Item 1.01 Entry Into A Material Definitive Agreement.
Business Combination Agreement
On
February 10, 2021, Atlas Crest Investment Corp., a Delaware corporation (“Atlas”), entered into a Business
Combination Agreement (as it may be amended, supplemented or otherwise modified from time to time, the “Business Combination
Agreement”), by and among Atlas, Artemis Acquisition Sub Inc., a Delaware corporation (“Artemis Merger Sub”),
and Archer Aviation Inc., a Delaware corporation (“Archer”).
The
Business Combination Agreement and the transactions contemplated thereby were approved by the boards of directors of each of Atlas
and Archer.
The Business Combination
The
Business Combination Agreement provides for, among other things, the following transactions on the date of closing of the Business
Combination (the “Closing”): (i) Atlas will amend and restate its certificate of incorporation (the “Post-Closing
Atlas Certificate of Incorporation”), pursuant to which, among other things, Atlas will have a dual class share structure
with (A) shares of Class A common stock that will carry voting rights in the form of one vote per share (the “New
Class A Common Stock”), and (B) shares of Class B common stock that will carry voting rights in the form of
ten votes per share (the “New Class B Common Stock” and, together with the New Class A Common Stock, the “New
Atlas Common Stock”), and (ii) Artemis Merger Sub will merge with and into Archer, with Archer as the surviving
company in the merger and, after giving effect to such merger, continuing as a wholly-owned subsidiary of Atlas (the “Merger”).
The
Merger and the other transactions contemplated by the Business Combination Agreement are hereinafter referred to as the “Business
Combination”.
The
Business Combination is expected to close in the second quarter of 2021, following the receipt of the required approval by Atlas’
stockholders and the fulfillment of other customary closing conditions.
Business Combination Consideration
In
accordance with the terms and subject to the conditions of the Business Combination Agreement, at the effective time of the
Merger, (i) outstanding shares of common stock and preferred stock of Archer will be converted into a right to receive a
number of shares of New Class B Common Stock determined on the basis of an implied Archer equity value of $2,525,000,000 (the
“Implied Equity Value”), (ii) all stock awards (whether vested or unvested) to purchase Archer common
stock will be converted into stock awards to purchase a number of shares of New Class B Common Stock based on an exchange
ratio derived from the Implied Equity Value, and (iii) outstanding warrants (whether vested or unvested) to purchase Archer
common stock will be converted into warrants to purchase a number of shares of New Class B Common Stock determined on the
basis of the Implied Equity Value. The former Archer equityholders will have the right to convert their shares of New Class B
Common Stock into shares of New Class A Common Stock pursuant to the Post-Closing Atlas Certificate of Incorporation.
Representations and Warranties;
Covenants
The
Business Combination Agreement contains representations, warranties and covenants of each of the parties thereto that are customary
for transactions of this type. Atlas has also agreed to take all action within its power as may be necessary or appropriate such
that, effective immediately after the Closing, the Atlas board of directors will be divided into three classes and be composed
of a total of seven directors, which directors shall include an individual designated by Atlas, three individuals designated by
Archer and three individuals to be identified by Archer in consultation with Atlas who qualify as “independent directors”
under the listing rules of the New York Stock Exchange.
Conditions to Each Party’s
Obligations
The
obligations of Atlas and Archer to consummate the Business Combination are subject to certain closing conditions, including, but
not limited to, (i) the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended, (ii) the absence of any law or governmental order or other legal restraint or prohibition preventing
the consummation of the Business Combination, (iii) the Registration Statement (as defined below) being declared effective under
the Securities Act of 1933, as amended (the “Securities Act”), (iv) the shares of New Class A Common Stock
to be issued in connection with the Business Combination having been approved for listing on the New York Stock Exchange, (v) the
approval of Atlas’ stockholders, (vi) the approval of Archer’s stockholders and (vii) Atlas having at least
$5,000,001 of net tangible assets (as determined in accordance with Rule 3a51-1(g)(1) of the Securities Exchange Act of 1934, as
amended) remaining after the Closing.
In
addition, the obligation of Archer to consummate the Business Combination is subject to, among other conditions, the aggregate
cash proceeds from Atlas’ trust account, together with the proceeds from the PIPE Financing (as defined below), equaling
no less than $600,000,000 (after deducting any amounts paid to Atlas shareholders that exercise their redemption rights in connection
with the Business Combination).
Termination
The
Business Combination Agreement may be terminated under certain circumstances prior to the Closing, including, but not limited
to, (i) by mutual written consent of Atlas and Archer, (ii) by either Atlas or Archer if the other party breaches its representations,
warranties or covenants such that the conditions set forth in the Business Combination Agreement would not be satisfied, and such
party fails to cure such breach (other than for certain limited exceptions), (iii) by either Atlas or Archer if the Business Combination
is not consummated by September 10, 2021, (iv) by either Atlas or Archer if any governmental entity issues an order or taken any
other action permanently enjoining, restraining or otherwise prohibiting the Business Combination and such order or other action
has become final and non-appealable, (v) by either Atlas or Archer if certain required approvals are not obtained from the Atlas
stockholders after the conclusion of a meeting of Atlas’ stockholders held for such purpose at which such shareholders voted
on such approvals, and (vi) by Atlas if (A) the Transaction Support Agreements are not executed and delivered to Atlas within
one business day of the signing date of the Business Combination Agreement, (B) Archer’s stockholders do not deliver,
within one business day of the Registration Statement being declared effective under the Securities Act, to Atlas a written consent
approving the Business Combination (the “Stockholder Written Consent”) or (C) Archer does not deliver,
within one business day of the Registration Statement being declared effective under the Securities Act, to Atlas a written consent
approving the conversion of all shares of preferred stock of Archer into shares of common stock of Archer immediately prior to
the Closing (the “Conversion Written Consent”).
If
the Business Combination Agreement is validly terminated, none of the parties to the Business Combination Agreement will have
any liability or any further obligation under the Business Combination Agreement, other than customary confidentiality obligations,
except in the case of Willful Breach or Fraud (each, as defined in the Business Combination Agreement).
A
copy of the Business Combination Agreement is filed with this Current Report on Form 8-K as Exhibit 2.1 and is incorporated herein
by reference, and the foregoing description of the Business Combination Agreement is qualified in its entirety by reference thereto.
The Business Combination Agreement contains representations, warranties and covenants that the respective parties made to each
other as of the date of the Business Combination Agreement or other specific dates. The assertions embodied in those representations,
warranties and covenants were made for purposes of the contract among the respective parties and are subject to important qualifications
and limitations agreed to by the parties in connection with negotiating such agreement. The representations, warranties and covenants
in the Business Combination Agreement are also modified in important part by the underlying disclosure schedules which are not
filed publicly and which are subject to a contractual standard of materiality different from that generally applicable to stockholders
and were used for the purpose of allocating risk among the parties rather than establishing matters as facts. Atlas does not believe
that these schedules contain information that is material to an investment decision.
Sponsor Letter Agreement
Concurrently with the execution of
the Business Combination Agreement, (i) Atlas, (ii) Atlas Crest Investment LLC, a Delaware limited liability company (the “Sponsor”),
(iii) Archer and (iv) Kenneth Moelis, Michael Spellacy, Taylor Rettig, Christopher Callesano, David Fox, Emanuel Pearlman, Eileen
Murray and Todd Lemkin, each of whom in this clause (iv) is a member of Atlas’ board of directors and/or management (the
“Insiders”), entered into the Sponsor Letter Agreement (the “Sponsor Letter Agreement”),
pursuant to which, among other things, the Sponsor has agreed to (i) vote in favor of the Business Combination Agreement and the
transactions contemplated thereby (including the Merger), (ii) waive any adjustment to the conversion ratio set forth in the governing
documents of Atlas or any other anti-dilution or similar protection with respect to the Atlas Class B shares (whether resulting
from the transactions contemplated by the Subscription Agreements (as defined below) or otherwise), (iii) be bound by certain
other covenants and agreements related to the Business Combination and (iv) be bound by certain transfer restrictions with respect
to its shares in Atlas prior to the closing of the Business Combination, in each case, on the terms and subject to the conditions
set forth in the Sponsor Letter Agreement. In addition, pursuant to the Sponsor Letter Agreement, the Sponsor, Atlas and the Insiders
have agreed to terminate the lock-up provisions in Section 7(a) of that certain letter agreement (the “Letter Agreement”),
dated as of October 27, 2020, by and among the Sponsor, Atlas and the Insiders, in respect of the Sponsor’s Atlas Class
B shares, which included, among other restrictions, a one year lock-up restriction on the Founder Shares (as defined in the Letter
Agreement) following an initial business combination (subject to certain exceptions) (it being understood that, following such
termination at the effective time of the Merger, the Sponsor and the Insiders shall be subject to the lock-up provisions described
in the Registration Rights Agreement (as defined below)).
A copy of the Sponsor
Letter Agreement is filed with this Current Report on Form 8-K as Exhibit 10.1 and is incorporated herein by reference, and the
foregoing description of the Sponsor Letter Agreement is qualified in its entirety by reference thereto.
PIPE Financing (Private Placement)
Concurrently
with the execution of the Business Combination Agreement, Atlas entered into subscription agreements (the “Subscription
Agreements”) with certain investors, including, among others, United Airlines, Stellantis and the venture arm of Exor,
Baron Capital Group, the Federated Hermes Kaufmann Funds, Mubadala Capital, Putnam Investments and Access Industries. Pursuant
to the Subscription Agreements, each investor agreed to subscribe for and purchase, and Atlas agreed to issue and sell to such
investors, on the Closing Date (as defined in the Business Combination Agreement) immediately following the Closing (as defined
in the Business Combination Agreement), an aggregate of 60,000,000 shares of Atlas’ Class A Common Stock for a purchase
price of $10.00 per share, for aggregate gross proceeds of $600 million (the “PIPE Financing”).
The closing of the
PIPE Financing is contingent upon, among other things, the substantially concurrent consummation of the Business Combination.
The Subscription Agreements provide that Atlas will grant the investors in the PIPE Financing certain customary registration rights.
The foregoing description
of the Subscription Agreements and the PIPE Financing is subject to and qualified in its entirety by reference to the full text
of the form of Subscription Agreement, a copy of which is attached as Exhibit 10.2 hereto and the terms of which are incorporated
herein by reference.
Transaction Support Agreements
Within one business day of the execution
of the Business Combination Agreement, certain equityholders of Archer (the “Archer Supporting Equityholders”)
are expected to enter into a transaction support agreement (collectively, the “Transaction Support Agreements”)
with Atlas. The Transaction Support Agreements provide, among other things, that the Archer Supporting Equityholders will (i)
execute and deliver the Stockholder Written Consent and the Conversion Written Consent, (ii) irrevocably appoint Atlas or any
individual designated by Atlas as the Archer Supporting Equityholder’s agent, attorney-in-fact and proxy to attend on behalf
of such Archer Supporting Equityholder at any meeting of the Archer Supporting Equityholders with respect to the Business Combination,
(iii) deliver a duly executed counterpart to the Registration Rights Agreement no later than three Business Days prior to the
Closing, (iv) in the case of all Archer Supporting Equityholders other than Brett Adcock and Adam Goldstein, agree to elect to
convert their shares of New Class B Common Stock received in the Business Combination into shares of New Class A Common Stock
pursuant to the Post-Closing Atlas Certificate of Incorporation and (v) be bound by certain other covenants and agreements related
to the Business Combination.
The foregoing description
of the Transaction Support Agreements is subject to and qualified in its entirety by reference to the full text of the form of
Transaction Support Agreement, a copy of which is included as Exhibit C to Exhibit 2.1 hereto, and the terms of which are incorporated
herein by reference.
Registration Rights Agreement
At
the closing of the Business Combination, Atlas, the Sponsor, and certain other individuals will enter into a registration rights
agreement (the “Registration Rights Agreement”) pursuant to which, among other things, the Sponsor and certain
other individuals will agree not to effect any sale or distribution of certain Atlas equity securities during the lock-up period
described therein (which includes a 180-day lock-up restriction following the Closing with respect to the shares covered thereby
(subject to certain exceptions)) and will be granted certain customary registration rights. The lock-up period described above
will not apply to any shares acquired in the PIPE Financing.
The
foregoing description of the Registration Rights Agreement is subject to and qualified in its entirety by reference to the full
text of the form of Registration Rights Agreement, a copy of which is included as Exhibit B to Exhibit 2.1 hereto,
and the terms of which are incorporated herein by reference.