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

December 23, 2021 7:52 AM EST

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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:

 

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

 

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

 

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

 

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

 

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

 

Title of each class   Trading Symbol(s)   Name of each exchange on
which registered
         
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, theRegistration 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.

 

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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.

 

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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:

 

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

 

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;

 

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;

 

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;

 

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

 

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:

 

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;

 

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;

 

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;

 

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

 

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:

 

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;

 

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;

 

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

 

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

 

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:

 

by mutual written consent of Ackrell and the Company;

 

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;

 

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;

 

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

 

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

 

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.

 

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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.

 

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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.

 

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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.

 

8

 

 

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.

 

9

 

 

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

 

i

 

 

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
     

 

ii

 

 

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

 

iii

 

 

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

 

iv

 

 

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

 

v

 

 

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;

 

1

 

 

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”);

 

2

 

 

 

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.

 

3

 

 

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.

 

4

 

 

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.

 

5

 

 

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).

 

6

 

 

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.

 

7

 

 

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.

 

8

 

 

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.

 

9

 

 

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.

 

10

 

 

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.

 

11

 

 

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)

 

12

 

 

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

 

13

 

 

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

 

14

 

 

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.

 

15

 

 

(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.

 

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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.

 

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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”).

 

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(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.

 

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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.

 

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(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”)

 

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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.

 

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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.

 

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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”).

 

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(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.

 

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(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.

 

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(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.

 

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(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.

 

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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.

 

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(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.

 

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(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.

 

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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.

 

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(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.

 

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(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.

 

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(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.

 

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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.

 

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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.

 

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(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.

 

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(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.

 

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(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.

 

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(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.

 

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(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;

 

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(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;

 

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(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.

 

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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.

 

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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.

 

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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.

 

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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.

 

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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.

 

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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.

 

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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.

 

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(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.

 

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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.

 

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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.

 

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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.

 

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(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.

 

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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.

 

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(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.

 

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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;

 

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(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;

 

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(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);

 

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(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.

 

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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;

 

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(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;

 

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(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.

 

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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.

 

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(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.

 

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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.

 

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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.

 

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(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.

 

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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).

 

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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 (3rd) 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).

 

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(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.

 

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(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.

 

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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.

 

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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.

 

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(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.

 

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(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.

 

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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).

 

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(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;

 

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(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.

 

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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, 11th 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]

 

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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).

 

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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.

 

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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]

 

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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.

 

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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).

 

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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.

 

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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.

 

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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.

 

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(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 2.1subsections 2.1.32.1.42.1.5 (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; providedhowever, 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.

 

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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.

 

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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.

 

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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.

 

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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.

 

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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.

 

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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.

 

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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.

 

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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.

 

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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.

 

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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.

 

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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]

 

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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.

 

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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.

 

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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:

 

4

 

 

(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.

 

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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, 11th 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.

 

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(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.

 

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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.

 

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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]

 

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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:  

 

10

 

 

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:  
       

 

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Exhibit A

Schedule of Stockholder Parties

 

Ackrell SPAC Sponsors I LLC

 

Roger Dahle

 

North Atlantic Imports, Inc.

 

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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.]

 

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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:  

 

 

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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.

 

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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.

 

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(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.

 

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(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.

 

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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:

 

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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).

 

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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.

 

 

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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.

 

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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.]

 

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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:  

 

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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:  

 

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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: ___________________

 

 

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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”);

 

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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.

 

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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.

 

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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.

 

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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 (2nd) trading day following the Effectiveness Date and ending with the tenth (10th) 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.

 

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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.

 

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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 decisio