporting should excess availability fall below the greater of (a) 12.5% of the Maximum Revolver Am ount and (b) $6,250,000 Financial Reporting Customary for financings of this type; i ncluding (i) monthly financial reports (30 days after month - end or 45 days after quarter end), (ii) annual audited financials (120 days after end of fiscal year), and (iii) annual projections Financial Covenants ABL Revolver : Springing minimum Fixed Charge Coverage Ratio of 1.0x should excess availability fall below the greater of (a) 10% of the M axi mum Revolver Amount and (b) $5,000,000 Term Loan : Maximum Total Leverage Ratio; Minimum Fixed Charge Coverage Ratio; and Minimum Liquid Assets Test Closing Fees ABL Revolver : $250,000 Term Loan : 200bps

67 Note: Assumes no redemptions, and a $10.00 stock price per share. Includes transfer of 0.267 million shares from the SPAC Sponsor and existing Blackstone shareholders to PIPE investors. Up to 2.464 million common share s ( 1.040 million shares from the SPAC Sponsor and 1.424 million shares from the shares being issued as merger consideration to Blackstone’s existing shareholders ) shall be held in escrow and used to provide a limited guarantee of the post - closing stock price to certain PIPE investors who si gn an extended anti - hedging anti - shorting agreement and are still holding their shares at the end of the applicable guarantee period if the stock pr ice is below $10.00 at such time (which we refer to as the “downside protection feature”). For the avoidance of doubt, no new sh ares will be issued, and such limited guarantee will cause no change to the Company’s pro forma share count . | ( 1) Includes Sponsor Founders, Private Units, Underwriter Rep Shares and Ackrell Capital Shares; (2) Includes approximately 17.6 million RSUs expected to be awarded to Roger Dahle with annual cliff vesting over a 7 year period commencing on the third anniversary of the consummation of the proposed business combination; (3) Excludes option pool and warrants, and assumes downside protection feature is not trig ge red. EQUITY VALUE & OWNERSHIP EVOLUTION North Atlantic BVI (Cowell) Roger Dahle Public Shareholders Sponsor Founders & Others 1 PIPE ▪ Pre - Business Combination ▪ Blackstone closed a $100M debt financing ▪ $100M in cash expected to be distributed to Cowell (distribution subject to completion of business combination) ▪ Roger Dahle currentl y expected to be awarded approximately 17.6M RSUs, subject to vesting 1 2 ▪ Post - Business Combination ▪ Equity inflows: ▪ $139M cash from SPAC public shareholders ▪ $31M net cash from PIPE ▪ $44M Sponsor Founders and Other Equity rollover ▪ Equity outflows: ▪ $ 150M cash distribution to Cowell 3 North Atlantic BVI (Cowell) Roger Dahle 85% 50% 26% 15% 50% 45% 18% 7% 4% $821M $721M $783M Current Pre-Business Combination Post-Business Combination RSUs RSUs North Atlantic BVI (Cowell) Roger Dahle

68 ILLUSTRATIVE PRO FORMA FULLY - DILUTED CAP TABLE Note: Assumes no redemptions, and a $10.00 stock price per share. Includes transfer of 0.267 million shares from the SPAC Sponsor and existing Blackstone shareholders to PIPE investors. Up 2.464 million common shares ( 1.0 40 million shares from the SPAC Sponsor and 1.424 million shares from the shares being issued as merger consideration to Blackstone’s existing shareholders ) shall be held in escrow and used to provide a limited guarantee of the post - closing stock price to certain PIPE investors who si gn an extended anti - hedging anti - shorting agreement and are still holding their shares at the end of the applicable guarantee period if the stock pr ice is below $10.00 at such time (which we refer to as the “downside protection feature”). For the avoidance of doubt, no new sh ares will be issued, and such limited guarantee will cause no change to the Company’s pro forma share count . Assumes downside protection feature is not triggered and no conversion of convertible notes. | (1) Roger Dahle is expected to receive approximately 17.6 million RSUs with annual cliff vesting over a 7 year period commencing on the third anniversary of the consummation of the proposed busine ss combination; (2) Each public shareholder unit consists of one subunit (consisting of one share of common stock and one - half of a warrant) and one - half of a warrant that is forfeited upon redemption of the subunit. (Millions of shares) Shareholder Shares RSUs 1 Total % of Total Warrants Roger Dahle 17.647 17.647 35.294 45% - North Atlantic BVI (Cowell) 20.351 - 20.351 26% - PIPE 3.333 - 3.333 4% 1.533 Public Shareholders 13.800 - 13.800 18% 13.800 Sponsor Founders & Others 5.545 - 5.545 7% 1.039 TOTAL 60.676 17.647 78.323 100% 16.372 Option Pool Available for Grant Post-Business Combination 13.822 - 13.822 TOTAL 74.498 17.647 92.145

Exhibit 99.3

 

Transcript of Investor Presentation

 

Jonathan Leong

 

Thank you. I’m delighted to introduce Blackstone’s management team. With us today is Blackstone’s founder & CEO, Roger Dahle; CFO, James McCormick and VP of Marketing, Scott Stevenson.

 

A brief overview of our transaction. Ackrell SPAC is a unique blend of industry, financial and public company expertise and has $139 million cash-in-trust. We were formed to merge with a branded consumer business and there’s a strong strategic fit with Blackstone Products. Blackstone is the category-defining, high-growth producer of griddles for the large and on-trend outdoor cooking industry.

 

Our transaction implies a pro forma enterprise value of $900 million, or 11.1x 2022 estimated adjusted EBITDA of $81 million, which is a significant discount to our closest comp, Traeger. It’s a 37% discount to where Traeger IPO’d at 17.6x and a 28% discount to where it trades today at 15.3x.

 

The transaction will be funded by a combination of cash-in-trust, rolled-over equity, PIPE, and convertible note proceeds and existing shareholders will receive 71% of pro forma equity. The transaction is expected to result in a strong balance sheet with 2x net leverage and approximately $95 million of net proceeds (assuming no redemptions) to fund marketing efforts, new product development, and international expansion.

 

Before we begin, please note that as part of this presentation we may discuss forward-looking statements within the meaning of the safe harbor provisions of the federal securities laws, including the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, among other things, future results of operations, customer demand, and inventory and supply chain. Forward-looking statements are made based on the parties’ expectations and beliefs concerning future events and therefore involve a number of risks and uncertainties. You’re cautioned that forward-looking statements are not guarantees and that actual results could differ materially from those expressed or implied in the forward-looking statements. Potential risks and uncertainties that could cause the actual results to differ materially from those expressed or implied by forward-looking statements are discussed elsewhere in this presentation, which has been concurrently filed as part of Ackrell’s Current Report on Form 8-K. All forward-looking statements are based upon information available to Ackrell and/or Blackstone as of the date hereof, and speak only as of the date hereof. The parties assume no obligation to update any forward-looking statements to reflect events or circumstances after the date hereof, except as required by law.

 

With that, I’ll hand it over to Roger.

 

Roger Dahle

 

Thank you for joining us today. One of the things that we want to emphasize today is: with Blackstone you can cook for breakfast, lunch, and dinner and we really unlock all three meals. This is a great advantage to us over our competition. We have a broad demographic appeal with men, women, and even children using our products outside which is revolutionary. We bring families and communities together and we create a lot of fun all based around food.

 

Some of our numbers at a glance, we’re having another tremendous year. Our revenue is expected to be over $450 million. That’s up from $300 million last year. Our adjusted EBITDA is expected to be $58 million, up from about $35 million last year. We believe the growth we have in front of us is substantial. We’re planning for roughly $600 million in revenue next year. Another thing that I’m very proud of is our Net Promoter Score of 78. The closest competitor in our category is at about 68, so our customers love our products and that is reflected in our Net Promoter Score.

 

 

We have a wonderful variety of products anchored by our appliances which are about 75% of our revenue. We also have a wonderful assortment of accessories that complement the appliances. Those accessories include specific tools for griddle cooking, covers, and we’ve also introduced consumables, spices, and sauces that are specifically formulated to complement and enhance griddle cooking.

 

We enjoy a wide distribution of retailers in the United States anchored by Walmart, our largest customer and the largest retailer in the country. We also have other large national retailers like Lowe’s, Ace Hardware, Dick’s Sporting Goods, and Tractor Supply who love to sell the Blackstone product lines.

 

We are completely redefining the outdoor cooking category. This is not your grandpa’s charcoal grill that we’re talking about. The griddle is a flat top surface that you cook on as opposed to an open grate system like a traditional grill that has allowed us to create a brand new category in outdoor cooking. This is interesting because for the last couple of years we have absolutely increased the opportunity for sales. We are essentially making the pie bigger in the backyard cooking industry and we’re capturing the griddle space like nobody else. We’re adding the potential for increased sales by just expanding our SKU count with current customers and then we’ll move into some other opportunities for expanded growth as well that I’ll talk about later in the presentation.

 

As we look at our potential for future growth we really look at a couple of different things. The number of households in the United States and our market penetration. Our household penetration right now is extremely low and there are many people probably on this call today who haven’t even heard of our brand but after this call, you’ll learn and you’ll probably go buy one as soon as you can. We have opportunity as I mentioned to increase sales by just expanding our SKU count, by continuing to educate the consumer through our TV advertising and our social media outreach, and our international potential which we are just now beginning to go after. We believe the international market combined is about as big as the US market. We have huge potential for growth over the next five years.

 

Some of the key investment highlights are that we own the griddle category and we were the first company to bring griddles to the backyard. Griddles have been around for a long time in the commercial markets but Blackstone was the first company to bring griddles to the patio and as a result, we dominate that space. We will continue to grow rapidly in this space as we have incredibly passionate customers. If you look at our social media pages and see the engagement of our users you’ll get a flavor for that.

 

We are very pleased with our go-to-market strategy and the way we distribute our product between different types of retailers. We have great historical performance with their financials and again a lot of whitespace for growth. The other thing we have that I think is a real competitive advantage is a very passionate management team. Everybody here is fully engaged. We love the products that we sell, we all use them and we all have fun with them and we all try to outdo each other with what we cook on our Blackstones. This is a great combination of market share, product innovation, great distribution to our retailers, and an awesome management team.

 

So if you’ve never been exposed to Blackstone, take a look at this picture on slide 14 and you can get a flavor for what I’m talking about. On the left, we have a picture of a brand new product that we just introduced a year ago. Those handles underneath the control knobs for the burners are actually air fryer drawers. Air fryers are the largest selling indoor countertop appliance today in the marketplace and we combine that with an outdoor griddle and put it in the backyard. We are the first and only company that’s ever done that and we have patents on it by the way. So what that means when you’re cooking your hamburgers is you can now have French fries to go along with them. It’s a phenomenal product development that we have. There are also pictures of some of our accessories that are all made specifically for griddle use. What I really love is on the right you see pictures of customers. These are pictures that were taken by customers who tell us how much they love their Blackstone. What you’ll notice about these photos is that we’re not only on the patio but we’re on a lot of different places like on-the-go tailgating and camping. You’ll also notice a wide variety of demographics and different styles of food being cooked on the Blackstone. With a Blackstone, you can cook breakfast, lunch, and dinner. Three meals a day, 365 days a year equals 1095 meal opportunities on a Blackstone. None of my competition can make that claim.

 

 

Moving on to slide 15. When we started we had only one 36-inch griddle model. That’s a picture of the original one on the far left, but now we’ve expanded our product category to over 70 SKUs of griddles. We now have 17-inch, 22-inch, 28-inch, 30-inch, and 36-inch models.

 

As we expanded our appliance offering, we found that the consumer really wanted specific tools for griddle cooking. You just don’t need one spatula for cooking on a griddle. We have smash burger kits, crepe making kits, taco kits, and breakfast kits to make pancakes and egg rings to make breakfast sandwiches. We have very specific tools to enhance the consumer experience and unlock food variety on the griddle. Consumers are loving our tools.

 

We have an amazing seven-to-one attachment rate for our accessories and consumables. For every griddle we sell, we also sell seven accessories (including consumables). This blows my competition away. We have added consumables over the last 18 months, which include spices and “Sear & Serve” sauces that are specifically formulated for griddle cooking.

 

Looking a little bit more at our product differentiation, and how our product portfolio has grown over the years. We’ve studied the demographical users of our products and we have, in my opinion, the best demographics in the industry. We have so many different styles of food meaning we have so many different types of people who like to use our products. We have someone who likes to take a Blackstone to deer camp, we have a foodie that’s really into high-end food, we have moms who love the Blackstone because there aren’t flare-ups and she can cook a lot of food fast for her family. The different demographic personas we have for each of our product lines help with our go-to-market strategy. This enables us to sell certain lines to Walmart, certain lines to Ace, certain lines to Lowe’s, and so on. This helps each retailer so they’re not all selling the same thing trying to beat each other with the same product and drive the retail prices down.

 

So griddle cooking has absolutely exploded on social media. People started buying Blackstones and immediately started posting the food that they were cooking on it to share with their friends and family. Along the way we found five personalities that came to us through social media and they’ve now turned into full-time employees for the company. We have a professionally trained chef in Nathan Lippy, we have Todd Toven who is into hunting, camping, and all things adventure. Todd also does our live demonstrations and cooking for new store openings for different retailers and he does The Griddle More Tour that we’ve successfully done now for three years with Walmart. It has been extremely successful in driving awareness of our brand and our style of cooking and letting people realize all the food you cook on a griddle. As a result of that, our social media, which has been 100% organically grown, has just exploded. If you go to Facebook, you will see the different types of users groups that have been created by the end-user. We didn’t start any of the user groups. They started all on their own. Now TikTok has just been a phenomenal success for us. Videos with the Blackstone hashtag now have nearly 490,000,000 views and growing every day.

 

Another thing that’s been really cool about our brand is our favorable brand positioning in the marketplace. While we offer a very affordable and value-driven product, we’re still in the aspirational category as viewed by our customers and by people who’ve never heard of us who get exposed to it for the first time. We gain this information from a market survey that we do each year where we really look at the outdoor cooking category, the industry, our competition, and how our customer views our brand. We’re proud that we’re still up in the high aspirational category as compared to our competition.

 

 

On the next slide, we can highlight some things to you as to what makes the griddle so different. If you haven’t ever cooked on a griddle you may not really understand this, but how it started was I wanted to have a product that I could cook breakfast on. Cooking bacon in the house is just too stinky. Even though it tastes delicious, my wife doesn’t really like me doing it so I wanted to cook outside and I wanted to cook for a lot of people. You can do that on a griddle. As you’ll see, griddle cooking is fast, it’s easy, it’s fun, and it’s not intimidating to use. You can cook everything on the griddle that you can cook on a traditional grill and a thousand things you can’t. You can cook eggs, bacon, pancakes, smash burgers, teppanyaki stir fry, fish, steak, and even desserts on the griddle. You just can’t cook that variety on a traditional grill and that’s why this thing is just exploding because people are understanding how much fun and how much food you can cook on the griddle.

 

When we came into the market our competition looked at us as this cute little niche item that we were selling. Our retail customers looked at it as maybe the second or third item that could be sold to their customers because they thought all we were going to do was unlock breakfast on the patio. What we quickly discovered is that people started cooking smash burgers, and then they started cooking stir fry and street tacos and all of those kinds of things you can’t cook on a regular grill. As a result, we’ve been experiencing explosive growth. Really, we’re following the same trajectory as Traeger. We’re a couple of years behind them but we believe we’ll catch up and pass them and the rest of the gas industry too. By the way, for years, the industry was only charcoal grills and then gas was invented, and that took over as the number one selling unit but that whole industry has been so stagnant for the last ten years without much product innovation. It was a boring industry and nobody really wanted to sell anything into it. The innovation was going from red to blue, big deal. We have exploded and created a whole new category with new, exciting innovation because of the variety of food you can cook on a griddle.

 

On the next slide, we want to tell you that there’s more to a griddle than just a flat piece of steel with some burners underneath. There is a lot of technology and a lot of experience that goes into making a griddle work properly. You need to have the burner spaced just so, you need to have a certain distance from the griddle plate, the griddle plate needs to be a certain thickness, all of these different things make a big difference in the overall cooking experience. Along the way, we have patented over 24 innovations and we have about 30 that are pending and we aggressively defend our intellectual property.

 

This picture here shows our AirFryer Combo Griddle. Again, with rear grease technology that we’ve already defended successfully against some of our competitors who just copied us. It shows some of the other innovations that are really critical to making this work well. There’s a lot of work that is behind the scenes in making our griddles work just right.

 

I get really excited talking about current innovation and what we have in the pipeline. We don’t have enough time today or tomorrow to cover everything that’s coming out because there’s so much innovation coming. It’s really awesome and exciting. Just to touch on two points. We update the current designs we have every two to three years for our retail customers. We show many new upgraded features and color combinations and then we work with our customers on a two to three-year rolling program for the current product. We’re also developing an app that will go with some of our future products. The other thing that’s really cool is we’re the first company that’s introduced an electric griddle that goes outside and can be used inside. That’s a huge deal because that’s unlocked a whole new demographic of customers. Apartment owners, smaller households, and people who want to use electricity versus gas for environmental reasons. That is the category we’re going to continue to expand and grow in. We also have a revised pizza oven that we’re introducing next year that has phenomenal technology in it along with four issued patents for it. We will continue to innovate our accessories and develop and drive new items to market as we work with end-users and see what they’re using as well as expanding our consumable lines because of the high margin, high volume, and high turnover. As a quick note, it is interesting, if you want to buy our consumables right now you have to go to the lawn and garden department at Walmart. Eventually, we’ll get that placed in the grocery department where we believe it will really sell. Lastly, we think we have a huge potential for market expansion in the commercial area as we get our product to caterers who will buy our big griddles and use them for events and other catering opportunities.

 

 

Next, I want to talk a little bit about our relationship with our customers. We have a couple of customers that we do a huge amount of business with. Walmart is our biggest customer by far. Walmart really jumped in early with griddles and was a market innovator and an early adopter growing the space. They recognized it early and jumped in with us and collaborated together from the beginning to really develop an incredible program with Walmart. They now sell more than 14 different griddle models. Think about that. When I first started selling this I thought I could sell one 36-inch griddle and now Walmart sells 14 different versions of it. Right now that’s anything from a 17-inch all the way up to the AirFryer Combo that you saw earlier and everything in between.

 

Lowe’s is new. They just got back into the griddle business and they have four SKUs of griddles, so as we deepen our relationships with these customers we’re helping them realize that you need to go really wide with your griddle offering and go really deep with accessories. For instance, Walmart has eight feet of shelf space right to left dedicated to Blackstone accessories. There are almost 70 SKUs of accessories at Walmart. Unheard of right? It’s an unbelievable amount. So, as you look at our customer concentration, the reason that it is that way is that Walmart has a huge number of griddles for sale. Blackstone needs to be where our customers want to buy our products. We will continue to teach our other retail customers how successful griddle sales can be. Walmart sales may continue to grow while being a smaller percentage of the total pie over the next five years but, I love our retail distribution strategy.

 

As we look at where we’re going to grow over the next couple of years, those areas where we can have more success, some of the easy things are further market penetration in the United States. We aim to do that by continuing to increase our advertising and driving customers to retail sales.

 

We talked a little bit about international expansion. We’ve hired our first full-time in-house international sales manager along with our first contracted Blackstone representative in Mexico City. We also have dialogue going on right now with retailers in Australia, France, Germany, the UK, and many more retailers in South America. We believe this will also drive a lot of growth over the next couple of years.

 

Our direct-to-consumer business is only about 2% of our revenue right now. It’s very low and that’s mainly been because we have just supported our retail customers. We have a plan to drive that initiative much higher next year. We’re starting to test the market this year with spending on Google and some of the other social media platforms to see if we could drive more sales to our website. We drove more business than we had inventory so we had to slow that down considerably. We believe we can grow our direct-to-consumer business significantly over the next three to five years.

 

One of the findings that came from our annual market survey is this page right here (slide 25). Basically what I want to highlight is that a high percentage of people have never heard of the Blackstone brand. We actually like this because that just means we will continue to drive revenue by increasing our product awareness and household penetration in the United States and internationally. We have a lot of whitespace for growth as people learn more and more about Blackstone.

 

 

And by the way, we’ll do that by continuing our TV marketing campaign and our social media outreach. On that note, I’d like to turn the time over to our VP of Marketing, Scott Stevenson to walk us through some of our exciting social media results.

 

Scott Stevenson

 

Thanks Roger. As many of you know, more than half of consumers that are purchasing products digitally start their search on Amazon and Blackstone searches there outnumber both Weber and Traeger combined. Blackstone’s three meal-a-day, versatile cooking platform has created mass-market appeal and everyday use which means people are shopping more for Blackstone and our accessories.

 

Our strong growth is driven by the versatility of our cooking platform. Blackstone has untethered outdoor cooking from just the traditional summer-time BBQ foods. Consumers want to cook a variety of food to fit their culture and express themselves and their tastes… because there is more you can do on a Blackstone, there’s more opportunity for new creative recipes and greater opportunity for our users to engage with us and others online. There’s an entire lifestyle and ecosystem built around Blackstone that’s created an enormous amount of excitement. With the ability to cook so much variety around breakfast, lunch, and dinner on a Blackstone, it really becomes more integrated into your everyday life.

 

Our passionate community of Blackstone users is more active and engaged and as a result, we see more people creating and joining online user groups than any other brand in our category.

 

Overall our digital presence is very strong, we see tremendous search volume, we’re rapidly adding followers on every platform every day, and we’re seeing an explosion of content and conversation around our brand. Back to you Roger.

 

Roger Dahle

 

Thanks Scott. The number of organic user group members is really exciting.

 

Let’s talk more about international expansion. As we look at this opportunity we look at Weber doing almost half of their revenue outside the United States so we’re hoping in the future that we can get at least as high as 25% of our revenue from outside of the US. One of the advantages Blackstone has over Weber and Traeger is the fact that griddle cooking internationally is much more accepted than it is in the United States. In other words, you go to a lot of other countries and they’re already cooking their food on flat top griddles so when we get to those countries and we offer the variety of products that we have, and all the accessories that go with it, we anticipate awesome opportunity. I mentioned that we’re in negotiations right now for retail distribution in several different countries as we speak.

 

This next slide just gives you an introduction to our main facility in Xiamen, China, which is just north of Hong Kong by about an hour’s flight. The facility that we built is an enormous plant with up to 3500 workers in the busy season. The annual production out of this factory right now is about 3 million griddles a year. With future expansion and improvement in capital investments into that facility, we will continue to see an increase in production there. Now that’s our main facility but, we have other factories that we will have to utilize as our demand continues to grow. We have a manufacturing supplier agreement in place with this facility that gives us the assurances that we need going forward after the transaction. They’ve been a great partner and we plan on working with them for a long time.

 

Talking a little bit more about our supply chain and some of the issues we’re facing there right now. Right now all of our griddles are coming out of mainland China. In the future, we’re looking at Vietnam and other Southeast Asian countries to move into. We are heavily engaged right now with a Korean-owned factory in Vietnam, and we fully anticipate having production with them starting early next year. We’re also looking at the United States with some contract manufacturing here in the US, especially for some of our higher-end lines. Some of our accessories come from the US right now and from mainland China. We’re also looking at other countries outside the United States, like Vietnam, the Philippines, and Cambodia. We will have accessories shipping from some of those other countries, hopefully before Chinese New Year. This will allow us to reduce some of the heavy tariffs that we’ve been subject to. Our consumables will continue to be all made and sourced in the United States, including our spices and sauces and things that we eat and taste.

 

 

OK moving on to our management team. Like I mentioned earlier we have an unbelievably passionate management team. I’ll put these guys up against anybody in this industry or any other consumer products industry. James McCormick is new to our company. He will come on board to take over the position of CFO concurrent with the closing of the merger. He has great public company experience and we need to rely on that as we go through this transaction and move forward as a publicly-traded company. We’re thrilled that James plans to join us.

 

Looking at our board of directors right now. We have listed five anticipated members, myself, Brad Johnson, and Fred Beck. They both come with tremendous experience as CFOs and have great consumer products industry knowledge. We are thrilled to have Denise Garner, who is currently the Chief Innovation Officer at the Clorox Company, and Janet Lamkin who is a Senior VP at United Airlines. Mike Ackrell is the founder of Ackrell Capital and finally, we have Shawn Lee, President of Cowell Group who brings substantial supply chain experience to the group.

 

We’re now going to move into the financials of the company and for that, I’m going to turn the time over to James McCormick to walk us through those numbers.

 

James McCormick

 

Thank you very much for the introduction Roger. I’d like to now take us through historical and projected financial information for the company. As you can see on this slide (33) we have demonstrated strong historical growth, both from a revenue and profitability standpoint. This is reflected in the 72% revenue CAGR from 2016 to 2020. When we adjust for the impact of tariffs and one-off supplier pricing increases, gross profit grew at a 65% CAGR for that same period. We believe that gross margin in 2020 is more representative of our gross margin baseline that we are going to build on over time. When we looked at the free cash flow conversion percentage you’ll see that the percentage is very high which shows that this is not a capex heavy business.

 

We’ve demonstrated strong revenue momentum through September 30^th of this year. A very interesting point is that Blackstone is no longer a seasonal business. We’ve been successful at expanding the selling season including things like creating National Griddle Week in April, supporting deer camp and tailgating in the fall, and gift-giving at Christmas time.

 

Roger previously explained our pillars of growth strategy which is reflected in this financial outlook. We have a billion dollars in revenue in sight and expect to achieve that during 2024. This is driven by a variety of things including further market penetration, international expansion, and new product introductions. This will represent 4 million griddles sold with increased ASP’s. In addition, gross margin percentage is projected to increase for a variety of reasons including diversification to additional factories and associated competitive pricing, and changing the product mix to higher-margin businesses like outdoor kitchens, and selling direct to consumers.

 

If we execute on our financial plan we expect to reach 17% adjusted EBITDA by 2024. As we look to the future, we believe we can reach $2 billion in revenue in the foreseeable future as we’re targeting over 10 million griddle units to be sold. This should result in a very attractive EBITDA margin of 22%. So, with that, I’d like to turn things over to Jonathan.

 

 

Jonathan Leong

 

Thanks James. Moving on to slide 39 and our transaction overview. Our transaction represents a pro forma enterprise value of $900 million or 11.1x 2022 estimated adjusted EBITDA of $81 million. Pro forma, Blackstone will be well capitalized with 2x net leverage and approximately $95 million of cash on the balance sheet (assuming no redemptions). Based on pro forma ownership, existing shareholders will own 71% of the pro forma equity, Roger will own 45%, Cowell will own 26%, and the remaining equity will be made up of public shareholders with 18%, PIPE shareholders with 4%, and sponsors with 7%.

 

Moving on to slide 40 and the valuation benchmarking. Investor appetite for the US outdoor cooking industry has been well demonstrated by the strong receptivity of recently IPO’d peers Traeger and Weber. Our transaction is at a material discount to Traeger, a 37% discount to where it IPO’d, and a 28% discount to where it trades today. It’s also a 23% discount to where Weber IPO’d and a 50% discount to where the consumer enthusiast peers, such as Yeti IPO’d.

 

Moving on to slide 41 and operational benchmarking, we think Blackstone stacks up extremely well against its peers from both a growth and margin perspective. With historical sales CAGR of 73% and projected growth of 35%, Blackstone outperforms the growth rates of Traeger, Weber, and the consumer enthusiast peers. On EBITDA margins, Blackstone is tracking Traeger closely at 13% vs 14% today, and by 2023 is expected to have similar margins at 16%.

 

On slide 42, going forward, we believe there is significant upside for investors. Blackstone has best-in-class industry growth and is priced at a significant discount at 11.1x today, so we believe there is a ton of room for multiple expansions. For example, at a 13.5x multiple, which is the average of where Traeger and Weber trade today, this would imply a discounted future enterprise value of $1.5 billion, or 71% of upside. With that, I’ll hand it back to Roger for closing remarks.

 

Roger Dahle

 

Thank you Scott, James, and Jonathan for those comments and insights. We’d like to just close by again re-emphasizing the key points of Blackstone and this opportunity that we presented. We are leaders in the griddle market and we’re going to continue to expand that. We’re expanding the customers and we’re bringing new customers into the outdoor cooking market every day. We are a leader in new product development. We have an awesome go-to-market strategy with wonderful distribution with our retail customers. Our historical financials are strong and the whitespace for growth over the next five years is just unbelievable.

 

 

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