Sponsor are entitled within any twelve-month period to make four written shelf takedown requests that Holley register the resale of any or all of their Common Stock on Form S-3 (or Form S-1 if Holley is ineligible to use Form S-3), so long as such demand is for at least $30,000,000 in shares of Common Stock of all stockholders participating in
such shelf takedown, or all registrable securities held by the requesting party. Subject to certain customary exceptions, if Holley proposes to file a registration statement under the Securities Act with respect to its securities, Holley will give
notice to the relevant security holders party to the A&R Registration Rights Agreement as to the proposed filing and offer such security holders an opportunity to register the resale of such number of their Common Stock as requested by such
stockholders, subject to customary cutbacks in an underwritten offering. Any other stockholders of Holley with piggyback registration rights may also participate in any such registrations, subject to customary cutbacks in an underwritten offering.
The foregoing description of the A&R Registration Rights Agreement is not complete and is qualified in its entirety by reference to the complete text
of the A&R Registration Rights Agreement, a copy of which is attached hereto as Exhibit 10.5 and is incorporated herein by reference.
Stockholders Agreement
Concurrent with the
Closing, Sponsor, the Holley Stockholder, certain affiliates of Sponsor (the Sponsor Investors), Holley and certain affiliates of the Holley Stockholder (the Sentinel Investors) entered into a Stockholders Agreement
(the Stockholders Agreement), pursuant to which the Holley Stockholder and the Sponsor have the right to designate nominees for election to Holleys board of directors subject to certain beneficial ownership requirements. The
number of nominees that Holley Stockholder, on the one hand, and the Sponsor, on the other hand, are entitled to nominate under the Stockholders Agreement is dependent on the Sentinel Investors and the Sponsor Investors,
respectively, beneficial ownership of shares of Common Stock. For so long as the Sentinel Investors beneficially own, in the aggregate, a number of shares of Common Stock equal to or greater than 43,491,429 shares, 26,634,286 shares, and 9,777,143
shares (36.9%, 22.6% and 8.3% of the number of shares of Common Stock issued and outstanding at the Closing) respectively, the Holley Stockholder has the right to nominate three, two or one director(s), respectively. For so long as the Sponsor
Investors beneficially own, in the aggregate, a number of shares of Common Stock equal to or greater than 3,050,000 shares or 1,525,000 shares (50% and 25% of the number of shares of Common Stock beneficially owned by the Sponsor Investors at the
Closing), respectively, the Sponsor has the right to nominate two or one director(s), respectively. In addition, the Holley Stockholder, on the one hand, and the Sponsor, on the other hand, have the right to designate the replacement for any of
their respective designees whose board service has terminated prior to the end of such director nominees term. The Holley Stockholder, on the one hand, and the Sponsor, on the other hand, also have the right to have their respective designees
participate on committees of the board of directors, subject to compliance with applicable law and stock exchange listing rules.
The foregoing
description of the Stockholders Agreement is not complete and is qualified in its entirety by reference to the complete text of the Stockholders Agreement, a copy of which is attached hereto as Exhibit 10.6 and is incorporated herein by
reference.
PIPE Subscription Agreements
MidOcean Partners V, LP, an affiliate of the Sponsor, entered into a PIPE Subscription Agreement with Empower on March 11, 2021 to purchase up to
1,950,000 shares of Common Stock in connection with the Business Combination for an aggregate purchase price of $19.5 million. The terms of the PIPE Subscription Agreement entered into with MidOcean Partners V, LP are the same as other PIPE
Investors. With the consent of Empower, MidOcean Partners V, LP assigned (i) 50,000 shares under its PIPE Subscription Agreement to a new PIPE Investor on March 17, 2021, (ii) 100,000 shares under its PIPE Subscription Agreement to another new
PIPE Investor on May 11, 2021, and (iii) 700,000 shares under its PIPE Subscription Agreement to certain new PIPE Investors on June 25, 2021.
The foregoing description of the PIPE Subscription Agreements is not complete and is qualified in its entirety by reference to the complete text of the form
of PIPE Subscription Agreement, a copy of which is attached hereto as Exhibit 10.2 and is incorporated herein by reference.
Incentive Plan
On April 7, 2021, Empowers board of directors approved the Holley Inc. 2021 Omnibus Incentive Plan (the Incentive
Plan). On July 14, 2021, Empowers shareholders approved the Incentive Plan at the Extraordinary Meeting (as defined below) and on July 16, 2021, the newly constituted board of directors of Holley ratified the Incentive Plan.
The purpose of the Incentive Plan is to advance the interests of Holley and its stockholders by providing an incentive program that will enable Holley to attract, retain and award employees, consultants and directors and to provide them with an
equity interest in the growth and profitability of Holley. These incentives are provided through the grant of stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares, performance units, other
stock-based awards and cash-based awards. No awards were granted under the Incentive Plan prior to its approval by the shareholders of Empower.
On July
16, 2021, concurrent with the Closing and each executives appointment as an executive officer of Holley, the board of directors of Holley approved the grant to each of Tom Tomlinson, Dominic Bardos, Vinod Nimmagadda, Sean Crawford, Terrill
Rutledge, Stephen Trussell and Jason Bruce of options to purchase 584,622, 179,711, 142,502, 124,963, 99,916, 64,080 and 58,612 shares of Common Stock (the Option Awards), respectively, under the Incentive Plan. Each Option Award will
vest in three equal installments on each of the first three anniversaries of the Closing, subject to the executives continued employment through the applicable vesting date.
In addition, certain restricted stock unit grants, and their terms and conditions, are expected to be approved and issued pursuant to the Incentive Plan upon
registration of a Form S-8, which is expected to be filed in 60 days following the Closing Date. All awards under the Incentive Plan will be granted at the discretion of the board of directors of Holley.
The foregoing descriptions of the Incentive Plan and Option Awards are not complete and are qualified in its entirety by reference to the complete text of the
Incentive Plan, a copy of which is attached hereto as Exhibit 10.7, and the form of Option Award, a copy of which is attached hereto as Exhibit 10.22, and in each case are incorporated herein by reference.
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