Merger Agreement

12 Months Ended

Dec. 31, 2019

Notes to Financial Statements

Merger Agreement

Note 9 — Merger Agreement

On December 12, 2019, the Company entered into the Merger Agreement, pursuant to which, (i) Meten Merger Sub will merge with and into Meten, with Meten being the surviving entity of such merger (the "Meten Merger") and becoming a wholly-owned subsidiary of Holdco ("Surviving Cayman Islands Company") and (ii) EdtechX Merger Sub will merge with and into EdtechX, with EdtechX being the surviving entity of the merger (the "EdtechX Merger" and together with the Meten Merger, the "Mergers") and becoming a wholly-owned subsidiary of Holdco ("Surviving Delaware Corporation").

Upon consummation of the Meten Merger, the shareholders of Meten will receive their pro rata portion of an aggregate of 48,391,607 ordinary shares of Holdco ("Meten Merger Shares"). EdtechX will be required to pay cash to electing Meten shareholders, in an amount equal to 50% of the excess of the remaining cash at closing over $30 million (after taking into account redemptions elected by EdtechX's public stockholders and together with the proceeds arising from Private Placements) up to an aggregate of $10 million. Cash consideration paid will reduce the Meten Merger Shares issuable to the Meten shareholders.

The shareholders of Meten who continue to hold ordinary shares of Holdco through certain earnout measurement dates will also have the right to receive their pro rata portion of up to 11,000,000 ordinary shares of Holdco ("Contingent Shares") as follows: (i) 4,000,000 Contingent Shares if the reported closing sale price of Holdco's ordinary shares equals or exceeds $12.50 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations or other similar actions) for any 20 consecutive trading days at any time before December 31, 2022, and (ii) 7,000,000 Contingent Shares if the reported closing sale price of Holdco's ordinary shares equals or exceeds $15.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations or other similar actions) for any 20 consecutive trading days during the fiscal year ending December 31, 2023.

Holdco will establish a new incentive equity plan (the "Holdco ESOP Plan"), and each outstanding option of Meten will be automatically converted into an option to purchase ordinary shares of Holdco, with the number of shares issuable upon exercise of the option and the option exercise price to be determined in accordance with a formula set forth in the Merger Agreement. A further number of Holdco ordinary shares equal to one percent (1%) per annum of the total outstanding Holdco ordinary shares upon the closing of the Mergers will be reserved under the new incentive equity plan.

Upon consummation of the EdtechX Merger, (i) each share of EdtechX common stock outstanding on the closing date will be exchanged for the right to receive one ordinary share of Holdco, except that holders of shares of EdtechX common stock sold in EdtechX's Initial Public Offering will be entitled to elect instead to receive a pro rata portion of EdtechX's Trust Account, as provided in EdtechX's charter documents, (ii) each outstanding warrant of EdtechX will entitle the holder to purchase one ordinary share of Holdco at a price of $11.50 per share, and (iii) each outstanding Unit Purchase Option will remain outstanding but will be deemed to have been converted to represent the right to purchase ordinary shares and warrants of Holdco.

As a result of the Mergers, Holdco will become the new public entity and the shareholders of Meten and the stockholders of EdtechX will become shareholders of Holdco. The Mergers will be consummated following receipt of the required shareholders approvals and the fulfillment of other conditions.

Support Agreement

Concurrently with the execution of the Merger Agreement, certain shareholders of Meten and certain stockholders of EdtechX have entered into a support agreement with Holdco and EdtechX ("Support Agreement"), pursuant to which each such person has agreed, among other things, to vote all of the Meten ordinary shares or EdtechX common stock, as applicable, beneficially owned by such person in favor of the Mergers, and to not take any action to solicit, knowingly encourage, initiate, engage in or otherwise knowingly facilitate discussions or negotiations with, provide any information to, or enter into any agreement with any person (other than the parties to the Merger Agreement) concerning any merger, sale of a significant portion of assets or similar transaction involving Meten or EdtechX until such time as the Mergers close or the Merger Agreement is terminated in accordance with its terms.

Conditions to Closing

General Conditions

Consummation of the Mergers is conditioned on approval of the Merger Agreement and contemplated transactions by EdtechX's stockholders and by Meten's shareholders. In addition, the consummation of the Mergers is conditioned upon, among other things:

● all waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended shall have expired and no order, judgment, injunction, decree, writ, stipulation, determination or award, in each case, entered by or with any governmental authority or statute, rule or regulation that is in effect and prohibits or enjoins the consummation of the Transactions;

● EdtechX having at least $5,000,001 of net tangible assets remaining immediately prior to, or upon the closing of, the business combination, after taking into account payments to holders of shares of EdtechX's common stock that properly demanded that EdtechX convert their common stock for their pro rata share of the trust account;

● no material adverse effect with respect to EdtechX or Meten shall have occurred between the date of the Merger Agreement and the closing of the transactions; and

● the Registration Statement shall have been declared effective by the Securities and Exchange Commission.

Meten's, Holdco's and the Merger Subs' Conditions to Closing

The obligations of Meten, Holdco, and the Merger Subs to consummate the Mergers are also conditioned upon, among other things:

● the accuracy of the representations and warranties of EdtechX (subject to certain bring-down standards);

● performance of the covenants of EdtechX required by the Agreement to be performed on or prior to the closing;

● the common stock and warrants of EdtechX continuing to be listed on the Nasdaq Capital Market up to the closing;

● the Azimut Investment having closed and EdtechX having at least $30,000,000 in cash, net of disbursements to EdtechX public shareholders who elect to have their shares of common stock converted to cash, and together with any funds in connection with the Azimut Investment and the Financing, which amount shall be reduced to $20,000,000 in the event that the parties raise less than $10 million in the Financing (the "Minimum Cash Closing Condition");

● resignations and appointments of certain officers and directors as specified in the Merger Agreement;

● the execution and delivery of the Voting Agreement by EdtechX and certain EdtechX stockholders;

● the execution and delivery of the Amended Stock Escrow Agreement;

● the execution and delivery of the Amended Registration Rights Agreement;

● the execution and delivery of the Support Agreement by EdtechX and certain stockholders of EdtechX; and

● the approval for listing of the Holdco ordinary shares on the Nasdaq Capital Market or the New York Stock Exchange, subject to official notice of approval and satisfaction of public holder requirements;.

EdtechX's Conditions to Closing

The obligations of EdtechX to consummate the Mergers are also conditioned upon, among other things:

● the accuracy of the representations and warranties of Meten, Holdco, and the Merger Subs (subject to certain bring-down standards);

● performance of the covenants of Meten, Holdco, and the Merger Subs required by the Merger Agreement to be performed on or prior to the closing;

● the execution and delivery of the Voting Agreement by Meten and certain shareholders of Meten; and

● the execution and delivery of the Lock-up Agreements by certain shareholders of Meten.

The Merger Agreement may be terminated at any time, but not later than the closing, under certain agreed circumstances. In the event of the termination of the Merger Agreement by EdtechX due to Meten's failure to materially comply with any applicable legal requirements, then Meten will pay EdtechX within two business days after such termination a termination fee equal to $125,000. In the event of the termination of the Merger Agreement by EdtechX due to Meten's breach of the exclusivity covenants contained in the Merger Agreement, then Meten will pay EdtechX within two business days after such termination a termination fee equal to $350,000. In the event of the termination of the Merger Agreement by Meten due to EdtechX's failure to materially comply with any applicable legal requirements, then EdtechX will pay Meten within two business days after such termination a termination fee equal to $125,000. In the event of the termination of the Merger Agreement by Meten due to EdtechX's breach of the exclusivity covenants contained in the Merger Agreement, then EdtechX will pay Meten within two business days after such termination a termination fee equal to $350,000.

Management of Holdco after the Mergers

After the Mergers, Holdco's board of directors will consist of nine directors, two of whom will be appointed by EdtechX. The executive officers of Meten will retain their positions with the Surviving Cayman Islands Company and will become officers of Holdco after the closing.