0001213900-22-026568.txt : 20220513 0001213900-22-026568.hdr.sgml : 20220513 20220513171818 ACCESSION NUMBER: 0001213900-22-026568 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 16 CONFORMED PERIOD OF REPORT: 20220511 ITEM INFORMATION: Entry into a Material Definitive Agreement ITEM INFORMATION: Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant ITEM INFORMATION: Unregistered Sales of Equity Securities ITEM INFORMATION: Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers: Compensatory Arrangements of Certain Officers ITEM INFORMATION: Other Events ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20220513 DATE AS OF CHANGE: 20220513 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SHIFT TECHNOLOGIES, INC. CENTRAL INDEX KEY: 0001762322 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-AUTO DEALERS & GASOLINE STATIONS [5500] IRS NUMBER: 825325852 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-38839 FILM NUMBER: 22924050 BUSINESS ADDRESS: STREET 1: 2525 16TH STREET STREET 2: SUITE 316 CITY: SAN FRANCISCO STATE: CA ZIP: 94103 BUSINESS PHONE: (815) 575-6739 MAIL ADDRESS: STREET 1: 2525 16TH STREET STREET 2: SUITE 316 CITY: SAN FRANCISCO STATE: CA ZIP: 94103 FORMER COMPANY: FORMER CONFORMED NAME: Insurance Acquisition Corp. DATE OF NAME CHANGE: 20181218 8-K 1 ea159944-8k_shifttech.htm CURRENT REPORT
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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) May 13, 2022 (May 11, 2022)

 

SHIFT TECHNOLOGIES, INC.

(Exact name of registrant as specified in its charter)

 

Delaware   001-38839   82-5325852
(State or other jurisdiction of
incorporation or organization)
  (Commission File Number)   (I.R.S. Employer
Identification No.)

 

290 Division Street, Suite 400, San Francisco, CA   94103
(Address of principal executive offices)   (Zip Code)

 

Registrant's telephone number, including area code: (855) 575-6739

 

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 240a-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 240.13a-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
Class A common stock, par value $0.0001 per share   SFT   Nasdaq Capital Market

 

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

 

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) if the Exchange Act.

 

 

 

 

 

 

Introductory Note

 

As previously disclosed, on March 14, 2022, Shift Technologies, Inc., a Delaware corporation (the “Company”), entered into:

 

·an asset purchase agreement (the “Original Purchase Agreement”) with Fair Financial Corp., a Delaware corporation (“Fair”), Fair IP, LLC, a Delaware limited liability company (“Fair IP” and together with Fair, the “Sellers”), and (for limited purposes) Cayman Project 2 Limited, a company incorporated under the laws of Cayman Islands (“SoftBank”), pursuant to which the Company agreed to acquire or cause a designated affiliate to acquire certain automotive dealer marketplace assets from the Sellers, subject to the terms and conditions of the Original Purchase Agreement, including consideration for the transferred assets consisting of cash in the amount of $15,000,000 and an amount of shares of the Company’s Class A common stock, par value $0.0001 per share (the “Class A common stock”), equal to 2.5% of the issued and outstanding shares of the Company’s Class A common stock as of immediately prior to the closing of the transactions contemplated by the Original Purchase Agreement; and
   
·in connection with the Original Purchase Agreement, a commitment letter (the “Commitment Letter”) with SoftBank Group Corp. (“SoftBank Group”), pursuant to which SoftBank Group committed to purchase in a private placement $20,000,000 of senior unsecured notes on the terms and subject to the conditions set forth in the Commitment Letter, and any definitive financing documentation, consisting principally of a note purchase agreement. 

 

Item 1.01 Entry into a Material Definitive Agreement.

 

Amended and Restated Equity and Asset Purchase Agreement

 

On May 11, 2022 (the “Closing Date”), the Company entered into an Amended and Restated Equity and Asset Purchase Agreement (the “Amended and Restated Purchase Agreement”), by and among the Company, the Sellers and SoftBank. The Amended and Restated Purchase Agreement amended and restated the Original Purchase Agreement in its entirety.

 

Also on May 11, 2022, the Company completed the acquisition of certain automotive dealer marketplace assets and all of the issued and outstanding limited liability company interests of Fair Dealer Services, LLC, a Delaware limited liability company (collectively, the “Acquired Assets”), from the Sellers, pursuant to the terms of the Amended and Restated Purchase Agreement. The consideration for the Acquired Assets consisted of cash in the amount of $15,000,000 (the “Cash Consideration”) and 2,066,978 shares of the Company’s Class A common stock (such shares being equal to 2.5% of the issued and outstanding shares of the Company’s Class A common stock as of immediately prior to the closing of the transactions contemplated by the Amended and Restated Purchase Agreement) (the “Stock Consideration”). The Company financed the acquisition of the Acquired Assets through the issuance of new debt financing pursuant to the Note Purchase Agreement, as described in more detail below.

 

The Amended and Restated Purchase Agreement includes customary representations, warranties and covenants from the parties thereto, including certain indemnification and confidentiality covenants applicable.

 

The foregoing description of the Amended and Restated Purchase Agreement set forth herein is subject to, and qualified in its entirety by reference to, the full text of the Amended and Restated Purchase Agreement, a copy of which is attached as Exhibit 2.1 hereto and is incorporated by reference herein. 

 

Lockup and Registration Rights Agreement

 

On the Closing Date, in connection with the Amended and Restated Purchase Agreement, the Company and SoftBank entered into a letter agreement (the “Lockup and Registration Rights Agreement”), pursuant to which, among other things, (i) SoftBank agreed to certain lockup restrictions and (ii) the Company agreed to register for resale, subject to the terms and conditions set forth therein, the Stock Consideration.

 

The Lockup and Registration Rights Agreement provides among other things that, subject to the terms, conditions and exceptions specified therein, from the Closing Date until the date that is one hundred eighty (180) days following the Closing Date (the “Lock-Up Period”), SoftBank shall not sell, offer to sell, contract or agree to sell, grant any option to purchase or otherwise dispose of, directly or indirectly, the Stock Consideration, establish or increase a put equivalent position or liquidate or decrease a call equivalent position within the meaning of Section 16 of the Securities Exchange Act of 1934, as amended, enter into any arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of any of the Stock Consideration, or publicly announce any intention to effect any transaction herein.

 

The Lockup and Registration Rights Agreement further provides, subject to the terms, conditions and exceptions specified therein, certain piggyback registration rights to SoftBank with respect to the Stock Consideration.

 

The foregoing description of the Lockup and Registration Rights Agreement is subject to, and qualified in its entirety by reference to, the full text of the Lockup and Registration Rights Agreement, a copy of which is attached as Exhibit 10.1 hereto and is incorporated by reference herein.

 

1

 

 

Note Purchase Agreement

 

On the Closing Date and in accordance with the Commitment Letter, the Company entered into a Note Purchase Agreement (the “Note Purchase Agreement”) by and between the Company, each of the Company’s subsidiaries party thereto as guarantors (each, a “Guarantor” and, collectively, the “Guarantors”), and SB LL Holdco, Inc., a Delaware corporation (the “Purchaser”). Pursuant to the Note Purchase Agreement and the terms and conditions set forth therein, the Company agreed to issue and sell, and the Purchaser agreed to purchase, a 6.00% Senior Unsecured Note due 2025 with a principal amount of $20,000,000 (the “Note”) in a private placement in reliance on an exemption from registration under the Securities Act of 1933, as amended (the “Securities Act”).

 

The Note bears interest at a rate of 6.00% per annum and will mature on May 11, 2025. The Company may, at its option, prepay the Note in its entirety (i) if prior to November 11, 2024, at 100% of the principal amount plus accrued and unpaid interest thereon to (but excluding) such date and a premium specified therein, or (ii) if on or after November 11, 2024, at 100% of the principal amount plus accrued and unpaid interest thereon to (but excluding) such date. The Note is senior unsecured indebtedness of the Company.

 

The Company will use the proceeds from the sale of the Note to (a) finance the Cash Consideration, (b) pay certain costs and expenses associated with the Note and Note Purchase Agreement and (c) provide for certain working capital needs and general corporate purposes, including investing in improvements of the Acquired Assets.

 

Each Guarantor, subject to the terms and conditions set forth in the Note Purchase Agreement, agreed to irrevocably and unconditionally guarantee to Purchaser the payment of principal, premium (if any) and interest from time to time payable by the Company, and accordingly undertake to pay Purchaser any amount or amounts which Company is at any time liable to pay in respect of the Note and which the Company has failed to pay, including amounts that become due in advance of their stated maturity as a result of acceleration (the “Guarantee”). The obligations of each Guarantor under its Guarantee constitute direct, unsecured and unsubordinated obligations of such Guarantor.

 

The foregoing description of the Note Purchase Agreement is subject to, and qualified in its entirety by reference to, the full text of the Note Purchase Agreement, a copy of which is attached as Exhibit 10.2 hereto and is incorporated by reference herein.

 

Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

 

The disclosure set forth above in Item 1.01 of this Current Report on Form 8-K with respect to the Note Purchase Agreement is incorporated by reference herein.

 

Item 3.02 Unregistered Sales of Equity Securities.

 

The shares of Class A common stock issued as Stock Consideration pursuant to the Amended and Restated Purchase Agreement were not registered under the Securities Act. Such shares were issued in reliance on an exemption from such registration requirements contained in Section 4(a)(2) of the Securities Act.

 

The disclosure set forth above in Item 1.01 of this Current Report on Form 8-K is incorporated by reference herein.

  

2

 

 

Item 5.02. Compensatory Arrangement of Jeff Clementz.

 

On May 12, 2022, Shift Platform, Inc. (“Shift Platform”), a wholly-owned subsidiary of the Company entered into a Second Amendment to the Employment Agreement with Jeff Clementz, President of the Company (the “Second Clementz Amendment”), amending that certain Employment Agreement by between Shift Platform and Mr. Clementz dated as of September 27, 2021, as amended on February 24, 2022 (the “Clementz Agreement”).

 

The Second Clementz Amendment accelerates the payment dates of the Special Cash Incentive (as defined in the Clementz Agreement), subject to continued employment through the applicable payment date, with the first installment equal to $500,000 to be paid on the first payroll date that occurs after September 30, 2022, and the second installment equal to $1,500,000 to be paid on the first payroll date that occurs after September 30, 2023. The Second Clementz Amendment also provides that in the event that Mr. Clementz voluntarily resigns employment with the Company without Good Reason (as defined in the Clementz Agreement), after September 30, 2022, but prior to September 30, 2023, Mr. Clementz must return to the Company the amount equal to the portion of the Special Cash Incentive actually received as of such time. Additionally, the Second Clementz Amendment provides that upon a “Change in Control Termination” (as defined in the Second Clementz Amendment), Mr. Clementz will be eligible to receive the full payment of the Special Cash Incentive (less any portion already paid) and full vesting of all outstanding unvested equity awards held by Mr. Clementz under the Shift Technologies, Inc. 2020 Omnibus Equity Compensation Plan, as amended, subject to Mr. Clementz’s employment being in good standing as of his termination date and executing a release of claims in favor of the Company. In addition, the Second Clementz Amendment provides that if Mr. Clementz voluntarily resigns from his position for any reason or no reason, no payments shall be due under the Clementz Agreement except (i) the Accrued Obligations (as defined in the Clementz Agreement) and (ii) if Mr. Clementz voluntarily resigns after September 30, 2022, but prior to payment of the 2022 Annual Bonus, then he will be paid a prorated portion of the 2022 Annual Bonus (as defined in the Second Clementz Amendment) at such time that bonuses are paid to other employees of the Company, subject to achievement of the applicable performance criteria.

 

The Second Clementz Amendment also amended the 2021 Equity Grant (as defined in the Clementz Agreement) to (i) adjust the vesting criteria, including elimination of performance-based vesting criteria, and (ii) provide for accelerated vesting of the 2021 Equity Grant in certain circumstances. The Second Clementz Amendment also amended the Clementz Agreement to combine the “Year Three Special Equity Grant” (as defined in the Clementz Agreement) and the “Year Four Special Equity Grant” (as defined in the Clementz Agreement) into a single Special Equity Grant (as defined in the Second Clementz Amendment), and increase the restricted stock units (“RSUs”) underlying such grant to a total of 586,339 RSUs, to be granted no later than May 31, 2022. The Special Equity Grant shall vest in full on September 30, 2023. Each of the 2021 Equity Grant and the Special Equity Grant is subject to Mr. Clementz’s continued employment with the Company through the applicable vesting dates, and, for the Special Equity Grant, achievement of performance acceptable to the Board. Additionally, the Second Clementz Amendment provides that if the Company terminates Mr. Clementz’s employment without Cause (as defined in the Clementz Agreement) after September 30, 2022 but prior to September 30, 2023, and subject to Mr. Clementz’s employment being in good standing as of the date of such termination of employment and the Release Requirement (as defined in the Clementz Agreement), Mr. Clementz shall receive a prorated portion of each of the 2021 Equity Grant and the Special Equity Grant.

 

The foregoing descriptions of the Second Clementz Amendment are not complete and are qualified in their entirety by reference to the full text of such agreements, copies of which will be filed as exhibits to the Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2022.

 

3

 

 

Item 8.01 Other Events.

 

On May 12, 2022, the Company issued a press release announcing the consummation of the transactions contemplated by the Amended and Restated Purchase Agreement and the Note Purchase Agreement. The press release is filed as Exhibit 99.1 hereto and is hereby incorporated herein by reference.

 

Item 9.01. Financial Statements and Exhibits.

 

Exhibit

Number

  Description
2.1*   Amended and Restated Equity and Asset Purchase Agreement by and among Shift Technologies, Inc., Fair Financial Corp., Fair IP, LLC, and, solely for purposes of Article IV, Article IX and Article X thereof, Cayman Project 2 Limited.
10.1   Letter Agreement, dated May 11, 2022, by and between Shift Technologies, Inc. and Cayman Project 2 Limited.
10.2*   Note Purchase Agreement, dated May 11, 2022, by and between Shift Technologies, Inc., the subsidiaries of Shift Technologies, Inc. as guarantors thereto, and SB LL Holdco, Inc., as purchaser.
99.1   Press release dated May 12, 2022, released by Shift Technologies, Inc.
104   Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

*Schedules and similar attachments have been omitted pursuant to Item 601(a)(5) of Regulation S-K. Shift agrees to furnish a supplemental copy of any omitted schedule or attachment to the SEC upon request.

 

4

 

 

SIGNATURE

 

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.

 

  SHIFT TECHNOLOGIES, INC.
   
Dated: May 13, 2022 /s/ George Arison
  Name:   George Arison
  Title: Chief Executive Officer and Chairman

 

 

 

5

 

 

EX-2.1 2 ea159944ex2-1_shifttech.htm AMENDED AND RESTATED EQUITY AND ASSET PURCHASE AGREEMENT BY AND AMONG SHIFT TECHNOLOGIES, INC., FAIR FINANCIAL CORP., FAIR IP, LLC, AND, SOLELY FOR PURPOSES OF ARTICLE IV, ARTICLE IX AND ARTICLE X THEREOF, CAYMAN PROJECT 2 LIMITED

Exhibit 2.1

 

EXECUTION VERSION

 

 

 

AMENDED AND RESTATED

 

EQUITY AND ASSET PURCHASE AGREEMENT

 

dated as of

 

May 11, 2022

 

by and among

 

FAIR FINANCIAL CORP.,

 

Fair ip, llc,

 

SHIFT TECHNOLOGIES, INC.

 

and, solely for purposes of Article IV, Article IX and Article X, CAYMAN PROJECT 2 LIMITED

 

 

 

 

 

 

TABLE OF CONTENTS

 

    Page
     
ARTICLE I CERTAIN DEFINITIONS - 2 -
     
1.1 Definitions - 2 -
     
1.2 Construction - 8 -
     
ARTICLE II PURCHASE AND SALE OF ASSETS; LIABILITIES ASSUMED; PURCHASE AND SALE OF TRANSFERRED INTERESTS - 9 -
     
2.1 Closing - 9 -
     
2.2 Purchase and Sale of the Transferred Assets and Transferred Interests - 9 -
     
2.3 Excluded Assets - 9 -
     
2.4 Nonassignable Assets; Transferred Contracts - 9 -
     
2.5 Assumption of Assumed Liabilities - 10 -
     
2.6 Excluded Liabilities - 10 -
     
2.7 Consideration - 10 -
     
2.8 Closing Deliveries - 10 -
     
2.9 Purchase Price Allocation. - 12 -
     
2.10 Withholding - 12 -
     
2.11 Transfer of Transferred Company Licenses - 12 -
     
ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLERS - 12 -
     
3.1 Organization of Sellers; Organization of the Transferred Company - 12 -
     
3.2 Due Authorization - 13 -
     
3.3 Capitalization; Subsidiaries - 13 -
     
3.4 No Conflict - 13 -
     
3.5 Litigation and Proceedings - 13 -
     
3.6 Legal Compliance - 14 -
     
3.7 Contracts; No Defaults - 14 -
     
3.8 Employees and Labor Relations - 15 -
     
3.9 Taxes - 15 -
     
3.10 Brokers’ Fees - 16 -
     
3.11 Permits - 16 -
     
3.12 Title to Transferred Assets - 16 -
     
3.13 Real Property - 16 -

 

i

 

 

3.14 Intellectual Property. - 17 -
     
3.15 Absence of Changes - 18 -
     
3.16 Affiliate Transactions - 18 -
     
3.17 Governmental Consents - 18 -
     
3.18 Transferred Company Matters - 18 -
     
3.19 No Additional Representations or Warranties - 18 -
     
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER - 19 -
     
4.1 Corporate Organization - 19 -
     
4.2 Due Authorization - 19 -
     
4.3 No Conflict - 19 -
     
4.4 Litigation and Proceedings - 19 -
     
4.5 Solvency - 20 -
     
4.6 Governmental Consents - 20 -
     
4.7 No Defaults - 20 -
     
4.8 Capitalization - 20 -
     
4.9 Exchange Act Reports; Financial Statements - 20 -
     
4.10 No Bankruptcy or Insolvency - 21 -
     
4.11 Intellectual Property - 21 -
     
4.12 Brokers’ Fees - 22 -
     
4.13 OFAC - 22 -
     
4.14 Anti-Corruption - 22 -
     
4.15 CFIUS - 22 -
     
4.16 No Additional Representations or Warranties - 22 -
     
ARTICLE V COVENANTS OF SELLERS - 22 -
     
5.1 Conduct of Business - 22 -
     
5.2 Inspection - 24 -
     
5.3 No Solicitation - 25 -
     
5.4 Reserved - 25 -
     
5.5 Confidentiality - 25 -
     
5.6 Notice of Certain Events - 26 -
     
ARTICLE VI JOINT COVENANTS - 26 -
     
6.1 Support of Transaction - 26 -
     
6.2 Further Assurances - 26 -
     
6.3 Tax Matters - 27 -

 

ii

 

 

6.4 Intellectual Property - 28 -
     
6.5 Hiring of Seller Personnel; Future Benefits - 28 -
     
6.6 Other Post-Closing Assistance - 29 -
     
ARTICLE VII CONDITIONS TO OBLIGATIONS - 30 -
     
7.1 Conditions to the Obligations of Buyer and Sellers - 30 -
     
7.2 Conditions to Obligations of Buyer - 30 -
     
7.3 Conditions to the Obligations of Sellers - 30 -
     
7.4 Waiver of Conditions; Frustration of Conditions - 31 -
     
ARTICLE VIII TERMINATION/EFFECTIVENESS - 31 -
     
8.1 Termination - 31 -
     
8.2 Effect of Termination - 32 -
     
ARTICLE IX INDEMNIFICATION - 32 -
     
9.1 Survival of Representations, Warranties and Covenants - 32 -
     
9.2 Indemnification - 32 -
     
9.3 Indemnification Claim Procedures - 33 -
     
9.4 Limitations on Indemnification Liability; Calculation of Damages - 34 -
     
9.5 Indemnification Sole and Exclusive Remedy - 35 -
     
9.6 Satisfaction of Indemnification Claims; Rights of Setoff. - 36 -
     
ARTICLE X MISCELLANEOUS - 36 -
     
10.1 Waiver - 36 -
     
10.2 Notices - 36 -
     
10.3 Assignment - 38 -
     
10.4 Rights of Third Parties - 38 -
     
10.5 Expenses - 38 -
     
10.6 Governing Law - 38 -
     
10.7 Captions; Counterparts - 38 -
     
10.8 Schedules and Annexes - 38 -
     
10.9 Entire Agreement - 38 -
     
10.10 Amendments - 38 -
     
10.11 Publicity - 39 -
     
10.12 Severability - 39 -
     
10.13 Bulk Transfer Laws - 39 -
     
10.14 Jurisdiction; Waiver of Jury Trial - 39 -
     
10.15 Enforcement - 39 -

 

iii

 

 

Schedubles  
   
Schedule 1.1(a) Permitted Liens
   
Schedule 1.1(b) Excluded Seller Personnel
   
Schedule 3.3 Subsidiaries
   
Schedule 3.4 No Conflict
   
Schedule 3.7(a) Contracts; No Defaults
   
Schedule 3.8(a) Company Benefit Plans
   
Schedule 3.9(d) Seller Personnel
   
Schedule 3.12 Permits
   
Schedule 3.13 Real Property
   
Schedule 3.14(a) Scheduled Intellectual Property
   
Schedule 3.14(g) List of Officers, Directors or Employees involved in the Development of Seller’s Intellectual Property
   
Schedule 3.15 Absence of Changes
   
Schedule 3.16 Affiliate Transactions
   
Schedule 4.3 No Conflict
   
Schedule 5.1 Conduct of Business
   
Schedule 8.2(e) Closing Consents
   
Schedule A(iii) Intangible Assets Related to the Business
   
Schedule A(xii) Other Tangible Assets
   
Schedule A(xiv) Other Transferred Assets
   
Schedule B(xii) Other Excluded Assets
   
Annexes  
   
Annex A Transferred Assets
   
Annex B Excluded Assets
   
Annex C Excluded Liabilities
   
Exhibits  
   
Exhibit A Form of Bill of Sale, Assignment and Assumption

 

iv

 

 

AMENDED AND RESTATED

 

EQUITY AND ASSET PURCHASE AGREEMENT

 

This Amended and Restated Equity and Asset Purchase Agreement (this “Agreement”), dated as of May 11, 2022, is entered into by and among Shift Technologies, Inc., a Delaware corporation (“Buyer”), Fair Financial Corp., a Delaware corporation (“Fair”), and Fair IP, LLC, a Delaware limited liability company (“Fair IP” and, together with Fair, each a “Seller” and collectively the “Sellers”), and, solely for purposes of Article IV, Article IX and Article X hereof, Cayman Project 2 Limited, a company incorporated under the laws of Cayman Islands (“Softbank”). Buyer, Sellers and SoftBank may each be referred to as a “Party” or collectively as the “Parties.”

 

RECITALS

 

WHEREAS, Sellers own the Transferred Assets (as defined below);

 

WHEREAS, Fair owns all of the issued and outstanding limited liability company interests (the “Transferred Interests”) of Fair Dealer Services, LLC, a Delaware limited liability company (the “Transferred Company”);

 

WHEREAS, Sellers seek to convey, transfer and sell the Transferred Assets to Buyer or its designated Affiliate, and Buyer or its designated Affiliate seeks to acquire, obtain and purchase the Transferred Assets from Sellers, all on the terms and subject to the conditions set forth in this Agreement;

 

WHEREAS, Fair seeks to convey, transfer and sell the Transferred Interests to Buyer or its designated Affiliate, and Buyer or its designated Affiliate seeks to acquire, obtain and purchase the Transferred Interests from Fair, all on the terms and subject to the conditions set forth in this Agreement;

 

WHEREAS, for U.S. federal income tax purposes, the Parties intend that the transactions contemplated by this Agreement shall be treated as a purchase and sale of the Transferred Assets and Transferred Interests, and shall not qualify as a “reorganization” within the meaning of Section 368(a) of the Code.

 

WHEREAS, prior to the Closing, the Buyer intends to organize (i) a limited liability company as a direct Subsidiary of Buyer (“Newco 1”), and (ii) a limited liability as a direct Subsidiary of Newco 1 (“Newco 2”), that Sellers shall convey, transfer and sell the Transferred Assets and Transferred Interests to Newco 2, and that Newco 2 shall pay the Purchase Price therefor;

 

WHEREAS, SoftBank and Buyer have duly executed and delivered a commitment letter, dated March 14, 2022, pursuant to which SoftBank has committed to purchase certain debt and equity securities of Buyer concurrently with the Closing in the aggregate amount set forth therein (as defined below) (the “Commitment Letter”, and the transactions contemplated thereby, the “Securities Transaction”);

 

WHEREAS, the Parties entered into that certain Asset Purchase Agreement, dated as of March 14, 2022 (the “Original Agreement”), pursuant to which the Sellers agreed to convey, transfer and sell the Transferred Assets to Buyer or its designated Affiliate, and Buyer or its designated Affiliate agreed to acquire, obtain and purchase the Transferred Assets from Sellers, all on the terms and subject to the conditions set forth in the Original Agreement; and

 

WHEREAS, the Parties desire to amend and restate the Original Agreement in its entirety, as set forth in this Agreement.

 

- 1 -

 

 

NOW, THEREFORE, in consideration of the foregoing and the respective representations, warranties, covenants and agreements set forth in this Agreement, and intending to be legally bound hereby, SoftBank (solely for purposes of Article IV, Article IX and Article X), Buyer and Sellers agree as follows:

 

ARTICLE I
CERTAIN DEFINITIONS

 

1.1 Definitions. As used herein, the following terms shall have the following meaning:

 

Action” means any claim, action, suit, audit, assessment, arbitration, inquiry, proceeding or investigation, in each case, at Law or in equity by or before any Governmental Authority.

 

Affiliate” means, with respect to any specified Person, any Person that, directly or indirectly, controls, is controlled by, or is under common control with, such specified Person, through one or more intermediaries or otherwise. For the avoidance of doubt, an Affiliate shall include, with respect to any specified Person, any Subsidiary of such Person, and with respect to any specified individual Person, any spouse, sibling or child of such Person. For purposes of this definition, the term “control” (including the terms “controlling”, “under common control with” and “controlled by”) means the possession, direct or indirect, of the power to direct or cause the direction of the management or policies of a Person, whether through the ownership of voting securities, by Contract or otherwise.

 

Affiliate Arrangement” has the meaning specified in Section 3.16.

 

Agreement” has the meaning specified in the Preamble hereto.

 

Ancillary Agreements” means collectively those agreements, the forms of which are set forth on Exhibits A and B hereto to be entered into at the Closing between Buyer or its Affiliates and Sellers or Sellers’ Affiliates and any other certificates or documents to be delivered at the Closing pursuant to ARTICLE VII.

 

Approved Indemnification Claim” has the meaning specified in Section 9.3(c).

 

Assumed Liabilities” means all Liabilities to the extent solely relating to or arising out of the Transferred Assets and the Transferred Company, in each case from and after the Closing, and excluding the Excluded Liabilities.

 

Bill of Sale, Assignment and Assumption” has the meaning specified in Section 2.8(a)(i).

 

Books and Records” means all books, ledgers, files, reports, plans, records, manuals and other materials (in any form or medium) related to Sellers.

 

Broker Fees” has the meaning specified in Section 3.10.

 

Business Day” means any day that is not a Saturday, a Sunday or other day on which the Federal Reserve Bank of New York is closed.

 

Buyer” has the meaning specified in the Preamble hereto.

 

Buyer Common Stock” means the Class A common stock, par value $0.0001 per share, of Buyer.

 

Buyer Cure Period” has the meaning specified in Section 8.1(c)(i).

 

Buyer Indemnified Parties” has the meaning specified in Section 9.2(a).

 

Cap” has the meaning specified in Section 9.4(a)(ii).

 

Cash” of any Person as of any date means cash and cash equivalents (including restricted cash).

 

Cash Consideration” means $15,000,000.

 

Closing” has the meaning specified in Section 2.1.

 

Closing Date” has the meaning specified in Section 2.1.

 

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COBRA” means the Consolidated Omnibus Budget Reconciliation Act of 1985 and the regulations promulgated thereunder.

 

Code” means the Internal Revenue Code of 1986.

 

Commitment Letter” has the meaning specified in the Recitals hereto.

 

Company Benefit Plan” means each “employee benefit plan” as defined in Section 3(3) of ERISA, and any other plan, policy, program, agreement or arrangement, whether subject to ERISA or not and whether written or oral, providing employment, compensation, bonuses, incentive pay, insurance, commissions, equity or securities of any kind, phantom equity, deferred compensation, severance, change in control, redundancy, post-retirement benefits, vacation pay or other paid time off benefits, retention pay, retirement benefits, fringe benefits, profit sharing, growth sharing, or other benefits to any current Seller Personnel, or independent contractor of the Transferred Company or the business of Sellers or any former employee or independent contractor of the Transferred Company or the business of Sellers, which are maintained, sponsored or contributed to by Sellers or any Affiliate (including the Transferred Company) or to which Sellers or any Affiliate (including the Transferred Company) has or could reasonably be expected to have any Liability.

 

Competing Transaction has the meaning specified in Section 5.3.

 

Confidentiality Agreement” has the meaning specified in Section 10.9.

 

Contracts” means any legally binding contracts, agreements, subcontracts, leases, subleases or purchase orders.

 

Damages” means, with respect to any Person, any losses, damages, Liabilities, Taxes, interest, judgments, penalties, and out-of-pocket costs and expenses (including reasonable attorneys’ fees and expenses).

 

Deductible Amount” has the meaning specified in Section 9.4(a)(i).

 

Dispute Notice” has the meaning specified in Section 9.3(c).

 

Dispute Period” has the meaning specified in Section 9.3(c).

 

ERISA” means the Employee Retirement Income Security Act of 1974.

 

Excluded Assets” has the meaning specified in Annex B.

 

Excluded Contracts” has the meaning specified in Annex B.

 

Excluded Liabilities” has the meaning specified in Annex C.

 

Fleet Business” means the business operations of Sellers and their Affiliates related to motor vehicle purchases, sales, leasing, subscription products and the related operations as conducted between January 1, 2020, up to the date immediately prior to the date this Agreement has been executed.

 

Fundamental Representations” has the meaning specified in Section 7.2(a)(i).

 

GAAP” means United States generally accepted accounting principles, consistently applied, as in effect on the date hereof.

 

Governmental Authority” means any federal, state, provincial, municipal, national, local or foreign government, governmental authority, regulatory or administrative agency, securities exchange, governmental commission, department, board, bureau, agency, instrumentality, court or tribunal.

 

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Governmental Order” means any order, judgment, injunction, decree, writ, stipulation, determination or award, in each case, entered by or with any Governmental Authority, including, for the avoidance of doubt, any order prohibiting Buyer from purchasing the Transferred Assets or Transferred Interests.

 

Indebtedness” means, with respect to any Person and, if an entity, each of its Affiliates, (i) all indebtedness for the repayment of borrowed money; (ii) all obligations represented by bonds, debentures, notes, letters of credit or similar instruments; (iii) all obligations to pay the deferred purchase or acquisition price of assets, property or services, other than trade accounts payable (other than for borrowed money) incurred in the Ordinary Course; (iv) all accrued and unpaid interest on any of the foregoing, and all premiums, penalties, fees and other amounts related to the payment of such amounts on the Closing Date; and (v) indebtedness of other Persons referred to in clauses (i) through (iv) above guaranteed directly or indirectly in any manner by such Person or any of its Affiliates.

 

Indemnification Claim” has the meaning specified in Section 9.3(a).

 

Indemnified Party” has the meaning specified in Section 9.3(a).

 

Indemnitor” means the Party required to provide indemnification pursuant to Section 9.3, as the case may be.

 

Intellectual Property” means any and all of the following, whether protected, created or arising under the Laws of the United States or any other jurisdiction worldwide or under any international convention, and all rights in, arising from or associated with the following: (1) all patents and industrial designs and applications therefor and all reissues, divisions, re-examinations, renewals, extensions, provisionals, substitutions, continuations and continuations-in-part thereof, and equivalent or similar rights anywhere in the world in inventions and discoveries including, without limitation, invention disclosures; (2) all trade secrets and other proprietary information which derives independent economic value from not being generally known to the public; (3) all copyrights, copyrights registrations and applications therefor; (4) all uniform resource locators, email and other internet addresses and domain names and applications and registrations therefor; (5) all trade names, corporate names, logos, slogans, trade dress, trademarks, service marks, and trademark and service mark registrations and applications therefor and all goodwill associated therewith; (6) rights of publicity; (7) moral rights and rights of attribution; (8) all Software; and (9) all documentation, including user manuals and training materials relating to the foregoing.

 

IRS” means the U.S. Internal Revenue Service.

 

Knowledge of Buyer” means that Buyer will be deemed to have “knowledge” of a particular fact, matter or thing if George Arison or Henry Bird, or any other executive officer of Buyer, is actually aware of such particular fact, matter or thing or would have been reasonably expected to learn about such particular fact, matter or thing after reasonable inquiry.

 

Knowledge of Sellers” means that Sellers will be deemed to have “knowledge” of a particular fact, matter or thing if Bradley Stewart, Mark Long, or Marc Bonanni, or any other executive officer of any Seller, is actually aware of such particular fact, matter or thing or would have been reasonably expected to learn about such particular fact, matter or thing after reasonable inquiry.

 

Law” means any statute, law, ordinance, rule, regulation, guidance or Governmental Order, in each case, of any Governmental Authority, including all applicable rules and regulations (including the Securities Act, Foreign Corrupt Practices Act of 1977, the Arms Export Control Act (22 U.S.C. § 2778), the International Traffic in Arms Regulations (22 C.F.R. § 120 et. seq.), the Export Administration Regulations (15 C.F.R. § 730 et. seq.), the Office of Foreign Assets Control regulations) and the equivalent laws in any jurisdiction in which any Seller or the Transferred Company operates.

 

Liabilities” means any and all debts, liabilities, deficiencies, assessments, Taxes, fines, penalties, commitments and obligations of any kind, whether fixed, contingent or absolute, matured or unmatured, liquidated or unliquidated, accrued or not accrued, asserted or not asserted, known or unknown, determined, determinable or otherwise, whenever or however arising (including, whether arising out of any Contract or tort based on negligence or strict liability) and whether or not the same would be required by GAAP to be reflected in financial statements or disclosed in the notes thereto.

 

Lien” means any mortgage, deed of trust, pledge, hypothecation, encumbrance, security interest, right of others, ownership interest of others, charge, claim, lease, sublease, license, occupancy agreement, adverse claim or interest, easement, covenant, condition, restriction, encroachment, burden, title defect, title retention agreement, voting trust agreement, interest, equity, option (including any option or right of purchase), lien, right of first refusal, charge or other restrictions or limitations of any nature whatsoever, including such as may arise under any Contract.

 

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Material Adverse Effect” means, (i) with respect to the Sellers, a material adverse effect on the business of Sellers or the Transferred Company, results of operations, assets, liabilities, or condition (financial or otherwise) of the Sellers or the Transferred Company; provided, however, that in no event will any of the following (or the effect of any of the following), alone or in combination, be deemed to constitute, or be taken into account in determining whether there has been or will be, a “Material Adverse Effect” on or in respect of the Sellers or the Transferred Company: (A) any change in Law, regulatory policies, accounting standards or principles (including GAAP) or any guidance relating thereto or interpretation thereof, (B) any change in interest rates or economic, political, business or financial market conditions generally (including any changes in credit, financial, commodities, securities or banking markets), (C) any change generally affecting any of the industries in which the Sellers or the Transferred Company operate or the economy as a whole, (D) the announcement or the execution of this Agreement, the pendency or consummation of the transactions contemplated hereby or thereby or the performance of such agreements, (E) any action taken or not taken at the express written request of Buyer, (F) any acts of terrorism, sabotage, war, the outbreak or escalation of hostilities, weather conditions, change in geopolitical conditions or other force majeure events, (G) any change resulting from Sellers’ or the Transferred Company’s cessation of business operations, or (H) the identity of Buyer; provided, in the cases of clauses (A), (B), (C) and (F), that such changes, developments, facts, circumstances or effects do not, individually or in the aggregate, have a disproportionate adverse impact on the Sellers or the Transferred Company relative to other companies or businesses in the same industries or geographies in which the Sellers or the Transferred Company operate; and (ii) with respect to Buyer, a material adverse effect on (1) the ability of Buyer, in a timely manner, to enter into, to perform its obligations under, or to consummate the transactions contemplated by, this Agreement or (2) the business of Buyer, results of operations, assets, liabilities, or condition (financial or otherwise) of Buyer, provided, however, that in no event will any of the following (or the effect of any of the following), alone or in combination, be deemed to constitute, or be taken into account in determining whether there has been or will be, a “Material Adverse Effect” on or in respect of Buyer: (A) any change in Law, regulatory policies, accounting standards or principles (including GAAP) or any guidance relating thereto or interpretation thereof, (B) any change in interest rates or economic, political, business or financial market conditions generally (including any changes in credit, financial, commodities, securities or banking markets), (C) any change generally affecting any of the industries in which Buyer operates or the economy as a whole, (D) the announcement or the execution of this Agreement, the pendency or consummation of the transactions contemplated hereby or thereby or the performance of such agreements, or (E) any acts of terrorism, sabotage, war, the outbreak or escalation of hostilities, weather conditions, change in geopolitical conditions or other force majeure events; provided, in the cases of clauses (A), (B), (C) and (E), that such changes, developments, facts, circumstances or effects do not, individually or in the aggregate, have a disproportionate adverse impact on Buyer relative to other companies or businesses in the same industries or geographies in which Buyer operates.

 

Material Contract” has the meaning specified in Section 3.7(a).

 

Nasdaq” means the Nasdaq Stock Market.

 

Newco 1” has the meaning specified in the Recitals.

 

Newco 2” has the meaning specified in the Recitals.

 

Offered Personnel” has the meaning specified in Section 6.5(a).

 

Ordinary Course” means, with respect to an action taken by any Person, that such action is consistent with the ordinary course of business and past practices of such Person in the period from January 1, 2020 to the date hereof.

 

Outside Date” means May 31, 2022.

 

Owned Intellectual Property” has the meaning specified in Section 3.14(a).

 

Parties” has the meaning specified in the Preamble hereto.

 

Permit” means any license, import licenses, export license, franchise, consent, permit, certificate, certificate of occupancy, order, authorization, approval or registration, and applications therefor, with any Person, or that are required or appropriate to operate the Transferred Assets or the business or assets of the Transferred Company.

 

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Permitted Liens” means (i) mechanics, materialmen’s, construction and similar Liens incurred in the Ordinary Course with respect to any amounts not yet due and payable or which are being contested in good faith through appropriate proceedings and for which adequate reserves have been established, which are not, individually or in the aggregate, material to the Transferred Assets or the business or assets of the Transferred Company; (ii) Liens for Taxes not yet due and payable; (iii) restrictions on transfer under applicable securities laws, and (iv) Liens described on Schedule 1.1(a).

 

Person” means any individual, firm, corporation, partnership, limited liability company, incorporated or unincorporated association, joint venture, joint stock company, governmental agency or instrumentality or other entity of any kind.

 

Post-Closing Covenants” has the meaning specified in Section 9.1.

 

Post-Closing Tax Period” means (i) any Tax period (or portion thereof) beginning after the Closing Date and (ii) with respect to any Straddle Period, the portion of such Straddle Period beginning after the Closing Date.

 

Pre-Closing Covenants” has the meaning specified in Section 9.1.

 

Pre-Closing Tax Period” means (i) any Tax period (or portion thereof) ending on (and including) or before the Closing Date and (ii) with respect to any Straddle Period, the portion of such Straddle Period ending on (and including) the Closing Date.

 

Purchase Price” means an amount equal to the sum of (i) the Cash Consideration plus (ii) the Stock Consideration.

 

Purchase Price Allocation” has the meaning specified in Section 2.9(a).

 

Remedies Exceptions” has the meaning specified in Section 3.2.

 

Representative” means, with respect to any Person, any director, officer, employee, manager, member, partner, stockholder, agent, attorney, accountant, advisor, consultant or other representative of such Person.

 

Scheduled Intellectual Property” has the meaning specified in Section 3.14(a).

 

Schedules” has the meaning specified in ARTICLE III.

 

Securities Act” means the Securities Act of 1933.

 

Securities Transaction” has the meaning specified in the Recitals hereto.

 

Sellers” has the meaning specified in the Preamble hereto.

 

Seller Cure Period” has the meaning specified in Section 8.1(b)(i).

 

Seller Indemnified Parties” has the meaning specified in Section 9.2(b).

 

Seller Intellectual Property” has the meaning specified in Section 3.14(a).

 

Seller Personnel” means each employee of Sellers prior to the Closing.

 

Seller Software” has the meaning specified in Section 3.15(e).

 

SoftBank” has the meaning specified in the Preamble hereto.

 

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Software” means computer programs, including operating systems, applications, firmware, middleware or other software code, in any form or format, whether in object code or source code.

 

Stock Consideration” means a number of shares of Buyer Common Stock equal to two and a half percent (2.50%) of the issued and outstanding shares of Buyer Common Stock as of immediately prior to the Closing.

 

Straddle Period” has the meaning specified in Section 6.3(a).

 

Subsidiary” means, with respect to a Person, any entity of which more than fifty percent (50%) of the voting power of the equity interests is owned or a majority of the general or limited partner interests are held or controlled, directly or indirectly, by such Person.

 

Superior Transaction” means the sale to a third party of some or all substantially all of the equity interests or assets of Sellers in response to an unsolicited, bona fide, written offer by such third party, in exchange for consideration consisting exclusively of cash or publicly traded equity securities or a combination thereof , that: (a) was not obtained or made as a direct or indirect result of a breach of or any action inconsistent with Section 5.3 of the Agreement; (b) is not subject to a financing contingency; and (c) is for aggregate consideration in excess of the outstanding amount of all Indebtedness of Sellers held by SoftBank or any of its Affiliates after taking into account any payments or expected payments with respect to such Indebtedness of Sellers from the proceeds from the sale of the Fleet Business.

 

Taxes” means all federal, state, provincial, local, foreign or other taxes, government fees or other like assessments or charges of any kind, including all income, gross receipts, license, payroll, employment, excise, severance, stamp, occupation, premium, windfall profits, environmental, customs duties, capital stock, ad valorem, value added, inventory, franchise, profits, withholding, social security (or similar), unemployment, disability, real property, personal property, sales, use, transfer, registration, alternative or add-on minimum, or estimated tax, including any interest, penalty or addition in respect of the foregoing, including any transferee, successor or secondary liability for any Tax.

 

Tax Returns” means any return, declaration, report, statement, information statement or return or other document filed or required to be filed with respect to Taxes, including any amendments or supplements of any of the foregoing.

 

Terminating Buyer Breach” has the meaning specified in Section 8.1(b)(i).

 

Terminating Seller Breach” has the meaning specified in Section 8.1(b)(i).

 

Third Party Action” has the meaning specified in Section 9.3(a).

 

Transaction Expenses” has the meaning specified in Annex C.

 

Transferred Assets” has the meaning specified in Annex A.

 

Transferred Books and Records” has the meaning specified in Annex A.

 

Transferred Company” has the meaning specified in the Recitals hereto.

 

Transferred Contracts” has the meaning specified in Annex A.

 

Transferred Employees” has the meaning specified in Section 6.5(a).

 

Transfer Taxes” has the meaning specified in Section 6.3(b).

 

WARN Act” means the Worker Adjustment and Retraining Notification Act and any similar state or local Law and the regulations promulgated thereunder.

 

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1.2 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 terms “hereof,” “herein,” “hereby,” “hereto” and derivative or similar words refer to this entire Agreement, (iv) the terms “ARTICLE,” “Section,” “Schedule” or “Annex” refer to the specified ARTICLE or Section of, or Schedule or Annex to, this Agreement, (v) the words “including,” “includes” or similar or derivative words shall be deemed to be followed by “without limitation,” (vi) the word “or” shall be disjunctive but not exclusive and (vii) the terms “in writing,” “written” and derivative or similar words shall be deemed to include e-mail communications.

 

(b) Unless the context of this Agreement otherwise requires, references to agreements and other documents shall be deemed to include all subsequent amendments thereto after the date hereof.

 

(c) Unless the context of this Agreement otherwise requires, references to statutes shall refer to such statutes as amended and include all rules and regulations promulgated thereunder.

 

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

 

(e) Whenever this Agreement refers to a number of days, such number shall refer to calendar days unless Business Days are specified. When calculating the period of time before which, within which or following which, any act is to be done or step taken pursuant to this Agreement, the date that is the reference date in calculating such period shall be excluded. If the last day of such period is a non-Business Day, the period in question shall end on the next succeeding Business Day.

 

(f) The phrase “to the extent” shall mean the degree to which a subject or other thing extends, and such phrase shall not mean simply “if”.

 

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

 

(h) All amounts payable pursuant to this Agreement shall be paid in U.S. dollars, and all references to “$” or “dollars” shall mean the lawful currency of the United States of America.

 

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ARTICLE II
PURCHASE AND SALE OF ASSETS; LIABILITIES ASSUMED; PURCHASE AND SALE OF TRANSFERRED INTERESTS

 

2.1 Closing. Subject to the terms and conditions of this Agreement, the consummation of the purchase and sale of the Transferred Assets and Transferred Interests and the assumption of the Assumed Liabilities (the “Closing”) shall take place electronically via email or facsimile, provided that if Sellers and Buyer mutually agree to a physical closing then the Closing shall occur at the offices of Buyer’s counsel, or at such other place as the Parties may agree to in writing, effective at 12:01 A.M. (Eastern Time) on the date that is three (3) Business Days after the date on which all conditions set forth in ARTICLE VII shall have been satisfied or waived (other than those conditions that by their nature are to be satisfied at the Closing but subject to the satisfaction or waiver of such conditions) or such other time and place as Buyer and Sellers mutually agree; provided, however that notwithstanding the foregoing, the Closing shall occur on May 31, 2022, unless Buyer shall elect in writing that the Closing shall occur as of an earlier date. The date on which the Closing actually occurs is referred to in this Agreement as the “Closing Date”.

 

2.2 Purchase and Sale of the Transferred Assets and Transferred Interests. Subject to the terms and conditions of this Agreement, at the Closing, Sellers and any of their Affiliates, as applicable, shall sell, convey, assign, transfer and deliver free and clear of all Liens (other than Permitted Liens) the Transferred Assets to Buyer or one or more of its Affiliates as designated in writing by Buyer prior to the Closing Date, and Buyer shall, or shall cause such Affiliates to, purchase, acquire and accept from each Seller, all of such Seller’s or any of its Affiliates’ right, title and interest in and to the Transferred Assets. For the avoidance of doubt, the Transferred Assets shall include the Transferred Interests, which Fair shall sell, convey, assign, transfer and deliver free and clear of all Liens (other than Permitted Liens) to Buyer or one or more of its Affiliates as designated in writing by Buyer prior to the Closing Date, and Buyer shall, or shall cause such Affiliates to, purchase, acquire and accept from Fair, all of Fair’s right, title and interest in and to the Transferred Interests.

 

2.3 Excluded Assets. Notwithstanding anything in this Agreement to the contrary, Buyer is not purchasing pursuant to this Agreement or any of the transactions contemplated hereby any right, title or interest in any Excluded Asset, and from and after the Closing, each Seller and its Affiliates shall retain all of their existing right, title and interest in and to, and there shall be excluded from the sale, conveyance, assignment or transfer to Buyer hereunder, the Excluded Assets. For the avoidance of doubt, the Transferred Assets shall not include any Excluded Assets.

 

2.4 Nonassignable Assets; Transferred Contracts.

 

(a) To the extent that the assignment of any Contract or other agreement included in the Transferred Assets or Assumed Liabilities would constitute a breach of any provision thereof, this Agreement shall not be deemed to constitute an assignment or an attempted assignment of the same unless and until any consent, approval, or other requirement necessary to eliminate such breach is obtained. If and to the extent the Parties consummate the Closing without all such consents, approvals and requirements having been obtained and delivered, until such time as such consent, approval or other requirement referred to in the foregoing sentence is obtained, the applicable Seller shall, and shall cause its respective Affiliates to, use their commercially reasonable efforts to obtain such consents, approvals and novations as soon as practicable after the Closing; provided, that (i) neither Buyer nor any of its Affiliates shall be required to satisfy any portion of a fee or payment, or incur any expense, necessary to obtain such consent or approval, other than de minimis administrative fees and expenses and (ii) if any required consent is not obtained within forty-five (45) days after the Closing, such Contract shall be deemed to be an Excluded Asset upon the earliest to occur of (A) the date on which the applicable Seller notifies Buyer of such Seller’s determination, in such Seller’s reasonable discretion, that treatment of such Contract as a Transferred Asset in accordance with this Section 2.4(a) unreasonably interferes with the orderly wind-down of Sellers’ operations and (B) the date on which a certificate of dissolution or certificate of cancellation, as applicable, is filed by such Seller with the Secretary of State of the State of Delaware. If any necessary consent, approval or novation is not obtained prior to the Closing, Buyer and the applicable Seller shall cooperate with each other in any reasonable lawful arrangement designed to provide Buyer with all of the benefits under such contract, lease agreement or other Transferred Asset as if such consent, approval or novation had been obtained, including subleases from the applicable Seller and undertakings by such Seller of the work necessary to complete Contracts as the agent of Buyer with the understanding that such Seller shall, or shall cause its Affiliates to, provide Buyer all of the benefits of such Contracts and then invoice the customer for services rendered and promptly remit the amount of the receivable to Buyer. Nothing herein shall excuse Buyer or any Seller from responsibility for any of its respective representations and warranties or covenants hereunder.

 

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(b) Notwithstanding anything to the contrary in this Agreement, in the event that, following the date of this Agreement, the Parties become aware of a Contract that was required to be set forth on Schedule 3.7(a), but was omitted from such Schedule, Buyer shall have the option, at its sole discretion, to accept or reject inclusion of such Contract as a Transferred Asset.

 

(c) Notwithstanding anything to the contrary in this Agreement, Buyer shall have the ability, at its sole discretion, to amend Schedule A(i) prior to the Closing to exclude or include additional Transferred Contracts related to the Owned Intellectual Property or the Transferred Assets.

 

2.5 Assumption of Assumed Liabilities. On the terms and subject to the conditions set forth herein, at the Closing, Buyer shall assume and discharge or perform, or shall cause one or more of its Affiliates as designated in writing by Buyer prior to the Closing Date to assume and discharge or perform when due, all of the Assumed Liabilities.

 

2.6 Excluded Liabilities. Notwithstanding anything in this Agreement to the contrary, Buyer is not assuming, pursuant to this Agreement or any of the transactions contemplated hereby, any of the Excluded Liabilities, and each Seller and its Subsidiaries shall retain and be responsible for all Excluded Liabilities.

 

2.7 Consideration. Subject to the terms and conditions of this Agreement, as consideration for the Transferred Assets, the Transferred Interests and Assumed Liabilities, Buyer shall on the Closing Date pay the Cash Consideration and issue the Stock Consideration pursuant to the terms of Section 2.8(b)(i) and (ii).

 

2.8 Closing Deliveries.

 

(a) Seller Closing Deliveries. At the Closing, Sellers shall deliver (or cause to be delivered) to Buyer all of the following:

 

(i)Sellers Officers’ Certificate. The certificate required to be delivered pursuant to Section 7.2(c);

 

(ii)Bill of Sale, Assignment and Assumption. A sale, assignment and assumption in the form attached hereto as Exhibit A, duly executed by each Seller (the “Bill of Sale, Assignment and Assumption”);

 

(iii)Release of Liens. Evidence reasonably satisfactory to Buyer of the release and discharge of all Liens (other than Permitted Liens) on (A) the Transferred Assets and (B) all assets and properties of the Transferred Company;

 

(iv)Lockup Agreement. A lockup agreement mutually acceptable to Buyer and SoftBank, acting reasonably and in good faith, duly executed by SoftBank, setting forth the rights and obligations accompanying the Stock Consideration, including (A) “piggyback” registration rights, (B) a lockup of no more than 180 days, and (C) transfer restrictions prohibiting transfer of the Stock Consideration directly or indirectly to any equityholder of Fair as of the Closing;

 

(v)Transferred Company Documents. Any equity books, equity ledger, minute books, and organizational documents of the Transferred Company;

 

(vi)Transferred Interests. Evidence of the assignment and transfer of the Transferred Interests from Fair to Buyer, and the admission of Buyer as a member of Transferred Company upon the assignment of such Transferred Interests, in form and substance reasonably satisfactory to Buyer, accompanied by duly executed equity powers or other similar transfer documents;

 

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(vii)Resignations; Removal. Evidence reasonably satisfactory to Buyer of the resignation or removal, effective as of the Closing, of all officers and members of the board of managers (or other similar governing body) of the Transferred Company;

 

(viii)Transferred Company Actions. Evidence reasonably satisfactory to Buyer that the Actions set forth on Schedule 2.8(a)(ix) have been settled, discharged and released in full, with no continuing Liabilities of the Transferred Company with respect thereto;

 

(ix)Tax Forms. Each of the Sellers shall have delivered to Buyer a properly executed IRS Form W-9, together with any other tax forms reasonably requested by Buyer that would permit the parties to avoid or reduce withholding on the Purchase Price or any other payment made hereunder; and

 

(x)Further Instruments. Such documents of further assurance reasonably necessary and typical for transactions similar to those contemplated by this Agreement in order to complete the transactions contemplated by this Agreement.

 

(b) Buyer Closing Deliveries. At the Closing, Buyer shall deliver (or cause to be delivered) to Sellers or their designee, at Sellers’ direction, all of the following:

 

(i)Cash Consideration. An amount equal to the Cash Consideration by wire transfer of immediately available funds to the account(s) previously designated to Buyer by Sellers in writing, with such account(s) designated to Buyer at least two (2) Business Days prior to the Closing;

 

(ii)Stock Consideration. The issuance of the Stock Consideration as designated by Sellers in writing at least two (2) Business Days prior to the Closing;

 

(iii)Buyer Officer’s Certificate. The certificate required to be delivered pursuant to Section 7.3(c);

 

(iv)Lockup Agreement. A lockup agreement mutually acceptable to Buyer and SoftBank, acting reasonably and in good faith, duly executed by Buyer, setting forth the rights and obligations accompanying the Stock Consideration, including (A) “piggyback” registration rights, (B) a lockup of no more than 180 days, and (C) transfer restrictions prohibiting transfer of the Stock Consideration directly or indirectly to any equityholder of Fair as of the Closing;

 

(v)Bill of Sale, Assignment and Assumption. The Bill of Sale, Assignment and Assumption, duly executed by Buyer; and

 

(vi)Further Instruments. Such documents of further assurance reasonably necessary and typical for transactions similar to those contemplated by this Agreement in order to complete the transactions contemplated by this Agreement.

 

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2.9 Purchase Price Allocation.

 

(a) Buyer and Sellers agree that any amounts treated as Purchase Price for U.S. federal income tax purposes, including the Cash Consideration and the Stock Consideration, and any Assumed Liabilities or other amounts properly included for such purpose, shall be allocated among the Transferred Assets, including to the Transferred Interests (and such amount shall be further allocated among the assets of the Transferred Company), in accordance with Section 1060 of the Code (such allocation, the “Purchase Price Allocation”). Within ninety (90) days after the Closing Date, Buyer will prepare and deliver to Sellers an initial Purchase Price Allocation and the Parties shall negotiate to resolve disputed items, if any, in such initial Purchase Price Allocation as promptly as practicable. If the Parties are unable to reach agreement with respect to the Purchase Price Allocation within thirty (30) days after the delivery of the initial Purchase Price Allocation, the Parties shall be entitled to use their own purchase price allocations for Tax reporting purposes.

 

(b) To the extent the Parties agree on a Purchase Price Allocation pursuant to Section 2.9(a), the Parties shall (i) timely file all Tax Returns required to be filed in connection with the Purchase Price Allocation, including IRS Form 8594, and (ii) prepare and file all Tax Returns and determine all Taxes in a manner consistent with the Purchase Price Allocation, except as may be required pursuant to a final determination within the meaning of Section 1313 of the Code and except as may be necessary to reflect adjustments to the Purchase Price Allocation resulting from post-Closing adjustments. Each of the Parties shall notify the other if it receives notice that any Governmental Authority proposes any allocation different from the Purchase Price Allocation.

 

2.10 Withholding. Buyer shall be entitled to deduct and withhold from the consideration payable or deliverable in connection with the transactions contemplated by this Agreement to any Person, such amounts that Buyer is required to deduct and withhold with respect to any such deliveries and payments under the Code or any provision of state, local, provincial or foreign Law; provided, that Buyer shall have provided Sellers with two (2) Business Days’ advance notice of any such requirement to deduct and withhold from any consideration payable to Sellers. To the extent that amounts are so withheld and duly and timely deposited with the appropriate Governmental Authority, such withheld amounts shall be treated for all purposes of this Agreement as having been paid to the Person in respect of which such deduction and withholding was made.

 

2.11 Transfer of Transferred Company Licenses. Buyer shall have the sole responsibility, post-Closing, to prepare and timely file with the California Department of Motor Vehicles any notices or other filings required as a result of the change in ownership of the Transferred Company and ultimate ownership of the dealer licenses, including, without limitation, the Auto/Commercial Vehicle Lessor-Retailer license, the Used Auto/Commercial Vehicle Dealer license, the Vehicle Dealer license, the California Department of Tax and Fee Administration Seller’s Permit, the Business Partner Automation Program permit, and the State Certificate of Authority to conduct business.

 

ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLERS

 

Except as set forth in the disclosure schedules attached to this Agreement (the “Schedules”), subject to Section 10.8, Sellers represent and warrant, jointly and severally, to Buyer as of the date of this Agreement and as of the Closing Date, as follows:

 

3.1 Organization of Sellers; Organization of the Transferred Company.

 

(a) Each Seller was duly organized, and is validly existing, as a corporation or limited liability company in good standing under the Laws of the State of Delaware and has the requisite power and authority to own, operate, or lease its properties and assets. Each Seller is duly licensed or qualified to do business and (where applicable) is in good standing in each jurisdiction except where the failure to be so licensed or qualified or in good standing would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on Seller.

  

(b) Transferred Company was duly organized, and is validly existing, as a limited liability company in good standing under the Laws of the State of Delaware and has the requisite power and authority to own, operate, or lease its properties and assets. Transferred Company is duly licensed or qualified to do business and (where applicable) is in good standing in each jurisdiction except where the failure to be so licensed or qualified or in good standing would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on Seller.

 

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3.2 Due Authorization. Each Seller has all requisite power and authority to execute and deliver this Agreement and each of the Ancillary Agreements and to perform all obligations to be performed by it and to consummate the transactions contemplated hereunder and thereunder. The execution and delivery of this Agreement and each of the Ancillary Agreements by each Seller and the consummation by each Seller of the transactions contemplated hereby and thereby have been duly and validly authorized and approved, and no other proceedings on Sellers’ part are necessary to authorize this Agreement or the Ancillary Agreements. This Agreement and the Ancillary Agreements have been duly and validly executed and delivered by each Seller and (assuming this Agreement and the Ancillary Agreements constitute legal, valid and binding obligations of Buyer), constitute a legal, valid and binding obligation of such Seller, enforceable against such Seller in accordance with their respective terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and similar Laws affecting creditors’ rights generally and subject, as to enforceability, to general principles of equity (collectively, the “Remedies Exceptions”).

 

3.3 Capitalization; Subsidiaries.

  

(a) Schedule 3.3(a) sets forth the entire capitalization (including the identity of each equityholder and the number and type of interests held by each such equityholder) of each Seller and the Transferred Company, including the Transferred Interests. Except as set forth on Schedule 3.3(b), no Seller nor the Transferred Company has any Subsidiaries and no Seller nor any of its Subsidiaries (including the Transferred Company) owns or otherwise holds, directly or indirectly, any stock, membership interest, partnership interest, joint venture interest or other equity interest in any other Person.

 

(b) The Transferred Interests constitute all of the issued and outstanding limited liability company interests of the Transferred Company, including any other similar equity interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distribution of assets of, the Transferred Company. The Transferred Interests are validly issued, without any violation of any preemptive rights or rights of first refusal or first offer. Fair owns good and valid title to all Transferred Interests in the amount set forth on Schedule 3.3(a), free and clear of all Liens (other than Permitted Liens). The Transferred Interests have been granted, offered, sold and issued in compliance with all applicable Laws. No dividends or distributions are payable with respect to any of the Transferred Interests.

 

(c) Except for this Agreement, there are no existing options, warrants, calls, rights, subscriptions, arrangements, claims, Contracts, commitments (contingent or otherwise) or other agreements of any character to which the Transferred Company is a party, or is otherwise subject, requiring, and there are no securities of the Transferred Company outstanding that upon conversion or exchange would require, the issuance, sale or transfer of any additional equity interests of the Transferred Company or other similar interests of the Transferred Company convertible into, exchangeable for or evidencing the right to subscribe for or purchase any equity or other similar interests of the Transferred Company. Except for this Agreement, none of the Sellers nor the Transferred Company is a party, or is otherwise subject, to any voting trust, voting agreement, proxies, member agreements, equity plans or other agreements or understandings with respect to any equity or similar interests of any of the Transferred Company or to any Contract relating to the issuance, sale, redemption, transfer, acquisition or other disposition or the registration of any equity or similar interests of the Transferred Company.

 

3.4 No Conflict. Subject to the receipt of the consents, approvals, authorizations and other requirements set forth on Schedule 3.4, the execution and delivery of this Agreement and the Ancillary Agreements by Sellers, and the consummation of the transactions contemplated hereby and thereby do not and will not, (a) violate any provision of, or result in a breach of, any applicable Law to which the Transferred Assets or the Transferred Company are subject, (b) violate or conflict with the respective certificate of incorporation, certificates of formation, bylaws, limited liability company agreements or other organizational documents of Sellers or the Transferred Company, (c) with or without notice or lapse of time or both, violate any provision of or result in a breach of or default under, require a consent under, or result in an event that would give rise to any right of notice, modification, acceleration, payment, cancellation or termination under, or in any manner release any party thereto from any obligation under, any Material Contract or any Permits listed on Schedule 3.12, or result in the creation of any Lien under any such Contract upon any of the Transferred Assets, Transferred Interests or any properties or assets of the Transferred Company, or (d) result in a violation or revocation of any material Permit or approval from any Governmental Authority.

 

3.5 Litigation and Proceedings. Except as set forth on Schedule 3.5, since January 1, 2020, there has been no, and there are no pending or, to the Knowledge of Sellers, threatened, material Actions before or by any Governmental Authority to which any Seller or the Transferred Company is subject or involving, relating to, or arising out of the Transferred Assets or any properties or assets of the Transferred Company, and neither any Seller nor the Transferred Company has received any cease-and-desist letter involving, relating to, or arising out of the Transferred Assets or the Transferred Company. There is no unsatisfied judgment or any open injunction or order involving, relating to, or arising out of the Transferred Assets or to which the Transferred Company or any of its properties or assets is subject.

 

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3.6 Legal Compliance.

 

(a) Sellers and the Transferred Company are, and at all times since January 1, 2020 have been, in material compliance with all applicable Laws.

 

(b) Sellers and the Transferred Company have not received any written notices from any Governmental Authority alleging a violation of any applicable Law, at any time since January 1, 2020.

 

3.7 Contracts; No Defaults.

 

(a) Schedule 3.7(a) contains a complete and accurate list, as of the date of this Agreement, of the following Contracts (i) that are used in connection with or related to the Transferred Assets, or by which any of the Transferred Assets are bound, or (ii) to which the Transferred Company is subject or by which the Transferred Company is bound, in each case as amended (together with any Contracts entered into prior to Closing in accordance with Section 5.1 to be used in connection with any Transferred Contracts or to which the Transferred Company is subject or by which the Transferred Company is bound, the Material Contracts):

 

(i)each Contract pursuant to which material personal property is leased;

 

(ii)each Contract pursuant to which goods, supplies and services are purchased by Sellers or the Transferred Company from vendors or similar third parties involving or that could reasonably be expected to involve payments in excess of $250,000 or greater in any twelve (12)-month period;

 

(iii)any Contract with any Seller Personnel that could reasonably be expected to involve payments in excess of $200,000 or greater in any twelve (12)-month period, other than any Company Benefit Plan;

 

(iv)any Contract concerning confidentiality or any arrangement concerning non-competition, non-disclosure, non-hire, non-solicitation or otherwise that limits the freedom of or restricts Sellers, the Transferred Company or the Transferred Assets in any way;

 

(v)all Contracts pursuant to which any Seller or the Transferred Company leases, licenses, is licensed or is otherwise authorized to use, develop or distribute any Intellectual Property, other than Contracts for commercial shrink wrap Software;

 

(vi)all Contracts pursuant to which any Intellectual Property was developed by Sellers, the Transferred Company or any third party on behalf of or for the benefit of Sellers or the Transferred Company, including any joint development agreements, to the extent not listed in Schedule 3.7(a)(v);

 

(vii)all Contracts relating to any acquisitions or dispositions (by merger, purchase or sale of assets or stock or otherwise) (i) of any of the Transferred Assets involving an aggregate purchase price of $250,000 or more, or (ii) to which the Transferred Company is subject or by which the Transferred Company is bound, in each case as to which any Seller or the Transferred Company has continuing material obligations or material rights;

 

(viii)any Contract (or group of related arrangements) under which any Seller or the Transferred Company has (A) created, incurred, assumed or guaranteed (or may create, incur, assume or guarantee) Indebtedness or (B) imposed (or may impose) any Lien, other than a Permitted Lien, on any of such entity’s assets, tangible or intangible;

 

(ix)any Contract containing a most-favored-nation, minimum purchase, best pricing or other similar term or provision or any Contract containing a requirement to deal exclusively with or grant exclusive rights or rights of first refusal to any customer, vendor, supplier, distributor, contractor or other party; and

 

(x)any settlement Contract with respect to any Action, other than settlement Contracts fully discharged solely for cash.

 

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(b) Sellers have made available to Buyer, prior to the execution of this Agreement, true and complete copies of each written Material Contract (including all amendments thereto), and an accurate and complete description of the terms of any oral Material Contract. All of the Transferred Contracts, and all Contracts to which the Transferred Company is subject or by which the Transferred Company is bound, are (i) in full force and effect, subject to the Remedies Exceptions, and (ii) represent the valid and binding obligations of the applicable Seller or the Transferred Company, and, to the Knowledge of Sellers, each of the other parties thereto. Sellers and the Transferred Company are not and, to the Knowledge of Sellers, no other party is, in breach of or in default under any Transferred Contract, or any Contract to which the Transferred Company is subject or by which the Transferred Company is bound, and Sellers and the Transferred Company have not received any claim or notice of breach of or default under any such Transferred Contract or any Contract to which the Transferred Company is subject or by which the Transferred Company is bound. No event has occurred that, individually or together with other events, would reasonably be expected to result in a material breach of or a material default under any such Transferred Contract or Contract to which the Transferred Company is subject or by which the Transferred Company is bound (in each case, with or without notice or lapse of time or both). There are no material disputes pending or threatened under any Transferred Contract or any Contract to which the Transferred Company is subject or by which the Transferred Company is bound.

 

3.8 Employees and Labor Relations.

 

(a) Schedule 3.8(a) sets forth a complete and correct list of each material Company Benefit Plan.

 

(b) Schedule 3.8(b) lists all Seller Personnel and independent contractors, together with (as applicable) the title, position, base salary or hourly wage rate, target bonus, immigration status, and classification as exempt or non-exempt, full-time or part-time, salaried or hourly, in each case, as of the date hereof. All Seller Personnel are employed at will, and their employment or engagement may be terminated at will. Schedule 3.8(b) also lists all Seller Personnel currently on disability or leaves of absence (including the date such disability or leave commenced, the type of leave of absence, and the expected date of return to active employment).

 

(c) There are no unpaid wages, bonuses, retention payments, change in control payments, commissions, social insurance, or housing fund payments due to or on behalf of any Seller Personnel, any independent contractor of the Business or any former employee or independent contractor of the Business, or premiums for, or contributions or payments due to, any Company Benefit Plan or any Governmental Authority in respect of the time period from January 1, 2020, through and including the Closing Date, except for (i) amounts for wages accrued in the Ordinary Course in the current pay period and (ii) any wages, bonuses, retention payments, or severance payments that are or may become payable by Sellers to Seller Personnel, regardless of whether they become Transferred Employees, as determined by Sellers in Sellers sole discretion.

 

(d) There are and have been no collective bargaining agreements or other labor union contracts applicable to or covering any Seller Personnel. There are no Actions for unfair labor practice, controversies, disputes, strikes, slowdowns, lockouts, picketing, or work stoppages pending or, to the Knowledge of Sellers, threatened by any Seller Personnel. There is no union organizing effort pending or, to the Knowledge of Sellers, threatened with respect to any Seller Personnel.

 

3.9 Taxes.

 

(a) All material Tax Returns required to be filed with respect to the Transferred Assets or the Transferred Company have been filed, and all such Tax Returns are true, complete, and correct in all material respects.

 

(b) All Taxes that are due and payable by Sellers or the Transferred Company or with respect to the Transferred Assets or the Transferred Company have been paid, whether or not shown on any Tax Return.

 

(c) Sellers have, with respect to the Transferred Assets, and the Transferred Company has, properly and timely withheld and collected all material amounts required to be withheld or collected, timely deposited such amounts with the appropriate Governmental Authority, and have properly reported all Taxes that they are required to withhold from amounts paid or owing to any employee, consultant, creditor or other third party.

 

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(d) No written notice of deficiency or assessment of Taxes has been received by Sellers from any Governmental Authority with respect to the Transferred Assets, or by the Transferred Company. Sellers have not, with respect to the Transferred Assets, and the Transferred Company has not, executed any waiver of any statute of limitations on, or extending the period for the assessment or collection of, any Tax.

 

(e) There is no Action, dispute, suit, proceeding, investigation, audit, claim, proposed adjustment, assessment, or examination ongoing or pending with respect to Taxes of Sellers or the Transferred Company, or with respect to the Transferred Assets, and Sellers have not, with respect to the Transferred Assets, and the Transferred Company has not, received any (i) notice indicating an intent to open an audit or other review, (ii) request for information related to Tax matters, (iii) claim that they are subject to Tax in a jurisdiction in which they do not file Tax Returns, or (iv) written notification of any audits, Actions, disputes, claims, refund litigations, proposed adjustments, assessments or examinations pending or proposed.

 

(f) None of the Transferred Assets are required to be depreciated under the alternative depreciation system under Section 168(g)(2) of the Code or are “tax-exempt use property” within the meaning of Section 168(h) of the Code.

 

(g) Sellers (with respect to the Transferred Assets) and the Transferred Company have not filed, and do not have pending, any ruling requests with any Governmental Authority, including any requests to change any accounting method.

 

(h) No Person who is not a “United States person” within the meaning of Section 7701(a)(30) of the Code is transferring a Transferred Asset that constitutes a “United States real property interest” within the meaning of Section 897(c) of the Code.

 

(i) The Transferred Company has at all relevant times been, and will continue to be through the Closing Date, an entity disregarded from its owner for United States federal (and relevant state) income tax purposes in accordance with Treasury Regulation 301.7701-3(b)(1)(ii).

 

3.10 Brokers’ Fees. No broker, finder, investment banker or other Person is entitled to any brokerage fee, finders’ fee or other similar commission, for which Buyer or any of its Affiliates would be liable in connection with the transactions contemplated by this Agreement based upon arrangements made by Sellers or any of their Affiliates (including the Transferred Company) (“Broker Fees”).

 

3.11 Permits. Schedule 3.11 contains a complete and accurate list of all material Permits held by Sellers, in connection with the Transferred Assets, and the Transferred Company. All such Permits are valid and in full force and effect and no suspension or cancellation of any such Permits is pending or, to the Knowledge of Sellers, threatened. The Transferred Assets and the business and operations of the Transferred Company are, and have at all times since January 1, 2020 been, conducted in compliance with all of the Permits necessary under applicable Law.

 

3.12 Title to Transferred Assets. Sellers own and have good title to, or have valid rights to use, all of the Transferred Assets free and clear of all Liens other than Permitted Liens. The Transferred Company owns and has good title to, or has valid rights to use, all of its assets free and clear of all Liens other than Permitted Liens. SoftBank maintains a perfected security interest in all of the Transferred Assets. This Section 3.12 is not intended to, and does not, constitute a representation or warranty as to validity, enforceability or non-infringement of Intellectual Property (such matters are exclusively represented to in Section 3.14).

 

3.13 Real Property. Except as set forth on Schedule 3.13, neither Sellers nor the Transferred Company currently lease, sublease, manage or occupy any premise or real property, and neither Sellers nor the Transferred Company are a party to any Contract or agreement agreeing to or purporting to agree to, lease, sublease, manage or occupy any premise or real property.

 

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3.14 Intellectual Property.

 

(a) Schedule 3.14(a) is a correct and complete list of all Intellectual Property registered with or the subject of a pending application for registration before, any Governmental Authority, in each case owned by Sellers or the Transferred Company (the Scheduled Intellectual Property), indicating for each such item the registration or application number and the applicable filing jurisdiction. The Intellectual Property owned by Sellers and included in the Transferred Assets ( the Owned Intellectual Property), and the Intellectual Property licensed to Sellers pursuant to a written license agreement that is valid and enforceable and included in the Transferred Assets (the Licensed Intellectual Property) (collectively, the Owned Intellectual Property together with the Licensed Intellectual Property, the Seller Intellectual Property) together includes all the Intellectual Property used or held by Sellers. Each material item of Seller Intellectual Property will be owned, licensed and available for use on identical terms following the consummation of the transactions contemplated hereby as such items were owned by, licensed to and available for use by Sellers prior to the consummation of the transactions contemplated hereby.

 

(b) Sellers exclusively own (beneficially, and of record where applicable) all right, title and interest in and to the Owned Intellectual Property, free and clear of all Liens (except Permitted Liens) and exclusive licenses.  The Owned Intellectual Property is valid, subsisting and enforceable, and is not subject to any outstanding Action or governmental proceeding adversely affecting or that could adversely affect Sellers use thereof or rights thereto. 

 

(c) Sellers have (i) complied with all internet domain name registration and other requirements of internet domain administration authorities concerning all internet domain names that are Seller Intellectual Property, and (ii) operated all websites associated with such internet domain names in accordance with, and in all material respects, with all applicable Laws. 

 

(d) The Owned Intellectual Property does not infringe, misappropriate, or otherwise violate, and has not infringed, misappropriated or otherwise violated, the Intellectual Property rights of any Person.  There are no Actions pending or, to the Knowledge of Sellers, threatened against Sellers concerning the ownership, validity, registerability, enforceability, infringement, misappropriation or violation of any Intellectual Property.  Sellers have not received any notice or other communication claiming, alleging or suggesting that Sellers have infringed, misappropriated or otherwise made any unlawful or unauthorized use of any Intellectual Property and, to the Knowledge of Sellers, no other Person has threatened to make any such claims. To the Knowledge of Sellers, no valid basis exists for any such Action, and no Person is infringing, misappropriating or otherwise violating, or has since January 1, 2020, infringed, misappropriated or otherwise violated, any Owned Intellectual Property. Except as set forth on Schedule 3.15(d), since January 1, 2020, Sellers have not made any claims in writing to any other Person alleging that such Person has infringed, misappropriated or otherwise violated any Owned Intellectual Property.

 

(e) Schedule 3.14(e)(i) sets forth a complete and accurate list of all Software owned by Sellers (the Seller Software).  Except as set forth in Schedule 3.14(e)(ii), the Seller Software, was (i) developed by employees of Sellers within the scope of their employment; or (ii) developed by independent contractors pursuant to a Contract under which the independent contractor irrevocably assigned its entire right, title and interest in and to the Seller Software developed by it to Sellers.  Sellers have taken commercially reasonable steps to ensure that all Software used by Sellers is free of any disabling codes or instructions, and any virus or other intentionally created, undocumented contaminant, that may, or may be used to, access, modify, delete, damage or disable any internal computer systems (including hardware, Software, databases and embedded control systems) of Sellers, and to the Knowledge of Sellers, such Software is free of any such codes, instructions, viruses and contaminants.   No source code of any Seller Software has been licensed or otherwise provided to any third party.

 

(f) No trade secret or material confidential know-how that is owned by Sellers has been disclosed to any third party, other than pursuant to a non-disclosure agreement that protects the proprietary interests in and to such trade secrets and confidential know-how.  Sellers have taken reasonable precautions to protect the secrecy, confidentiality and value of their trade secrets and material confidential know-how.

  

(g) Except as set forth in Schedule 3.14(g), all current and former officers and directors of Sellers, and all current and former employees, independent contractors and consultants of Sellers who are or were at any time involved in the development of Intellectual Property for or on behalf of Sellers, or who may be or were exposed to any material trade secret or material confidential information of Sellers, have executed and delivered to Sellers an agreement assigning to Sellers their entire right, title and interest in and to such Intellectual Property,  and protecting the secrecy, confidentiality and value of such trade secrets or confidential information, or have otherwise assigned the foregoing to Sellers by operation of applicable Law.

 

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3.15 Absence of Changes. Since January 1, 2020 and except for (i) the sale of the assets of the Fleet Business, (ii) in the Ordinary Course of business, and (iii) as set forth on Schedule 3.15, there has not been:

 

(a) any disposal of any of the material assets of Sellers or the Transferred Company;

 

(b) any Contracts entered into by Sellers and any current Seller Personnel, or the Transferred Company, or current independent contractors with respect to any change in control, retention, severance or similar type payments or benefits;

 

(c) any transfer or assignment of or grant of any license or sublicense under or with respect to any Scheduled Intellectual Property or Owned Intellectual Property;

 

(d) any failure to take or maintain reasonable measures to protect the confidentiality or value of any trade secrets or know-how included in the Owned Intellectual Property;

 

(e) any cancellation, compromise, release or assignment of any material Indebtedness owed to Sellers or the Transferred Company or any material claims held by Sellers or the Transferred Company;

 

(f) any loan to (or forgiveness of any loan to), or entry into any other transaction with, any current or former directors, officers or employees of Sellers or the Transferred Company; and

 

(g) any Contract by Sellers, the Transferred Company or any other Person to take any of the foregoing.

 

3.16 Affiliate Transactions. Except as set forth on Schedule 3.16, there are no Contracts or other instruments, arrangements, relationships or understandings between or affecting the Transferred Assets, the Transferred Company or the Assumed Liabilities, on the one hand, and Sellers, SoftBank, their respective Affiliates or any employee, officer, board member, equityholder or stockholder of Sellers or SoftBank, on the other hand, other than a Contract for employment of such Person by Sellers (each, an “Affiliate Arrangement”).

 

3.17 Governmental Consents. Assuming the truth and completeness of the representations and warranties of Buyer contained in this Agreement, no consent, notice, approval or authorization of, or designation, declaration, registration or filing with, any Governmental Authority is required on the part of Sellers or the Transferred Company as a result of Sellers’ execution or delivery of this Agreement and the Ancillary Agreements or the consummation by Sellers of the transactions contemplated hereby and thereby.

 

3.18 Transferred Company Matters.

 

(a) The Transferred Company has no Indebtedness outstanding.

 

(b) The Transferred Company has no Transaction Expenses outstanding.

 

(c) The Transferred Company has no employees or independent contractors.

 

(d) The Transferred Company has no Liabilities other than (a) liabilities and obligations arising under the executory terms of any Contracts disclosed in this Agreement (or its Exhibits or Disclosure Schedule) and not arising as a result of any breach of the terms thereof, (b) liabilities incurred in the Ordinary Course of Business that do not and would not exceed $50,000 in the aggregate, and (c) accrued Taxes that are not yet due and payable and that are immaterial in amount.

 

3.19 No Additional Representations or Warranties. Except as provided in this ARTICLE III, in any Ancillary Agreement or in the case of fraud or willful misrepresentation, none of Sellers nor any of their respective Affiliates, nor any of their respective Representatives, has made, or is making, any representation or warranty whatsoever to Buyer or its Representatives or Affiliates regarding Sellers, any business conducted by Sellers, or the Transferred Assets or the Transferred Company, and absent fraud or willful misrepresentation, no such party shall be liable in respect of the accuracy or completeness of any such information provided to Buyer or its Representatives or Affiliates regarding Sellers, any business conducted by Sellers, or the Transferred Assets or the Transferred Company.

 

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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER

 

Except (i) as disclosed in, and reasonably apparent from, the Exchange Act Reports publicly available after January 1, 2021 and prior to the date of this Agreement (but excluding any risk factor disclosures contained under the heading “Risk Factors,” any disclosure of risks included in any “forward-looking statements” disclaimer or any other statements that are similarly non-specific, predictive or forward-looking in nature, in each case, other than any specific factual information contained therein), or (ii) as disclosed in a document of even date herewith delivered by Buyer to the Sellers prior to the execution and delivery of this Agreement and referring by section or subsection number to the representations and warranties in this Agreement (the “Buyer Disclosure Schedule”) (subject to Section 10.8), Buyer represents and warrants to Sellers and to SoftBank as of the date of this Agreement and as of the Closing Date, as follows:

 

4.1 Corporate Organization. Buyer has been duly incorporated and is validly existing as a corporation in good standing under the Laws of Delaware and has the requisite power and authority to own, lease or operate its properties and to conduct its business as it is now being conducted. Buyer is duly licensed or qualified and (where applicable) in good standing in each jurisdiction in which the ownership of its property or the character of its activities is such as to require it to be so licensed or qualified or in good standing, as applicable, except where the failure to be so licensed or qualified or in good standing would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on Buyer.

 

4.2 Due Authorization. Buyer has all requisite corporate power and authority to execute and deliver this Agreement and each of the Ancillary Agreements and to perform all obligations to be performed by it hereunder and thereunder. The execution and delivery of this Agreement and the Ancillary Agreements by Buyer and the consummation by Buyer of the transactions contemplated hereby and thereby have been duly and validly authorized and approved, and no other proceedings on the part of Buyer are necessary to authorize this Agreement or the Ancillary Agreements. This Agreement and each of the Ancillary Agreements has been duly and validly executed and delivered by Buyer and (assuming this Agreement and each of the Ancillary Agreements constitute legal, valid and binding obligations of the other Parties thereto) constitutes a legal, valid and binding obligation of Buyer, enforceable against Buyer in accordance with its terms, subject to the Remedies Exceptions. The shares constituting the Stock Consideration have been duly authorized and, when issued and delivered in accordance with the terms of this Agreement, such shares will be validly issued, fully paid and non-assessable and will not have been issued in violation of or subject to any preemptive or similar rights credited under Buyer’s certificate of incorporation or bylaws or under the laws of the State of Delaware.

 

4.3 No Conflict. Subject to the receipt of the consents, approvals, authorizations and other requirements set forth on Schedule 5.3, the execution and delivery of this Agreement and the Ancillary Agreements by Buyer and the consummation by Buyer of the transactions contemplated hereby and thereby do not and will not, as of the Closing, (a) violate any provision of, or result in the breach of, any applicable Law to which Buyer is subject or by which any property or asset of Buyer is bound, (b) violate or conflict with the certificate of incorporation, bylaws or other organizational documents of Buyer, or (c) with or without notice or lapse of time or both, violate any provision of or result in a breach of or default under, require a consent under, or result in an event which would give rise to any right of notice, modification, acceleration, payment, cancellation or termination under, or in any manner release any party thereto from any obligation under, any material agreement to which Buyer is a party or by which Buyer may be bound.

 

4.4 Litigation and Proceedings. As of the date of this Agreement, there are no pending or, to the knowledge of Buyer, threatened, Actions by or before any Governmental Authority against Buyer that, if determined adversely, would, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on Buyer. There is no unsatisfied judgment or any open injunction binding upon Buyer which would, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on Buyer. The Buyer has not received any written communication from a Governmental Authority that alleges that the Buyer is not in compliance with or is in default or violation of any applicable law, except where such non-compliance, default or violation would not, individually or in the aggregate, be reasonably likely to have a Material Adverse Effect on Buyer. As of the date of this Agreement, there is no suit, action, proceeding or investigation pending or, to the knowledge of Buyer, threatened against Buyer by Nasdaq or the Securities and Exchange Commission (the “Commission”) with respect to any intention by such entity to deregister the Buyer Common Stock or prohibit or terminate the listing of the Buyer Common Stock on Nasdaq. Buyer has taken no action that is designed to terminate the registration of the Buyer Common Stock under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or the listing of the Buyer Common Stock on Nasdaq.

 

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4.5 Solvency. Buyer is not entering into this Agreement or the transactions contemplated hereby with the actual intent to hinder, delay or defraud either present or future creditors. Assuming (a) the representations and warranties of Sellers contained in this Agreement are true and correct in all material respects without any omission of any material fact necessary to make the statements contained herein untrue, and (b) the performance by Sellers of Sellers’ obligations hereunder, after giving effect to the transactions contemplated by this Agreement, at and immediately after the Closing, each of Buyer and its Affiliates (i) will have adequate capital and liquidity with which to own and operate the Transferred Assets and (ii) will not have incurred and does not plan to incur debts beyond its ability to pay as they mature or become due.

 

4.6 Governmental Consents. Assuming the truth and completeness of the representations and warranties of Sellers contained in this Agreement, no consent, waiver, approval or authorization of, or designation, declaration, registration or filing with, any Governmental Authority is required on the part of Buyer with respect to Buyer’s execution or delivery of this Agreement and the Ancillary Agreements or the consummation by Buyer of the transactions contemplated hereby and thereby (including the issuance of the Stock Consideration), except for any consents, waiver, approvals, authorizations, designations, declarations or filings, the absence of which would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on Buyer.

 

4.7 No Defaults. As of the date of this Agreement, the Buyer is not in default or violation (and no event has occurred which, with notice or the lapse of time or both, would constitute a default or violation) of any term, condition or provision of (i) the certificate of incorporation, bylaws or other organizational documents of Buyer, (ii) any loan or credit agreement, guarantee, note, bond, mortgage, indenture, lease or other agreement, permit, franchise or license to which, Buyer is a party or by which Buyer’s properties or assets are bound or (iii) any applicable Law to which Buyer is subject or by which any property or asset of Buyer is bound, except, in the case of clauses (ii) and (iii), for defaults or violations that have not had and would not be reasonably likely to have, individually or in the aggregate, a Material Adverse Effect on Buyer.

 

4.8 Capitalization. As of the date of this Agreement and as of immediately prior to the Closing Date, the authorized capital stock of Buyer consists of (i) 1,000,000 shares of preferred stock, par value $0.0001 per share (“Preferred Stock”), (ii) 500,000,000 shares of Buyer Common Stock and (iii) 10,000,000 shares of Class B common stock, par value $0.0001 per share (the “Class B Common Stock”). As of the close of business on the Business Day prior to the date of this Agreement, (i) no shares of Preferred Stock are issued and outstanding, (ii) 82,679,131 shares of Buyer Common Stock are issued and outstanding, (iii) no shares of Class B Common Stock are issued and outstanding, (iv) 1,502,040 options to purchase Buyer Common Stock are outstanding, and (v) 8,194,738 unvested restricted stock units to acquire Buyer Common Stock are outstanding. All issued and outstanding shares of Buyer Common Stock have been duly authorized and validly issued, are fully paid and are non-assessable and are not subject to preemptive rights. Except as set forth above, there are no outstanding options, warrants or other rights to subscribe for, purchase or acquire from Buyer any shares of Buyer Common Stock or other equity interests in Buyer, or securities convertible into or exchangeable or exercisable for such equity interests. There are no stockholder agreements, voting trusts or other agreements or understandings to which Buyer is a party or by which it is bound relating to the voting of any securities of Buyer, other than as set forth on Schedule 4.8. There are no securities or instruments issued by or to which Buyer is a party containing anti-dilution or similar provisions that will be triggered by the issuance of the Stock Consideration that have not been or will not be validly waived on or prior to the Closing Date.

 

4.9 Exchange Act Reports; Financial Statements. Buyer’s public reports filed with the Commission since January 1, 2021 (collectively, the “Exchange Act Reports”) did not when filed, and as amended to the date hereof do not, contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading and such Exchange Act Reports complied in all material respects with the requirements of the Exchange Act and the rules and regulations of the Commission promulgated thereunder. Buyer has timely filed each report, statement, schedule, prospectus, and registration statement that Buyer was required to file with the Commission since January 1, 2021. There are no material outstanding or unresolved comments in comment letters from the Commission with respect to any of Buyer’s filings with the Commission (the “SEC Documents”). Each of the financial statements (including, in each case, any notes thereto) contained in the SEC Documents was prepared in accordance with U.S. generally accepted accounting principles applied on a consistent basis throughout the periods indicated (except as may be indicated in the notes thereto or, in the case of unaudited statements, as permitted by Form 10-Q of the Commission) and each fairly presents, in all material respects, the financial position, results of operations and cash flows of Buyer as at the respective dates thereof and for the respective periods indicated therein.

 

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4.10 No Bankruptcy or Insolvency. Neither Buyer nor any of its Subsidiaries has taken any steps to seek protection pursuant to any law or statute relating to bankruptcy, insolvency, reorganization, receivership, liquidation, administration or winding up or failed to pay its debts when due, nor does Buyer or any Buyer’s Subsidiary have any knowledge or reason to believe that any of their respective creditors intend to initiate involuntary bankruptcy proceedings or seek to commence an administration.

 

4.11 Intellectual Property.

 

(a) Buyer exclusively owns (beneficially, and of record where applicable) all right, title and interest in and to the Intellectual Property it purports to own, free and clear of all Liens and exclusive licenses (excluding Intellectual Property purchased pursuant to this Agreement, the Buyer Intellectual Property).  The Buyer Intellectual Property is valid, subsisting and enforceable, and is not subject to any outstanding Action or governmental proceeding adversely affecting or that could adversely affect Buyers use thereof or rights thereto. 

 

(b) Buyer has (i) complied with all internet domain name registration and other requirements of internet domain administration authorities concerning all internet domain names that are Buyer Intellectual Property, and (ii) operated all websites associated with such internet domain names in accordance with, and in all material respects, with all applicable Laws. 

 

(c) The Buyer Intellectual Property does not infringe, misappropriate, or otherwise violate, and has not infringed, misappropriated or otherwise violated, the Intellectual Property rights of any Person.  There are no Actions pending or, to the Knowledge of Buyer, threatened against Buyer concerning the ownership, validity, registerability, enforceability, infringement, misappropriation or violation of any Intellectual Property.  Buyer has not received any notice or other communication claiming, alleging or suggesting that Buyer has infringed, misappropriated or otherwise made any unlawful or unauthorized use of any Intellectual Property and, to the Knowledge of Buyer, no other Person has threatened to make any such claims. To the Knowledge of Buyer, no valid basis exists for any such Action, and no Person is infringing, misappropriating or otherwise violating, or has since January 1, 2020, infringed, misappropriated or otherwise violated, any Buyer Intellectual Property. Since January 1, 2020, Buyer has not made any claims in writing to any other Person alleging that such Person has infringed, misappropriated or otherwise violated any Owned Intellectual Property.

 

(d) All Software owned by Buyer was (i) developed by employees of Buyer within the scope of their employment; or (ii) developed by independent contractors pursuant to a Contract under which the independent contractor irrevocably assigned its entire right, title and interest in and to such Software developed by it to Buyer.  Buyer has taken commercially reasonable steps to ensure that all Software used by Buyer is free of any disabling codes or instructions, and any virus or other intentionally created, undocumented contaminant, that may, or may be used to, access, modify, delete, damage or disable any internal computer systems (including hardware, Software, databases and embedded control systems) of Buyer, and to the Knowledge of Buyer, such Software is free of any such codes, instructions, viruses and contaminants.   No source code of any such Software has been licensed or otherwise provided to any third party.

 

(e) No trade secret or material confidential know-how that is owned by Buyer has been disclosed to any third party, other than pursuant to a non-disclosure agreement that protects the proprietary interests in and to such trade secrets and confidential know-how.  Buyer has taken reasonable precautions to protect the secrecy, confidentiality and value of its trade secrets and material confidential know-how.

 

(f) All current and former officers and directors of Buyer, and all current and former employees, independent contractors and consultants of Buyer who are or were at any time involved in the development of Intellectual Property for or on behalf of Buyer, or who may be or were exposed to any material trade secret or material confidential information of Buyer, have executed and delivered to Buyer an agreement assigning to Buyer their entire right, title and interest in and to such Intellectual Property, and protecting the secrecy, confidentiality and value of such trade secrets or confidential information, or have otherwise assigned the foregoing to Buyer by operation of applicable Law.

 

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4.12 Brokers’ Fees. No broker, finder, investment banker or other Person is entitled to any brokerage fee, finders’ fee or other similar commission, for which Seller, SoftBank or any of its Affiliates would be liable in connection with the transactions contemplated by this Agreement based upon arrangements made by Buyer or any of its Affiliates.

 

4.13 OFAC. Buyer and its directors, officers, employees, representatives, agents and any person acting on its behalf is not (i) a person or entity named on the List of Specially Designated Nationals and Blocked Persons, the Executive Order 13599 List, the Foreign Sanctions Evaders List, or the Sectoral Sanctions Identification List, each of which is administered by the U.S. Treasury Department's Office of Foreign Assets Control “OFAC”), or any other Executive Order issued by the President of the United States and administered by OFAC (collectively “OFAC List”), (ii) owned or controlled by, or acting on behalf of, a person, that is named on an OFAC List; (iii) organized, incorporated, established, located, resident or born in, or a citizen, national, or the government, including any political subdivision, agency, or instrumentality thereof, of, Cuba, Iran, North Korea, Syria, the Crimea region of Ukraine, or any other country or territory embargoed or subject to substantial trade restrictions by the United States or (iv) a Designed National as defined in the Cuban Assets Control Regulations, 31 C.F.R. Part 515.

 

4.14 Anti-Corruption. (i) Buyer and its directors, officers employees, representatives, agents and any person acting on its behalf has not engaged in any activity or conduct which would violate any applicable anti-bribery, anti-corruption or anti-money laundering laws, regulations or rules in any applicable jurisdiction (including, without limitation, the U.S. Foreign Corrupt Practices Act of 1977, as amended), (ii) Buyer has instituted and maintains systems, policies and procedures designed to prevent violation of such laws, regulations and rules and (iii) no action, suit or proceeding by or before any court or governmental or regulatory agency, authority or body or any arbitrator having jurisdiction over Buyer with respect to such laws, regulations and rules is pending and, to the Knowledge of Buyer, no such actions, suits or proceedings are threatened.

 

4.15 CFIUS. As of the date of this Agreement, Buyer is not a U.S. business that (i) produces, designs, tests, manufactures, fabricates, or develops one or more “critical technologies,” (ii) performs the functions as set forth in appendix A to 31 C.F.R. Part 800 with respect to “covered investment critical infrastructure,” or (iii) maintains or collects, directly or indirectly, “sensitive personal data” of U.S. citizens, in each case as such terms are defined in 31 C.F.R. Part 800.

 

4.16 No Additional Representations or Warranties. Except as provided in this ARTICLE IV, in any Ancillary Agreement or in the case of fraud or willful misrepresentation, none of Buyer nor any of its Affiliates, nor any of their respective Representatives, has made, or is making, any representation or warranty whatsoever to Seller, SoftBank or their respective Representatives or Affiliates regarding Buyer, and absent fraud or willful misrepresentation, no such party shall be liable in respect of the accuracy or completeness of any such information provided to Seller, SoftBank or their respective Representatives or Affiliates regarding Buyer.

 

ARTICLE V
COVENANTS OF SELLERS

 

5.1 Conduct of Business.

 

(a) From the date hereof through the Closing, except (i) as would constitute a violation of applicable Law (including any applicable antitrust or competition Law), (ii) as set forth on Schedule 5.1 or as expressly required by this Agreement, (iii) failure to comply with any Contracts that are not Transferred Contracts or Contracts of the Transferred Company, or (iv) as consented to by Buyer in writing (which consent shall not be unreasonably conditioned, withheld, delayed or denied), Sellers shall use commercially reasonable efforts to maintain (x) good and valid title to the Owned Intellectual Property and valid licenses with respect to the Licensed Intellectual Property and (y) relationships with Sellers’ and the Transferred Company’s material customers, suppliers and vendors and retain the services of Seller Personnel and Sellers’ independent contractors.

 

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(b) Without limiting the generality of the foregoing, from the date hereof through the Closing, to the extent involving, relating to, or arising out of the Transferred Company or the ownership and use of the Transferred Assets, Sellers shall not, and shall cause their respective Subsidiaries (including the Transferred Company) not to, except (i) as would constitute a violation of applicable Law, (ii) as set forth on Schedule 5.1 or as expressly required by this Agreement, or (iii) as consented to by Buyer in writing (which consent shall not be unreasonably conditioned, withheld, delayed or denied):

 

(i)(A) materially modify, amend, assign or terminate (excluding any expiration in accordance with its terms) any Material Contract, provided, however, that Sellers or the Transferred Company may reduce the spending on any Material Contract by up to fifty percent (50%) of the trailing twelve (12)-month spend under such Material Contract without the consent of Buyer so long as any such reduction would not (x) cause any breach or default of such Material Contract or (y) be reasonably likely to result in any impairment or adverse effect on the Transferred Company or any of the Transferred Assets, or (B) waive, release or assign in any material respect any rights or claims in any Material Contract;

 

(ii)enter into any Contract that would be a Material Contract if entered into prior to the date hereof, provided, however, that Sellers may enter into any Contract to effectuate the orderly wind down of Sellers, each as determined by Sellers in their sole discretion;

 

(iii)sell, assign, transfer, convey, lease, license, knowingly surrender, encumber, divest, cancel, knowingly abandon, allow to lapse or expire or otherwise dispose of or subject to any Lien (other than Permitted Liens), any Transferred Assets;

 

(iv)except as required by Law, the terms of any Company Benefit Plans as in effect on the date hereof, or with respect to any wages, bonuses, retention payments, or severance payments that are or may become payable by Sellers to Seller Personnel in the sole discretion of Sellers, regardless of whether such Seller Personnel become Transferred Employees on the date of this Agreement, (A) increase or announce the increase of in any manner the compensation, bonus, severance, employee benefits and fringe benefits under any Company Benefit Plan affecting any Seller Personnel or (B) enter into or amend any Company Benefit Plan or employment, services, consulting or similar agreement or arrangement with any Seller Personnel;

 

(v)hire or terminate any Seller Personnel who are to become Transferred Employees, or attempt to induce any Seller Personnel who are to become Transferred Employees to terminate their employment or engagement with the Sellers prior to, at or after the Closing Date;

 

(vi)cancel, compromise, release or assign any material claims relating to the Transferred Assets or any assets of the Transferred Company;

 

(vii)make any material election relating to Taxes (except such that are consistent with past practices) or settle or compromise any Tax Liability or amend any Tax Return if such election, settlement or compromise would be binding on Buyer or otherwise affect the Transferred Assets or the Transferred Company;

 

(viii)fail to maintain all insurance covering the Sellers employees (including Seller Personnel) and the Transferred Assets and the Transferred Company in full force and effect with their existing insurance providers, comparable in amount, scope and coverage to that in effect on the date hereof;

 

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(ix)(1) make any filings with any Governmental Authority relating to the withdrawal or surrender of any Permits held by Sellers and used in connection with the Transferred Assets, or by the Transferred Company, or (2) fail to use commercially reasonable efforts to keep current and in full force and effect, or to apply for or renew, any Permit of Sellers issued by any Governmental Authority that is used in connection with the Transferred Assets, or any Permit of the Transferred Company;

 

(x)(i) declare, set aside or pay any dividends on, or make any other distributions (whether in securities or other property) in respect of, any equity interests of the Transferred Company; (ii) adjust, split, combine or reclassify any of the equity interests of the Transferred Company or issue or authorize the issuance of any other securities in respect of, in lieu of or in substitution for equity interests or any other securities of the Transferred Company; or (iii) purchase, redeem or otherwise acquire, or offer to purchase, redeem or otherwise acquire, any equity interests or any other securities of the Transferred Company or any rights, warrants or options to acquire any such equity interests or other securities;

 

(xi)issue, deliver, sell, transfer, grant, pledge or amend the terms (whether by merger, consolidation or otherwise) of any equity interests of the Transferred Company, any other voting securities or any securities convertible or exercisable into or exchangeable for, or any rights, warrants or options to acquire, any such equity interests, voting securities or convertible or exchangeable securities;

 

(xii)amend, adopt, authorize or propose any amendments to any of the organizational documents, including the certificate of formation or limited liability company agreement, of the Transferred Company;

 

(xiii)propose, adopt or enter into any Contract or plan with respect to or consummate any plan of liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of the Transferred Company; or

 

(xiv)authorize, agree, resolve or otherwise commit to do any action prohibited under this Section 5.1(b).

 

(c) Nothing in this Section 5.1 shall prevent Sellers from selling all or any portion of the Fleet Business absent the consent of Buyer.

 

5.2 Inspection.

 

(a) From the date hereof through the Closing, Sellers shall provide Buyer and its Representatives reasonable access, during normal business hours, in such manner as to not unreasonably interfere with the normal operation of the Business, to the Books and Records, the officers and employees of Sellers and the Transferred Company and shall furnish such Representatives with financial and operating data and other information concerning the Transferred Assets and, to the extent that separate operating data and other information exists with respect the Transferred Company, the Transferred Company, in each case as such Representatives may reasonably request.

 

(b) Any investigation pursuant to this Section 5.2 shall (i) be conducted in accordance with applicable Law, (ii) be subject to confidentiality obligations and similar restrictions that may be applicable to information furnished to Sellers or their Affiliates by third parties that may be in their possession from time to time, and (iii) exclude any information that is subject to attorney-client privilege from disclosure. Further, any investigation pursuant to this Section 5.2 shall only be upon reasonable notice and shall be at Buyer’s sole cost and expense. All information obtained by Buyer and its Representatives shall be subject to the Confidentiality Agreement, which shall remain in full force and effect until the Closing, at which time it shall automatically terminate (along with all obligations thereunder). All requests for access to the properties or Books and Records shall be made to such Representatives of Sellers as Sellers shall designate.

 

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5.3 No Solicitation.

 

(a) On the date hereof, Sellers shall, and shall cause their respective Representatives to, immediately cease any existing discussion or negotiation with any Person (other than Buyer and its Affiliates and their respective Representatives) relating to an acquisition of the assets of Sellers (other than the Fleet Business) or the Transferred Company, in whole or in part, whether directly or indirectly, through purchase, merger, consolidation or otherwise (collectively, a “Competing Transaction”). During the period beginning on the date hereof and ending on the Closing Date, Sellers shall, and shall cause their respective Affiliates and each of their respective Representatives (including their Affiliates’ respective Representatives) to, refrain from, directly or indirectly, taking or soliciting offers from, negotiating with, or entering into any agreement or Contract with any Person (other than Buyer, its Affiliates and their respective Representatives), or in any manner encouraging any proposal by any other Person, in each case, relating to a Competing Transaction. Sellers shall notify Buyer as soon as practicable after receipt by any Seller or any Seller’s Affiliates or any of their respective Representatives (including their Affiliates’ respective Representatives) of any expression of interest, proposal or offer (including any request for non-public information) relating to a possible Competing Transaction that is received from any Person on or after the date hereof, identifying the Person making such expression of interest, proposal or offer and describing the material terms thereof.

 

(b) Notwithstanding the foregoing, prior to the Closing Date, the board of directors of Fair may withdraw or modify any approval or recommendation in favor of this Agreement, approve or recommend a Competing Transaction, or cause Sellers to enter into an agreement with respect to a Competing Transaction if: (i) Fairs board of directors determines in good faith, after having taken into account the advice of Fairs outside legal counsel and financial advisors, that such Competing Transaction constitutes a Superior Transaction; and (ii) Fairs board of directors determines in good faith, after having taken into account the advice of Fairs outside legal counsel, that the failure to take such action would constitute a breach of its fiduciary obligations under applicable Delaware Law. In evaluating any unsolicited Competing Transaction, Fairs board of directors or any committee thereof may consider any statement or indication from or on behalf of SoftBank that it will not agree to such Competing Transaction, provided that such fact shall not prevent Fairs board of directors from taking any action permitted pursuant to this Section 5.3.

 

5.4 Reserved.

 

5.5 Confidentiality. From and after Closing, Sellers shall, and shall cause Sellers’ Subsidiaries, Representatives and any Subsidiary’s Representatives having access to such information, to hold in confidence and not use any documents and information concerning or relating to the Transferred Company, the Transferred Assets or the Assumed Liabilities, except that the foregoing requirements of this Section 5.5 shall not apply to the extent that (a) any such information is or becomes generally available to the public other than through disclosure by Sellers, Sellers’ Subsidiaries, or any of their respective Representatives or (b) any such information was or becomes lawfully available to Sellers or Sellers’ Subsidiaries on a non-confidential basis and from a source (other than from Sellers, Sellers’ Subsidiaries, or any of their respective Representatives) that is not bound by an obligation of confidentiality with respect to such information. If Sellers or any of Sellers’ Subsidiaries are requested or required (in any legal proceeding, interrogatory, subpoena, civil investigative demand, or similar process) to disclose any such confidential information, then the applicable Seller shall notify Buyer promptly of the request or requirement so that Buyer may seek an appropriate protective order or waive compliance with the provisions of this Section 5.5. If, in the absence of a protective order or the receipt of a waiver hereunder, Sellers are, on the written advice of counsel, compelled to disclose any such confidential information to any tribunal or else stand liable for contempt, then the applicable Seller may disclose the confidential information to the tribunal; provided, however, that the applicable Seller shall, upon the request and at the expense of Buyer, exert their best efforts to obtain an order or other assurance that confidential treatment will be accorded to such portion of the confidential information required to be disclosed as Buyer shall designate.

 

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5.6 Notice of Certain Events.

 

(a) From the date hereof until the Closing or earlier termination of this Agreement, Sellers shall promptly notify Buyer in writing of (i) any fact, circumstance, event or action, the existence, occurrence or taking of which (A) has had, or could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Transferred Assets or the Transferred Company, (B) has resulted in, or could reasonably be expected to result in, any representation or warranty made by Sellers hereunder not being true and correct or (C) has resulted in, or could reasonably be expected to result in, the failure of any of the conditions set forth in ARTICLE VII to be satisfied; (ii) any notice or other communication from any Person alleging that the consent of such Person is or may be required in connection with the transactions contemplated by this Agreement; (iii) any notice or other communication from any Governmental Authority in connection with the transactions contemplated by this Agreement; and (iv) any Actions commenced, threatened against, relating to, involving or otherwise affecting Sellers that relate to the Transferred Assets, the Transferred Company or the consummation of the transactions contemplated by this Agreement.

 

(b) Buyers receipt of information pursuant to this Section 5.6 shall not operate as a waiver or otherwise affect any representation, warranty, covenant or agreement given or made by Sellers in this Agreement, including for purposes of (i) indemnification or termination rights contained in this Agreement or (ii) determining whether or not the conditions set forth in ARTICLE VII have been satisfied, and shall not be deemed to amend or supplement the Schedules.

 

ARTICLE VI
JOINT COVENANTS

 

6.1 Support of Transaction.

 

(a) Subject to the other terms and conditions of this Agreement, Buyer and Sellers shall use commercially reasonable efforts to (i) take, or cause their respective Affiliates to promptly take, and to do, or cause to be done promptly, all actions necessary, proper or advisable in order to consummate and make effective the transactions contemplated by this Agreement, or to assist and cooperate with the other Parties in doing or causing to be done the same, and (ii) to take such action as may reasonably be necessary or as another Party may reasonably request to satisfy the conditions of ARTICLE VII or otherwise to comply with this Agreement and to consummate the transactions contemplated hereby as soon as practicable.

 

(b) Sellers shall use commercially reasonable efforts, and Buyer shall, and shall cause its Affiliates to, cooperate with Sellers to the extent commercially reasonable to do so, to give at the earliest practicable date all notices and obtain at the earliest practicable date all consents and approvals, in each case, that would be required as a result of, or to consummate, the transactions contemplated by this Agreement, including the notices, consents and approvals set forth on or required to be set forth on Schedule 3.4; provided, that Sellers shall distribute all such required notices and requests for consent no later than five (5) Business Days following the date of this Agreement; provided further that none of Buyer nor any of its Affiliates shall be required to satisfy any portion of a fee or payment, or incur any expense, necessary to obtain such consent or approval, other than de minimis administrative fees and expenses.

 

(c) Except as otherwise expressly set forth herein, each Party shall be solely responsible for its own costs and fees payable to any Governmental Authority or other Person in connection with the transactions contemplated by this Agreement.

 

6.2 Further Assurances. Each Party agrees that, from time to time after the Closing Date, it will execute and deliver, or cause its respective Affiliates and their respective Representatives, in each case, to execute and deliver, such further instruments, and take (or cause its respective Affiliates or their Representatives to take) such other action, as may be reasonably necessary to carry out the purposes and intent of this Agreement.

 

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6.3 Tax Matters.

 

(a) Taxes Payable. For purposes of this Agreement, the following portions of any Taxes payable with respect to a Tax period beginning on or prior to the Closing Date and ending after the Closing Date (a “Straddle Period”) shall be allocated to the Pre-Closing Tax Period:

 

(i)in the case of Taxes that are either (A) based upon or related to income or receipts or (B) imposed in connection with any sale or other transfer or assignment of property (real or personal, tangible or intangible), other than conveyances pursuant to this Agreement, the amount which would be payable if the taxable year ended on the Closing Date; and

 

(ii)in the case of Taxes imposed on a periodic basis with respect to the assets or otherwise measured by the level of any item, the amount equal to the product of (A) the amount of such Taxes for the entire period (or, in the case of such Taxes determined on an arrears basis, the amount of such Taxes for the immediately preceding period) and (B) a fraction, the numerator of which is the number of calendar days in the portion of the Straddle Period ending on (and including) the Closing Date and the denominator of which is the number of calendar days in the entire Straddle Period.

 

(b) Transfer Taxes. Notwithstanding anything to the contrary in this Agreement, all federal, state, local or foreign or other excise, sales, use, value added, transfer (including real property transfer or gains or transfer Taxes, if any, payable upon assignment of any Transferred Contracts), stamp, documentary, filing, recordation and other similar Taxes and fees that may be imposed or assessed as a result of the transactions contemplated by this Agreement, together with any interest, additions or penalties with respect thereto and any interest in respect of such additions or penalties (“Transfer Taxes”), shall be borne by Buyer; provided, however, that each of the Sellers and Buyer shall use, and each shall cause their respective Affiliates to use, reasonable efforts to obtain any available exemptions from any such Transfer Taxes, and to cooperate with the other such parties in providing any information and documentation that may be necessary to obtain such exemption.

 

(c) Assistance and Cooperation. After the Closing Date, the Parties shall cooperate fully in connection with the filing of Tax Returns and in preparing for any audits of, or disputes with Tax authorities regarding, any Tax Returns and payments in respect thereof. Each Party shall (i) provide timely notice to the other in writing of any pending or proposed audits or assessments with respect to Taxes for which any other Party or any of its Affiliates may have a Liability, and (ii) furnish the other with copies of all relevant correspondence received from any Tax authority in connection with any audit or information request with respect to any Taxes referred to in clause (i) above. In addition, Buyer and Sellers shall cooperate in good faith in obtaining any certificate or other document from any Governmental Authority or any other Person as may be necessary to mitigate, reduce or eliminate any Tax that could be imposed by the transactions contemplated hereby.

 

(d) Filings of Pre-Closing Income Tax Returns:

 

(i)Sellers and Buyer will each prepare and file their own income Tax Returns for all periods and will exercise exclusive control over the handling, disposition and settlement of their own income Tax Returns and any inquiry, examination, or Action by a Governmental Authority with respect to income Taxes.

 

(ii)Sellers will prepare and timely file all Tax Returns in respect of the business of Sellers and the Transferred Company for all Pre-Closing Tax Periods ending on or before the Closing Date.  Sellers will pay all Taxes due and payable with respect to such Tax Returns.  Buyer will prepare and timely file all Tax Returns in respect of the business of operating the Transferred Assets and the Transferred Company for all Post-Closing Tax Periods.  To the extent any Taxes payable with respect to such Buyer-prepared Tax Returns relate to any Pre-Closing Tax Period or are Taxes otherwise allocable to a Pre-Closing Tax Period pursuant to Section 6.3(a), Sellers shall promptly pay the amount of such Taxes at the written request of Buyer. Upon reasonable written request by Buyer, Sellers shall permit an amendment of any pre-Closing Tax Return. 

 

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6.4 Intellectual Property.

 

(a) Except as expressly set forth in Section 6.4(b), from and after the Closing, Sellers and their Affiliates shall have no right to use any Intellectual Property included within the Transferred Assets.

 

(b) Within ninety (90) days after the Closing Date, Sellers shall, and shall cause their Subsidiaries whose legal names contain any trade names, trademarks, trade dress or corporate names included within the Transferred Assets (including the “FAIR FINANCIAL” and “FAIR FINANCIAL CORP.” names and marks, and those that are derivative thereof or confusingly or substantially similar thereto) to, take all actions necessary to change their legal names such that they do not include such name or mark or any name or mark that is confusingly similar thereto, at their sole cost and expense. To the extent that any such name change requires a filing with, or certificate or other instrument from, a Governmental Authority in order to be effective, Sellers shall, and shall cause each of their Affiliates to make, all such filings as soon as reasonably possible, and in any event within ninety (90) days, following the Closing Date, and to use its commercially reasonable efforts to obtain as expeditiously as reasonably practicable all such certificates or instruments. Sellers shall provide Buyer with evidence of the changes upon completion. Sellers shall not, and shall cause their Subsidiaries not to, register, attempt to register or assist another in registering any trademark that is confusingly similar to any trademark included within the Transferred Assets.

 

6.5 Hiring of Seller Personnel; Future Benefits.

 

(a) Prior to the Closing Date, Sellers shall provide Buyer with an update to the list of Seller Personnel and related information set forth in Schedule 3.8(b) to reflect new hires, terminations or other personnel changes occurring between the date hereof and the Closing Date, subject to Section 5.1. Effective as of the Closing Date, Buyer or one of its Affiliates shall offer employment to all Seller Personnel set forth on a written list delivered to Sellers by Buyer prior to the Closing Date (such Seller Personnel, the Offered Personnel) employed as of the Closing Date, on such terms and conditions as Buyer shall determine in its sole discretion; provided, however, that Buyer shall have no obligation to offer employment to any Offered Personnel who does not meet Buyers customary hiring conditions, including background checks, compliance with wage, labor and immigration Laws and drug tests. Offered Personnel who accept Buyers or such Affiliates offer of employment and who are thereafter employed by Buyer or its Affiliates, are hereinafter referred to as Transferred Employees. Sellers shall terminate, or shall cause to be terminated, the employment of all Transferred Employees effective as of the Closing Date (and, for the avoidance of doubt, Sellers will pay all Transferred Employees any wages, bonuses (including transaction bonuses and any other accrued bonuses or other Liabilities under the Company Benefit Plans), accrued vacation, and benefits, if any, that he or she is entitled to, up to the time of termination including any other payments required by Law). Sellers will cooperate, and cause their Affiliates that employ Seller Personnel to cooperate, with Buyer to facilitate the logistics of Buyers communication with Seller Personnel for the purposes of communicating employment offers and for discussing Seller Personnels employment after the Closing with Buyer or its Affiliates, and by making Seller Personnel available from time to time between the date hereof and the Closing Date to meet and interview with Buyers Representatives, subject to reasonable limits to minimize disruption to the business of Sellers and to the right of Sellers to advance notice and an opportunity to attend and participate in all such meetings. Sellers agree to provide Buyer with a reasonable opportunity to review, and to consider in good faith, any changes requested by Buyer, with respect to their communication plan and communications provided by Sellers or their Affiliates to Seller Personnel in connection with the transactions contemplated by this Agreement. Effective as of the Closing, Sellers and their Affiliates shall waive any covenants not to compete, covenants not to solicit, confidentiality provisions or other similar restrictions that may be applicable to the Transferred Employees, but only to the extent such covenants, provisions or restrictions relate to the Transferred Assets and would prohibit such Transferred Employees from accepting employment with Buyer or its Affiliates or continuing in such employment without violating such covenants, provision or restrictions. Sellers shall not, and shall cause their Affiliates not to, engage in any activity intended to discourage any Offered Personnel from accepting any offer of employment. Notwithstanding the foregoing, nothing in this Agreement will, after the Closing Date, impose on Buyer any obligation to retain any Transferred Employee in its employment.

 

(b) None of Buyer nor any of Buyers Affiliates shall assume, continue, maintain or have any Liability or obligation thereunder, or be obligated to assume, continue or maintain, any Company Benefit Plan or any other employee benefit plan, program or arrangement maintained or contributed to by Sellers or any of their Affiliates, and no assets or Liabilities under any Company Benefit Plan or any other employee benefit plan, program or arrangement maintained or contributed to by Sellers or any of their Affiliates shall be transferred to, or be assumed by, Buyer or its Affiliates or any benefit plans maintained by Buyer or its Affiliates.

 

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(c) Sellers and their Affiliates shall comply with the provisions of COBRA, as set forth in Section 4980B of the Code and Part 6 of Title I of ERISA (and assume and retain all responsibility for providing notice and continuation coverage as may be required thereunder), with respect to any employee, former employee or beneficiary of such employee or former employee who is covered by any group health plan, as defined in Section 5000(b)(1) of the Code maintained by Sellers or their Affiliates as of the Closing Date or whose qualifying event as defined in COBRA and its regulations occurs on or prior to the Closing Date, pursuant to the provisions of COBRA, including all qualified M&A beneficiaries as defined by COBRA and its regulations.

 

(d) Sellers and their Affiliates shall be responsible for any required notices and other obligations under the WARN Act for any terminations by it up to and including the date and time of the Closing, and Buyer shall be responsible for any required notices and any other obligations under the WARN Act for any terminations by it after the date and time of the Closing as it relates to Transferred Employees.

 

(e) For purposes of any reporting required under the Affordable Care Act or any other applicable Law, at the request of Buyer, Sellers shall timely provide Buyer or any of its Affiliates with any information in its possession that is necessary for Buyer or its Affiliates to timely comply with such Affordable Care Act reporting requirements.

 

(f) The provisions of this Section 6.5 are solely for the benefit of the Parties, and no current or former employee, director or independent contractor or any other individual associated therewith shall be regarded for any purpose as a third-party beneficiary of this Section 6.5, and nothing herein shall be construed as an establishment or adoption of, or an amendment to, any Company Benefit Plan or other employee benefit plan for any purpose. Nothing in this Section 6.5 shall be construed as an establishment or adoption of, or an amendment to, any Company Benefit Plan or other employee benefit plan for any purpose.

 

6.6 Other Post-Closing Assistance.

 

(a) After the Closing, each Party agrees to provide, or cause to be provided, to each other, as soon as reasonably practicable after written request therefor and at the requesting Party’s sole expense, reasonable access, during normal business hours, to such Party’s information in any way related to the business of Sellers or the Transferred Company (i) to comply with reporting, disclosure, filing or other requirements imposed on the requesting Party (including under applicable securities Laws or securities exchange rules) by a Governmental Authority or securities exchange having jurisdiction over the requesting Party; or (ii) as reasonably necessary for financial and Tax reporting and accounting matters; provided, however, that no Party shall be required to provide access to or disclose information where such access or disclosure would violate any Law or Contract, waive any attorney-client privilege or disclose competitively sensitive or proprietary information, and each Party may redact information regarding itself or its Affiliates or otherwise not relating to the other Party and its Affiliates, and, in the event such provision of information could reasonably be expected to violate any Law or Contract, waive any attorney-client privilege or disclose competitively sensitive or proprietary information, such Parties shall take all reasonable measures to permit the compliance with such obligations in a manner that avoids any such harm or consequence. Notwithstanding the foregoing, this Section 6.6 shall not apply to Actions with respect to which such Parties are in dispute as to whether a Party has an obligation to provide indemnification under ARTICLE IX. Any information provided to Sellers hereunder shall be subject to the confidentiality provisions of Section 5.5.

 

(b) Production of Witnesses; Records; Cooperation. In the case of a legal, administrative or other proceeding or Action between one Party and a third party relating to the Transferred Assets, the Transferred Company, the Assumed Liabilities, this Agreement (including any matters subject to indemnification hereunder) or the transactions contemplated hereby, or any other Ancillary Agreements, each Party shall use its commercially reasonable efforts to make available to the other Parties, upon reasonable written request, the former (to the extent practicable), current (to the extent practicable) and future officers, employees, other personnel and agents of such Party as witnesses, and any books, records or other documents within its control or which it otherwise has the ability to make available, to the extent that any such Person (giving consideration to business demands of such directors, officers, employees, other personnel and agents) or books, records or other documents may reasonably be required in connection with such legal, administrative or other proceeding or Action, whether such legal, administrative or other proceeding or Action is a matter with respect to which indemnification may be sought hereunder; provided, however, that no Party shall be required to provide access to or disclose information where such access or disclosure would violate any Law or Contract, waive any attorney-client privilege or disclose competitively sensitive information, and each Party may redact information regarding itself or its Affiliates or otherwise not relating to the other Parties and their respective Affiliates, and, in the event such provision of information could reasonably be expected to violate any Law or Contract, waive any attorney-client privilege or disclose competitively sensitive information, the Parties shall take all reasonable measures to permit the compliance with such obligations in a manner that avoids any such harm or consequence. Such requesting Party shall bear all out of pocket costs and expenses in connection with the foregoing (unless an Indemnified Party is entitled to indemnification therefor under ARTICLE IX, in which case the costs and expense shall be borne by the Indemnitor as set forth in ARTICLE IX). The foregoing shall not limit any of the rights of the Parties in respect of the foregoing under ARTICLE IX.

 

(c) Third Party Confidential Information. Nothing in this Section 6.6 shall require any Party to violate any Contract with any third parties regarding the confidentiality of confidential and proprietary information; provided, however, that in the event that any Party is required under this Section 6.6 to disclose such information, such Party shall use all commercially reasonable efforts to seek to obtain such third party’s consent to the disclosure of such information and implement the requisite procedures to enable the disclosure of such information.

 

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ARTICLE VII
CONDITIONS TO OBLIGATIONS

 

7.1 Conditions to the Obligations of Buyer and Sellers. The obligations of Buyer and Sellers to consummate the transactions contemplated by this Agreement are subject to the satisfaction of the following conditions, which may be waived in writing by such Parties:

 

(a) there shall not be in force any Governmental Order to, and there shall be no Action pending that seeks to, enjoin or prohibit the transactions contemplated by this Agreement or any Ancillary Agreement; and

 

(b) Buyer and SoftBank shall have entered into definitive agreements with respect to and be prepared to consummate the Securities Transaction in connection with the Closing.

 

7.2 Conditions to Obligations of Buyer. The obligations of Buyer to consummate the transactions contemplated by this Agreement are subject to the satisfaction of the following additional conditions, any one or more of which may be waived in writing by Buyer:

 

(a) (i) each of the representations and warranties contained in Section 3.1 (Organization of Sellers; Organization of the Transferred Company), Section 3.2 (Due Authorization), Section 3.3 (Capitalization; Subsidiaries); Section 3.10 (Brokers’ Fees), Section 3.12 (Title to Transferred Assets) and Section 3.18(a)(c) (collectively, the “Fundamental Representations”) shall be true and correct in all respects as of the Closing Date, as if made anew at and as of that date, except with respect to representations and warranties which speak as to another date, which representations and warranties shall be true and correct in all respects at and as of such date, in each case disregarding all qualifications contained therein relating to materiality or Material Adverse Effect; and (ii) each of the other representations and warranties contained in ARTICLE III shall be true and correct in all material respects as of the Closing Date, as if made anew at and as of that date, except with respect to representations and warranties which speak as to another date, which representations and warranties shall be true and correct in all material respects at and as of such date, in each case disregarding all qualifications contained therein relating to materiality or Material Adverse Effect;

 

(b) each of the covenants of Sellers to be performed at or prior to the Closing shall have been performed in all material respects;

 

(c) Sellers shall have delivered to Buyer a certificate signed by an officer of each Seller, dated as of the Closing Date, certifying that (i) the conditions specified in Sections 7.2(a), 7.2(b) and 7.2(e), have been fulfilled and (ii) attached thereto is a true and complete copy of resolutions duly adopted (or a duly executed written consent) by the board of directors and stockholders of such Seller authorizing the execution, delivery and performance of the documents, including this Agreement and each of the Ancillary Agreements, executed in connection with the transactions contemplated hereby;

 

(d) Sellers and their applicable Affiliates shall have duly executed and delivered to Buyer the Ancillary Agreements, including the documents referenced in Section 2.8(a); and

 

(e) there shall not have been any event, occurrence, development or circumstance that has had or is reasonably likely to have, individually or in the aggregate, a Material Adverse Effect on the Transferred Assets or the Transferred Company.

  

7.3 Conditions to the Obligations of Sellers. The obligation of Sellers to consummate the transactions contemplated by this Agreement are subject to the satisfaction of the following additional conditions, any one or more of which may be waived in writing by Fair:

 

(a) (i) each of the representations and warranties contained in Section 4.1 (Corporate Organization) and Section 4.2 (Due Authorization) shall be true and correct in all respects as of the Closing Date, as if made anew at and as of that date, except with respect to representations and warranties which speak as to another date, which representations and warranties shall be true and correct in all respects at and as of such date, in each case disregarding all qualifications contained therein relating to materiality or Material Adverse Effect; and (ii) each of the other representations and warranties contained in ARTICLE IV shall be true and correct in all material respects as of the Closing Date, as if made anew at and as of that date, except with respect to representations and warranties which speak as to another date, which representations and warranties shall be true and correct in all material respects at and as of such date, in each case disregarding all qualifications contained therein relating to materiality or Material Adverse Effect;

 

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(b) each of the covenants of Buyer to be performed at or prior to the Closing shall have been performed in all material respects;

 

(c) Buyer shall have delivered to Fair a certificate signed by an officer of Buyer, dated as of the Closing Date, certifying that the conditions specified in Section 7.3(a) and Section 7.3(b) have been fulfilled; and

 

(d) Buyer shall have executed and delivered to Fair the Ancillary Agreements, including the documents referenced in Section 2.8(b).

 

7.4 Waiver of Conditions; Frustration of Conditions. Neither Sellers nor Buyer may rely on the failure of any condition set forth in this ARTICLE VII to be satisfied if such failure was caused by the failure of Sellers, on the one hand, or Buyer, on the other hand, respectively, to comply with, or use commercially reasonable efforts to comply with, their or its obligations under this Agreement.

 

ARTICLE VIII
TERMINATION/EFFECTIVENESS

 

8.1 Termination. This Agreement may be terminated and the transactions contemplated hereby abandoned any time prior to the Closing:

 

(a) by mutual written consent of Fair and Buyer;

 

(b) by written notice to Fair from Buyer if:

 

(i)there is any breach of any representation, warranty, covenant or agreement on the part of Sellers set forth in this Agreement, such that the conditions specified in Section 7.1 or Section 7.2 would not be satisfied at the Closing (a “Terminating Seller Breach”), except that, if any such Terminating Seller Breach is curable by Sellers through the exercise of its commercially reasonable efforts, then, for a period of up to fifteen (15) days after receipt by Fair of notice from Buyer of such breach, but only as long as Sellers continue to use Sellers’ commercially reasonable efforts to cure such Terminating Seller Breach (the “Seller Cure Period”), such termination shall not be effective until the end of the Seller Cure Period (provided, that such Seller Cure Period shall not extend past the Outside Date), and such termination shall become effective only if the Terminating Seller Breach is not cured within the Seller Cure Period;

 

(ii)the Closing has not occurred on or before the Outside Date, unless Buyer’s breach of its obligations under this Agreement is the primary reason for the Closing not occurring on or before such date;

 

(iii)the Closing is permanently enjoined or prohibited by the terms of a final, non-appealable Governmental Order; or

 

(iv)Fair (or its board of directors) shall have withdrawn or modified any approval or recommendation in favor of this Agreement, approved or recommended a Competing Transaction, or caused Sellers to enter into an agreement with respect to a Competing Transaction pursuant to Section 5.3.

 

(c) by written notice to Buyer from Fair if:

 

(i)there is any breach of any representation, warranty, covenant or agreement on the part of Buyer set forth in this Agreement, such that the conditions specified in Section 7.1 or Section 7.3 would not be satisfied at the Closing (a “Terminating Buyer Breach”), except that, if any such Terminating Buyer Breach is curable by Buyer through the exercise of its commercially reasonable efforts, then, for a period of up to fifteen (15) days after receipt by Buyer of notice from Fair of such breach, but only as long as Buyer continues to use its commercially reasonable efforts to cure such Terminating Buyer Breach (the “Buyer Cure Period”), such termination shall not be effective until the end of the Buyer Cure Period (provided, that such Buyer Cure Period shall not extend past the Outside Date), and such termination shall become effective only if the Terminating Buyer Breach is not cured within the Buyer Cure Period;

 

(ii)the Closing has not occurred on or before the Outside Date, unless Sellers’ breach of their obligations under this Agreement is the primary reason for the Closing not occurring on or before such date; or

 

(iii)the Closing is permanently enjoined or prohibited by the terms of a final, non-appealable Governmental Order.

 

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8.2 Effect of Termination. Except as otherwise set forth in this Section 8.2, in the event of the termination of this Agreement pursuant to Section 8.1, this Agreement shall forthwith become void and have no effect, without any Liability on the part of any Party or its respective Affiliates, officers, directors, employees, stockholders or other equity holders, other than Liability of Sellers or Buyer, as the case may be, for any breach of this Agreement occurring prior to such termination; provided, however, that, a failure of Buyer or Sellers to consummate the transactions contemplated hereby in breach of this Agreement within two (2) Business Days of the date in which the Closing should have occurred pursuant to Section 2.1 shall be deemed to be a breach of such Party’s obligations under this Agreement. The provisions in ARTICLE I, Section 5.5 (Confidentiality), this Section 8.2, ARTICLE X, and the Confidentiality Agreement, shall survive any termination of this Agreement.

 

ARTICLE IX
INDEMNIFICATION

 

9.1 Survival of Representations, Warranties and Covenants. The representations and warranties contained in this Agreement, including any rights arising out of any breach of such representations and warranties, shall survive the Closing until the date that is eighteen (18) months after the Closing Date, except that (i) (A) the Fundamental Representations shall survive the Closing Date until 60 days following the expiration of the applicable statute of limitations, and (B) the representations and warranties set forth in Section 4.1 (Corporate Organization), Section 4.2 (Due Authorization) and Section 4.12 (No Brokers) shall survive the Closing Date until 60 days following the expiration of the applicable statute of limitations; and (ii) the survival expiration set forth herein shall not limit any claims based on fraud or intentional misrepresentation. With respect to covenants and agreements, (x) those covenants and agreements contained herein that by their terms require performance in full prior to or at the Closing (the “Pre-Closing Covenants”), shall survive the Closing until the date that is one (1) year after the Closing Date; and (y) those covenants and agreements contained herein that by their terms require performance after the Closing (the “Post-Closing Covenants”), shall survive the Closing until the date that is one (1) year following performance in accordance with their terms. No claim for indemnification pursuant to Section 9.2(a) or Section 9.2(b) may be asserted unless on or before the survival expiration date, set forth above, in accordance with this ARTICLE IX. If a claim for indemnification is properly asserted in accordance with this ARTICLE IX prior to the expiration of the representation, warranty or covenant that is the basis of such claim, then such representation, warranty, covenant or other agreement contained in this Agreement shall survive beyond the applicable survival date set forth above, but only for the purpose of the resolution of such claim.

 

9.2 Indemnification.

 

(a) Subject to Section 9.4, from and after the Closing, Sellers, solely to the extent of any insurance or other funds, if any, then available to Sellers, shall, jointly and severally, indemnify, defend and hold harmless Buyer and its Affiliates and their respective, officers, directors, members, managers, partners, equityholders, Representatives, agents and successors and assigns (collectively, the “Buyer Indemnified Parties”) from and against and in respect of any and all Damages any Buyer Indemnified Party may suffer, sustain or incur that result from, arise out of, relate to, or are caused by, any of the following: (i) any breach of, or inaccuracy in, any representation or warranty of Sellers contained in this Agreement or in any certificates delivered by Sellers pursuant to Article VII, other than the Fundamental Representations; (ii) any breach of, or inaccuracy in, the Fundamental Representations; (iii) the Excluded Liabilities; (iv) any breach of Sellers’ Post-Closing Covenants; or (v) any breach of Sellers’ Pre-Closing Covenants.

 

(b) Subject to Section 9.4, from and after the Closing, SoftBank shall indemnify, defend and hold harmless the Buyer Indemnified Parties from and against and in respect of any and all Damages any Buyer Indemnified Party may suffer, sustain or incur that result from, arise out of, relate to, or are caused by, any of the following: (i) any breach of, or inaccuracy in, any representation or warranty of Sellers contained in Section 3.14 of this Agreement; (ii) any breach of, or inaccuracy in, the Fundamental Representations except for Fundamental Representations in Sections 3.18(a)(c); or (iii) any breach of SoftBank’s Post-Closing Covenants.

 

(c) Subject to Section 9.4, from and after the Closing, Buyer shall indemnify, defend and hold harmless Sellers, SoftBank, their Affiliates and their respective, officers, directors, members, managers, partners, equityholders, Representatives, agents and successors (collectively, the “Seller Indemnified Parties”) from and against and in respect of any and all Damages any Seller Indemnified Party may suffer, sustain or incur that result from, arise out of, relate to, or are caused by, any of the following: (i) any breach of, or inaccuracy in, the representations and warranties of Buyer contained in this Agreement or in any certificates delivered by Buyer pursuant to ARTICLE VII; (ii) the Assumed Liabilities; (iii) any breach of its Post-Closing Covenants; or (iv) any breach of its Pre-Closing Covenants.

 

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9.3 Indemnification Claim Procedures.

 

(a) If any Action is commenced or threatened by any Person that is not a Party or an Affiliate of a Party (a “Third Party Action”) that may give rise to a claim for indemnification (an “Indemnification Claim”) by any Person entitled to indemnification pursuant to Section 9.2 (each, an “Indemnified Party”), then such Indemnified Party shall promptly (i) notify the Indemnitor and (ii) deliver to the Indemnitor a written notice (A) describing in reasonable detail the nature of the Action to the extent known, (B) including a copy of all papers served with respect to such Action, (C) including the Indemnified Party’s estimate of the amount of Damages that may arise from such Action (if reasonably capable of being estimated at such time), and (D) describing in reasonable detail the basis for the Indemnified Party’s request for indemnification under this Agreement. Failure to notify the Indemnitor in accordance with this Section 9.3(a) will not relieve the Indemnitor of any Liability that it may have to the Indemnified Party, except to the extent the defense of such Action is materially prejudiced by the Indemnified Party’s failure to give such notice.

 

(b) An Indemnitor may elect at any time to assume and thereafter conduct the defense of any Third Party Action subject to any such Indemnification Claim with counsel of the Indemnitor’s choice, and each Indemnified Party shall cooperate reasonably with the conduct of such defense by such Indemnitor at the expense of such Indemnitor (but, for the avoidance of doubt, shall not be required to make or participate in any claims, counterclaims or cross complaints against any Person in connection with such Action); provided, however, that the Indemnitor will not approve the entry of any judgment or enter into any settlement or compromise with respect to such Action without the Indemnified Party’s prior written approval (which must not be unreasonably conditioned, withheld, delayed or denied (except in the case of a settlement or compromise for material non-monetary restrictions on the freedom of the Indemnified Party or any of its Affiliates to operate, in which case such approval may be withheld at the Indemnified Party’s sole discretion)), unless (x) the terms of such settlement provide for a complete release of the claims that are the subject of such Action in favor of the Indemnified Party, (y) there is no finding or admission of any violation of any Law or the rights of any other Person by any Indemnified Party and (z) the sole relief is monetary Damages that Indemnitor shall have paid or caused to be paid in full. If the Indemnified Party gives an Indemnitor notice of a Third Party Action and the Indemnitor does not, within fifteen (15) days after such notice is given, (i) give notice to the Indemnified Party of its election to assume the defense of the Action(s), including an acknowledgement in writing of the Indemnitor’s indemnification obligations to the Indemnified Party with respect to any Indemnification Claim related to such Action(s) and (ii) thereafter promptly assume and use commercially reasonable efforts to pursue such defense, then the Indemnified Party may conduct the defense of such Action; provided, however, that the Indemnified Party will not agree to the entry of any judgment or enter into any settlement or compromise with respect to such Action(s) without the prior written consent of the Indemnitor (which consent shall not be unreasonably conditioned, withheld, delayed or denied). Notwithstanding anything to the contrary, the Indemnitor shall not be entitled to assume the defense of any Third Party Action (A) that involves any customer or supplier of the Indemnified Party, (B) in which the Indemnitor is Sellers or SoftBank and the aggregate amount of Damages reasonably expected to be incurred in connection with such Third Party Action exceeds the applicable Cap, (C) where such Third Party Action involves criminal or quasi-criminal allegations, or (D) where such Third Party Action includes a claim for injunctive or other non-monetary relief. If the Indemnitor shall assume the defense of any Third Party Action, the Indemnified Party may participate, at its own expense, in the defense of such Indemnification Claim; provided, however, that such Indemnified Party shall be entitled to participate in any such defense with separate counsel at the expense of the Indemnitor if (i) so requested by the Indemnitor to participate or (ii) based on the written advice of counsel to the Indemnified Party, a conflict or potential conflict exists between the Indemnified Party and the Indemnitor that would make such separate representation advisable; provided, further, that the Indemnitor shall not be required to pay for more than one such counsel (plus any appropriate local counsel) for all Indemnified Parties in connection with any Indemnification Claim. To the extent that the Indemnified Party or the Indemnitor does not participate in the defense of a particular Third Party Action, such Party so proceeding with such Third Party Action shall keep the other informed of all material developments and events relating to such Third Party Action.

 

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(c) If any Indemnified Party becomes aware of any circumstances that may give rise to an Indemnification Claim for any matter not involving a Third Party Action, then such Indemnified Party shall promptly (i) notify the Indemnitor and (ii) deliver to the Indemnitor a written notice (A) describing in reasonable detail the nature of the circumstances giving rise to the Indemnification Claim to the extent known, (B) including the Indemnified Party’s reasonable estimate of the amount of Damages that may arise from such circumstances (if reasonably capable of being estimated at such time), and (C) describing in reasonable detail the basis to the extent known for the Indemnified Party’s request for indemnification under this Agreement. Failure to notify the Indemnitor in accordance with this Section 9.3(c) will not relieve the Indemnitor of any Liability that it may have to the Indemnified Party, except to the extent (1) the defense of such Indemnification Claim is materially prejudiced by the Indemnified Party’s failure to give such notice or (2) the Indemnified Party fails to notify the Indemnitor of such Indemnification Claim in accordance with this Section 9.3(c) prior to the applicable survival period expiration date set forth in Section 9.1 to the extent such Indemnification Claim relates to a breach of, or inaccuracy in, representations and warranties. Following the receipt of such notice in accordance with this Section 9.3(c), the Indemnitor shall have thirty (30) days from the date it receives such notice (the Dispute Period) to make such investigation of the claim as the Indemnitor deems necessary or desirable. If the Indemnitor disagrees with the validity or amount of all or a portion of such claim made by the Indemnified Party, the Indemnitor shall deliver to the Indemnified Party written notice thereof (the Dispute Notice) prior to the expiration of the Dispute Period. If no Dispute Notice is received by the Indemnified Party within the Dispute Period or the Indemnitor provides notice that it does not have a dispute with respect to such claim or any portion thereof, such claim or portion thereof shall be deemed approved and consented to by the Indemnitor (such claim, an Approved Indemnification Claim). If a Dispute Notice is received by the Indemnified Party within the Dispute Period and the Indemnified Party and the Indemnitor do not agree to the validity or amount of such disputed claim or any portion thereof, no payment with respect to such disputed claim or portion thereof shall be made until such disputed claim or portion thereof is resolved, whether by adjudication of such matter, agreement between the Indemnified Party and the Indemnitor, or otherwise (and upon any such resolution, such claim or portion thereof shall be deemed to be an Approved Indemnification Claim). Each Approved Indemnification Claim shall be paid no later than five (5) Business Days after the date on which the subject claim or portion thereof became an Approved Indemnification Claim and the Damages of the Indemnified Party have been suffered, sustained or incurred, in each case, by wire transfer of immediately available funds to the account designated in writing by the Party entitled to such payment.

 

(d) At the reasonable request of the Indemnitor in connection with any Indemnification Claim for matters involving a Third Party Action, each Indemnified Party shall grant the Indemnitor and its Representatives all reasonable access to the books and records, employees and properties of such Indemnified Party (except for any information that is subject to attorney-client privilege, prohibited from disclosure by Law or Contract or is otherwise competitively sensitive or proprietary in nature) to the extent reasonably related to the matters to which the applicable Indemnification Claim relates and solely to the extent necessary to, and for the purpose of, defending such Indemnification Claim. All such access shall be granted during normal business hours, be under conditions which shall not unreasonably interfere with the business and operations of such Indemnified Party and be at the Indemnitor’s sole cost and expense.

 

9.4 Limitations on Indemnification Liability; Calculation of Damages. Notwithstanding any provision of this Agreement to the contrary, any claims an Indemnified Party makes under this ARTICLE IX shall be limited as follows:

 

(a) Seller Indemnification Deductible and Cap. Except in the case of fraud (provided that this proviso shall only be applicable to SoftBank in the case of fraud committed directly by SoftBank (and not by Sellers)), (i) no Buyer Indemnified Party shall be entitled to indemnification for any Damages under Section 9.2(a)(i) or Section 9.2(b)(i) unless and until one or more claims identifying such Damages in excess of an amount equal to 0.5% of the Purchase Price in the aggregate (the Deductible Amount) has or have been delivered to Sellers or SoftBank, and such amount is payable in accordance with this ARTICLE IX, whereupon only the aggregate amount of such Damages in excess of the Deductible Amount shall thereafter be recoverable in accordance with the terms hereof; provided, further that Sellers or SoftBank shall not have any obligation to indemnify any Buyer Indemnified Party under Section 9.2(a)(i) or Section 9.2(b)(i) with respect to any Damages of less than $10,000 per occurrence (for purposes hereof, aggregating multiple claims arising out of or relating to the same set of facts and circumstances), and (ii) the aggregate amount of Damages for which the Buyer Indemnified Parties shall be entitled to indemnification (A) pursuant to Section 9.2(a)(i), Section 9.2(b)(i) and Section 9.2(b)(iii) shall not exceed, in the aggregate, an amount equal to fifteen percent (15%) of the Purchase Price and (B) pursuant to Section 9.2(a)(ii) and Section 9.2(b)(ii) shall not exceed, in the aggregate, the amount of the Purchase Price (with, for purposes of this Section 9.4(a), the value of the Stock Consideration component of the Purchase Price to be calculated based on the thirty (30) day volume weighted average Nasdaq trading price of Buyer Common Stock for the consecutive thirty (30) day period ending immediately prior to the Closing Date) (each of such clauses (A) and (B), as applicable, a Cap).

 

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(b) Buyer Indemnification Deductible and Cap. Except in the case of fraud, (i) no Seller Indemnified Party shall be entitled to indemnification for any Damages under Section 9.2(c)(i) unless and until one or more claims identifying such Damages in excess of the Deductible Amount has or have been delivered to Buyer, and such amount is payable in accordance with this ARTICLE IX, whereupon only the aggregate amount of such Damages in excess of the Deductible Amount shall thereafter be recoverable in accordance with the terms hereof; provided, further that Buyer shall not have any obligation to indemnify any Seller Indemnified Party under Section 9.2(c)(i) with respect to any Damages of less than $10,000 per occurrence (for purposes hereof, aggregating multiple claims arising out of or relating to the same set of facts and circumstances), and (ii) the aggregate amount of Damages for which the Seller Indemnified Parties shall be entitled to indemnification pursuant to Section 9.2(c)(i) shall not exceed, in the aggregate, an amount equal to fifteen percent (15%) of the Purchase Price (with, for purposes of this Section 9.4(b), the value of the Stock Consideration component of the Purchase Price to be calculated based on the thirty (30) day volume weighted average Nasdaq trading price of Buyer Common Stock for the consecutive thirty (30) day period ending immediately prior to the Closing Date).

 

(c) Damages Net of Insurance Proceeds. All Damages for which any Indemnified Party would otherwise be entitled to indemnification under this ARTICLE IX shall be reduced by the amount of insurance proceeds actually received by such Indemnified Party in respect of any Damages incurred by such Indemnified Party (net of any fees, costs and expenses of collection or increased premiums, if applicable). In the event any Indemnified Party is entitled to any insurance proceeds in respect of any Damages for which such Indemnified Party is entitled to indemnification pursuant to this ARTICLE IX, such Indemnified Party shall use commercially reasonable efforts to obtain or receive such proceeds; provided, however, that such Indemnified Party shall have no obligation to litigate against the applicable third party, including any insurance company, to obtain any such proceeds. In the event that any such insurance proceeds are actually received by an Indemnified Party subsequent to receipt by such Indemnified Party of any indemnification payment hereunder in respect of the claims to which such insurance proceeds, indemnity payments or other third-party recoveries relate, an appropriate refund shall be made promptly by the relevant Indemnified Parties to the Indemnitor in an amount not to exceed the lesser of (i) the amount by which (A) the amount received by the Indemnified Party, net of any fees, costs and expenses or increased premiums incurred by such Indemnified Party in collecting such amount, plus the payment received from the Indemnitor, exceeds (B) the total Damages suffered or incurred by the Indemnified Party with respect to the applicable Indemnification Claim; (ii) the amount received by the Indemnified Party, net of any fees, costs and expenses or increased premiums incurred by such Indemnified Party in collecting such amount; and (iii) the amount paid by the Indemnitor pursuant to this ARTICLE IX.

 

(d) Types of Damages. No Indemnified Party shall be entitled to indemnification for any punitive or exemplary Damages except, in each case, to the extent such Damages are finally awarded in connection with a Third Party Action against the Indemnified Party.

 

(e) No Duplicate Recovery; Materiality. No Indemnified Party may recover Damages in respect of an Indemnification Claim to the extent that the Indemnified Party has otherwise been compensated for such Damages. For the purpose of determining the amount of Damages, the representations and warranties of Sellers and SoftBank will not be deemed to be qualified by any references to materiality, in all material respects or Material Adverse Effect.

 

(f) Mitigation of Damages. Each Indemnified Party shall use its commercially reasonable efforts to mitigate any Damages for which it is entitled to indemnification pursuant to this ARTICLE IX to the extent required by applicable Law.

 

(g) Tax Treatment. All amounts paid with respect to Indemnification Claims under this Agreement shall be treated by the Parties for all Tax purposes as adjustments to the Purchase Price, unless otherwise required by Law.

 

9.5 Indemnification Sole and Exclusive Remedy. Subject to Section 10.15, the Parties (on their own behalf and on behalf of any Person claiming by or through them, including the Indemnified Parties) acknowledge and agree that, from and after the Closing, their sole and exclusive remedy with respect to any and all claims for any breach of any representation, warranty, covenant or other agreement set forth in, or otherwise pursuant to, this Agreement shall be pursuant to the indemnification provisions set forth in this ARTICLE IX. Nothing in this Section 9.5 shall limit any Party’s rights to seek and obtain (a) any equitable relief to which such Party may be entitled pursuant to Section 9.15, (b) any remedies with respect to claims of fraud or intentional misrepresentation, or (c) any remedies pursuant to any definitive agreements with respect to the Securities Transaction.

 

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9.6 Satisfaction of Indemnification Claims; Rights of Setoff.

 

(a) Any Indemnification Claim made against Sellers by Buyer on behalf of any Buyer Indemnified Party for Damages under this ARTICLE IX shall be satisfied by payment by Sellers of immediately available funds by wire transfer to an account designated by Buyer.

 

(b) Any Indemnification Claim made against SoftBank by Buyer on behalf of any Buyer Indemnified Party for Damages under this ARTICLE IX shall be satisfied (at SoftBanks election in its sole discretion) by (i) cancellation of indebtedness in the amount of such Damages from any then outstanding indebedtness owed by Buyer or its Affiliates to SoftBank or its Affiliates, (ii) surrender to Buyer of shares of Buyer Common Stock held by SoftBank or its Affiliates with a value equal to such Damages, such value based on the thirty (30) day volume weighted average Nasdaq trading price of Buyer Common Stock for the consecutive thirty (30) day period ending three trading days prior to the final determination of the responsibility to pay such Damages, (iii) payment by Sellers of immediately available funds by wire transfer to an account designated by Buyer or (iv) any combination of the foregoing in SoftBanks sole discretion.

 

(c) Any Indemnification Claim by Sellers or SoftBank on behalf of any Seller Indemnified Party for Damages under this ARTICLE IX shall be satisfied by payment by Buyer of immediately available funds by wire transfer to an account designated by Sellers or SoftBank, as applicable.

 

ARTICLE X
MISCELLANEOUS

 

10.1 Waiver. No waiver by any of the Parties of any of the provisions hereof shall be effective unless explicitly set forth in writing and executed by the Party sought to be charged with such waiver. No waiver by any of the Parties of any default, misrepresentation or breach of representation, warranty, covenant or other agreement hereunder, whether intentional or not, shall be deemed to extend to any prior or subsequent default, misrepresentation or breach or affect in any way any rights arising by virtue of any prior or subsequent such occurrence. No failure or delay by any Party in exercising any power, right, or privilege under this Agreement shall be deemed to constitute a waiver by the Party taking such action of compliance with any representation, warranty, covenant or other agreement contained herein, and in any documents delivered or to be delivered pursuant to this Agreement and in connection with the Closing hereunder.

 

10.2 Notices. All notices and other communications among the Parties shall be in writing and shall be deemed to have been duly given (a) when delivered in person, (b) when delivered by FedEx or other internationally recognized overnight delivery service, or (c) when delivered by facsimile or email (in each case in this clause (c), to the extent provided below and solely if receipt is confirmed), addressed as follows; provided, however, that any notices and other communications delivered to Buyer, to be effective, shall be delivered pursuant to clauses (a) or (b) above, or by facsimile, to the appropriate address or number set forth for Buyer:

 

(i) If to any Seller, to:

 

Fair Financial Corp. 

8665 Wilshire Blvd., Suite 412 

Beverly Hills, CA 90211 

Attention: Bradley Stewart 

Phone: (424) 372-5028 

Email: brad@fair.com

 

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with a copy (which shall not constitute notice) to:

 

Young Conaway Stargatt & Taylor, LLP 

Rodney Square, 1000 North King Street 

Wilmington, DE 19801 

Attn:Joseph Barry, Esq.

Craig D. Grear, Esq. 

Facsimile: (302) 576-3280; (302) 576-3296 

Email:jbarry@ycst.com
 cgrear@ycst.com

 

(ii) If to Buyer, to:

 

Shift Technologies, Inc.
2525 16th Street, Suite 316
San Francisco, CA 94103
Attention: Ryan Lawrence
Phone: (773) 706-7643
Email: ryan.lawrence@shift.com

 

with a copy (which shall not constitute notice) to:

 

Jenner & Block LLP 

353 N. Clark Street 

Chicago, IL 60654-3456 

Attention: Robert Rawn; Jeremy Casper 

Facsimile: (212) 891-1635; (312) 840-7231 

Email: rrawn@jenner.com; jcasper@jenner.com

 

(iii) If to SoftBank, to:

 

Cayman Project 2 Limited

c/o Appleby Global Services (Cayman) Limited,

PO Box 500,

71 Fort Street, George Town, Grand Cayman,

KY1-1106, Cayman Islands

 

with a copy (which shall not constitute notice) to:

 

SoftBank Group Corp.

Attention:  CFO Office, Finance Unit

1-7-1 Kaigan

Minato-Ku

Tokyo 105-7537

Japan

E-mail: sbgrp-greensill-cds@g.softbank.co.jp; SBGRP-legalnotice@g.softbank.co.jp

 

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Gary S. Lee, Esq. 

Benjamin Butterfield, Esq. 

Morrison & Foerster LLP 

250 West 55th Street 

New York, NY 10019-9601 

Email: glee@mofo.com; bbutterfield@mofo.com

 

or to such other address or addresses as the Parties may from time to time designate in writing.

 

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10.3 Assignment. No Party shall assign this Agreement or any part hereof without the prior written consent of the other Parties; provided, however, that Buyer may assign its rights under this Agreement, including the right to acquire any or all of the Transferred Assets (including the Transferred Interests) to one or more of its Affiliates (provided, that no permitted assignment hereunder shall relieve any Party of its obligations hereunder). Any attempted assignment in violation of the foregoing shall be null and void. Subject to the foregoing, this Agreement shall be binding upon and inure to the benefit of the Parties and their respective successors and permitted assigns.

 

10.4 Rights of Third Parties. Nothing expressed or implied in this Agreement is intended or shall be construed to confer upon or give any Person, other than the Parties, any rights or remedies under or by reason of this Agreement; provided, however, that the Buyer Indemnified Parties and the Seller Indemnified Parties are intended third party beneficiaries of, and may enforce, ARTICLE IX.

 

10.5 Expenses. Except as otherwise expressly set forth in this Agreement, each Party shall bear its own expenses incurred in connection with this Agreement and the transactions contemplated hereby whether or not such transactions shall be consummated, including all fees of its legal counsel, financial advisors, accountants and other Representatives.

 

10.6 Governing Law. 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 to the extent such principles or rules would require or permit the application of Laws of another jurisdiction.

 

10.7 Captions; 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 or more counterparts, including by facsimile signature or other electronic transmission, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

 

10.8 Schedules and Annexes. The Schedules and Annexes referenced herein are a part of this Agreement as if fully set forth herein. All references herein to Schedules and Annexes shall be deemed references to such parts of this Agreement, unless the context shall otherwise require. Any disclosure made by a Party in the Schedules with reference to any Section or schedule of this Agreement shall be deemed to be a disclosure with respect to all other Sections or schedules to which the relevance of such disclosure is reasonably apparent on its face to a reader thereof. Certain information set forth in the Schedules is included solely for informational purposes and may not be required to be disclosed pursuant to this Agreement. The disclosure of any information shall not be deemed to constitute an acknowledgment that such information is required to be disclosed in connection with the representations and warranties made in this Agreement, nor shall such information be deemed to establish a standard of materiality.

 

10.9 Entire Agreement. This Agreement (together with the Schedules and Annexes to this Agreement), the Ancillary Agreements and that certain Confidentiality Agreement, by and between Fair and Buyer (as it may be supplemented or amended in accordance with its terms, the “Confidentiality Agreement”) constitute the entire agreement among the Parties relating to the transactions contemplated hereby and supersede any other agreements, whether written or oral, that may have been made or entered into by or among any of the Parties or any of their respective Affiliates relating to the transactions contemplated hereby. No representations, warranties, covenants, understandings or agreements, oral or otherwise, relating to the transactions contemplated by this Agreement exist between the Parties, except as expressly set forth in this Agreement, the Ancillary Agreements and the Confidentiality Agreement. Without limiting the generality of the foregoing, the Parties acknowledge and agree that the Original Agreement is hereby amended and restated in its entirety as set forth in, and is hereby superseded by, this Agreement.

 

10.10 Amendments. This Agreement may be amended or modified, in whole or in part, only by a duly authorized agreement in writing executed by all Parties which makes reference to this Agreement.

 

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10.11 Publicity. Sellers, SoftBank and Buyer agree that no public release or announcement concerning the transactions contemplated hereby or any terms thereof shall be issued or made by or on behalf of any Party without the prior written consent of the other Parties, except that Buyer may (a) make announcements, issue press releases or make any public filings that Buyer reasonably determines are necessary or appropriate to comply with applicable Law or any Nasdaq or other applicable securities exchange guidance or rules; and (b) as of and following the Closing, issue press releases relating to the transactions contemplated by this Agreement or the Ancillary Agreements, provided that Buyer provides SoftBank a reasonable opportunity to review and comment on any such press release in advance and in good faith considers any written feedback promptly provided by SoftBank. Subject to the foregoing, Sellers, SoftBank and Buyer agree to maintain in confidence the terms and provisions of this Agreement and the Ancillary Agreements, including the Cash Consideration, the Stock Consideration and all elements thereof, except to the extent and to the Persons to whom disclosure is required by applicable Law, by any applicable securities exchange (or their respective rules or guidance) or for purposes of compliance with financial reporting obligations or enforcing rights hereunder; provided, the Parties may (i) disclose such terms to their respective employees, accountants, advisors, lenders, investors and other Representatives as necessary in connection with the ordinary conduct of their respective businesses (so long as such Persons agree to, or are bound by Contract, professional or fiduciary obligations to, keep the terms of this Agreement and the Ancillary Agreements confidential and each Party shall be responsible to the other Parties for any breach of this Section 10.11 or such confidentiality obligations by the recipients of its disclosures); and (ii) disclose the transaction or such terms (including by means of public releases or announcements concerning the transactions contemplated hereby or any terms thereof) so long as such disclosure, statements or announcements are consistent with (and not materially expansive of) information included in any previous public releases or announcements issued in accordance with this Section 10.11.

 

10.12 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 reasonable actions necessary to render the remaining provisions of this Agreement valid and enforceable to the fullest extent permitted by Law and, to the extent reasonable and 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.

 

10.13 Bulk Transfer Laws. The Parties hereby waive, to the fullest extent permitted by applicable Law, compliance with the provisions of any so-called “bulk transfer law” or similar Law of any jurisdiction in connection with the sale of the Transferred Assets.

 

10.14 Jurisdiction; Waiver of Jury Trial.

 

(a) Any Action based upon, arising out of or related to this Agreement or the Ancillary Agreements or the transactions contemplated hereby and thereby may be brought in the courts of the State of Delaware or, in the case of claims to which the federal courts have subject matter jurisdiction, any federal court of the United States of America sitting in the State of Delaware, and, in each case, appellate courts therefrom, and each of the Parties irrevocably submits to the exclusive jurisdiction of each such court in any such Action, waives any objection it may now or hereafter have to personal jurisdiction, venue or to convenience of forum, agrees that all claims in respect of such Action shall be heard and determined only in any such court, and agrees not to bring any Action arising out of or relating to this Agreement or the Ancillary Agreements or the transactions contemplated hereby or thereby in any other court. Nothing herein contained shall be deemed to affect the right of any Party to serve process in any manner permitted by Law or to commence legal proceedings or otherwise proceed against any other Party in any other jurisdiction, in each case, to enforce judgments obtained in any Action brought pursuant to this Section 10.14.

 

(b) Each Party hereby waives, to the fullest extent permitted by applicable Law, any right it may have to a trial by jury in respect of any Action arising out of this Agreement or the Ancillary Agreements or the transactions contemplated hereby or thereby. Each Party (i) certifies that no Representative of any other Party has represented, expressly or otherwise, that such Party would not, in the event of any Action, seek to enforce the foregoing waiver, and (ii) acknowledges that it and the other Parties have been induced to enter into this Agreement and the Ancillary Agreements by, among other things, the mutual waiver and certifications contained in this Section 10.14(b).

 

10.15 Enforcement. The Parties acknowledge and agree that irreparable damage would occur, and that the Parties would not have any adequate remedy at Law, in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the Parties shall be entitled to seek an injunction or injunctions to prevent breaches of this Agreement and to specifically enforce the terms and provisions of this Agreement, without proof of actual Damages, in addition to any other remedy to which any Party is entitled at Law or in equity. Each Party agrees to waive any requirement for the securing or posting of any bond in connection with such remedy. The Parties further agree not to assert that a remedy of specific enforcement is unenforceable, invalid, contrary to Law or inequitable for any reason, nor to assert that such specific enforcement is unavailable because a remedy of monetary Damages would provide an adequate remedy.

 

[Remainder of page intentionally left blank.]

 

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IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed as of the date first above written.

 

  SELLERS
   
  Fair Financial Corp., a Delaware corporation

 

  By: /s/ Bradley Stewart
  Name: Bradley Stewart
  Title:  Chief Executive Officer

 

  Fair IP, LLC, a Delaware limited liability company

 

  By: /s/ Bradley Stewart
  Name: Bradley Stewart
  Title: President

 

[Signature page to Asset Purchase Agreement]

 

 

 

 

  SOFTBANK
   
  Cayman Project 2 Limited, a company incorporated under the laws of Cayman Islands

 

  By: /s/ Ippei Mimura
  Name: Ippei Mimura
  Title: Director

 

[Signature page to Asset Purchase Agreement]

 

 

 

 

  BUYER
   
  Shift Technologies, Inc., a Delaware corporation

 

  By: /s/ George Arison
  Name: George Arison
  Title: Chief Executive Officer and Chairman

 

[Signature page to Asset Purchase Agreement]

 

 

 

 

Annex A

 

Transferred Assets

 

Transferred Assets means all of Sellers or any of their Affiliates right, title, and interest in, to, and under (i) all Transferred Interests and (ii) all of the assets, properties, rights, Contracts and claims related to Owned Intellectual Property (except, as to Contracts, solely to the extent constituting Transferred Contracts pursuant to Section A(i) below) as they exist at the Closing of every kind, nature, character, and description, tangible and intangible, and personal (except for the Excluded Assets), including the following:

 

(i)subject to Section 2.4(b), the Contracts set forth on Schedule A(i) (the “Transferred Contracts”);

 

(ii)any and all transferable Permits that are held by Sellers and required or appropriate for ownership and use of the Transferred Assets, including those set forth on or required to be set forth on Schedule 3.11;

 

(iii)any and all intangible assets (including all Intellectual Property) related to the Owned Intellectual Property, including those set forth on Schedule A(iii);

 

(iv)the Books and Records; provided, however, that to the extent (A) any Books and Records also relate to or arise from or are used in connection with the Excluded Assets or Excluded Liabilities, or are commingled with the information contained in the Excluded Assets or (B) the transfer of ownership thereof of any such documents to Buyer would be prohibited by Law, the original information in such documents shall not be a Transferred Asset (provided that Buyer shall have the right to use such information to the extent permitted by applicable Law) and shall be retained by Sellers, with accurate and complete copies thereof to be provided to Buyer at Closing (the Books and Records, after giving effect to such proviso, the “Transferred Books and Records”);

 

(v)except as prohibited by applicable Law, any and all personnel and other records related to the Transferred Employees;

 

(vi)any and all claims, rights of recovery and causes of action arising out of any Action to the extent arising from any Transferred Asset or Assumed Liability, and all files, documents, instruments, papers, books and records, that are related to the foregoing;

 

(vii)any and all of Sellers’ rights under warranties, indemnities and all similar rights against third parties to the extent related to any Transferred Assets;

 

(viii)except to the extent otherwise set forth in the Agreement, any and all insurance benefits, including all rights and proceeds, and warranty and condemnation net proceeds received after the Closing Date arising from or relating to any Transferred Assets or any Assumed Liabilities;

 

(ix)any and all attorney-client privilege and attorney work product primarily related to Assumed Liabilities, other than attorney-client privilege and attorney work product relating directly to the negotiation and consummation of the transactions contemplated by this Agreement;

 

(x)any and all goodwill, and going concern value, of Sellers;

 

(xi)any and all of Sellers’ or any of their Affiliates’ right, title, and interest in, to, and under all of the confidentiality, nondisclosure or invention assignment agreements related to the Transferred Assets with any third party, including any current or former employee or independent contractor of Sellers or their Affiliates;

 

(xii)any and all of Sellers’ interests in all data underlying any Software and supplies and other tangible personal property owned by Sellers and related to the Transferred Assets and all other assets set forth on Schedule A(xii);

 

(xiii)any and all customer lists and supplier lists; and

 

(xiv)the specific assets set forth on Schedule A(xiv).

 

A-1

 

 

Annex B

 

Excluded Assets

 

Excluded Assets means Sellers right, title and interest in, to and under all of the following assets, in each case, as of the Closing:

 

(i)any and all Cash held by or on behalf of Sellers;

 

(ii)any and all right, title and interest in, to and under all assets that are not Transferred Assets, whether tangible or intangible, real, personal or mixed, as they exist at the Closing;

 

(iii)any and all Contracts of Sellers and their Affiliates (other than the Transferred Company) that are not Transferred Contracts (the “Excluded Contracts”);

 

(iv)any and all Tax assets arising out of, relating to or in respect of the Transferred Assets, the Transferred Company or Sellers’ business with respect to any Pre-Closing Tax Period;

 

(v)any and all monies to be received by Sellers under this Agreement;

 

(vi)any and all personnel files of employees who are not Transferred Employees or Transferred Company Personnel;

 

(vii)any and all (a) minute books, stock ledgers, certificates of incorporation, certificates of formation, bylaws, operating agreements or similar organizational documents of Sellers, (b) other documents and correspondence that relate to Sellers’ corporate organization and maintenance thereof, and (c) Sellers’ Tax Returns and records relating to Taxes;

 

(viii)any and all Affiliate Arrangements;

 

(ix)any and all Contracts of Sellers and their Affiliates (other than the Transferred Company) for the ownership, lease, sublease, occupancy or management of any real property;

 

(x)any and all insurance policies (and related prepaid expenses) of Sellers;

 

(xi)any and all Company Benefit Plans, and all rights, assets, properties, and Contracts with respect to the Company Benefit Plans;

 

(xii)any accounts receivable of Sellers and their Affiliates (other than the Transferred Company);

 

(xiii)any equity interests of Sellers or any of their Subsidiaries (other than the Transferred Company); and

 

(xiv)the specific assets set forth on Schedule B(xiv).

 

B-1

 

 

Annex C

 

Excluded Liabilities

 

Excluded Liabilities means:

 

(a)Any and all Liabilities to the extent relating to or arising out of the Excluded Assets.

 

(b)Any and all Liabilities of Sellers and their Affiliates (including the Transferred Company) other than the Assumed Liabilities.

 

(c)Any and all of the following Liabilities of Sellers and their Affiliates (including the Transferred Company):

 

(i)any and all Liabilities arising under the Transferred Contracts or any Contract of the Transferred Company, to the extent that such Liabilities relate to any failure to perform, improper performance, warranty or other breach, default or violation by Sellers or any Affiliate thereof on or prior to the Closing or any penalty related to any such failure, breach, default or violation;

 

(ii)any and all Broker Fees and other fees and expenses of counsel, auditors, accountants, consultants, engineers, investment bankers and any other advisor or Representative retained by Sellers or their Affiliates for services rendered in connection with the preparation, negotiation, execution, delivery and performance of this Agreement, any Ancillary Agreement or the transactions contemplated hereby or thereby or the process of selling the Transferred Assets (collectively, “Transaction Expenses”);

 

(iii)any and all trade payables, accounts payable and any accrued expenses accrued or arising as of or prior to Closing;

 

(iv)any and all Liabilities arising out of, relating to, or in respect of (w) the Company Benefit Plans at any time, (x) the employment of any Seller Personnel who do not become a Transferred Employee at any time, including any Liability or obligation with respect to wages, remuneration, compensation, benefits, severance, vacation, sick pay or other paid-time-off, COBRA, the WARN Act or other accrued obligations, (y) the employment of any Seller Personnel who become a Transferred Employee, including any Liability or obligation with respect to wages, remuneration, compensation, benefits, severance, vacation, sick pay or other paid-time-off, COBRA, the WARN Act or other accrued obligations for any period on or prior to the Closing Date (or, if later, the date on which such Transferred Employee commences employment with Buyer), and (z) the employment of any Transferred Company Personnel, including any Liability or obligation with respect to wages, remuneration, compensation, benefits, severance, vacation, sick pay or other paid-time-off, COBRA, the WARN Act or other accrued obligations for any period on or prior to the Closing Date;

 

(v)any and all Indebtedness of Sellers and their Affiliates or guarantees of the Liabilities of any other Person;

 

(vi)(x) any and all Taxes of Sellers and their Affiliates (other than the Transferred Company), and (y) any and all Taxes arising out of, relating to or in respect of the Transferred Company, Assumed Liabilities or the Transferred Assets with respect to any Pre-Closing Tax Period;

 

(vii)any and all Affiliate Arrangements;

 

(viii)any and all Liabilities arising out of, relating to, or in respect of, Sellers’ or their Affiliates’ operations prior to the Closing;

 

(ix)any and all Liabilities under or in connection with any Action pending as of the Closing;

 

(x)any and all Liabilities to indemnify, reimburse or advance amounts to any present or former officer, director, employee or agent of Sellers (including with respect to any breach of fiduciary obligations by same), in their capacities as such;

 

(xi)any and all Liabilities arising out of, in respect of or in connection with the failure by Sellers or any of their Affiliates to comply with any Law or Governmental Order;

 

(xii)any and all Liabilities arising out of, relating to, or in respect of, any purchase agreement whereby Sellers, or one of their Affiliates, acquired the Transferred Assets, or any other agreements entered into in connection with the transactions contemplated by such agreement; and

 

(xiii)any and all Liabilities of Sellers arising under or relating to the Fleet Business.

 

C-1

 

 

Exhibit A

 

Form of Bill of Sale, Assignment and Assumption

 

This BILL OF SALE, ASSIGNMENT AND ASSUMPTION (this Bill of Sale) is entered into as of [], 2022 (the Effective Date), by and among [SHIFT DESIGNEE] a [] (Buyer), Fair Financial Corp., a Delaware corporation (Fair), and Fair IP, LLC, a Delaware limited liability company (Fair IP and, together with Fair, each a Seller and collectively the Sellers). Unless otherwise indicated, capitalized terms used herein but not otherwise defined herein shall have the respective meanings set forth in the Purchase Agreement (as defined below).

 

WHEREAS, reference is made to that certain Asset Purchase Agreement, dated as of March 14, 2022 (as it may be amended, the Purchase Agreement), by and among Shift Technologies, Inc., a Delaware corporation, Sellers and SoftBank (as defined therein), providing for, among other things, the transfer to Buyer of the Transferred Assets by Sellers for consideration in the amount and on the terms and conditions set forth in the Purchase Agreement; and

 

WHEREAS, to carry out the intent and purpose of the Purchase Agreement, Sellers and Buyer are executing and delivering this instrument evidencing the vesting in Buyer of all of Sellers right, title and interest in and to the Transferred Assets, free and clear of all Liens, and Buyers assumption of the Assumed Liabilities, on the terms and conditions set forth in the Purchase Agreement, in addition to such other instruments that Buyer shall have otherwise received or may hereafter receive pursuant to the Purchase Agreement.

 

NOW, THEREFORE, FOR GOOD AND VALUABLE CONSIDERATION, the receipt and sufficiency of which is hereby acknowledged, and subject to the terms and conditions of this Bill of Sale, Buyer and Sellers agree as follows:

 

1. Assets to Be Transferred. Pursuant to Section 2.2 of the Purchase Agreement and subject to the terms and conditions of the Purchase Agreement, Sellers hereby sell, convey, assign, transfer and deliver, free and clear of all Liens other than Permitted Liens, the Transferred Assets, to have and to hold the same unto Buyer, its successors and assigns forever. Notwithstanding anything to the contrary contained herein or in the Purchase Agreement, the Transferred Assets shall specifically not include the Excluded Assets, which shall remain the property of Sellers.

 

2. Liabilities to Be Assumed. Pursuant to Section 2.5 of the Purchase Agreement and subject to the terms and conditions of the Purchase Agreement, Buyer hereby assumes the Assumed Liabilities and agrees to discharge or perform when due all of the Assumed Liabilities. Notwithstanding anything to the contrary contained herein or in the Purchase Agreement, the Assumed Liabilities shall specifically not include the Excluded Liabilities, which shall remain the Liabilities of Sellers.

 

3. Miscellaneous. The provisions of this Bill of Sale are subject, in all respects, to the terms and conditions of the Purchase Agreement and all of the representations and warranties, covenants, and agreements contained therein. Nothing in this Bill of Sale, express or implied, is intended to or shall be construed to modify, expand or limit in any way the terms of the Purchase Agreement. To the extent that any provision of this Bill of Sale conflicts with or is inconsistent with the terms of the Purchase Agreement, the Purchase Agreement shall govern. This Bill of Sale may be executed in one or more counterparts, including by facsimile signature or other electronic transmission, each of which shall be deemed an original, and all of which shall constitute one and the same agreement. Without limiting the generality of the foregoing, the terms and provisions set forth in Section 10.14 (Jurisdiction; Waiver of Jury Trial) of the Purchase Agreement shall apply, mutatis mutandis, to this Bill of Sale, and are hereby expressly incorporated by reference with the same force and effect as if set forth herein.

 

[Remainder of page intentionally left blank]

 

A-1

 

 

IN WITNESS WHEREOF, Buyer and Sellers have executed this Bill of Sale as of the Effective Date.

 

  Fair Financial Corp., a Delaware corporation  

 

  By:  
     
  Name:  
     
  Title:  

 

  Fair IP, LLC, a Delaware limited liability company  

 

  By:  
     
  Name:
     
  Title:  

 

  [●], a [●]

 

  By:  
     
  Name:  
     
  Title:  

 

[Signature page to Bill of Sale]

 

 

 

 

 

EX-10.1 3 ea159944ex10-1_shifttech.htm LETTER AGREEMENT, DATED MAY 11, 2022, BY AND BETWEEN SHIFT TECHNOLOGIES, INC. AND CAYMAN PROJECT 2 LIMITED

Exhibit 10.1

 

May 11, 2022

 

Shift Technologies, Inc.

2525 16th Street, Suite 316

San Francisco, CA 94103

 

Ladies and Gentlemen:

 

This letter agreement (“Letter Agreement”), dated as of May 11, 2022 (the “Effective Date”), by and between Shift Technologies, Inc., a Delaware corporation (“Shift”), and Cayman Project 2 Limited, a company incorporated under the laws of Cayman Islands (the “Stockholder”), is being delivered in connection with the consummation of the transactions contemplated by that certain Amended and Restated Equity and Asset Purchase Agreement, dated May 11, 2022 (the “Purchase Agreement”), by and among Fair Financial Corp., Fair IP, LLC (together with Fair Financial Corp., “Fair”), Shift and Stockholder. Capitalized terms not otherwise defined herein shall have the meanings ascribed thereto in the Purchase Agreement.

 

Pursuant to the Purchase Agreement, (i) Fair has agreed to convey, transfer and sell the Transferred Assets to Shift or its designated Affiliate and, in connection therewith, Fair shall receive as consideration the Cash Consideration and the Stock Consideration pursuant to Sections 2.8(b)(i) and (b)(ii) of the Purchase Agreement; and (ii) immediately following the Closing, Fair has agreed to convey and transfer the Cash Consideration and the Stock Consideration to Stockholder (collectively, the “Transaction”). Also pursuant to Section 2.8(a)(iv) and Section 2.8(b)(iv) of the Purchase Agreement, Shift and the Stockholder agreed to execute and deliver this Letter Agreement in connection with the Closing.

 

In consideration of the foregoing and the respective representations, warranties, covenants and agreements set forth in this Letter Agreement, and intending to be legally bound hereby, Shift and the Stockholder agree as follows:

 

1. Exhibit A hereto sets forth the number of shares of Shift Class A common stock, par value $0.0001 per share (the “Common Stock”), held by the Stockholder immediately following the Transaction (the “Shares”).

 

2. From the Effective Date until the date that is one hundred eighty (180) days following the Effective Date (the “Lock-Up Period”), the Stockholder shall not (i) sell, offer to sell, contract or agree to sell, hypothecate, pledge, grant any option to purchase or otherwise dispose of or agree to dispose of, directly or indirectly, the Shares, or establish or increase a put equivalent position or liquidate or decrease a call equivalent position within the meaning of Section 16 of the Exchange Act of 1934, as amended (the “Exchange Act”), and the rules and regulations of the Securities and Exchange Commission promulgated thereunder, with respect to the Shares (a “Transfer”), (ii) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of any of the Shares, whether any such transaction is to be settled by delivery of shares or other securities, in cash or otherwise, or (iii) publicly announce any intention to effect any transaction specified in the immediately preceding subsections (i) or (ii) (any of the foregoing actions in clauses (i)-(iii), the “Lock-Up Transfer Restrictions”).

 

 

 

 

3. Notwithstanding the Lock-Up Transfer Restrictions contained in Section 2 hereof, the Stockholder may transfer Shares (a) to any investment fund or other entity controlled or managed by or under common management or control with the Stockholder or its officers, directors or affiliates (as such term is defined in Rule 405 of the Securities Act of 1933, as amended (the “Securities Act”)), (b) by bona fide gift, (c) to any stockholder, member, partner or trust beneficiary as part of a distribution, or to any corporation, partnership or other entity that is an affiliate of the Stockholder, (d) in the event of a liquidation, merger, stock exchange or other similar transaction which results in all of Shift’s stockholders having the right to exchange their shares of Common Stock for cash, securities or other property, or (e) in connection with a Public Offering pursuant to the Piggyback Registration rights as provided for herein; provided, that, in the case of clauses (a) through (c), (i) these transferees shall enter into a written agreement with Shift agreeing to be bound by the Transfer Restrictions set forth herein; (ii) any such transfer shall not involve a disposition for value; and (iii) no such transfer shall be to SoftBank Vision Fund (AIV M2) L.P. or any of its controlling or controlled Affiliates.

 

4. From and after the Effective Date for so long as the Stockholder owns any Shares (together with the Lock-Up Period, the “Restricted Period”), the Stockholder shall not (i) execute or agree to execute a Transfer, (ii) enter into any swap or other arrangement that transfers, in whole or in part, any of the economic consequences of ownership of any of the Shares, whether any such transaction is to be settled by delivery of shares or other securities, in cash or otherwise, or (iii) publicly announce any intention to effect any transaction specified in the immediately preceding subsections (i) or (ii), in each case to any holder of stock or other equity securities of Fair as of the Closing (any of the foregoing actions in clauses (i)-(iii), the “Fair Equityholder Transfer Restrictions” and, together with the Lock-Up Transfer Restrictions, the “Transfer Restrictions”).

 

5. The Stockholder understands that the Shares are being offered in a transaction not involving any public offering within the meaning of the Securities Act and that the Shares have not been registered under the Securities Act. The Stockholder understands that the Shares may not be resold, transferred, pledged or otherwise disposed of by the Stockholder absent an effective registration statement under the Securities Act, except (i) to Shift or a subsidiary thereof, (ii) to non-U.S. persons pursuant to offers and sales that occur in an “offshore transaction” within the meaning of Regulation S under the Securities Act, (iii) pursuant to Rule 144 under the Securities Act, provided that all of the applicable conditions thereof have been met or (iv) pursuant to another applicable exemption from the registration requirements of the Securities Act. The Stockholder acknowledges that the Shares will not be eligible for resale pursuant to Rule 144A promulgated under the Securities Act.

 

6. The Stockholder hereby acknowledges and agrees that Shift shall have the right to affix one or more legends to the Shares through its transfer agent and registrar to reflect the Transfer Restrictions and the transfer restrictions set forth in Section 5.

 

2

 

 

7. The Stockholder (i) is a “qualified institutional buyer” (as defined in Rule 144A under the Securities Act) or an institutional “accredited investor” (within the meaning of Rule 501(a) under the Securities Act), (ii) is acquiring the Shares only for its own account and not for the account of others, or if the Stockholder is a “qualified institutional buyer” and is subscribing for the Shares as a fiduciary or agent for one or more investor accounts, each owner of such account is a “qualified institutional buyer” and the Stockholder has full investment discretion with respect to each such account, and the full power and authority to make the acknowledgements, representations and agreements herein on behalf of each owner of each such account, and (iii) is not acquiring the Shares with a view to, or for offer or sale in connection with, any distribution thereof in violation of the Securities Act. The Stockholder acknowledges that it is aware that there are substantial risks incident to the acquisition and ownership of the Shares, including those set forth in documents publicly filed by Shift with the Securities and Exchange Commission. The Stockholder has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of an investment in the Shares, and the Stockholder has sought such accounting, legal and tax advice as the Stockholder has considered necessary to make an informed investment decision. Alone, or together with any professional advisor(s), the Stockholder represents and acknowledges that the Stockholder has adequately analyzed and fully considered the risks of an investment in the Shares and determined that the Shares are a suitable investment for the Stockholder and that the Stockholder is able at this time and in the foreseeable future to bear the economic risk of a total loss of the Stockholder’s investment in Shift. The Stockholder acknowledges specifically that a possibility of total loss exists.

 

8. Subject to the limitations described herein, the Stockholder shall retain its rights as a security holder with respect to his, her or its Shares during the Restricted Period including, without limitation, the right to vote the Shares.

 

9. During the Restricted Period, all dividends and distributions payable in cash with respect to the Stockholder’s Shares shall be paid, as applicable, to such Stockholder, but all dividends and distributions payable in Common Stock or other equity or securities convertible into equity shall become subject to Transfer Restrictions under this Letter Agreement until the end of the Restricted Period.

 

10. If Shift proposes to register any of its Common Stock under the Securities Act in connection with a public offering and sale of shares of Common Stock for cash pursuant to an effective registration statement under the Securities Act (a “Public Offering”) (other than (a) a registration on Form S-4 or Form S-8 or any successor form to such forms or (b) a registration of securities solely relating to an offering and sale to employees or directors of Shift or its Subsidiaries pursuant to any employee stock plan or other employee benefit plan arrangement), Shift shall, at such time, promptly (and in any event no later than four (4) days prior to the filing of the applicable registration statement) give the Stockholder notice of such registration. Upon the request of the Stockholder given within two (2) days after such notice is given by Shift, Shift shall, subject to the provisions of this Section 10, cause all of the Shares that such Stockholder has requested in writing to be included in such registration to be registered under the Securities Act with the securities which Shift at the time proposes to register to permit the sale or other disposition by the Stockholder (in accordance with the intended method of distribution thereof) (a “Piggyback Registration”). The Piggyback Registration rights shall be subject to the following term and conditions:

 

(a) In connection with any Public Offering involving an underwriting of shares of Shift’s Common Stock pursuant to this Section 10, Shift shall not be required to include the Stockholder’s Shares in such underwriting unless such Stockholder accepts the terms of the underwriting as agreed upon between Shift and its underwriters, and then only in such quantity as the underwriters in their sole discretion determine will not jeopardize the success of the offering by Shift, subject to the provisions of this Section 10. If the total number of Shares requested by the Stockholder to be included in such offering exceeds the number of securities to be sold (other than by Shift) that the underwriters in their reasonable discretion determine is compatible with the success of the offering, then Shift shall be required to include in the offering only that number of Shares which the underwriters and Shift in their sole discretion determine will not jeopardize the success of the offering, with any necessary reductions in Shares to be sold through the offering to be allocated ratably as among Stockholder and any other selling holders of Shares.

 

3

 

 

(b) If, at any time after giving written notice of its intention to register any Common Stock and prior to the effective date of the registration statement filed in connection with such registration, Shift shall determine for any reason not to register or to delay registration of such equity securities, Shift may, at its election, give written notice of such determination to the Stockholder and (a) in the case of a determination not to register, shall be relieved of its obligation to register any Shares in connection with such abandoned registration, and (b) in the case of a determination to delay such registration of its equity securities, shall be permitted to delay the registration of such Shares for the same period as the delay in registering such other equity securities.

 

(c) In the case of any registration under this Section 10, if Shift has determined to enter into an underwriting agreement in connection therewith, all securities to be included in such underwritten offering shall be subject to such underwriting agreement and no Person may participate in such underwritten offering unless such Person (a) agrees to sell such Person’s securities on the basis provided therein and completes and executes all reasonable questionnaires, and other customary documents (including custody agreements and powers of attorney) which must be executed in connection therewith; and (b) provides such other information to Shift or the underwriter as may be necessary to register such Person’s securities.

 

(d) It shall be a condition precedent to the obligations of Shift to take any action pursuant to this Section 10 with respect to the Shares of the Stockholder that such Stockholder shall furnish to Shift such information regarding itself, the Shares held by it, and the intended method of disposition of such securities as is reasonably required to effect the registration of such Stockholder’s Shares.

 

(e) All expenses incurred by Shift in complying with its obligations pursuant to this Letter Agreement in connection with registrations, filings or qualifications, including all registration, filing and qualification fees; printers’ and accounting fees; fees and disbursements of counsel and accountants for Shift shall be borne and paid by Shift. Shift shall not be required to pay any fees and disbursements to underwriters not customarily paid by the issuers of securities in an offering similar to the applicable offering, including underwriting discounts and commissions and transfer taxes, if any, attributable to the sale of Shares.

 

(f) If any Shares are included in a registration statement pursuant to this Section 10:

 

(i)To the extent permitted by law, Shift will indemnify and hold harmless the selling Stockholder, its directors and officers and each Person who controls (within the meaning of the Securities Act or the Exchange Act) such Persons, against any Damages, and Shift will pay to such Stockholder or other aforementioned Person any legal or other expenses reasonably incurred thereby in connection with investigating or defending any claim or proceeding from which Damages may result, as such expenses are incurred arising out of or based upon (A) any untrue or alleged untrue statement of a material fact contained in any registration statement under which such Shares are registered or sold under the Securities Act (including any final, preliminary or summary prospectus contained therein or any amendment thereof or supplement thereto or any documents incorporated by reference therein) or any other disclosure document produced by or on behalf of Shift or any of its Subsidiaries including any report and other document filed under the Exchange Act, (B) any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein (in the case of a prospectus or preliminary prospectus, in light of the circumstances under which they were made) not misleading or (C) any violation or alleged violation by Shift or any of its Subsidiaries of any federal, state, foreign or common law rule or regulation applicable to Shift or any of its Subsidiaries and relating to action or inaction in connection with any such registration, disclosure document or other document or report; provided, that neither the Stockholder nor any of the aforementioned Persons shall be entitled to indemnification pursuant to this Section 10 in respect of any untrue statement or omission contained in any information relating to such selling Stockholder furnished in writing by such selling Stockholder to Shift specifically for inclusion in a registration statement and used by Shift in conformity therewith (such information, “Stockholder Information”).

 

4

 

 

(ii)To the extent permitted by law, the selling Stockholder will indemnify and hold harmless Shift, its directors and officers and each Person who controls (within the meaning of the Securities Act or the Exchange Act) Shift, against any Damages, and the selling Stockholder will pay to Shift or other aforementioned Person any legal or other expenses reasonably incurred thereby in connection with investigating or defending any claim or proceeding from which Damages may result, as such expenses are incurred arising out of or based upon (A) any untrue statement of a material fact in any registration statement under which such registrable securities were registered or sold under the Securities Act (including any final, preliminary or summary prospectus contained therein or any amendment thereof or supplement thereto or any documents incorporated by reference therein) or (B) any omission to state therein a material fact required to be stated therein or necessary to make the statements therein (in the case of a prospectus or preliminary prospectus, in light of the circumstances under which they were made) not misleading, in each case to the extent that such untrue statement or omission is contained in the Stockholder Information.

 

(iii)The obligations of Shift and the Stockholder under this Section 10(f) shall survive the completion of any offering of registrable securities in a registration under this Letter Agreement, and otherwise shall survive the termination of this Letter Agreement.

 

5

 

 

(g) The Stockholder agrees, to the extent requested in writing by Shift or a managing underwriter in connection with any Public Offering, to become bound by and to execute and deliver a lock-up agreement in form and substance satisfactory to Shift restricting such Stockholder’s right to (i) Transfer or otherwise dispose, directly or indirectly, any equity securities of Shift held by such Stockholder or (ii) enter into any swap or other arrangement that transfers to another any of the economic consequences of ownership of such securities during the period commencing on the date of the final prospectus relating to the underwritten Public Offering and ending on the date specified by the underwriters (such period not to exceed one hundred eighty (180) days (plus customary seventeen (17) day lockup extension periods) plus such additional period as may be requested by Shift or an underwriter to accommodate regulatory restrictions on the publication or other distribution of research reports and analyst recommendations and opinions, if applicable).

 

11. The Stockholder represents and warrants that it has complete corporate or equivalent organizational authority, as applicable, without violating any agreement to which such Stockholder is bound, to enter into and perform its obligations under this Letter Agreement.

 

12. This Letter Agreement constitutes the entire agreement and understanding of the parties hereto in respect of the subject matter hereof and supersedes all prior understandings, agreements, both written and oral, with respect to such subject matter hereof. This Letter Agreement may not be changed, amended, modified (other than to correct a typographical error) as to any particular provision, except by a written instrument executed by each of the parties hereto. This Letter Agreement may not be waived as to any particular provision, except by a written instrument executed by the party against whom any such waiver is sought.

 

13. No party may assign either this Letter Agreement or any of its rights, interests, or obligations hereunder without the prior written consent of Shift. Any purported assignment in violation of this Section 13 shall be void and ineffectual and shall not operate to transfer or assign any interest or title to the purported assignee. Subject to the foregoing, this Letter Agreement shall be binding on each undersigned party and each of such undersigned party’s, as applicable, heirs, personal representatives, successors and assigns.

 

14. This Letter Agreement, the rights and duties of the parties hereto, and any disputes (whether in contract, tort or statute) arising out of, under or in connection with this Letter Agreement will be governed by and construed and enforced in accordance with the laws of the State of Delaware, without giving effect to its principles or rules of conflict of laws to the extent such principles or rules would require or permit the application of the laws of another jurisdiction. The parties hereto irrevocably and unconditionally submit to the exclusive jurisdiction of the United States District Court for the District of Delaware or, if such court does not have jurisdiction, the Delaware state courts located in Wilmington, Delaware, in any action arising out of or relating to this Letter Agreement. The parties hereto irrevocably agree that all such claims shall be heard and determined in such a Delaware federal or state court, and that such jurisdiction of such courts with respect thereto will be exclusive. Each party hereto hereby waives, and agrees not to assert, as a defense in any action, suit or proceeding arising out of or relating to this Letter Agreement that it is not subject to such jurisdiction, or that such action, suit or proceeding may not be brought or is not maintainable in such courts or that the venue thereof may not be appropriate or that this Letter Agreement may not be enforced in or by such courts.

 

15. Each party acknowledges and agrees that monetary damages would not adequately compensate an injured party for the breach of this Letter Agreement by any party hereto and, accordingly, that this Letter Agreement shall be specifically enforceable, and that any breach of this Letter Agreement shall be the proper subject of a temporary or permanent injunction or restraining order. Further, each party hereto waives any claim or defense that there is an adequate remedy at law for such breach or threatened breach and agrees that a party’s rights would be materially and adversely affected if the obligations of the other parties under this Letter Agreement were not carried out in accordance with the terms and conditions hereof.

 

16. In the event that any provision of this Letter Agreement shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

 

17. Any notice, consent or request to be given in connection with any of the terms or provisions of this Letter Agreement shall be in writing and shall be sent by express mail or similar private courier service, by certified mail (return receipt requested), by hand delivery, electronic or facsimile transmission.

 

18. This Letter Agreement may be executed in two or more counterparts, each of which shall be deemed an original and all of which together shall constitute one instrument. Delivery of an executed counterpart of a signature page to this Letter Agreement by facsimile or portable document format shall be effective as delivery of a mutually executed counterpart to this Letter Agreement.

 

[Signature page follows]

 

6

 

 

  Very truly yours,
   
  Shift Technologies, Inc.
     
  By:  /s/ George Arison
  Name:   George Arison
  Title: Chief Executive Officer and Chairman

 

[Signature Page to Stockholder Letter Agreement]

 

 

 

 

  Cayman Project 2 Limited
     
  By: /s/ Ippei Mimura
  Name :  Ippei Mimura
  Title: Director

 

[Signature Page to Stockholder Letter Agreement]

 

 

 

 

Exhibit A

 

Common Stock Shares held by Stockholder

 

2,066,978

 

 

 

 

 

EX-10.2 4 ea159944ex10-2_shifttech.htm NOTE PURCHASE AGREEMENT, DATED MAY 11, 2022, BY AND BETWEEN SHIFT TECHNOLOGIES, INC., THE SUBSIDIARIES OF SHIFT TECHNOLOGIES, INC. AS GUARANTORS THERETO, AND SB LL HOLDCO, INC., AS PURCHASER

Exhibit 10.2

 

EXECUTION VERSION

 

 

 

SHIFT TECHNOLOGIES, INC.

 

$20,000,000

 

6.00% Senior Notes due 2025

 

Fully and Unconditionally Guaranteed by the Guarantors Party Hereto

 

________________________

 

Note Purchase Agreement

________________________

 

May 11, 2022

 

 

 

 

 

 

Table of Contents

 

    PAGE
SECTION Heading
Section 1. Authorization of Notes; Ranking; Interest Rate. 1
Section 1.1. Authorization of Notes 1
Section 1.2. Ranking 1
Section 1.3. Interest Rate 1
Section 2. Sale and Purchase of Notes. 2
Section 3. Closing. 2
Section 4. Conditions to Closing. 2
Section 4.1. Financing Documentation 2
Section 4.2. Closing of the Transaction 3
Section 4.3. Material Adverse Effect 3
Section 4.4. Know Your Customer 3
Section 4.5. Representations and Warranties 3
Section 4.6. No Default or Event of Default 3
Section 4.7. No Prohibition on Funding 3
Section 5. Representations and Warranties of the CREDIT PARTIES. 4
Section 5.1. Financial Statements 4
Section 5.2. Organization and Good Standing; Capitalization 4
Section 5.3. Due Authorization, Execution and Delivery; Binding Obligations 4
Section 5.4. No Conflicts or Further Consents Required 4
Section 5.5. Legal Proceedings 5
Section 5.6. Real Property 5
Section 5.7. Intellectual Property 5
Section 5.8. Investment Company 6
Section 5.9. Taxes 6
Section 5.10. Licenses and Permits 6
Section 5.11. Labor Disputes 6
Section 5.12. Compliance with Laws 6
Section 5.13. ERISA 6
Section 5.14. Insurance 7
Section 5.15. Anti-Money Laundering; Foreign Corrupt Practices Act; Sanctions Compliance 7
Section 5.16. Solvency 8
Section 5.17. Broker’s Fees 8
Section 5.18. Securities Laws; General Solicitation; No Integration 8
Section 5.19. Margin Rules 8
Section 6. Representations of Purchaser. 8
Section 6.1. Purchase for Investment 8
Section 6.2. Investment Experience; Access to Information 9
Section 6.3. Authorization 9

 

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Section 7. Payment and Prepayment of the Notes. 9
Section 7.1. Interest on the Notes; Maturity 9
Section 7.2. Optional Prepayments 9
Section 7.3. Maturity 10
Section 7.4. Payments Due on Non-Business Days 10
Section 8. Covenants. 10
Section 8.1. Payment of Notes 10
Section 8.2. Exchange Act Reports 10
Section 8.3. Rule 144A Information 10
Section 8.4. Compliance and Default Certificates 11
Section 8.5. Stay, Extension, and Usury Laws 11
Section 9. Events of Default. 11
Section 10. Remedies on Default, Etc. 12
Section 10.1. Acceleration 12
Section 10.2. Other Remedies 12
Section 10.3. Rescission 12
Section 10.4. No Waivers or Election of Remedies 12
Section 10.5. Waiver of Stay or Extension Laws 13
Section 10.6. Expenses 13
Section 11. INDEMNITY. 13
Section 11.1. Indemnity 13
Section 11.2. Survival 13
Section 12. Survival of Representations and Warranties; Entire Agreement. 13
Section 13. Amendment and Waiver. 14
Section 13.1. Requirements 14
Section 13.2. Notices 14
Section 14. Confidential Information. 15
Section 15. Guarantee. 15
Section 15.1. Guarantees 15
Section 15.2. Status 16
Section 15.3. Duration 16
Section 15.4. Exercise of Rights; Subrogation; Claims against Issuer; Invalidity 16
Section 16. Miscellaneous. 16
Section 16.1. Successors and Assigns 16
Section 16.2. Severability 17
Section 16.3. Construction, Etc 17
Section 16.4. Counterparts 17
Section 16.5. Governing Law 18
Section 16.6. Jurisdiction and Process; Waiver of Jury Trial 18

 

Schedule A Defined Terms
     
Exhibit 1 Form of 6.00% Global Note
     
Schedule 5.2(b) Authorized Capital of Issuer
     
Schedule 5.5 Legal Proceedings
     
Schedule 5.11 Labor Disputes

 

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NOTE PURCHASE AGREEMENT

 

6.00% Senior Notes due 2025

 

This Note Purchase Agreement (this “Agreement”) is dated as of May 11, 2022 (the “Closing Date”) and entered into by Shift Technologies, Inc., a Delaware corporation (“Issuer”), each of Issuer’s subsidiaries party hereto (each a “Guarantor” and, collectively, the “Guarantors,” and together with the Issuer, the “Credit Parties”), and SB LL Holdco, Inc. a Delaware corporation, as purchaser (“Purchaser”). Certain capitalized and other terms used in this Agreement are defined in Schedule A.

 

WHEREAS, Issuer and Fair Financial Corp. (“Fair”) are parties to that certain Asset Purchase Agreement dated as of March 14, 2022 (the “Asset Purchase Agreement”), whereby Fair and certain of its subsidiaries have agreed to sell certain of their intellectual property and related assets to Issuer for certain consideration including cash in an aggregate amount of $15,000,000.00 and a number of shares of common stock reflecting 2.5% of the issued and outstanding Class A common stock of Issuer immediately prior to the closing thereof. The transactions set forth in the Asset Purchase Agreement and the execution and delivery of all documents contemplated thereby are referred to collectively herein as the “Transaction”); and

 

WHEREAS, Purchaser has agreed to finance Issuer’s purchase of the Fair intellectual property and related assets pursuant to the Transaction through the purchase of notes on the terms and conditions set forth herein;

 

NOW THEREFORE, in consideration of the premises and the agreements contained herein, and for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged and agreed, the parties hereto agree as follows:

 

Section 1. Authorization of Notes; Ranking; Interest Rate.

 

Section 1.1. Authorization of Notes. Issuer agrees to the issue and sale of $20,000,000 aggregate principal amount of its 6.00% Senior Notes due 2025 (the “Notes”) to Purchaser on the terms set forth in this Agreement. The Notes shall initially be represented by one global note substantially in the form attached as Exhibit 1.

 

Section 1.2. Ranking. The Notes shall be the senior unsecured Indebtedness of Issuer, ranking (i) effectively junior to Issuer’s obligations pursuant to that certain Inventory Financing and Security Agreement by and among Ally Bank, Ally Financial, Issuer and certain Guarantors, dated as of December 9, 2021, as amended, restated, supplemented, refinanced, replaced or otherwise modified from time to time, (ii) pari passu with Issuer’s outstanding 4.75% Convertible Senior Notes due 2026 issued pursuant to that certain Indenture dated as of May 27, 2021 by and between Issuer and U.S. Bank National Association, as trustee, as amended, restated, supplemented, refinanced, replaced or otherwise modified from time to time, and (iii) senior to any subordinated Indebtedness of Issuer.

 

Section 1.3. Interest Rate. The Notes shall bear interest at a rate of 6.00% per annum, payable quarterly in arrears and in cash. Following the occurrence and during the continuance of an Event of Default the Notes shall bear interest at the Default Rate.

 

 

 

 

Section 2. Sale and Purchase of Notes.

 

Subject to the terms and conditions of this Agreement, Issuer will issue and sell to Purchaser, and Purchaser will purchase from Issuer, at the Closing provided for in Section 3, Notes in the principal amount of $20,000,000 at the purchase price of 100% of the principal amount thereof.

 

Section 3. Closing.

 

The sale and purchase of the Notes to be purchased by Purchaser shall occur through the mutual exchange of electronic signatures and delivery of related documents at one closing (the “Closing”) on the Closing Date; provided, however, that the Closing Date may be moved to such other Business Day as may be agreed upon by the Credit Parties and Purchaser. At the Closing, Issuer will deliver to Purchaser the Notes to be purchased by such Purchaser evidenced by a fully executed global note in the form attached hereto as Exhibit 1, against delivery by Purchaser to Issuer of the purchase price therefor by wire transfer of immediately available funds for the account of Issuer as set forth in wire instructions provided by Issuer.

 

SECTION 4. CONDITIONS TO CLOSING.

 

Purchaser’s obligation to purchase and pay for the Notes to be sold to Purchaser at the Closing is subject to the fulfillment to such Purchaser’s reasonable satisfaction, prior to or at the Closing, of the following conditions:

 

Section 4.1. Financing Documentation. The Credit Parties shall have executed and delivered to Purchaser the Financing Documentation together with the following associated documents, in each case in form and substance reasonably satisfactory to Purchaser:

 

(a)  Officer’s Certificate. An Officer’s Certificate on behalf of Issuer, dated as of the Closing Date, certifying that (i) the conditions specified in Section 4.5, Section 4.6 and Section 4.7 have been fulfilled and (ii) the Credit Parties, on a consolidated basis, are Solvent as of the Closing Date.

 

(b)  Secretary’s Certificate. A certificate of its secretary on behalf of each of the Credit Parties, dated as of the Closing Date, certifying as to (i) the resolutions attached thereto relating to the authorization, execution and delivery of the Financing Documentation to which it is a party, and (ii) each of Credit Party’s organizational documents as then in effect.

 

(c)  Good Standing Certificates. A certificate of good standing with respect to each Credit Party, dated as of a recent date, from the Secretary of State of the State of Delaware.

 

(d)  Certified Articles. Certified copies of the certificate of formation or other registered organizational documents from the Secretary of State of the State of Delaware for each of the Credit Parties.

 

(e)  Legal Opinion. A customary legal opinion of Jenner & Block LLP, as counsel to the Credit Parties covering such matters relating to the Credit Parties, this Agreement and the transactions contemplated hereby as Purchaser and its counsel shall reasonably request.

 

(f)   Payment of Purchaser Fees and Expenses. Issuer shall have made satisfactory arrangements for the payment of all reasonable, documented and invoiced out-of-pocket expenses incurred by Purchaser in accordance with Section 5 of that certain Commitment Letter dated March 14, 2022 between Issuer and SoftBank Group Corp.

 

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Section 4.2. Closing of the Transaction. The Transaction shall have been consummated in all respects either prior to or concurrently with the issue and sale of Notes described in Section 2 in accordance with the Transaction Documents, without waiver or amendment thereof adverse in any material respect to Purchaser without the consent of Purchaser (such consent not to be unreasonably withheld, conditioned or delayed): provided, that any amendment to the definition of “Material Adverse Effect” in the Transaction Documents” shall be deemed to be adverse in a material respect to Purchaser.

 

Section 4.3. Material Adverse Effect. Since December 31, 2021, there has not occurred with respect to Issuer, a material adverse effect on the business of Issuer, results of operations, assets, liabilities or condition (financial or otherwise) of Issuer; provided, however, that in no event will any of the following (or the effect of any of the following), alone or in combination, be deemed to constitute, or be taken into account in determining whether there has been or will be, a “Material Adverse Effect” on or in respect of Issuer: (A) any change in Law, regulatory policies, accounting standards or principles (including GAAP) or any guidance relating thereto or interpretation thereof, (B) any change in interest rates or economic, political, business or financial market conditions generally (including any changes in credit, financial, commodities, securities or banking markets), (C) any change generally affecting any of the industries in which Issuer operates or the economy as a whole, (D) the announcement or the execution of the financing contemplated by this Agreement or the Transaction, the pendency or consummation of the transactions contemplated hereby or thereby or the performance of such agreements, (E) any action taken or not taken at the express written request of Purchaser, (F) any acts of terrorism, sabotage, war, the outbreak or escalation of hostilities, weather conditions, change in geopolitical conditions or other force majeure events, (G) any change resulting from Issuer’s cessation of business operations, or (H) the identity of Purchaser; provided, in the cases of clauses (A), (B), (C) and (F), that such changes, developments, facts, circumstances or effects do not, individually or in the aggregate, have a disproportionate adverse impact on Issuer relative to other companies or businesses in the same industries or geographies in which Issuer operates. As used herein, “Material Adverse Effect” shall have the meaning set forth in this Section 4.3.

 

Section 4.4. Know Your Customer. Issuer shall have provided such documentation and other information to Purchaser and Trustee for the Financing Documentation that is required by regulatory authorities under applicable “know your customer” and anti-money-laundering rules and regulations, including the U.S.A. PATRIOT Act, to the extent requested in writing to Issuer at least fifteen (15) Business Days prior to the Closing Date.

 

Section 4.5. Representations and Warranties. The representations and warranties of the Credit Parties set forth in Section 5 shall be true and correct in all material respects (except in the case of any representation or warranty which expressly relates to a given date or period, such representation or warranty shall be true and correct in all material respects as of the respective date or for the respective period, as the case may be); provided, that to the extent that any representation or warranty is qualified by or subject to materiality, or “material adverse effect”, or similar term or qualification, the same shall be true and correct in all respects.

 

Section 4.6. No Default or Event of Default. Immediately following the Closing Date after giving effect to the funding, no Default or Event of Default shall exist under the Financing Documentation.

 

Section 4.7.  No Prohibition on Funding. There shall exist no (a) injunction, temporary restraining order or judgment which prohibits making or funding of the purchase of Notes or (b) banking moratorium (declared by either federal or state authorities) that prohibits the purchase of the Notes on the Closing Date.

 

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Section 5. Representations and Warranties of the CREDIT PARTIES.

 

Each of the Credit Parties represents and warrants to Purchaser, as of the Closing Date (or, if any such representations and warranties expressly relate to an earlier date, then as of such earlier date), that:

 

Section 5.1. Financial Statements. The consolidated financial statements of Issuer, together with the related schedules and notes thereto, included in the SEC Filings present fairly in all material respects the financial condition, results of operations, cash flows and changes in financial position of Issuer and its consolidated subsidiaries on the basis stated in the SEC Filings at the respective dates or for the respective periods to which they apply; such financial statements and related schedules and notes thereto have been prepared in conformity with GAAP applied consistently throughout the periods involved, except as disclosed therein; and the other financial information and data set forth in the SEC Filings is accurately presented in all material respects. There are no other financial statements (historical or pro forma) that are required to be included in the SEC Filings. No Credit Party has any material liabilities or obligations, direct or contingent (including any off-balance sheet obligations), that are not disclosed in the SEC Filings. All disclosures contained in the SEC Filings, if any, regarding “non-GAAP financial measures” (as such term is defined by the rules and regulations of the Commission) (i) comply with Regulation G of the Exchange Act and Item 10(e) of Regulation S-K under the Securities Act, to the extent applicable, and (ii) present fairly in the information shown therein and the basis for using such measures, in all material respects.

 

Section 5.2. Organization and Good Standing; Capitalization.

 

(a)  Each Credit Party is a corporation or limited liability company duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation or organization and has all requisite corporate or limited liability power and authority to carry on its business as now conducted. Each Credit Party is duly qualified to transact business and is in good standing in each jurisdiction in which the failure to so qualify could reasonably be expected to have a Material Adverse Effect.

 

(b)  The authorized capital of Issuer is as set forth on Schedule 5.2(b). All outstanding shares and other Equity Interests of each Credit Party are duly authorized, validly, issued, fully paid and non-assessable.

 

Section 5.3. Due Authorization, Execution and Delivery; Binding Obligations. The execution and delivery of this Agreement and each of the other Financing Documents to which it is a party, and the performance of its obligations under this Agreement and each of the Financing Documents to which it is a party, has been duly and validly authorized, and this Agreement and each of the other Financing Documents to which it is a party have been duly executed and delivered, and, assuming due authorization, execution and delivery by the other parties thereto (other than any other Credit Party), this Agreement and each of the other Financing Documents to which it is a party constitute legal, valid and binding obligations of such Credit Party, in accordance with their terms, except as such enforceability may be limited by (i) applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the enforceability of creditors’ rights generally and (ii) general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law).

 

Section 5.4. No Conflicts or Further Consents Required. None of the issuance and sale of the Notes by Issuer, the execution, delivery and performance by each of the Credit Parties of the Financing Documents to which it is a party, nor the consummation by the Credit Parties of the transactions contemplated herein or therein will (i) contravene, result in any breach of, or constitute a default under, or result in the creation of any Lien in respect of any property of the Credit Parties under, any (A) indenture, mortgage, deed of trust, loan, purchase or credit agreement, lease or any other agreement or instrument to which any of the Credit Parties is bound or by which any of the Credit Parties may be bound or affected or (B) the corporate charter, operating agreement, regulations or by-laws or shareholders agreement of the Credit Parties, (ii) conflict with or result in a breach of any of the terms, conditions or provisions of any order, judgment, decree or ruling of any court, arbitrator or Governmental Authority applicable to any of the Credit Parties, or (iii) violate any provision of any statute or other rule or regulation of any Governmental Authority applicable to any of the Credit Parties, except where any of the foregoing (other than clause (i)(B) above), individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect.

 

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Section 5.5. Legal Proceedings. Other than as set forth on Schedule 5.5, (i) there is no action, suit, proceeding, inquiry or investigation before or brought by any court or governmental agency or body, domestic or foreign, now pending, or, to the knowledge of the Credit Parties, threatened, against or affecting the Credit Parties that would, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect, or that would reasonably be expected to materially and adversely affect the consummation of the transactions contemplated in this Agreement and the other Financing Documents, as applicable, or the performance by the Credit Parties of their respective obligations hereunder or thereunder; and (ii) the aggregate of all pending legal or governmental proceedings to which the Credit Parties are a party or of which any of their property or assets is the subject, including ordinary routine litigation incidental to the business, would not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect.

 

Section 5.6. Real Property. The Credit Parties have good and marketable title to all real property owned by any of them (if any) and good title to all other material properties and assets owned by any of them, except for (i) minor defects in title that do not interfere with its ability to conduct business as currently conducted or to utilize such properties and assets for their intended purposes, and (ii) as otherwise could not reasonably be expected to have a Material Adverse Effect. All real property, buildings and other improvements, and all equipment and other property, held under lease or sublease by any of the Credit Parties is held by them under valid, subsisting and enforceable leases or subleases, as the case may be, with, solely in the case of leases or subleases relating to real property and buildings or other improvements, such exceptions as are not material and do not materially interfere with the use made of such property and buildings or other improvements by the Credit Parties, and all such leases and subleases are in full force and effect. No Credit Party has received any notice of any claim of any sort that has been asserted by anyone adverse to the rights of the Credit Parties under any of the leases or subleases mentioned above or affecting or questioning the rights of the Credit Parties to the continued possession of the leased or subleased premises, or to the continued use of the leased or subleased equipment or other property, except for such claims which, if successfully asserted against any of the Credit Parties, would not reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect.

 

Section 5.7. Intellectual Property. The Credit Parties own and possess or have valid and enforceable licenses to use, all patents, patent rights, patent applications, licenses, copyrights, inventions, know-how (including trade secrets and other unpatented and/or unpatentable proprietary or confidential information, systems or procedures), trademarks, service marks, trade names, service names, software, internet addresses, domain names and other intellectual property (collectively, “Intellectual Property”; provided, that “Intellectual Property shall not include any intellectual property acquired pursuant to the Transactions) that is described in the SEC Filings or that is reasonably necessary for the conduct of their respective businesses as currently conducted; no Credit Party has received any notice or otherwise has knowledge of any infringement of or conflict with rights of others with respect to any Intellectual Property or of any facts or circumstances which would render any Intellectual Property invalid or inadequate to protect the interests of the applicable Credit Party; there are no third parties who have or, to the knowledge of the Credit Parties, will be able to establish rights to any Intellectual Property of the Credit Parties, except for, and to the extent of, the ownership rights of the owners of the Intellectual Property which the SEC Filings disclose is licensed to any Credit Party; there is no pending or, to the knowledge of the Credit Parties, threatened action, suit, proceeding or claim by others challenging the Guarantor’s or any subsidiary’s rights in or to any such Intellectual Property, or challenging the validity, enforceability or scope of any such Intellectual Property, or asserting that any Credit Party infringes or otherwise violates, or would, upon the commercialization of any product or service described in the SEC Filings, infringe or violate, any Intellectual Property of others, and the Credit Parties do not have knowledge of any facts which could form a reasonable basis for any such action, suit, proceeding or claim; the Credit Parties have complied with the terms of each agreement pursuant to which any Intellectual Property has been licensed to any Credit Party, all such agreements are in full force and effect, and no event or condition has occurred or exists that gives or with notice or passage of time or both, would give any person the right to terminate any such agreement; there is no patent or patent application that contains claims that interfere with the issued or pending claims of any such Intellectual Property of any Credit Party or that challenges the validity, enforceability or scope of any such Intellectual Property, except, in each case with respect to this Section 5.7, such failures, allegations, actions, proceedings, violations, infringements, or other circumstances as would not reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect.

 

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Section 5.8. Investment Company. None of the Credit Parties is, and after the issuance of the Notes and the use of the proceeds therefrom will be, required to be registered as an “investment company” under the Investment Company Act of 1940.

 

Section 5.9. Taxes. The Credit Parties have filed all material foreign, federal, state and local tax returns that are required to be filed or have obtained extensions thereof, except where the failure so to file would not reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect, and have paid all taxes (including any estimated taxes) required to be paid and any other assessment, fine or penalty, to the extent that any of the foregoing is due and payable, except for any such tax, assessment, fine or penalty that is currently being contested in good faith by appropriate actions and except for such taxes, assessments, fines or penalties the nonpayment of which would not reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect.

 

Section 5.10. Licenses and Permits. The Credit Parties have all franchises, permits, licenses and any similar authority necessary for the conduct of the business as now being conducted by it, except as would not reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect. No Credit Party is in default under any of such franchises, permits, licenses or other similar authority, except as would not reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect.

 

Section 5.11. Labor Disputes. Except as set forth on Schedule 5.11, there are no collective bargaining agreements covering the employees of the Credit Parties and there is no pending, nor (to the knowledge of the Credit Parties) is there threatened, any strike, walkout, slowdown or work stoppage, or any unfair labor practice complaint or grievance or arbitration proceeding arising out of or under any collective bargaining agreement covering the employees of the Credit Parties except as would not reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect.

 

Section 5.12. Compliance with Laws. No Credit Party is in violation of any applicable statute, rule, regulation, order or restriction of any domestic or foreign government or any instrumentality or agency thereof in respect of the conduct of its business or the ownership of its properties, except as would not reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect.

 

Section 5.13. ERISA. None of the following events has occurred or exists: (i) a failure to fulfill the obligations, if any, under the minimum funding standards of Section 302 of ERISA with respect to a Plan (as defined below) determined without regard to any waiver of such obligations or extension of any amortization period; (ii) an audit or investigation by the Internal Revenue Service, the U.S. Department of Labor, the Pension Benefit Guaranty Corporation or any other federal, state or foreign governmental or regulatory agency with respect to the employment or compensation of employees by the Credit Parties that might reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect; or (iii) any breach of any contractual obligation, or any violation of law or applicable qualification standards, with respect to the employment or compensation of employees by the Credit Parties that might reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect. None of the following events has occurred or is reasonably likely to occur: (i) a material increase in the aggregate amount of contributions required to be made to all Plans in the current fiscal year of the Credit Parties compared to the amount of such contributions made in the Credit Parties’ most recently completed fiscal years; (ii) a material increase in the “accumulated post-retirement benefit obligations” (within the meaning of Accounting Standards Codification Topic 715-60) of the Credit Parties compared to the amount of such obligations in the Credit Parties’ most recently completed fiscal year; (iii) any event or condition giving rise to a liability under Title IV of ERISA that might reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect; or (iv) the filing of a claim by one or more employees or former employees of the Credit Parties related to a Plan that might reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect. For purposes of this paragraph and the definition of ERISA, the term “Plan” means a plan (within the meaning of Section 3(3) of ERISA) with respect to which a Credit Party may have any liability.

 

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Section 5.14. Insurance. The Credit Parties are insured by insurers of recognized financial responsibility against such losses and risks and in such amounts as are prudent and customary in the businesses in which they are engaged. All policies of insurance and any fidelity or surety bonds insuring the Credit Parties or their respective businesses, assets, employees, officers and directors are in full force and effect.

 

Section 5.15. Anti-Money Laundering; Foreign Corrupt Practices Act; Sanctions Compliance.

 

(a)  The operations of the Credit Parties are and have been conducted at all times in compliance in all material respects with applicable Anti-Money Laundering Laws and the rules and regulations promulgated thereunder.

 

(b)  None of the Credit Parties nor, to the knowledge of the Credit Parties, any director, officer, agent, employee or Affiliate of the Credit Parties has taken any action, directly or indirectly, that would result in a material violation by such persons of applicable Anti-Corruption Laws and the rules and regulations promulgated thereunder, including taking any action in furtherance of an offer, payment, promise to pay or authorization of the payment of any money, or other property, gift, promise to give or authorization of the giving of anything of value to any “foreign official” (as such term is defined in the Foreign Corrupt Practices Act) or any foreign political party or official thereof or any candidate for foreign political office, in contravention of applicable Anti-Corruption Laws; and the Credit Parties and, to the knowledge of the Credit Parties, their Affiliates, have conducted their businesses in compliance in all material respects with the Anti-Corruption Laws and have instituted and maintain policies and procedures designed to ensure, and which are reasonably expected to continue to ensure, continued compliance in all material respects therewith.

 

(c)  None of the Credit Parties nor, to the knowledge of the Credit Parties, any director, officer, agent, employee or Affiliate of the Credit Parties is currently subject to any U.S. sanctions administered by the Office of Foreign Assets Control of the U.S. Department of the Treasury (“OFAC”), and the Credit Parties will not directly or indirectly use the proceeds of the sale of the Notes, or lend, contribute or otherwise make available such proceeds to any subsidiary, joint venture partner or other person or entity, for the purpose of financing the activities of any person currently subject to any U.S. sanctions administered by OFAC (a “Sanctioned Person”). In addition, none of the Credit Parties, nor, to the knowledge of the Credit Parties, any director, officer, agent, employee or Affiliate of the Credit Parties, is an individual or entity currently the subject of any sanctions administered or enforced by OFAC, the United Nations Security Council, the European Union or Her Majesty’s Treasury (collectively, “Sanctions”), nor are the Credit Parties located, organized or resident in a country or territory that is the subject or the target of comprehensive Sanctions, including Cuba, Iran, North Korea, Russia, Syria and Crimea (each, a “Sanctioned Country”). None of the Credit Parties will, directly or indirectly, use the proceeds of the sale of the Notes, or lend, contribute or otherwise make available such proceeds to any subsidiary, joint venture partner or other person or entity to fund or facilitate any activities of or business with any person, or in any country or territory, that, at the time of such funding or facilitation, is a Sanctioned Person or Sanctioned Country, in each case, in any manner that will result in a violation by any person of any Sanctions. Since their inception, none of the Credit Parties have knowingly engaged in, or are now knowingly engaged in, any dealings or transactions with any person that at the time of the dealing or transaction is or was a Sanctioned Person or with any Sanctioned Country.

 

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Section 5.16. Solvency. The Credit Parties are Solvent.

 

Section 5.17. Broker’s Fees. No Credit Party is under any obligation to pay any broker’s, finder’s or other fee or commission in connection with the sale of the Notes (other than to William Blair & Company, L.L.C.], including, for the avoidance of doubt, any fee or commission payable to any stockholder or Affiliate of Issuer.

 

Section 5.18. Securities Laws; General Solicitation; No Integration.

 

(a)  None of the SEC Filings contain an untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. No forward-looking statement (within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act) contained in the SEC Filings has been made or reaffirmed without a reasonable basis or has been disclosed other than in good faith.

 

(b)  None of the Credit Parties nor anyone authorized to act on their behalf has engaged in a general solicitation or general advertising (within the meaning of Regulation D of the Securities Act) of investors with respect to offers or sales of the Notes.

 

(c)  None of the Credit Parties nor anyone acting on their behalf has taken, or will take, any action that would subject the issuance or sale of the Notes to the registration requirements of Section 5 of the Securities Act or to the registration requirements of any securities or blue sky laws of any applicable jurisdiction, whether through integration with prior offerings pursuant to Rule 502(a) of the Securities Act or otherwise.

 

Section 5.19. Margin Rules. No part of the proceeds from the sale of the Notes hereunder will be used, directly or indirectly, for the purpose of buying or carrying any margin stock within the meaning of Regulation U of the Board of Governors of the Federal Reserve System (12 CFR 221), or for the purpose of buying or carrying or trading in any securities under such circumstances as to involve Issuer in a violation of Regulation X of said Board (12 CFR 224) or to involve any broker or dealer in a violation of Regulation T of said Board (12 CFR 220).

 

Section 6. Representations of Purchaser.

 

Section 6.1. Purchase for Investment. Purchaser is purchasing the Notes for its own account or for one or more separate accounts maintained by Purchaser and not with a view to the distribution thereof. Purchaser understands that the offer and sale of the Notes have not been registered under the Securities Act and the Notes may be resold only if such resale is registered pursuant to the provisions of the Securities Act or if an exemption from registration is available, and that Issuer is not required to register the offer and sale, or resale, of the Notes.

 

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Section 6.2. Investment Experience; Access to Information. Purchaser (a) is an “accredited investor” as defined in Rule 501(a) of Regulation D promulgated under the Securities Act, (b) either alone or together with its representatives has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of this investment and make an informed decision to so invest, and has so evaluated the risks and merits of such investment, (c) has the ability to bear the economic risks of this investment and can afford a complete loss of such investment, (d) understands the terms of and risks associated with the purchase of the Notes, including a lack of liquidity, pricing availability and risks associated with the industry in which the Credit Parties operate, (e) has had the opportunity to review the business and financial condition of the Credit Parties as Purchaser has determined to be necessary in connection with the purchase of the Notes, and (f) has had an opportunity to ask such questions and make such inquiries concerning the Credit Parties, their business and financial condition as Purchaser has deemed appropriate in connection with such purchase and to receive satisfactory answers to such questions and inquiries.

 

Section 6.3. Authorization. Purchaser has full power and authority to enter into this Agreement. This Agreement, when executed and delivered by such Purchaser, will constitute a valid and legally binding obligation of Purchaser, enforceable in accordance with its terms, except as limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance and any other laws of general application affecting enforcement of creditors’ rights generally, and as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies.

 

Section 7. Payment and Prepayment of the Notes.

 

Section 7.1. Interest on the Notes; Maturity. Interest on the Notes shall be paid at the times and in the amounts set forth therein. As provided therein, the entire unpaid principal balance of the Notes shall be due and payable on the Maturity Date thereof.

 

Section 7.2. Optional Prepayments.

 

(a)  Prior to November 11, 2024, Issuer may, at its option, upon ten (10) Business Days’ prior written notice to Purchaser, prepay the Notes in their entirety at any time, at 100% of the principal amount, plus (i) accrued and unpaid interest thereon to (but excluding) such date and (ii) the Applicable Premium (as defined below).

 

Applicable Premium” means, with respect to the Notes on any date of redemption, the greater of: (1) 1.0% of the principal amount of the Notes, and (2) the excess, if any, of (a) the present value as of the date of such redemption of (i) the principal amount of Notes (assuming the final maturity date is six (6) months before the Maturity Date) plus (ii) all required interest payments due on the Notes through six (6) months before the Maturity Date (excluding accrued and unpaid interest to but excluding the date of redemption), computed using a discount rate equal to the Applicable Treasury Rate as of such date of redemption plus 50 basis points, over (b) the then outstanding principal amount of the Notes.

 

Applicable Treasury Rate” means, as of any date of redemption of the Notes, the yield to maturity at the time of computation of U.S. Treasury securities with a constant maturity (as compiled and published in the most recent Federal Reserve Statistical Release H.15 (519) that has become publicly available at least two (2) Business Days prior to the redemption date (or, if such Statistical Release is no longer published, any publicly available source or similar market data)) most nearly equal to the period from the redemption date to the date that is six (6) months before the Maturity Date; provided, however, that if the period from the redemption date to the date that is six (6) months before the Maturity Date is not equal to the constant maturity of a U.S. Treasury security for which a weekly average yield is given, the Applicable Treasury Rate shall be obtained by linear interpolation (calculated to the nearest one-twelfth of a year) from the weekly average yields of U.S. Treasury securities for which such yields are given, except that if the period from the redemption date to the date that is six (6) months before the Maturity Date is less than one year, the weekly average yield on actually traded U.S. Treasury securities adjusted to a constant maturity of one year shall be used.

 

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(b)  On or after November 11, 2024, Issuer may, at its option, upon ten (10) Business Days’ prior written notice to Purchaser, prepay the Notes in their entirety at any time, at 100% of the principal amount being prepaid, plus accrued and unpaid interest thereon to (but excluding) such date.

 

Section 7.3. Maturity. In the case of a prepayment of Note pursuant to this Section 7, the principal amount of the Note shall mature and become due and payable on the date fixed for such prepayment, together with interest on such principal amount accrued to (but excluding) such date and Applicable Premium, if any.

 

Section 7.4. Payments Due on Non-Business Days. Anything in this Agreement or the Notes to the contrary notwithstanding, (x) except as set forth in clause (y), any payment of interest on the Notes that is due on a date that is not a Business Day shall be made on the next succeeding Business Day without including the additional days elapsed in the computation of the interest payable on such next succeeding Business Day; and (y) any payment of principal of, or Applicable Premium, if any, on the Notes (including principal due on the Maturity Date) that is due on a date that is not a Business Day shall be made on the next succeeding Business Day without including the additional days elapsed in the computation of interest payable on such next succeeding Business Day.

 

Section 8. Covenants.

 

Issuer covenants that so long as any of the Notes are outstanding:

 

Section 8.1. Payment of Notes. Issuer shall promptly pay the principal of, premium, if any, and interest on the Notes on the dates and in the manner provided in this Agreement.

 

Section 8.2. Exchange Act Reports. Issuer will deliver to Purchaser copies of all reports that Issuer is required to file with or furnish to the SEC pursuant to Section 13(a) or 15(d) of the Exchange Act within fifteen (15) calendar days after the date that Issuer is required to file or furnish the same (after giving effect to all applicable grace periods under the Exchange Act ); provided, however, that Issuer need not send to Purchaser any material for which Issuer (i) has received, or is seeking in good faith and has not been denied, confidential treatment by the SEC or (ii) is permitted to omit from public filings pursuant to Item 601 of Regulation S-K. Any report that Issuer files with or furnishes to the SEC through the EDGAR system (or any successor thereto) will be deemed to be sent to Purchaser at the time such report is so filed or furnished via the EDGAR system (or such successor). Upon the request of Purchaser, Issuer will provide to Purchaser a copy of any report that Issuer has furnished or filed, other than a report that is deemed to be sent to Purchaser pursuant to the preceding sentence.

 

Section 8.3. Rule 144A Information. If Issuer is not subject to Section 13 or 15(d) of the Exchange Act at any time when the Notes are outstanding and constitute “restricted securities” (as defined in Rule 144), then Issuer will promptly provide to Purchaser the information required to be delivered pursuant to Rule 144 A (d)(4) under the Securities Act to facilitate the resale of the Notes pursuant to Rule 144A. Issuer will take such further action as Purchaser may reasonably request to enable Purchaser to sell such Notes pursuant to Rule 144A.

 

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Section 8.4. Compliance and Default Certificates.

 

(a)  Annual Compliance Certificate. Within ninety (90) days after December 31, 2022 and each fiscal year of Issuer ending thereafter, Issuer will deliver an Officer ’s Certificate to Purchaser stating (i) that the signatory thereto has supervised a review of the activities of Issuer and its subsidiaries during such fiscal year with a view towards determining whether any Default or Event of Default has occurred; and (ii) whether, to such signatory’s knowledge, a Default or Event of Default has occurred and is continuing (and, if so, describing all such Defaults or Events of Default and what action Issuer is taking or proposes to take with respect thereto).

 

(b)  Default Certificate. If a Default or Event of Default occurs, then Issuer will, within thirty (30) days after its first occurrence, promptly deliver an Officer’s Certificate to Purchaser describing the same and what action Issuer is taking or proposes to take with respect thereto; provided, however, that Issuer will not be required to deliver such notice if such Default or Event of Default, as applicable, has been cured within the applicable grace period, if any, provided herein.

 

Section 8.5. Stay, Extension, and Usury Laws. To the extent that it may lawfully do so, Issuer (a) agrees that it will not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension, or usury law (wherever or whenever enacted or in force) that may affect the covenants or the performance of its obligations pursuant to this Agreement; and (b) expressly waives all benefits or advantages of any such law and agrees that it will not, by resort to any such law, hinder, delay, or impede the execution of any power granted to Purchaser pursuant to this Agreement, but will suffer and permit the execution of every such power as though no such law has been enacted.

 

Section 9. Events of Default.

 

An “Event of Default” shall exist if any of the following conditions or events shall occur and be continuing:

 

(a)  the default in the payment of any installment of interest on any Notes when due and payable and the continuance of such default for a period of thirty (30) consecutive days;

 

(b)  the default in the payment of principal or premium, if any, on any Note when due at its stated maturity, upon optional redemption or upon mandatory redemption;

 

(c)  the Guarantee issued by any Guarantor ceases at any time to remain in full force and effect;

 

(d)  the default by Issuer under any Indebtedness for borrowed money under which there is outstanding at least $10,000,000 where such default (a) constitutes a failure to pay the principal, or premium or interest on, any such Indebtedness when due or payable at stated maturity, upon required repurchase, upon declaration of acceleration or otherwise, or (b) results in the acceleration of such Indebtedness before its stated maturity, in each case, where such default is not cured or waived within thirty (30) days after notice to Issuer;

 

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(e)  the failure by Issuer or any Guarantor to pay final, non-appealable judgments aggregating in excess of $25,000,000 (or its foreign currency equivalent) (net of any amounts covered by insurance), which judgments are not paid, discharged or stayed within sixty (60) days after (a) the right to appeal has expired, if no appeal has commenced, or (b) the date on which all rights to appeal have been extinguished;

 

(f)   the commencement of any voluntary bankruptcy proceeding by Issuer or any Guarantor;

 

(g)  the commencement of any involuntary bankruptcy proceeding with respect to Issuer or any Guarantor if such petition, order or decree remains unstayed or in effect for sixty (60) consecutive days;

 

(h)  the default by Issuer under any covenant set forth in Section 8 where such default is not cured or waived within sixty (60) days after notice to Issuer.

 

Section 10. Remedies on Default, Etc.

 

Section 10.1. Acceleration.

 

(a)  Upon the occurrence of an Event of Default described in Section 9(b), Section 9(f) or Section 9(g), the Notes shall automatically become immediately due and payable.

 

(b)  If any Event of Default (other than an Event of Default described in Section 9(b), Section 9(f) or Section 9(g)) has occurred and is continuing, Purchaser may at any time at its option, by notice or notices to Issuer, declare the Notes to be immediately due and payable.

 

Upon the Notes becoming due and payable under this Section 10.1, whether automatically or by declaration, the Notes will forthwith mature and the entire unpaid principal amount of the Notes, plus all accrued and unpaid interest thereon (including interest accrued thereon at the Default Rate) and Applicable Premium (if any), shall be due and payable without presentment, demand, protest or further notice, all of which are hereby waived.

 

Section 10.2. Other Remedies. If any Event of Default has occurred and is continuing, and the Notes have been declared immediately due and payable under Section 10.1, Purchaser may proceed to protect and enforce its rights as a holder of the Notes by an action at law, suit in equity or other appropriate proceeding, whether for the specific performance of any agreement contained herein or in the Notes, or for an injunction against a violation of any of the terms hereof or thereof, or in aid of the exercise of any power granted hereby or thereby or by law or otherwise.

 

Section 10.3. Rescission. At any time after any Notes have been declared due and payable pursuant to Section 10.1(b), Purchaser, by written notice to Issuer, may rescind and annul any such declaration and its consequences if (a) Issuer has paid all overdue interest on the Notes (including interest accrued at the Default Rate), (b) all Events of Default and Defaults, other than non-payment of amounts that have become due solely by reason of such declaration, have been cured or have been waived pursuant to Section 13.1, and (c) no judgment or decree has been entered for the payment of any monies due pursuant hereto or to the Notes. No rescission and annulment under this Section 10.3 will extend to or affect any subsequent Event of Default or Default or impair any right consequent thereon.

 

Section 10.4. No Waivers or Election of Remedies. No course of dealing and no delay on the part of Purchaser in exercising any right, power or remedy shall operate as a waiver thereof or otherwise prejudice Purchaser’s rights, powers or remedies. No right or remedy herein conferred by this Agreement or the Notes upon or reserved to Purchaser is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy.

 

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Section 10.5. Waiver of Stay or Extension Laws. Issuer covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, or plead or in any manner whatsoever, claim or take the benefit or advantage of, any stay or extension law wherever enacted, now or at any time hereafter in force, that may affect the covenants or the performance of this Agreement; and Issuer (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law, and covenants that it will not hinder, delay or impede the execution of any power herein but will suffer and permit the execution of every such power as though no such law had been enacted.

 

Section 10.6. Expenses. Without limiting the obligations of the Issuer under Section 11, Issuer will pay to Purchaser on demand such further amount as shall be sufficient to cover all costs and expenses incurred by Purchaser in any enforcement or collection under this Section 10, including reasonable and documented attorneys’ fees, expenses and disbursements.

 

Section 11. INDEMNITY.

 

Section 11.1. Indemnity. Issuer will indemnify and hold harmless Purchaser and each of its Affiliates, each of its officers, directors, employees, partners, agents, controlling persons, members, advisors, and each of their successors and permitted assigns (each, an “Indemnitee”) from and against any and all losses, claims, damages, liabilities and related expenses to which any such Indemnitee may become subject arising out of or in connection with the purchase of the Notes by Purchaser, the use of the proceeds of the Notes by Issuer or any other Credit Party or any actual or threatened claim, litigation, investigation, inquiry, arbitration or proceeding relating to any of the foregoing (including in relation to enforcing the terms of this Section 11.1) (each, a “Proceeding”), regardless of whether any Indemnitee is a party thereto, whether or not such Proceedings are brought by a Credit Party or any of its Affiliates, equity holders, creditors or any other Person, and to reimburse each Indemnitee upon demand for any reasonable out-of-pocket expenses (including reasonable documented attorneys’ fees and expenses) incurred in connection with investigating or defending any of the foregoing; provided, that the foregoing indemnity will not, as to any Indemnitee, apply to losses, claims, damages, liabilities or related expenses to the extent any such losses, claims, damages, liabilities or related expenses (a) are found by a final, non-appealable judgment of a court of competent jurisdiction to have arisen or resulted from (i) the gross negligence, bad faith or willful misconduct of the respective Indemnitee or any Related Person (as defined below) of such Indemnitee, (ii) a material breach of the express obligations of any Indemnitee or any Related Person thereof under this Agreement or the Financing Documentation, or (iii) any claim, litigation, investigation, inquiry, arbitration or proceeding (except to the extent involving any act or omission by a Credit Party or any of its Affiliates) brought by any Indemnitee against another Indemnitee or any of its Related Persons. For purposes hereof, a “Related Person” of an Indemnitee means (A) any Affiliate of such Indemnitee, (B) the respective directors, officers or employees of such Indemnitee or any of its Affiliates and (C) the respective agents, advisors and representatives of such Indemnitee or any of its Affiliates. Notwithstanding anything to the contrary, Issuer shall not be obligated to indemnify any Indemnitee for any special, indirect, consequential or punitive damages arising out of, in connection with, or as a result of the transactions contemplated hereunder.

 

Section 11.2. Survival. The obligations of Issuer under this Section 11 will survive the payment or transfer of any Note, the enforcement, amendment or waiver of any provision of this Agreement or the Notes, and the termination of this Agreement.

 

Section 12. Survival of Representations and Warranties; Entire Agreement.

 

All representations and warranties contained herein shall survive the execution and delivery of this Agreement and the Notes, the purchase or transfer by Purchaser of the Notes or portion thereof or interest therein and the payment of any Notes, and may be relied upon by any subsequent holder of such Note, regardless of any investigation made at any time by or on behalf of such Purchaser or any other holder of a Note. All statements contained in any certificate or other instrument delivered by or on behalf of the Credit Parties pursuant to this Agreement shall be deemed representations and warranties of the Credit Parties under this Agreement. Subject to the preceding sentence, this Agreement and the Notes embody the entire agreement and understanding between Purchaser and the Credit Parties and supersede all prior agreements and understandings relating to the subject matter hereof.

 

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Section 13. Amendment and Waiver.

 

Section 13.1. Requirements. This Agreement and the Notes may only be amended upon the written consent of the Credit Parties and Purchaser. Compliance by the Credit Parties with the terms set forth in this Agreement and the Financing Documents may be only be waived upon the written consent of Purchaser.

 

Section 13.2. Notices. All notices and communications provided for hereunder shall be in writing and sent by e-mail to the addresses set forth below; provided, that upon request of any party to receive paper copies of such notices or communications, the applicable party will promptly deliver such paper copies to the other. All notices pursuant to this Agreement may be delivered in the following manner:

 

(i) if to Purchaser:

 

SB LL Holdco, Inc.

1 Circle Star Way

San Carlos, CA 94070

Attention: SBGI Corporate Legal

Email: sbgi-notice@softbank.com

 

with a copy to:

 

Morrison & Foerster LLP

250 W. 55th Street

New York, New York 10019-9601

Attention: John Owen

Email: JOwen@mofo.com

 

or at such other address as Purchaser shall have specified to the Credit Parties in writing, and

 

(ii) if to the Credit Parties:

 

Shift Technologies, Inc.

290 Division Street, Suite 400

San Francisco, CA 94103-4234

Attention: Ryan Lawrence, General Counsel and Corporate Secretary

 

with a copy to:

 

Jenner & Block LLP

1155 Avenue of the Americas

New York, NY 10036

Attention: Martin C. Glass

Brian S. Hart

Email: MGlass@jenner.com

BHart@jenner.com

 

or at such other address as the Credit Parties shall have specified to Purchaser in writing.

 

Notices under this Section 13 will be deemed given only when actually received.

 

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Section 14. Confidential Information.

 

For the purposes of this Section 14, “Confidential Information” means information delivered to Purchaser by or on behalf of a Credit Party in connection with the transactions contemplated by or otherwise pursuant to this Agreement that is proprietary in nature and that was clearly marked or labeled or otherwise adequately identified when received by Purchaser as being confidential information of a Credit Party, provided, that such term does not include information that (a) was publicly known or otherwise known to Purchaser prior to the time of such disclosure, (b) subsequently becomes publicly known through no act or omission by Purchaser or any Person acting on Purchaser’s behalf, (c) otherwise becomes known to Purchaser other than through disclosure by a Credit Party or (d) constitutes financial statements delivered to Purchaser as set forth in Section 8.2 that are otherwise publicly available. Purchaser will maintain the confidentiality of such Confidential Information in accordance with procedures adopted by Purchaser, in good faith to protect confidential information of third parties delivered to Purchaser; provided, that Purchaser may deliver or disclose Confidential Information to (i) its directors, officers, employees, agents, attorneys, trustees and Affiliates (to the extent such disclosure reasonably relates to the administration of the investment represented by the Notes), (ii) its auditors, financial advisors and other professional advisors who agree to hold confidential the Confidential Information substantially in accordance with this Section 14, (iii) any financial institution to which Purchaser sells or offers to sell the Notes or any part thereof or any participation therein (if such Person has agreed in writing prior to its receipt of such Confidential Information to be bound by this Section 14), (iv) any Person from which Purchaser offers to purchase any security of Issuer (if such Person has agreed in writing prior to its receipt of such Confidential Information to be bound by this Section 14), (v) any federal or state regulatory authority having jurisdiction over Purchaser, (vi) any nationally recognized rating agency that requires access to information about Purchaser’s investment portfolio, or (vii) any other Person to which such delivery or disclosure may be necessary or appropriate (w) to effect compliance with any law, rule, regulation or order applicable to Purchaser, (x) in response to any subpoena or other legal process, (y) in connection with any litigation to which Purchaser or is a party or (z) if an Event of Default has occurred and is continuing, to the extent Purchaser may reasonably determine such delivery and disclosure to be necessary or appropriate in the enforcement or for the protection of the rights and remedies under the Notes (if applicable), this Agreement or any of the other Financing Documentation. Any holder of a Note, by its acceptance of a Note, will be deemed to have agreed to be bound by and to be entitled to the benefits of this Section 14 as though it were a party to this Agreement. On reasonable request by a Credit Party in connection with the delivery to any holder of the Note of information required to be delivered to such holder under this Agreement or requested by such holder (other than a holder that is a party to this Agreement or its nominee), such holder will enter into an agreement with the Credit Parties embodying this Section 14.

 

Section 15. Guarantee.

 

Section 15.1. Guarantees. Each Guarantor, in accordance with the terms hereof, irrespective of the validity and the legal effects of the Notes, irrespective of restrictions of any kind on Issuer’s performance of its obligations under the Notes, and waiving all rights of objection and defense (other than relating to payment in full) arising from the Note, hereby agrees to irrevocably and unconditionally guarantee (the “Guarantee”) to Purchaser, the due and punctual payment of principal, premium (if any), and interest (including any additional amounts required to be paid in accordance with the terms and conditions of the Notes) from time to time payable by Issuer and when the same shall become due, whether at stated maturity, upon redemption or repayment, by acceleration or otherwise, and accordingly undertakes to pay Purchaser, in the manner and the currency set forth in the terms and conditions of the Notes, any amount or amounts which Issuer is at any time liable to pay in respect of the Notes and which Issuer has failed to pay, including amounts that become due in advance of their stated maturity as a result of acceleration. Any diligence, presentment, demand, protest or notice, whether in relation to any Guarantor or the Guarantors collectively, Issuer, or any other person, from Purchaser, in respect of any of the Guarantor’s obligations under the Guarantee is hereby waived.

 

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Section 15.2. Status. The obligations of each Guarantor under its Guarantee constitute direct, unsecured and unsubordinated obligations of such Guarantor, and each Guarantor undertakes that its obligations hereunder will rank pari passu with all other present or future direct, unsecured and unsubordinated obligations of such Guarantor.

 

Section 15.3. Duration. Each Guarantor’s Guarantee is a guarantee of payment and not merely of collection and it shall continue in full force and effect by way of continuing security until all principal, premium (if any) and interest (including any additional amounts required to be paid in accordance with the terms and conditions of the Notes) have been paid in full and all other actual or contingent obligations of Issuer in relation to the Notes or under this Agreement have been satisfied in full. Notwithstanding the foregoing, if any payment received by Purchaser is, on the subsequent bankruptcy or insolvency of Issuer, avoided under any applicable laws, including, among others, laws relating to bankruptcy or insolvency, such payment will not be considered as having discharged or diminished the liability of any Guarantor under its Guarantee and the Guarantee will continue to apply as if such payment had at all times remained owing by Issuer.

 

Section 15.4. Exercise of Rights; Subrogation; Claims against Issuer; Invalidity.

 

(a)  Until all principal, premium (if any) and interest and all other monies payable by Issuer in respect of the Notes shall be paid in full, (i) no right of any Guarantor, by reason of the performance of any of its obligations under its Guarantee, to be indemnified by Issuer or to take the benefit of or enforce any security or other guarantee or indemnity against Issuer in connection with the Notes shall be exercised or enforced and (ii) no Guarantor shall (a) by virtue of the Guarantee or any other reason be subrogated to any rights of Purchaser or (b) claim in competition with Purchaser against Issuer. If any Guarantor receives any benefit, payment or distribution in relation to such rights it shall hold that benefit, payment or distribution to the extent necessary to enable all amounts which may be or become payable to Purchaser by Issuer under or in connection with the Notes to be paid in full on behalf and for the benefit of Purchaser and shall promptly pay or transfer the same to Purchaser as they may direct to the extent such amount shall be due and unpaid by Issuer to Purchaser.

 

(b)  If any provision of this Section 15 with respect to the Guarantee is or becomes illegal, invalid or unenforceable in any jurisdiction, that shall not affect the validity or enforceability in that jurisdiction or in any other jurisdiction of any other provision of the Guarantee.

 

SECTION 16. MISCELLANEOUS.

 

Section 16.1. Successors and Assigns.

 

(a)  All covenants and other agreements contained in this Agreement by or on behalf of any of the parties hereto bind and inure to the benefit of their respective successors and assigns (including any subsequent holder of a Note) whether so expressed or not, except that (i) a Credit Party may not assign or otherwise transfer any of its rights or obligations hereunder or under the Notes without the prior written consent of Purchaser, and (ii) no assignment by Purchaser of its rights under this Agreement or the Notes shall be effective until Purchaser or its assignee have delivered written notice of such assignment to Issuer.

 

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(b)  For the avoidance of doubt, Purchaser may assign its interests in the Notes in whole or in part at any time. In connection with any partial transfer of Purchaser’s interest in the Notes, Issuer, upon written notice from Purchaser, shall issue a new Note in the name of the transferee.

 

(c)  Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto and their respective successors and assigns permitted hereby) any legal or equitable right, remedy or claim under or by reason of this Agreement.

 

Section 16.2. Severability. Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall (to the full extent permitted by law) not invalidate or render unenforceable such provision in any other jurisdiction.

 

Section 16.3. Construction, Etc. Each covenant contained herein shall be construed (absent express provision to the contrary) as being independent of each other covenant contained herein, so that compliance with any one covenant shall not (absent such an express contrary provision) be deemed to excuse compliance with any other covenant. Where any provision herein refers to action to be taken by any Person, or which such Person is prohibited from taking, such provision shall be applicable whether such action is taken directly or indirectly by such Person.

 

Defined terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation.” The word “will” shall be construed to have the same meaning and effect as the word “shall.” Unless the context requires otherwise (a) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein) and any reference herein to any Person shall be construed to include such Person’s successors and assigns, (c) the words “herein,” “hereof” and “hereunder,” and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, (d) all references herein to Sections and Schedules shall be construed to refer to Sections of, and Schedules to, this Agreement, and (e) any reference to any law or regulation herein shall, unless otherwise specified, refer to such law or regulation as amended, modified or supplemented from time to time.

 

Section 16.4. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be an original but all of which together shall constitute one instrument. Each counterpart may consist of a number of copies hereof, each signed by less than all, but together signed by all, of the parties hereto.

 

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Section 16.5. Governing Law. This Agreement shall be construed and enforced in accordance with, and the rights of the parties shall be governed by, the law of the State of New York.

 

Section 16.6. Jurisdiction and Process; Waiver of Jury Trial.

 

(a)  The undersigned parties irrevocably submit to the non-exclusive jurisdiction of any New York State or federal court, in each case, sitting in the Borough of Manhattan, City of New York, over any suit, action or proceeding arising out of or relating to this Agreement or the Notes. To the fullest extent permitted by applicable law, each of undersigned parties irrevocably waives and agrees not to assert, by way of motion, as a defense or otherwise, any claim that it is not subject to the jurisdiction of any such court, any objection that it may now or hereafter have to the laying of the venue of any such suit, action or proceeding brought in any such court and any claim that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum.

 

(b)  The undersigned parties agree, to the fullest extent permitted by applicable law, that a final judgment in any suit, action or proceeding brought in any such court shall be conclusive and binding upon it subject to rights of appeal, as the case may be, and may be enforced in the courts of the United States of America or the State of New York (or any other courts to the jurisdiction of which it or any of its assets is or may be subject) by a suit upon such judgment.

 

(c)  Each of the Credit Parties consents to process being served by or on behalf of Purchaser in any suit, action or proceeding by mailing a copy thereof by registered, certified, priority or express mail (or any substantially similar form of mail), postage prepaid, return receipt or delivery confirmation requested, to it at its address specified in Section 13 or at such other address of which such holder shall then have been notified pursuant to said Section. Each of the Credit Parties agrees that such service upon receipt (i) shall be deemed in every respect effective service of process upon it in any such suit, action or proceeding and (ii) shall, to the fullest extent permitted by applicable law, be taken and held to be valid personal service upon and personal delivery to it. Notices hereunder shall be conclusively presumed received as evidenced by a delivery receipt furnished by the United States Postal Service or any reputable commercial delivery service.

 

(d)  Nothing in this Section 16.6 shall affect the right of Purchaser to serve process in any manner permitted by law, or limit any right that Purchaser may have to bring proceedings against any of the Credit Parties in the courts of any appropriate jurisdiction or to enforce in any lawful manner a judgment obtained in one jurisdiction in any other jurisdiction.

 

(e)  THE PARTIES HERETO HEREBY WAIVE TRIAL BY JURY IN ANY ACTION BROUGHT ON OR WITH RESPECT TO THIS AGREEMENT, THE NOTES OR ANY OTHER DOCUMENT EXECUTED IN CONNECTION HEREWITH OR THEREWITH.

 

*  *  *  *  *

 

-18-

 

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first written above.

 

  ISSUER
     
  SHIFT TECHNOLOGIES, INC.
     
  By: /s/ George Arison
  Name:  George Arison
  Title: Chief Executive Officer and Chairman

 

Signature Page to Note Purchase Agreement

 

 

 

 

  GUARANTORS
   
  SHIFT PLATFORM, INC.
     
  By: /s/ George Arison
  Name: George Arison
  Title: Chief Executive Officer
     
  SHIFT OPERATIONS LLC
     
  By: /s/ George Arison
  Name: George Arison
  Title: Chief Executive Officer
     
  SHIFT TRANSPORTATION LLC
 
  By: /s/ George Arison
  Name: George Arison
  Title: Chief Executive Officer
     
  SHIFT INSURANCE SERVICES LLC
     
  By: /s/ George Arison
  Name: George Arison
  Title: Chief Executive Officer
     
  SHIFT FINANCE, LLC
     
  By: /s/ George Arison
  Name: George Arison
  Title: Chief Executive Officer
     
  SHIFT MARKETPLACE HOLDINGS, LLC
     
  By: /s/ George Arison
  Name: George Arison
  Title: Chief Executive Officer
     
  SHIFT MARKETPLACE, LLC
     
  By: /s/ George Arison
  Name: George Arison
  Title: Chief Executive Officer

 

Signature Page to Note Purchase Agreement

 

 

 

 

  PURCHASER
   
  SB LL HOLDCO, INC.
     
  By: /s/ Alex Clavel
  Name:  Alex Clavel
  Title: Director

 

Signature Page to Note Purchase Agreement

 

 

 

 

Schedule A

 

Defined Terms

 

As used herein, the following terms have the respective meanings set forth below or set forth in the Section hereof following such term:

 

Affiliate” means, with respect to any Person, any other Person which, directly or indirectly, controls, is controlled by, or is under common control with, such Person. For purposes of this definition, “control” (together with the correlative meanings of “controlled by” and “under common control with”) means possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities or other beneficial interests, by contract, or otherwise.

 

Agreement” means this Note Purchase Agreement, including all Schedules attached to this Agreement.

 

Anti-Corruption Laws” means any law or regulation in a U.S. or any non-U.S. jurisdiction regarding bribery or any other corrupt activity, including the U.S. Foreign Corrupt Practices Act and the U.K. Bribery Act 2010.

 

Anti-Money Laundering Laws” means any law or regulation in a U.S. or any non-U.S. jurisdiction regarding money laundering, drug trafficking, terrorist-related activities or other money laundering predicate crimes, including the Currency and Foreign Transactions Reporting Act of 1970 (otherwise known as the Bank Secrecy Act) and the USA PATRIOT Act.

 

Applicable Premium” is defined in Section 7.2(a).

 

Asset Purchase Agreement” is defined in the Recitals.

 

Business Day” means any day other than a Saturday, a Sunday or a day on which commercial banks in New York, New York, are required or authorized to be closed.

 

Capital Lease Obligations” of any Person means the obligations of such Person to pay rent or other amounts under any lease of (or other arrangement conveying the right to use) real or personal property, or a combination thereof, which obligations are required to be classified and accounted for as capital leases on a balance sheet of such Person under GAAP, and the amount of such obligations shall be the capitalized amount thereof determined in accordance with GAAP.

 

cash” means any immediately available funds in Dollars.

 

Closing” is defined in Section 3.

 

Closing Date” is defined in the Recitals.

 

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

 

Confidential Information” is defined in Section 14.

 

control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise; and the terms “controlled” and “controlling” shall have meanings correlative to the foregoing.

 

SCHEDULE A

(to Note Purchase Agreement)

 

 

Default” means an event or condition the occurrence or existence of which would, with the lapse of time or the giving of notice or both, become an Event of Default.

 

Default Rate” means 2% per annum above the rate of interest on the Notes then in effect.

 

Dollars” or “$” refers to lawful money of the United States of America.

 

Equity Interests” means shares of capital stock, partnership interests, membership interests in a limited liability company, beneficial interests in a trust or other equity ownership interests or equivalents (however designated, including any instrument treated as equity for U.S. federal income tax purposes) in a Person, and any warrants, options or other rights entitling the holder thereof to purchase or acquire any such equity interest.

 

Event of Default” is defined in Section 9.

 

Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder from time to time in effect.

 

Fair” is defined in the Recitals.

 

Financing Documentation” means (a) the Note Purchase Agreement, (b) the Notes, and (c) each other document or instrument now or hereafter executed and delivered by a Credit Party in connection with, pursuant to or relating to this Agreement, in each case, as amended, but excluding the Transaction Documents.

 

GAAP” means generally accepted accounting principles as in effect from time to time in the United States of America.

 

Governmental Authority” means the government of the United States of America, or any entity exercising executive, legislative, judicial, regulatory or administrative functions of, or pertaining to, any such government.

 

guarantee” of or by any Person (the “guarantor”) means any obligation, contingent or otherwise, of the guarantor guaranteeing or having the economic effect of guaranteeing any Indebtedness or other obligation of any other Person (the “primary obligor”) in any manner, whether directly or indirectly, and including any obligation of the guarantor, direct or indirect,

 

(a) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation or to purchase (or to advance or supply funds for the purchase of) any security for the payment thereof,

 

(b) to purchase or lease property securities or services for the purpose of assuring the owner of such Indebtedness or other obligation of the payment thereof,

 

(c) to maintain working capital, equity capital or any other financial statement condition or liquidity of the primary obligor so as to enable the primary obligor to pay such Indebtedness or other obligation or

 

(d) as an account party in respect of any letter of credit or letter of guaranty issued to support such Indebtedness or obligation;

 

SCHEDULE A

(to Note Purchase Agreement)

 

 

provided, that the term guarantee shall not include (i) endorsements for collection or deposit in the ordinary course of business or (ii) customary indemnification agreements entered into in the ordinary course of business, provided, that such indemnification obligations are unsecured, such Person has determined that any liability thereunder is remote and such indemnification obligations are not the functional equivalent of the guaranty of a payment obligation of the primary obligor.

 

Guarantee” has the meaning set forth in Section 15.1.

 

Guarantor” is defined in the first paragraph of this Note Purchase Agreement.

 

Hedging Agreement” means any interest rate protection agreement, foreign currency exchange protection agreement, commodity price protection agreement or other interest or currency exchange rate or commodity price hedging arrangement.

 

Indebtedness” of any Person means, without duplication,

 

(a) all obligations of such Person for borrowed money,

 

(b) all obligations of such Person evidenced by bonds, debentures, notes or similar instruments,

 

(c) all obligations of such Person under conditional sale or other title retention agreements relating to property acquired by such Person,

 

(d) all obligations of such Person in respect of the deferred purchase price of property or services (excluding accounts payable and accrued expenses incurred in the ordinary course of business),

 

(e) all Indebtedness of others secured by any Lien on property owned or acquired by such Person, whether or not the Indebtedness secured thereby has been assumed (with the value of such debt being the lower of the outstanding amount of such debt and the fair market value of the property subject to such Lien),

 

(f) all guarantees by such Person of Indebtedness of others,

 

(g) all Capital Lease Obligations of such Person,

 

(h) all obligations, contingent or otherwise, of such Person as an account party in respect of letters of credit and letters of guaranty and

 

(i) all obligations, contingent or otherwise, of such Person in respect of bankers’ acceptances.

 

The Indebtedness of any Person shall include the Indebtedness of any other entity (including any partnership in which such Person is a general partner) to the extent such Person is liable therefor as a result of such Person’s ownership interest in or other relationship with such entity, except to the extent the terms of such Indebtedness provide that such Person is not liable therefor.

 

Intellectual Property” is defined in Section 5.7.

 

Investment Company Act” means the Investment Company Act of 1940, as amended from time to time.

 

SCHEDULE A

(to Note Purchase Agreement)

 

Issuer” is defined in the first paragraph of this Agreement.

 

Key Personnel” means George Arison, Oded Shein and Ryan Lawrence.

 

knowledge of the Credit Parties” shall mean the actual or constructive knowledge of any of the Key Personnel, after due inquiry.

 

Lien” means, with respect to any asset, any mortgage, deed of trust, lien, pledge, hypothecation, encumbrance, charge or security interest in, on or of such asset.

 

Material Adverse Effect” is defined in Section 4.3.

 

Maturity Date” means the earlier of (i) the third anniversary of the Closing Date or (ii) such other date upon which the outstanding principal of the Note, plus accrued and unpaid interest thereon and Applicable Premium, if any, shall be become due and payable pursuant to the terms of this Agreement.

 

Notes” is defined in Section 1.1.

 

OFAC” means the Office of Foreign Assets Control of the United States Department of the Treasury.

 

OFAC Sanctions Program” means any economic or trade sanction that OFAC is responsible for administering and enforcing. A list of OFAC Sanctions Programs may be found at http://www.treasury.gov/resource-center/sanctions/Programs/Pages/Programs.aspx.

 

Officer’s Certificate” means a certificate of a Senior Financial Officer or of any other officer of Issuer whose responsibilities extend to the subject matter of such certificate.

 

Person” means an individual, partnership, corporation, limited liability company, association, trust, unincorporated organization, business entity or Governmental Authority.

 

Proceeding” is defined in Section 11.1.

 

property” or “properties” means, unless otherwise specifically limited, real or personal property of any kind, tangible or intangible, choate or inchoate.

 

Related Person” is defined in Section 11.1.

 

SEC” means the Securities and Exchange Commission of the United States of America.

 

SEC Filings” means, collectively, all of Issuer’s filings filed with the SEC on or prior to the Closing Date.

 

securities” or “security” shall have the meaning specified in section 2(1) of the Securities Act.

 

Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder from time to time in effect.

 

Senior Financial Officer” means the chief financial officer, principal accounting officer, treasurer or comptroller of Issuer.

 

SCHEDULE A

(to Note Purchase Agreement)

 

 

Solvent” means, on any date, with respect to Issuer and its subsidiaries on a consolidated basis, that on such date (a) the present fair salable value of the assets of Issuer and its subsidiaries are on a consolidated basis (i.e., the amount that may be realized within a reasonable time, considered to be six months to one year, either through collection or sale at the regular market value, conceiving the latter as the amount that could be obtained from the property in question within such period by a capable and diligent businessperson from an interested buyer who is willing to purchase under ordinary selling conditions) is not less than the amount that will be required to pay the probable liability of Issuer and its subsidiaries on their debts (including contingent, unmatured and unliquidated liabilities) as they become absolute and matured, (b) Issuer and its subsidiaries will not, on a consolidated basis, have an unreasonably small capitalization relative to their business or with respect to any transaction then contemplated, and (c) Issuer and its subsidiaries, on a consolidated basis, are able to pay their debts and liabilities as they mature in the ordinary course of business.

 

subsidiary” means, as to any Person, any other Person in which such first Person or one or more of its subsidiaries or such first Person and one or more of its subsidiaries owns sufficient equity or voting interests to enable it or them (as a group) ordinarily, in the absence of contingencies, to elect a majority of the directors (or Persons performing similar functions) of such second Person, and any partnership or joint venture if more than a 10% interest in the profits or capital thereof is owned by such first Person or one or more of its subsidiaries or such first Person and one or more of its subsidiaries (unless such partnership or joint venture can and does ordinarily take major business actions without the prior approval of such Person or one or more of its subsidiaries).

 

Transaction” means the transactions set forth in the Asset Purchase Agreement and the execution and delivery of all documents contemplated thereby.

 

Transaction Documents” means all documents and related certificates entered into and/or delivered in connection with the Transaction, but excluding the Financing Documentation.

 

USA PATRIOT Act” means United States Public Law 107-56, Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA PATRIOT ACT) Act of 2001 and the rules and regulations promulgated thereunder from time to time in effect.

 

SCHEDULE A

(to Note Purchase Agreement)

 

 

Exhibit 1

 

[Form of Global Note]

 

THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”) OR UNDER THE APPLICABLE SECURITIES LAWS OF THE VARIOUS STATES. THIS NOTE MAY NOT BE OFFERED, TRANSFERRED, RESOLD, PLEDGED OR OTHERWISE DISPOSED OF EXCEPT AS PERMITTED UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION UNDER THE ACT OR SUCH LAWS OR PURSUANT TO AN APPLICABLE EXEMPTION FROM REGISTRATION REQUIREMENTS.

 

SHIFT TECHNOLOGIES, INC.

 

6.00% Senior Note Due 2025

 

No. 1 [Date]
$20,000,000.00  

 

FOR VALUE RECEIVED, the undersigned, SHIFT TECHNOLOGIES, INC. (herein called “Issuer”), a corporation organized and existing under the laws of the State of Delaware, hereby promises to pay to SB LL HOLDCO, INC., or its permitted assigns, the principal sum of TWENTY MILLION DOLLARS (or so much thereof as shall not have been prepaid) on [●], 2025 (the “Maturity Date”), with interest (computed on the basis of a 360-day year of twelve 30-day months) (a) on the unpaid balance hereof at the rate of 6.00% per annum, from the date hereof, payable quarterly in arrears, on the fifteenth (15th) day of March, June, September and December in each year, commencing with the June 15th next succeeding the date hereof, and on the Maturity Date, until the principal hereof shall have become due and payable, and (b) to the extent permitted by law, (x) on any overdue payment of interest and (y) during the continuance of an Event of Default, on such unpaid balance at a rate per annum from time to time equal to the Default Rate (as defined in the hereinafter defined Note Purchase Agreement), payable quarterly as aforesaid (or, at the option of the holder hereof, on demand).

 

Payments of principal of, interest on and any Applicable Premium, if any, with respect to this Note are to be made in lawful money of the United States of America in such manner as Purchaser shall have designated by written notice to Issuer as provided in the Note Purchase Agreement referred to below.

 

This Note is issued pursuant to that certain Note Purchase Agreement, dated May 11, 2022 (as from time to time amended, the “Note Purchase Agreement”), by and among the Credit Parties and Purchaser named therein and is entitled to the benefits thereof. Each holder of this Note will be deemed, by its acceptance hereof, to have (i) agreed to the confidentiality provisions set forth in Section 14 of the Note Purchase Agreement and (ii) made the representations set forth in Section 6 of the Note Purchase Agreement. Unless otherwise indicated, capitalized terms used in this Note shall have the respective meanings ascribed to such terms in the Note Purchase Agreement.

 

Upon surrender of this Note to Issuer accompanied by a written instrument of transfer duly executed, a new Note for a like principal amount will be issued to the transferee.

 

This Note is subject to optional prepayment, in whole, or from time to time at the times and on the terms specified in the Note Purchase Agreement, but not otherwise.

 

If an Event of Default occurs and is continuing, the principal of this Note may be declared or otherwise become due and payable in the manner, at the price and with the effect provided in the Note Purchase Agreement.

 

EXHIBIT 1

(to Note Purchase Agreement)

 

 

This Note shall be construed and enforced in accordance with, and the rights of the Credit Parties and the holder of this Note shall be governed by, the law of the State of New York.

 

  SHIFT TECHNOLOGIES, INC.
     
  By:                      

 

EXHIBIT 1

(to Note Purchase Agreement)

EX-99.1 5 ea159944ex99-1_shifttech.htm PRESS RELEASE DATED MAY 12, 2022, RELEASED BY SHIFT TECHNOLOGIES, INC

Exhibit 99.1

 

Shift Closes Acquisition of Fair’s Dealer Listing Marketplace Technology

 

SAN FRANCISCO, May 12, 2022 – Shift Technologies, Inc. (Nasdaq: SFT), a leading end-to-end auto ecommerce platform transforming the used car industry with a technology-driven, hassle-free customer experience, has closed its acquisition of certain assets of Fair Financial Corp. and certain of its subsidiaries (“Fair”) and the acquisition of the equity interests of a subsidiary of Fair. Concurrently with the closing of the Fair acquisition, Shift also closed the issuance of senior unsecured notes to an affiliate of SoftBank Group Corp. (“SoftBank Group”).

 

The original press release announcing the acquisition and note issuance can be found on Shift’s investor relations website.

 

“We look forward to welcoming new members to our team and building out the marketplace, accelerating our vision of becoming the destination marketplace for car ownership,” said George Arison, Shift’s Co-founder and CEO. “As we worked toward the close, we’ve continued to ensure that this acquisition will be cash-neutral for Shift. I want to congratulate the Shift and Fair teams for their effective execution on the close.”

 

“As the supply of used cars remains highly competitive, offering consumers a wide range of options is more important than ever,” added Jeff Clementz, Shift’s President. “The dealer marketplace allows us to expand our inventory assortment, while leveraging the investments we’ve already made in our technology and brand.”

 

The marketplace pilot is expected to launch sometime in Q2.

 

Shift is advised by William Blair & Company as financial advisor and Jenner & Block LLP as legal counsel. Fair is advised by Cohen & Company Capital Markets, a division of J.V.B. Financial Group, as financial advisor and Young Conaway Stargatt and Taylor, LLP as legal counsel. SoftBank Group is advised by Morrison & Foerster LLP as legal counsel.

 

About Shift

 

Shift is a leading end-to-end auto ecommerce platform transforming the used car industry with a technology-driven, hassle-free customer experience. Shift’s mission is to make car purchase and ownership simple — to make buying or selling a used car fun, fair, and accessible to everyone. Shift provides comprehensive, digital solutions throughout the car ownership lifecycle: finding the right car, having a test drive brought to you before buying the car, a seamless digitally-driven purchase transaction including financing and vehicle protection products, an efficient, digital trade-in/sale transaction, and a vision to provide high-value support services during car ownership. For more information, visit www.shift.com. The contents of our website are not incorporated into this press release.

 

Forward-Looking Statements

 

This document includes “forward looking statements” within the meaning of the “safe harbor” provisions of the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by the use of words such as “forecast,” “intend,” “seek,” “target,” “anticipate,” “believe,” “expect,” “estimate,” “plan,” “outlook,” and “project” and other similar expressions that predict or indicate future events or trends or that are not statements of historical matters. Such forward looking statements include estimated financial information. Such forward looking statements with respect to revenues, earnings, performance, strategies, prospects and other aspects of Shift’s business are based on current expectations that are subject to risks and uncertainties. A number of factors could cause actual results or outcomes to differ materially from those indicated by such forward looking statements. These factors include, but are not limited to: (1) Shift’s ability to sustain its current rate of growth, which may be affected by, among other things, competition, Shift’s ability to grow and manage growth profitably, maintain relationships with customers and suppliers and retain its management and key employees; (2) changes in applicable laws or regulations; (3) the possibility that Shift may be adversely affected by other economic, business, and/or competitive factors; (4) the operational and financial outlook of Shift; (5) the ability for Shift to execute its growth strategy; (6) Shift’s ability to purchase sufficient quantities of vehicles at attractive prices; and (7) other risks and uncertainties indicated from time to time in other documents filed or to be filed with the SEC by Shift. You are cautioned not to place undue reliance upon any forward-looking statements, which speak only as of the date made. Shift undertakes no commitment to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by law.

 

 

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