ASTS AST SpaceMobile Inc

 

 

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): January 16, 2024

 

 

AST SpaceMobile, Inc.

(Exact name of Registrant as Specified in Its Charter)

 

 

Delaware		001-39040		84-2027232
(State or Other Jurisdiction of Incorporation)		(Commission File Number)		(IRS Employer Identification No.)

 

Midland Intl. Air & Space Port 2901 Enterprise Lane Midland, Texas				79706
(Address of Principal Executive Offices)				(Zip Code)

 

Registrant’s Telephone Number, Including Area Code: (432) 276-3966

 

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

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

 

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Class A common stock, par value $0.0001 per share		ASTS		The Nasdaq Stock Market LLC
Warrants exercisable for one share of Class A common stock at an exercise price of $11.50		ASTSW		The Nasdaq Stock Market LLC

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 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) of the Exchange Act. ☐

 

 

 

On January 18, 2024, AST SpaceMobile, Inc. (the “Company”) announced strategic investments and commercial commitments from AT&T Venture Investments, LLC (“AT&T”), Google LLC (“Google”), and Vodafone Ventures Limited (“Vodafone, and together, the “Investors”), as well as plans for additional capital actions described further below that, if completed, would, together with the strategic partners commitments, result in up to $306.5 million in aggregate gross proceeds to the Company. The Company received commitments for a total of $155.0 million from three strategic partners, consisting of $110.0 million in subordinated convertible notes of the Company and $45.0 million of commercial payments (subject to the conditions described below). In addition, the Company plans to seek a waiver to permit the draw of up to an additional $51.5 million under its senior-secured credit facility with ACP Post Oak Credit II LLC, as administrative agent and collateral agent, and Atlas Credit Partners, LLC, as lender, and is launching a registered offering (the “Offering”) of $100.0 million Class A common stock of the Company, par value $0.0001 per share (“Class A Common Stock”). If the Company is able to draw the remaining available amount under the credit facility, the Company will receive proceeds of approximately $43.8 million after payment of fees, expenses, a required deposit into an interest reserve escrow account, and other amounts. Whether the Company is granted a waiver and the timing for any drawdown is uncertain. In addition, there is no certainty as to whether the Company will be able to complete the public offering on acceptable terms or at all or if the Company does complete the offering, what the size or price per share will be.

 

The information set forth in this Current Report on Form 8-K and the exhibits attached hereto is not an offer to sell the Company’s Class A Common Stock or any other securities of the Company and does not constitute the solicitation of an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

 

Item 1.01. Entry into a Material Definitive Agreement.

 

Convertible Security Investment Agreement

 

On January 16, 2024, the Company entered into a Convertible Security Investment Agreement (the “Investment Agreement”) with AT&T, Google and Vodafone. Pursuant to the Investment Agreement, the Investors have agreed to purchase the Company’s subordinated convertible notes for an aggregate principal amount of $110.0 million (such notes, the “Notes” and such investments, the “Investments”).

 

The Notes will bear interest at a rate of 5.50% per year, payable semi-annually in arrears on June 30 and December 30 of each year, beginning on June 30, 2024. The Company has the option to pay interest on the Notes in cash or in kind. If the Company elects to pay interest on the Notes in kind, the principal amount of the Notes will be increased by the amount of the interest payment, and interest will accrue on such increased principal amount in subsequent interest periods. The Notes will have a ten-year term unless earlier converted.

 

The holders of the Notes (the “Holders”) may convert the Notes (subject to certain exceptions) at an initial conversion rate of 173.9130 shares of Class A Common Stock per $1,000 principal amount of Notes (equivalent to an initial conversion price of $5.75 per share of Class A Common Stock, representing a 39% premium to the stock price at the time of signing). Upon conversion of the Notes, the Company will deliver shares of Class A Common Stock to the Holders. The Holders may convert their Notes at their option at any time on or after January 16, 2025. The Holders will also have the right to convert the Notes prior to January 16, 2025 in the event that the Company undergoes a fundamental change (defined to include change of control, certain mergers of the Company with another company, the sale of all or substantially all of the assets of the Company, and liquidation). The conversion rate is also subject to customary anti-dilution adjustments if certain events occur.

 

On or after January 16, 2025, the Company may require the Holders to convert the Notes (subject to certain exceptions), at an initial conversion rate of 173.9130 shares of Class A Common Stock per $1,000 principal amount of Notes (equivalent to an initial conversion price of $5.75 per share of Class A Common Stock) at its option, if the VWAP of the Class A Common Stock has been at least 130% of the conversion price then in effect for 30 consecutive trading days, on the immediately succeeding trading day after the last trading day of such 30 day period.

 

 

The Notes may be accelerated upon the occurrence of certain events of default. In the case of an event of default with respect to the Notes arising from specified events of bankruptcy or insolvency of the Company, 100% of the principal of, and accrued and unpaid interest on, the Notes will automatically become due and payable. If any other event of default with respect to the Notes occurs or is continuing (which include customary events of default, including the failure to pay principal or interest when due and the failure to comply with other covenants contained in the Investment Agreement), the Holders of at least 60% in aggregate principal amount of the then outstanding Subordinated Obligations (as defined in the Investment Agreement to include the obligations under the Notes) may declare the principal amount of the Notes to be immediately due and payable.

 

Upon the occurrence of a “fundamental change” prior to the conversion or maturity of the Notes, the Company is required to repay the Notes immediately prior to the consummation of such fundamental change in an amount equal to the aggregate principal amount of such Notes, plus any accrued and unpaid interest thereon.

 

The Investment Agreement provides for the Notes to be issued on the closing date (expected to be January 22, 2024) to the Investors in a private placement transaction exempt from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”). The offer and sale of the Notes will not be registered under the Securities Act and may not be offered or sold absent registration or an applicable exemption from registration. The Investment Agreement contains customary representations, warranties, covenants, events of default and acceleration provisions.

 

The consummation of the transactions contemplated by the Investment Agreement are subject to customary and other closing conditions. If we unable to consummate these transactions, it could have an adverse effect on our business.

 

The descriptions of the Investment Agreement and the Notes are summaries and are qualified in their entirety by reference to the complete text of the Investment Agreement, a copy of which is filed as Exhibit 10.1 hereto and is incorporated by reference, and to the Form of Note, a copy of which is filed as Exhibit B to the Investment Agreement filed as Exhibit 10.1 hereto and is incorporated herein by reference.

 

Investor and Registration Rights Agreement

 

On January 22, 2024, in connection with the closing of the Investments, each of the Investors will enter into an Investor and Registration Rights Agreement (the “Registration Rights Agreement”) with the Company.

 

Under the terms of the Registration Rights Agreement, the Company will grant the Investors certain registration rights with respect to their Registrable Securities (as defined in the Registration Rights Agreement). Among other things, the Registration Rights Agreement will require the Company to register the shares of Class A Common Stock issuable upon conversion of the Notes. The Investors will be entitled to (i) make a written demand for registration under the Securities Act of all or part of their shares of Class A Common Stock (up to a maximum of three demands) and only if the offering will include Registrable Securities with a total offering price reasonably expected to exceed, in the aggregate, $50 million, and (ii) “piggy-back” registration rights to registration statements filed in the future. The Company will bear all of the expenses incurred in connection with the filing of any such registration statement.

 

In addition, each Investor will agree to vote its Registrable Securities in accordance with the recommendation of the Company’s board of directors in the event of any change of control transaction.

 

The description of the Registration Rights Agreement is a summary and is qualified in its entirety by reference to the complete text of the form of Registration Rights Agreement, a copy of which is filed as Exhibit 10.2 hereto and is incorporated herein by reference.

 

Item 2.02 Results of Operations and Financial Condition

 

In connection with the Offering, the Company filed a prospectus supplement, dated January 18, 2024 (the “Prospectus Supplement”) with the SEC, which contains the following information regarding the Company’s results of operations or financial condition for the three and twelve months ended December 31, 2023:

 

Set forth below are the Company’s unaudited preliminary estimated results for cash and cash equivalents and restricted cash, and capitalized property and equipment costs as of December 31, 2023, and Total operating expenses and Adjusted operating expenses for the three and twelve months ended December 31, 2023 and cash and cash equivalents and restricted cash, and capitalized property and equipment costs as of December 31, 2022, and Total operating expenses and Adjusted operating expenses for the three and twelve months ended December 31, 2022.

 

 

Adjusted operating expense is an alternative financial measure used by the Company’s management to evaluate its operating performance as a supplement to its most directly comparable U.S. GAAP financial measure. The Company defines Adjusted operating expenses as Total operating expenses adjusted to exclude amounts of stock-based compensation expense and depreciation and amortization expense. The Company believes Adjusted operating expense is a useful measure across time in evaluating the Company’s operating performance as the Company uses Adjusted operating expenses to manage the business, including in preparing its annual operating budget and financial projections. Adjusted operating expenses is a non-GAAP financial measure that has no standardized meaning prescribed by GAAP, and therefore has limits in its usefulness to investors. Because of the non-standardized definition, it may not be comparable to the calculation of similar measures of other companies and is presented solely to provide investors with useful information to more fully understand how management assesses performance. This measure is not, and should not be viewed as, a substitute for its most directly comparable GAAP measure of Total operating expenses.

 

The following are the Company’s unaudited preliminary estimated results as of and for the three and twelve months ended December 31, 2023 and actual results as of and for the three and twelve months ended December 31, 2022:

 

	●	Cash and cash equivalents and restricted cash of approximately $88.1 million as of December 31, 2023 compared to $239.3 million as of December 31, 2022;
	●	Incurrence of approximately $234.1 million to $242.1 million of capitalized property and equipment costs as of December 31, 2023 as compared to $146.0 million of capitalized property and equipment costs incurred as of December 31, 2022;
	●	Preliminary Total operating expenses between $55.3 million and $61.0 million for the three months ended December 31, 2023 as compared to $42.6 million in Total operating expenses for the three months ended December 31, 2022;
	●	Preliminary Total operating expenses between $216.8 million and $222.5 million for the twelve months ended December 31, 2023 as compared to $152.9 million in Total operating expenses for the twelve months ended December 31, 2022;
	●	Preliminary Adjusted operating expenses between $34.1 million and $38.8 million for the three months ended December 31, 2023 as compared to $39.1 million in Adjusted operating expenses for the three months ended December 31, 2022; and
	●	Preliminary Adjusted operating expenses between $150.2 million and $154.9 million for the twelve months ended December 31, 2023 as compared to $138.8 million in Adjusted operated expenses for the twelve months ended December 31, 2022.

 

Set forth below is a reconciliation of preliminary Adjusted operating expenses to preliminary Total operating expenses for the three and twelve months ended December 31, 2023:

 

		Three months ended December 31, 2023								Twelve months ended December 31, 2023
(Dollars in thousands)		Low				High				Low				High
Preliminary Total operating expenses		$	55,309			$	61,009			$	216,798			$	222,498
Less: Preliminary stock-based compensation, depreciation and amortization			(21,169	)			(22,169	)			(66,641	)			(67,641	)
Preliminary Adjusted operating expenses		$	34,140			$	38,840			$	150,157			$	154,857

 

Set forth below is a reconciliation of Adjusted operating expenses to Total operating expenses for the three and twelve months ended December 31, 2022:

 

(Dollars in thousands)		Three months ended December 31, 2022				Twelve months ended December 31, 2022
Total operating expenses		$	42,607			$	152,875
Less: Stock-based compensation, depreciation and amortization			(3,549	)			(14,102	)
Adjusted operating expenses		$	39,058			$	138,773

 

The preliminary estimated financial results are management estimates and is based on information available to management as of the date of the Prospectus Supplement and is subject to completion of financial closing procedures as of and for the three and twelve months ended December 31, 2023. As a result, the actual results may vary materially from the preliminary estimated financial results included herein. These preliminary estimated financial results have been prepared by, and is the responsibility of, the Company’s management and is based on a number of assumptions. The Company’s independent registered public accountants have not audited, reviewed, compiled or performed any procedures with respect to these preliminary estimated financial results as of and for the three and twelve months ended December 31, 2023 and accordingly do not express an opinion or any other form of assurance with respect to these preliminary estimated financial results. Actual financial results will be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.

 

 

The information included in this Item 2.02 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (“Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, except as expressly set forth by specific reference in such a filing.

 

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

 

The information provided under Item 1.01 above under the caption “Convertible Security Investment Agreement” is incorporated by reference in this Item 2.03 in its entirety.

 

Item 3.02. Unregistered Sales of Equity Securities.

 

The information provided under Item 1.01 above under the caption “Convertible Security Investment Agreement” below is incorporated by reference in this Item 3.02 in its entirety. The issuance of the Notes is exempt from registration under Section 4(a)(2) of the Securities Act.

 

Item 7.01. Regulation FD Disclosure.

 

On January 18, 2024, the Company issued a press release related to the Investments and the Letter Agreements (as defined below). A copy of the press release is attached hereto as Exhibit 99.1 and incorporated by reference herein.

 

In addition, in connection with the Offering, the Company will disclose the following additional information:

 

The Company is currently assembling and testing its first five commercial BlueBird satellites (“Block 1 BB satellites”) at the Company’s facilities in Midland, Texas. The Company has a dedicated orbital launch scheduled for five Block 1 BB satellites late in the first quarter of 2024. The exact timing of this launch is contingent upon a number of factors, including satisfactory and timely completion of assembly, integrating and testing of the satellites, logistics, weather conditions, regulatory approvals, and other factors, many of which are beyond the Company’s control. The Company has flexibility under the launch services agreement to reschedule the date of this dedicated launch, subject to the launch vehicle provider’s launch schedule availability. As the Company approaches the launch window, the Company will continuously assess the optimal timing for the launch to ensure that it has satisfactorily completed all required pre-launch activities. Based on the current estimate, the Company believes the launch will occur in the second quarter of 2024.

 

The information contained in this Item 7.01 and Exhibit 99.1 are furnished and shall not be deemed to be filed for the purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities of such section, nor will such information be deemed incorporated by reference in any filing under the Securities Act, or the Exchange Act, except as may be expressly set forth by specific reference in such filing.

 

Item 8.01. Other Events.

 

Letter Agreements

 

On January 16, 2024, in connection with the Investments, each of AT&T Services, Inc. (“AT&T Services”), Google and Vodafone Group Services Limited (“Vodafone Group Services”) have entered into letter agreements with AST & Science, LLC (“AST LLC”) and the Company (the “Letter Agreements”).

 

The consummation of the transactions contemplated by such letter agreements are subject to customary and other closing conditions. If the Company is unable to consummate these transactions, it could have a material adverse effect on the Company’s business.

 

AT&T Letter Agreement

 

The letter agreement between AT&T Services, the Company and AST LLC provides, among other things, that AT&T Services will make a non-refundable $20.0 million commercial payment for prepaid service revenue, creditable against future service revenue of AST LLC, due after the launch and successful initial operation of the first five commercial satellites. AT&T Services also submitted a purchase order under a separate agreement for purchase of network equipment from AST LLC to support planned commercial service, for an undisclosed amount.

 

Under the letter agreement, the Company is required to use reasonable best efforts to cause the Stockholders’ Agreement of the Company, dated April 6, 2021 to be amended such that AT&T Services shall have the right to nominate, and the parties to such Stockholders’ Agreement agree to vote for and cause the appointment of, any representative of AT&T Services that it determines in its sole discretion to (i) serve as a non-voting observer to the Company’s board of directors or (ii) serve as a director to the Company’s board of directors.

 

 

Google Letter Agreement

 

AST LLC has entered into a letter agreement with Google whereby the parties will negotiate and execute a definitive agreement to provide, among other things, certain services to each other and have agreed to collaborate on product development, testing and implementation plans for SpaceMobile network connectivity on Android devices.

 

Vodafone Letter Agreement

 

The letter agreement between Vodafone Group Services and AST LLC provides, among other things, for an initial revenue commitment of $25.0 million to AST LLC to be paid by Vodafone Group Services over a two and a half year period to be defined in a future definitive agreement for AST LLC to provide connectivity services. Vodafone also agreed to purchase and submitted a purchase order for network equipment from AST LLC to support planned commercial service, for an undisclosed amount.

 

Update on Legal Proceedings

 

The Company received two books and records demands pursuant to 8 Del. C. § 220 from two stockholders seeking certain information relating to the de-SPAC merger to which the Company has responded. On December 27, 2023, one of those stockholders filed a putative class action lawsuit, Taylor v. Coleman, et al. (C.A. No. 2023-1292) in the Delaware court of Chancery against the Company, certain current and former directors of the Company and its predecessor entity, New Providence Acquisition Corp., and Abel Avellan (the “Delaware Class Action Litigation”). The plaintiff in the Delaware Class Action Litigation purports to represent a class of investors and alleges that the Company aided and abetted breaches of fiduciary duty by its former directors and purported former controllers, and breaches of fiduciary duty by the former directors and purported former controllers, in connection with the de-SPAC merger. The complaint seeks equitable relief and monetary damages. A schedule for the case has not yet been set and the outcome of these proceedings is uncertain.

 

Forward-Looking Statements

 

This communication contains “forward-looking statements” that are not historical facts, and involve risks and uncertainties that could cause actual results of the Company to differ materially from those expected and projected. These forward-looking statements can be identified by the use of forward-looking terminology, including the words “believes,” “estimates,” “anticipates,” “expects,” “intends,” “plans,” “may,” “will,” “would,” “potential,” “projects,” “predicts,” “continue,” or “should,” or, in each case, their negative or other variations or comparable terminology.

 

These forward-looking statements involve significant risks and uncertainties that could cause the actual results to differ materially from the expected results. Most of these factors are outside the Company’s control and are difficult to predict. Factors that may cause such differences include, but are not limited to: (i) expectations regarding the Company’s strategies and future financial performance, including the Company’s future business plans or objectives, products and services, pricing, marketing plans, operating expenses, market trends, revenues, liquidity, cash flows, uses of cash and capital expenditures; (ii) expected functionality of the SpaceMobile Service; (iii) the timing of the assembly, integration and testing as well as regulatory approvals for the launch of the Company’s Block 1 BB satellites; (iv) anticipated timing and level of deployment of satellites and anticipated developments in technology included in the Company’s satellites; (v) anticipated demand and acceptance of mobile satellite services; (vi) anticipated costs necessary to execute on the Company’s business plan, which costs are preliminary estimates and are subject to change based upon a variety of factors, including but not limited to the Company’s success in deploying and testing its constellation of satellites; (vii) anticipated timing of the Company’s needs for capital or expected incurrence of future costs; (viii) prospective performance and commercial opportunities and competitors; (ix) the Company’s ability to comply with domestic and foreign regulatory regimes and the timing of obtaining regulatory approvals; (x) the Company’s ability to continue to raise funds to finance its operating expenses, working capital and capital expenditures; (xi) commercial partnership acquisition and retention; (xii) the negotiation of definitive agreements with mobile network operators and governmental entities relating to the SpaceMobile Service that would supersede preliminary agreements and memoranda of understanding; (xiii) success in retaining or recruiting, or changes required in, officers, key employees or directors; (xiv) the Company’s expansion plans and opportunities, including the size of its addressable market; (xv) the Company’s ability to invest in growth initiatives and enter into new geographic markets; (xvi) the possibility that the Company may be adversely affected by other economic, business, and/or competitive factors; (xvii) changes in applicable laws or regulations; (xviii) the outcome of any legal proceedings that may be instituted against the Company; (xix) the Company’s ability to deal appropriately with conflicts of interest in the ordinary course of its business; and (xx) other risks and uncertainties indicated in the Company’s filings with the SEC, including those in the Risk Factors section of the Company’s Form 10-K filed with the SEC on March 31, 2023

 

 

The Company cautions that the foregoing list of factors is not exclusive. The Company cautions readers not to place undue reliance upon any forward-looking statements, which speak only as of the date made. For information identifying important factors that could cause actual results to differ materially from those anticipated in the forward-looking statements, please refer to the Risk Factors incorporated by reference into the Company’s Form 10-K filed with the SEC on March 31, 2023. The Company’s securities filings can be accessed on the EDGAR section of the SEC’s website at www.sec.gov. Except as expressly required by applicable securities law, the Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise.

 

Item 9.01 Financial Statements and Exhibits.

 

(d) Exhibits

 

Exhibit No.		Description
10.1		Convertible Security Investment Agreement, dated as of January 16, 2024, by and among AST SpaceMobile, Inc. and the parties named therein
10.2		Form of Investor and Registration Rights Agreement
99.1		Press release dated January 18, 2024
104		Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

		AST SpaceMobile, Inc.
Date:	January 18, 2024	By:	/s/ Sean R. Wallace
		Name:	Sean R. Wallace
		Title:	Chief Financial Officer

 

 

 

Exhibit 10.1

 

CONVERTIBLE Security Investment AGREEMENT

 

THIS CONVERTIBLE SECURITY INVESTMENT AGREEMENT (this “Agreement”) is made as of the 16th day of January, 2024 (the “Effective Date”), by and among AST SpaceMobile, Inc., a Delaware corporation (the “Company”), and the individuals and/or entities who become party hereto from time to time upon execution of a counterpart signature page (the “Purchaser Signature Page”) in substantially the form attached hereto as Exhibit A (each a “Purchaser” and collectively, the “Purchasers”).

 

WHEREAS, at the Closing (as defined below), the Company desires to issue and sell to one or more Purchasers convertible notes, each in substantially the form attached hereto as Exhibit B (each a “Note” and together with any other Note issued pursuant to this Agreement, and with any exchange or replacement thereof, the “Notes”), with each Note convertible, in accordance with its terms, into shares of the Company’s Class A Common Stock; and

 

WHEREAS, in connection with the issuance and sale of the Notes, the Company and the Purchasers intend to enter into the Registration Rights Agreement (as defined below), pursuant to which the Company will agree to provide certain registration rights in respect of the shares of Class A Common Stock issuable upon conversion of the Notes.

 

NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements herein contained, the parties hereby agree as follows:

 

Article I

PURCHASE, SALE AND TERMS OF NOTES

 

1. Sale and Issuance of the Notes; Schedule of Purchasers. Subject to the terms and conditions of this Agreement, at each Closing (as defined below), the Company agrees to issue and sell to each of the Purchasers, and, subject to and in reliance upon the representations, warranties, covenants, terms and conditions of this Agreement, each of the Purchasers, severally and not jointly, agrees to purchase, a Note in the principal amount set forth on the Purchaser Signature Page for such Purchaser for such Closing. The Company shall maintain and update the Schedule of Purchasers attached hereto as Exhibit C to include the names, addresses and initial principal amounts of the Notes purchased by the Purchasers at each Closing.

 

2. Closing; Delivery. The purchase and sale of the Notes shall take place remotely via the exchange of documents on January 22, 2024 or at such other time as the Company and the Purchasers purchasing the Notes at Closing shall agree (the “Initial Closing” and in the event there is more than one closing, the term “Closing” shall apply to each such closing unless otherwise specified). At each Closing, the Company shall issue and deliver to each Purchaser purchasing a Note at such Closing such Purchaser’s Note, and such Purchaser shall pay the Company the purchase price for such Purchaser’s Note equal to the principal amount set forth on the Purchaser Signature Page for such Purchaser by wire transfer of immediately available funds in accordance with the instructions of the Company. The Initial Closing will be contingent upon the simultaneous closing and funding of an aggregate amount of $110,000,000 of the Subordinated Obligations. Nothing herein shall prohibit the Company from issuing additional Notes following the Initial Closing, and in connection therewith, the Company shall update the Schedule of Purchasers attached hereto as Exhibit C. At each Closing, the Company and each Purchaser purchasing a Note as such Closing shall deliver a duly executed counterpart of the Registration Rights Agreement.

 

 

3. No Usury. This Agreement and the Notes issued pursuant to the terms of this Agreement are hereby expressly limited so that in no event whatsoever, whether by reason of deferment or advancement of loan proceeds, acceleration of maturity of the loan evidenced hereby, or otherwise, shall the amount paid or agreed to be paid to the Purchasers hereunder for the loan, use, forbearance or detention of money exceed the maximum interest rate permitted by the laws of Delaware. If at any time the performance of any provision hereof or the Notes involves a payment exceeding the limit of the price that may be validly charged for the loan, use, forbearance or detention of money under applicable Law, then automatically and retroactively, ipso facto, the agreed upon interest rate as set forth in the Notes shall be reduced to such limit, it being the specific intent of the Company and the Purchasers that all payments under this Agreement or the Notes are to be credited first to interest as permitted by law, but not in excess of (a) the agreed rate of interest set forth in the Notes, or (b) that permitted by law, whichever is the lesser, and the balance toward the reduction of principal. The provisions of this paragraph shall never be superseded or waived and shall control every other provision of this Agreement and the Notes.

 

4. Use of Proceeds. In accordance with the directions of the Company’s board of directors, the Company will use the proceeds from the sale of the Notes for working capital and other general corporate purposes. The Company and its subsidiaries will not, directly or indirectly, (i) use any part of the proceeds from the sale of the Notes, or lend, contribute or otherwise make available such proceeds to any subsidiary or joint venture partner or, knowingly to any other Person (as defined below), to fund or facilitate any dealings or transactions with, involving or for the benefit of any Sanctioned Person (as defined below), a Person located in a Sanctioned Country (as defined below), or otherwise in any manner that would constitute or give rise to a violation of any Sanctions (as defined below) or Export Controls Laws (as defined below) by any Person or (ii) use any part of the proceeds from the sale of the Notes, or lend, contribute or otherwise make available such proceeds to any subsidiary or joint venture partner or, knowingly to any other Person, to repay any existing indebtedness of the Company.

 

5. Defined Terms. In addition to any additional term defined above or below this ARTICLE I, Section 5, the following terms used in this Agreement shall be construed to have the meanings set forth or referenced below.

 

“Affiliate” means, with respect to any specified Person, any other Person who or which, directly or indirectly, controls, or is controlled by, or is under common control with such specified Person. For purposes of this definition, “control,” “controlled by” and “under common control with” 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.

 

“Atlas Credit Facility” means the senior secured term loan credit agreement by and among the Company, AST & Science, LLC, ACP Post Oak Credit II LLC and the lenders party thereto, dated as of August 14, 2023.

 

 

“Business Day” means any day other than a Saturday, a Sunday or a day on which the Federal Reserve Bank of New York is authorized or required by law or executive order to close or be closed.

 

“Class A Common Stock” means shares of the Company’s Class A common stock, par value $0.0001 per share.

 

“Class B Common Stock” means shares of the Company’s Class B common stock, par value $0.0001 per share.

 

“Class C Common Stock” means shares of the Company’s Class C common stock, par value $0.0001 per share.

 

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

 

“Common Stock” refers collectively to the Company’s Class A Common Stock, Class B Common Stock and Class C Common Stock.

 

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

 

“Event of Default” means:

 

	a)	default in any payment of interest on any Note for three (3) Business Days after such interest is due;
	b)	default in the payment of principal of any Note when due and payable on the Maturity Date (as defined in the Note), upon declaration of acceleration or otherwise;
	c)	failure of the Company to comply with its obligation to convert the Notes in accordance with this Agreement or any Note upon exercise of a Holder’s conversion right;
	d)	failure by the Company to perform, or breach by the Company of any other covenant, agreement or condition (except for any failure by the Company to perform, or breach by the Company of Article II, Section 8 or Article IV, Section 1), and such failure or breach continues for thirty (30) days after the earlier of (i) notice to the Company or (ii) the Company becoming aware of such failure or breach;
	e)	failure of the Company to issue a Fundamental Change Notice when required to do so pursuant to Section 2.4 of the Note;
	f)	the Company shall commence a voluntary case or other proceeding seeking liquidation, reorganization or other relief with respect to the Company or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect or seeking the appointment of a trustee, receiver, liquidator, custodian or other similar official of the Company or any substantial part of its property, or shall consent to any such relief or to the appointment of or taking possession by any such official in an involuntary case or other proceeding commenced against it, or shall make a general assignment for the benefit of creditors, or shall fail generally to pay its debts as they become due; or

 

 

g)

an involuntary case or other proceeding shall be commenced against the Company seeking liquidation, reorganization or other relief with respect to the Company or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect or seeking the appointment of a trustee, receiver, liquidator, custodian or other similar official of the Company or any substantial part of its property, and such involuntary case or other proceeding shall remain undismissed and unstayed for a period of sixty (60) consecutive days.

 

“Fundamental Change” shall be deemed to have occurred at the time after the Notes are originally issued if any of the following occurs prior to the Maturity Date or earlier conversion:

 

	a)	a “person” or “group” within the meaning of Section 13(d) of the Exchange Act (as defined below) other than the Company or other than Abel Avellan and his Permitted Transferees (as defined in the Company’s Amended and Restated Stockholders Agreement), files a Schedule TO (or any successor schedule, form or report) or any schedule, form or report under the Exchange Act disclosing that such person or group has become the direct or indirect “beneficial owner,” as defined in Rule 13d-3 under the Exchange Act, of the Common Stock (or such common equity into which the Common Stock has been reclassified) representing more than 50% of the voting power of the Common Stock (or such common equity into which the Common Stock has been reclassified) provided that no person or group shall be deemed to be the beneficial owner of any securities tendered pursuant to a tender or exchange offer made by or on behalf of such “person” or “group” until such tendered securities are accepted for purchase or exchange under such offer;
	b)	the consummation of (i) any share exchange, consolidation or merger of the Company pursuant to which all of the Common Stock will be converted into cash, securities of another entity or other property or assets, unless (A) the stockholders of the Company immediately prior to such transaction hold a majority of the voting securities of such entity following such share exchange, consolidation or merger or (B) a majority of the board of directors of the resulting entity were either directors of the Company prior to such share exchange, consolidation or merger, were nominated for election or elected to such board of directors with the affirmative vote of a majority of the members of the board of directors of the Company or were nominated for election or elected by the stockholders entitled to nominate or designate directors pursuant to the Company’s Stockholders Agreement; or (ii) any sale, lease or other transfer in one transaction or a series of transactions of all or substantially all of the consolidated assets of the Company and its subsidiaries, taken as a whole, to any Person; or
	c)	the stockholders of the Company approve any plan or proposal for the liquidation or dissolution of the Company.

 

 

“Fundamental Change Notice” means a written notice from the Company to all Holders, specifying:

 

	a)	the events causing the Fundamental Change;
	b)	the effective date of the Fundamental Change; and
	c)	the last date on which a Holder may exercise its conversion right prior to such Fundamental Change in accordance with Section 4.1 of its Note, as applicable.

 

“GAAP” means U.S. generally accepted accounting principles.

 

“Governmental Approvals” means all authorizations, consents, orders, approvals, filings and declarations, and all expirations of waiting periods required from, any Governmental Authority required for the consummation of the Transactions shall have been filed, occurred or been obtained, including under the HSR Act.

 

“Governmental Authority” means the government of the United States, any other nation, or any political subdivision thereof, whether state, provincial or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government (including any supra-national bodies such as the European Union or the European Central Bank).

 

“HSR Act” means the Hart-Scott-Rodino Antitrust Improvement Act of 1976.

 

“Holder” means the original Purchaser and any permitted assigns thereof.

 

“Investment Company” means a Person that is primarily engaged in the business of investing in securities and/or making loans or investments, including (i) an “investment company” within the meaning of the Investment Company Act of 1940, as amended or similar non-U.S. laws, and (ii) for the avoidance of doubt, any bank, pension fund, sovereign wealth fund, family office, venture fund, credit fund, mezzanine debt provider, export/import bank or governmental agency or quasi-governmental agency funding vehicle.

 

“Law” means any federal, state, local, foreign, national, international or supranational statute, law (including common law), act, statute, ordinance, treaty, rule, code, regulation, standard, determination, order, writ, injunction, decree, arbitration award, authorization, license, permit or other binding directive or guidance of a Governmental Authority.

 

 

“Lone Star Facility” means the loan agreement by and among the AST & Science, LLC, AST & Science Texas LLC, AST SpaceMobile Manufacturing, LLC and Lone Star State Bank of West Texas, dated as of August 14, 2023.

 

“Material Adverse Effect” means any material adverse effect on (i) the business, properties, assets, liabilities, operations or financial condition of the Company or its subsidiaries, taken as a whole, (ii) the ability of the Company to consummate the Transactions or in any other documents, agreements or instruments entered into in connection with the Transactions or (iii) the authority or ability of the Company or any of its subsidiaries to perform any of their respective obligations under the Transactions; provided that, none of the following, in and of itself or themselves, shall constitute a Material Adverse Effect:

 

	a)	changes generally affecting the economy or financial markets in the United States or other countries in which the Company or its subsidiaries conduct material operations or changes that are the result of acts of war or terrorism;
	b)	changes that are the result of factors generally affecting the industries in which the Company or its subsidiaries operate;
	c)	any loss of, or adverse change in, the relationship of the Company or its subsidiaries with its customers, employees or suppliers proximately caused by the pendency or the announcement of the transactions contemplated by this Agreement;
	d)	changes in United States generally accepted accounting principles or in any statute, rule or regulation unrelated to the Transaction and of general applicability after the date of this Agreement;
	e)	any failure by the Company to meet any estimates of revenues or earnings for any period ending on or after the date of this Agreement and prior to the Closing; and
	f)	a decline in the price of the Common Stock;

 

provided, that the exceptions in clauses (e) and (f) shall not prevent or otherwise affect a determination that any change, effect, circumstance or development underlying such decline has resulted in, or contributed to, a Material Adverse Effect; provided, further, that, with respect to clauses (a), (b) and (d), such change, event, circumstance or development may be taken into account in determining whether there has been, or would reasonably be expected to be, a Material Adverse Effect if such change, event, circumstance or development has a disproportionate adverse effect on the business, results of operations, assets or financial condition of the Company and its subsidiaries as compared to other companies of similar size operating in the industries in which the Company and its subsidiaries operate.

 

“Nasdaq” means the Nasdaq Stock Market LLC.

 

 

“Person” means an individual or legal entity, including but not limited to a corporation, a limited liability company, a partnership, a joint venture, a trust, an unincorporated organization and a government or any department or agency thereof.

 

“Preferred Stock” means shares of the Company’s preferred stock, par value $0.0001 per share.

 

“Qualified Convertible Security” refers to any security exchangeable for, redeemable for or convertible into Class A Common Stock; provided, however, that, none of the following shall constitute a Qualified Convertible Security:

 

	a)	any security issued pursuant to an agreement executed at least 12 or 24 months (as applicable) after the Initial Closing;
	b)	restricted share or restricted share units, or options to employees, officers or directors of the Company pursuant to any share or option plan duly adopted for such purpose;
	c)	any security initially issued in a primary offering registered under the Securities Act, provided that no such security was directly offered in such primary offering to a Strategic Partner or any warrants issued to a commercial party pursuant to a commercial agreement with an exercise price no less than $5.75 (as proportionately increased or decreased as necessary to reflect the proportionate change in the shares of Class A Common Stock as a result of any stock dividends, stock splits, recapitalizations, combinations, consolidations or the like);
		and
	d)	any security sold only to purchasers that are either an Investment Company or Covered Company (as defined in 17 C.F.R. Part 270.3c-5); provided, however, that:

 

	i.	no such purchaser is a Strategic Partner or an Affiliate of a Strategic Partner;
	ii.	no such purchaser beneficially owns in excess of 10% of a Strategic Partner; and
	iii.	no such purchaser is purchasing such security with a view of distribution to a Strategic Partner or any Person that beneficially owns in excess of 10% of a Strategic Partner.

 

“Registration Rights Agreement” means that certain Investor and Registration Rights Agreement, to be dated as of the date of the Initial Closing, with respect to the registration of the Class A Common Stock issuable upon conversion of the Note and certain other related matters.

 

 

“SEC” means the U.S. Securities and Exchange Commission.

 

“Securities Act” means the Securities Act of 1933, as amended.

 

“Strategic Partner” means a Person primarily in the business of telecommunications or fiberoptics.

 

“Subordinated Obligations” means all Notes issued hereunder and any additional Notes issued by the Company following the Initial Closing.

 

“Trading Day” means, with respect to the Class A Common Stock, each Monday, Tuesday, Wednesday, Thursday and Friday, other than any day on which securities are not generally traded on Nasdaq (or its successor) or such other principal securities exchange or inter-dealer quotation system on which the Class A Common Stock are then traded.

 

“Transactions” means collectively, the execution, delivery and performance by the Company of this Agreement, the Registration Rights Agreement and the Notes on each Closing.

 

“VWAP” means the per share volume-weighted average sale price of the Class A Common Stock on Nasdaq (or other national securities exchange on which the Class A Common Stock are then listed), as reported by, or based upon data reported by, Bloomberg Financial Markets or an equivalent, reliable reporting service as determined by the Company.

 

Article II

REPRESENTATIONS, WARRANTIES and covenants OF THE COMPANY

 

The Company represents and warrants to each Purchaser that the representations and warranties are true and correct as of the date hereof and, with respect to each Purchaser purchasing a Note at a Closing, as of such Closing, except as otherwise indicated:

 

1. Organization, Good Standing, Corporate Power and Qualification. The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and has all requisite corporate power and authority to carry on its business as presently conducted and to carry out the transactions contemplated by this Agreement. The Company is duly qualified to transact business and is in good standing in each jurisdiction in which the failure to so qualify would have a Material Adverse Effect, and its subsidiaries, taken as a whole, it being noted that on February 16, 2023 a petition to the Delaware Court of Chancery for relief pursuant to Section 205 of the Delaware General Corporate Law was filed, which petition was granted by the Court of Chancery on March 14, 2023. Each of the Company’s significant subsidiaries is duly organized, validly existing and in good standing (where such concept is recognized under applicable Laws) under the laws of the jurisdiction of its organization, except where the failure to be so organized, existing and in good standing would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. Each of the Company’s significant subsidiaries is duly licensed or qualified to do business and is in good standing (where such concept is recognized under applicable Law) in each jurisdiction in which the nature of the business conducted by it or the character or location of the properties and assets owned or leased by it makes such licensing or qualification necessary, except where the failure to be so licensed, qualified or in good standing would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

 

 

2. Capitalization.

 

(a) Authorized Stock. As of December 31, 2023, the authorized capital stock of the Company consisted of: 1,225,000,000 shares, consisting of (i) 800,000,000 shares of Class A Common Stock, of which 90,161,309 shares are issued and outstanding, (ii) 200,000,000 shares of Class B Common Stock, of which 50,041,757 shares are issued and outstanding, (iii) 125,000,000 shares of Class C Common Stock, of which 78,163,078 shares are issued and outstanding and (iv) 100,000,000 shares of Preferred Stock, of which no shares are issued and outstanding. The rights, privileges and preferences of the Preferred Stock are as stated in the Second Amended and Restated Certificate of Incorporation of the Company (the “Certificate of Incorporation”).

 

(b) The outstanding shares of Common Stock and Preferred Stock are all duly and validly authorized and issued, fully paid and nonassessable, and were issued in accordance with the registration or qualification provisions of the Securities Act, and any relevant state securities laws, or pursuant to valid exemptions therefrom, it being noted that on February 16, 2023 a petition to the Delaware Court of Chancery for relief pursuant to Section 205 of the Delaware General Corporate Law was filed, which petition was granted by the Court of Chancery on March 14, 2023.

 

3. Valid Issuance. The Notes have been duly authorized by all necessary corporate action of the Company. When issued and sold against receipt of the consideration therefor, the Notes will be valid and legally binding obligations of the Company, enforceable in accordance with their terms, subject to the limitation of such enforcement by the Enforceability Exceptions (as defined below). The Company has available for issuance the maximum number of shares of the Company’s Class A Common Stock initially issuable upon conversion of the Notes if such conversion were to occur immediately following the Closing. The Class A Common Stock to be issued upon conversion of the Notes in accordance with the terms of the Notes has been duly authorized, and when issued upon conversion of the Notes in accordance with the terms hereof, all such Class A Common Stock will be validly issued, fully paid and nonassessable and free of pre-emptive or similar rights.

 

4. Authorization of the Notes and Related Agreements; No Conflicts. All corporate action required to be taken by the board of directors, officers, and stockholders of the Company for the authorization, execution and delivery of this Agreement, the Notes and the Registration Rights Agreement, the performance of all obligations of the Company under this Agreement to be performed as of the Closing, and the issuance and delivery of the Notes has been taken or will be taken prior to the Closing. This Agreement and each of the Notes, when executed and delivered by the Company, shall constitute valid and legally binding obligations of the Company, enforceable against the Company in accordance with their respective terms except (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance, or other laws of general application relating to or affecting the enforcement of creditors’ rights generally or (ii) as limited by laws relating to the availability of specific performance, injunctive relief, or other equitable remedies (the “Enforceability Exceptions”). The execution and delivery by the Company of this Agreement and the performance by the Company of its obligations hereunder and the issuance, sale and delivery of the Notes, and the performance of its obligations thereunder, (a) will not violate any provision of law or any order of any court or other agency of government, the result of any of which would have a Material Adverse Effect, (b) will not violate the Certificate of Incorporation or the Bylaws of the Company, and (c) will not (i) result in violation of any provision of any contract, indenture, agreement or other instrument to which the Company or any of its properties or assets is bound or conflict with, (ii) result in a material breach of or constitute (with due notice or lapse of time or both) a default under any such contract, indenture, agreement or other instrument, or (iii) result in the creation or imposition of any lien, charge, restriction or encumbrance upon any of the properties or assets of the Company, in each case that would be material to the Company. The Company has obtained any consents, and has taken all actions, required under the Atlas Credit Facility and Lone Star Facility in connection with the execution, delivery and performance of this Agreement by the Company, including the issuance of the Notes and the Class A Common Stock issuable upon conversion of the Notes .

 

 

5. Authorization of the Class A Common Stock Issuable Upon Conversion. All corporate action required to be taken by the board of directors, officers, and stockholders of the Company for the issuance of the Class A Common Stock issuable upon conversion of the Notes has been taken or will be taken prior to any conversion of the Notes into Class A Common Stock.

 

6. Governmental Approvals for Issuance of Notes. Subject to the accuracy of the representations and warranties of the Purchasers set forth in ARTICLE III, no registration or filing with, or consent or approval of or other action by, any U.S. federal or state governmental agency or instrumentality is or will be necessary for the valid execution, delivery and performance by the Company of this Agreement or the issuance, sale and delivery of the Notes as contemplated by this Agreement, except for filings with Nasdaq and pursuant to applicable U.S. federal or state securities laws, all of which have been or will be made by the Company in a timely manner; provided, that this ARTICLE II, Section 6 does not apply to the issuance of Class A Common Stock upon conversion of the Notes.

 

7. General Solicitation; No Integration. Other than with respect to the Purchasers, neither the Company nor any other Person or entity authorized by the Company to act on its behalf has engaged in any form of 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. The Company has not, directly or indirectly, sold, offered for sale, solicited offers to buy or otherwise negotiated in respect of, any security (as defined in the Securities Act) which, to its knowledge, is or will be integrated with the Notes sold pursuant to this Agreement.

 

8. SEC Reports; Financial Statements; Liabilities; Disclosure Controls.

 

(a)

As of their respective dates, all reports and other documents required to be filed by the Company with the SEC since January 1, 2023 (collectively, the “SEC Reports”) complied in all material respects with the requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the rules and regulations of the SEC promulgated thereunder, and none of the SEC Reports, when filed, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.

 

 

	(b)	The financial statements of the Company (including all related notes or schedules) included in the SEC Reports comply in all material respects with applicable accounting requirements and the rules and regulations of the SEC with respect thereto as in effect at the time of filing and fairly present in all material respects the financial position of the Company as of and for the dates thereof and the results of operations and cash flows as at the respective dates thereof and for the respective periods indicated, subject, in the case of unaudited statements, to normal, year-end audit adjustments. A copy of each SEC Report is available to the Purchaser via the SEC’s EDGAR system. There are no outstanding or unresolved comments in comment letters received by the Company from the staff of the Division of Corporation Finance of the SEC with respect to any of the SEC Reports.
	(c)	Neither the Company nor any of its subsidiaries has any liabilities of any nature (whether accrued, absolute, asserted or unasserted, known or unknown, contingent or otherwise) that would be required under GAAP, as in effect on the date hereof, to be reflected on a consolidated balance sheet of the Company (including the notes thereto) except liabilities (i) specifically reflected or reserved against in the balance sheet (or the notes thereto) of the Company and its subsidiaries as of the date of the Company’s most recent financial statements contained in the Company’s most recently filed, prior to the date hereof, Annual Report on Form 10-K or Quarterly Report on Form 10-Q (the “Balance Sheet Date”) included in the SEC Reports, (ii) incurred after the Balance Sheet Date in the ordinary course of business, (iii) as expressly contemplated by this Agreement or otherwise incurred in connection with the transactions contemplated by this Agreement, (iv) that have been discharged or paid prior to the date of this Agreement or (v) as would not, individually or in the aggregate, reasonably be expected to be material to the Company or its subsidiaries. Neither the Company nor any of its subsidiaries is a party to, or has any commitment to become a party to, any material “off-balance sheet arrangement” within the meaning of Item 303 of Regulation S-K promulgated under the Securities Act.
	(d)	The Company has established and maintains disclosure controls and procedures and internal controls over financial reporting (as such terms are defined in paragraphs (e) and (f), respectively, of Rule 13a-15 under the Exchange Act) as required by Rules 13a-15 and 15d-15 of the Exchange Act. Such disclosure controls and procedures are designed and effective to ensure that material information required to be disclosed in the Company’s periodic reports filed or submitted under the Exchange Act is recorded and reported on a timely basis to the individuals responsible for the preparation of the Company’s filings with the SEC and other public disclosure documents. The Company is in compliance in all material respects with the applicable provisions of the Sarbanes-Oxley Act of 2002. The Company has not identified (i) any material weakness or significant deficiency in the design or operation of internal control over financial reporting which is reasonably likely to adversely affect the Company’s ability to record, process, summarize and report financial information or (ii) any fraud or allegation of fraud, whether or not material, which involves management or other employees who have a significant role in the Company’s internal control over financial reporting.

 

 

9. Compliance with Laws; Permits. The Company and each of its subsidiaries are, and its and their business and operations are, and since January 1, 2023 have been, in compliance with all Laws and judgments, applicable to the Company or any of its subsidiaries, except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. The Company and each of its subsidiaries hold and maintain all licenses, registrations, franchises, permits, certificates, approvals and authorizations from Governmental Authorities necessary for the lawful conduct of their respective businesses as currently conducted, except where the failure to hold or maintain the same would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

 

10. No Violations or Defaults. None of the Company or any of its subsidiaries are (i) in violation of its articles of incorporation or by-laws (or similar organizational documents) or (ii) in default in the performance or observance of any material obligation, agreement, covenant or condition contained in any indenture, mortgage, deed of trust, loan agreement, lease or other agreement or instrument to which it is a party or by which it or any of its properties may be bound, except where such violation or default would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

 

11. Absence of Certain Changes. Except as disclosed in the SEC Reports, since the Balance Sheet Date, there has been no Material Adverse Effect and neither the Company nor any of its subsidiaries has (i) declared or paid any dividends, (ii) sold any material assets, individually or in the aggregate, outside of the ordinary course of business, (iii) made any material capital expenditures, individually or in the aggregate, outside of the ordinary course of business, (iv) made any revaluation of any of their respective material assets other than in the ordinary course of business, (v) made changes in the capital stock (other than as a result of (a) the exercise, if any, of stock options or the award, if any, of stock options or restricted stock in the ordinary course of business pursuant to the Company’s equity plans that are described in the SEC Reports or (b) the issuance, if any, of stock upon conversion of the Company’s securities as described in the SEC Reports or upon redemption of membership interests in the Company’s subsidiaries for Common Stock of the Company pursuant to the Company’s equity plans or compensation agreements that are described in the SEC Reports), partnership interests or membership interests, or (vi) made any change in the long-term debt of the Company and its subsidiaries, other than as incurred in the ordinary course of business.

 

12. Investment Company Act. The Company is not, and immediately after receipt of payment for the Notes will not be, an “investment company” within the meaning of the Investment Company Act of 1940, as amended.

 

13. Brokers and Finders. Other than Barclays Capital Inc., UBS Securities Inc. and Stillpoint Capital LLC, the Company has not retained, utilized or been represented by, or otherwise become obligated to, any broker, placement agent, financial advisor or finder in connection with the Transactions contemplated by this Agreement whose fees the Purchaser would be required to pay.

 

 

14. Listing and Maintenance Requirements. The Company’s Class A Common Stock is registered pursuant to Section 12(b) of the Exchange Act, and the Company has taken no action, and will take no action, designed to terminate the registration of the Class A Common Stock under the Exchange Act nor has the Company received any notification that the SEC is contemplating terminating such registration. The Company is, and will use best efforts to continue to be, in compliance in all material respects with the listing and maintenance requirements for continued trading of the Class A Common Stock on Nasdaq.

 

15. Legal Proceedings. There is no material action, suit, arbitration, proceeding, inquiry or investigation before or by Nasdaq, any court, public board, other Governmental Authority, self-regulatory organization or body pending or, to the knowledge of the Company, threatened against or affecting the Company or any of its subsidiaries, the Common Stock or any of the Company’s or its subsidiaries’ officers or directors, whether of a civil or criminal nature or otherwise, in their capacities as such, except as set forth in the SEC Reports, that would reasonably be expected to have a Material Adverse Effect. Without limitation of the foregoing, there has not been, and to the knowledge of the Company, there is not pending or threatened, any inquiry or investigation by the SEC involving the Company, any of its subsidiaries or any current or former director or officer of the Company or any of its subsidiaries.

 

16. Solvency. As of each Closing, the Company is, individually and together with its subsidiaries, and after giving effect to the incurrence of all indebtedness and obligations being incurred in connection with this Agreement will be, generally able to meet their debts as they become due.

 

17. Cybersecurity. The information technology assets and equipment, computers, systems, networks, hardware, software, websites, applications, and databases used or owned by, or leased or licensed to, the Company or any of its subsidiaries (collectively, “IT Systems”) are adequate for, and operate and perform in all material respects as required in connection with the operation of the business of the Company and its subsidiaries as currently conducted, and to the Company’s knowledge, free and clear of all material bugs, errors, defects, Trojan horses, time bombs, malware and other corruptants. The Company and its subsidiaries have implemented and maintained commercially reasonable physical, technical and administrative controls, policies, procedures, and safeguards to maintain and protect their material confidential information and the integrity, continuous operation, redundancy, and security of all IT Systems used in connection with their businesses and data processed by or for Company or any of its subsidiaries (“Company Data”), including “Personal Data.” “Personal Data” means (i) a natural person’s name, street address, telephone number, e-mail address, photograph, social security number or tax identification number, driver’s license number, passport number, credit card number, bank information, or customer or account number; (ii) any information which would qualify as “personally identifying information” under the Federal Trade Commission Act, as amended; (iii) “personal data” as defined by the European Union General Data Protection Regulation or the United Kingdom General Data Protection Regulation (collectively, the “GDPR”); (iv) any information which qualifies as “protected health information” under the Health Insurance Portability and Accountability Act of 1996, as amended by the Health Information Technology for Economic and Clinical Health Act (collectively, “HIPAA”); and (v) any other information that qualifies as “personal data,” “personal information,” “personally identifiable information,” or any similar term under any applicable Privacy Law, that allows the identification of any natural person, or his or her family, or permits the collection or analysis of any data related to an identified person’s health or sexual orientation. There have been no breaches, violations, outages or instances of unauthorized access to, or use or other processing of, any Company Data, including any Personal Data, except where such breach, violation or outage would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. The Company and its subsidiaries are, and at all prior times were, in compliance in all material respects with all applicable Laws or statutes and all judgments, orders, rules and regulations of any court or arbitrator or governmental or regulatory authority, internal policies and contractual obligations relating to the privacy, data protection, and security of IT Systems and Company Data, and to the protection of such IT Systems and Company Data, from unauthorized use, access, misappropriation or modification.

 

 

18. Privacy. The Company and its subsidiaries are, and at all prior times were, in compliance in all material respects with all applicable privacy, data protection and security laws and regulations, including, as applicable, HIPAA, the GDPR and the California Consumer Privacy Act, as amended by the California Privacy Rights Act (collectively, the “Privacy Laws”), and all Policies (as defined below, and together with the Privacy Laws, the “Privacy Requirements”). To ensure compliance with the Privacy Laws, the Company and its subsidiaries have in place, comply with, and take appropriate steps reasonably designed to ensure compliance in all material respects with their policies and procedures relating to privacy, data protection, and security, and the collection, storage, use, disclosure, handling, analysis, and other processing of Personal Data (the “Policies”). The Company and its subsidiaries have at all times made all notices and disclosures required by applicable Privacy Requirements, and none of such notices or disclosures, including in any made or contained in any Policy, has, to the knowledge of the Company, been inaccurate or in violation of any applicable Privacy Requirement in any material respect. Neither the Company nor any subsidiary: (i) has received notice of any actual or potential liability under or relating to, or actual or potential violation of, any Privacy Law, and has no knowledge of any event or condition that would reasonably be expected to result in any such liability or violation; (ii) is currently conducting or paying for, in whole or in part, any investigation, remediation, or other corrective action pursuant to any Privacy Law; or (iii) is a party to any order, decree, or agreement that imposes any obligation or liability under any Privacy Law.

 

19. Foreign Corrupt Practices Act. Neither the Company nor any of its subsidiaries, nor, to the knowledge of the Company, any director, officer, agent, employee or other person acting on behalf of the Company or any of its subsidiaries, has: (i) used any corporate funds for any unlawful contribution, gift, entertainment or other unlawful expense relating to political activity; (ii) made any direct or indirect unlawful payment to any foreign or domestic government official or employee from corporate funds; (iii) violated or is in violation of any provision of the U.S. Foreign Corrupt Practices Act of 1977, applicable legislation implementing the Organization for Economic Co-operation and Development Convention on Bribery of Foreign Public Officials in International Business Transactions, and the rules and regulations thereunder or any other similar applicable foreign or domestic law or regulation; or (iv) made any illegal bribe, payoff, influence payment, kickback or other unlawful payment; except, in each case, where the failure to be in compliance would not, individually or in the aggregate, reasonably be expected to be material to the Company and its subsidiaries, taken as a whole.

 

20. Money Laundering Laws. The operations of the Company and its subsidiaries are and have been conducted at all times in compliance in all material respects with applicable money laundering laws of all jurisdictions to which the Company or its subsidiaries are subject, the rules and regulations thereunder issued, administered or enforced by any Governmental Authority (collectively, the “Money Laundering Laws”) and no action by or before any Governmental Authority involving the Company or any of its subsidiaries with respect to the Money Laundering Laws is pending or, to the knowledge of the Company, threatened, except where the failure to be in compliance would not, individually or in the aggregate, reasonably be expected to be material to the Company and its subsidiaries, taken as a whole.

 

 

21. Sanctions. None of the Company, any of its subsidiaries or any director, officer, employee or, to the knowledge of the Company and its subsidiaries, nor, to the knowledge of the Company, any agent or other person acting for or on behalf of the foregoing is the subject or target of any economic or financial sanctions imposed, administered or enforced by the United States (including the U.S. Department of the Treasury Office of Foreign Assets Control and the U.S. Department of State) or other relevant sanctions authority (collectively, “Sanctions” and each such Person, a “Sanctioned Person”) or a Person with whom transactions are prohibited or restricted under applicable export control laws and regulations including the Arms Export Control Act (22 U.S.C. Section 2778 et. Seq.), the International Traffic in Arms Regulations (ITAR (22 C.F.R. 120 Parts 120-130), the Export Administration Regulations (EAR) (15 C.F.R. Parts 730-774) and all other applicable export control laws adopted by Governmental Authorities of the United States and other countries (“Export Control Laws”). None of the Company, any of its subsidiaries or any director, officer, employee or, to the knowledge of the Company and its subsidiaries, agent or other person acting for or on behalf of the foregoing has engaged in any prohibited dealings or transactions with any Sanctioned Person or any Person located in a country or territory that is or was the subject of comprehensive, territory-wide sanctions, including currently the Crimea, Donetsk and Luhansk regions of Ukraine, Cuba, Iran, North Korea, or Syria (each, a “Sanctioned Country”). To the knowledge of the Company, the operations of the Company and its subsidiaries are, and have been conducted within the past three years, in material compliance with applicable Sanctions and Export Control Laws. The Company, any of its subsidiaries or any director, officer, employee or, to the knowledge of the Company and its subsidiaries, agent or other person acting for or on behalf of the foregoing are not now, and have not been, the subject of any actual or, to the knowledge of the Company or any of its subsidiaries, asserted or threatened charge, proceeding, investigation or inquiry with respect to potential or actual violations of any Sanctions Laws or Export Control Laws and have not made any voluntary disclosure with respect to an apparent violation of Sanctions Laws or Export Control Laws to any Governmental Authority or been subject to civil or criminal penalties imposed by any Governmental Authority administering Sanctions Laws or Export Control Laws.

 

22. Real Property. Each of the Company and its subsidiaries have (i) good and marketable title in fee simple to all real property owned by them and (ii) good and marketable title to all personal property owned by them that is material to the respective businesses of the Company and its subsidiaries, and, in each case, such properties are free and clear of all liens, encumbrances and defects, except as described in the SEC Reports or where such liens, encumbrances and defects do not materially affect the value of such property and do not materially interfere with the use made and proposed to be made of such property by the Company and its subsidiaries. Each of the Company and its subsidiaries have valid, subsisting and enforceable leases or subleases to all real property and buildings held under lease by them, with such limitations on the Company and its subsidiaries as are not material and do not materially interfere with the use made and proposed to be made of such leased real property by the Company and its subsidiaries.

 

 

Article III

REPRESENTATIONS AND WARRANTIES OF PURCHASERS

 

At each Closing, each Purchaser purchasing a Note at such Closing, severally and not jointly, represents and warrants to the Company that:

 

1. Authority. If such Purchaser is an entity, such Purchaser has full power and authority to enter into and perform this Agreement in accordance with its terms. This Agreement has been duly executed and delivered by the Purchaser and constitutes the legal, valid and binding obligation of such Purchaser, enforceable in accordance with its terms subject to the Enforceability Exceptions.

 

2. Consents and Approvals for the Notes Issuance. No consent, approval, order or authorization of, or registration, declaration or filing with, or exemption or review by, any Governmental Authority is required on the part of the Purchaser in connection with the execution, delivery and performance by the Purchaser of this Agreement and the consummation by the Purchaser of the Transactions to which it is a party, except any consent, approval, order, authorization, registration, declaration, filing, exemption or review the failure of which to be obtained or made, individually or in the aggregate, would not reasonably be expected to adversely affect or delay the consummation of the Transactions.

 

3. Suitability.

 

	(a)	The Purchaser is either (i) a qualified institutional buyer as defined in Rule 144A promulgated under the Securities Act or (ii) an institution that is an institutional accredited investor (as defined in Rule 501 promulgated under the Securities Act) and is aware that the sale of the Note is being made in reliance on a private placement exemption from registration under the Securities Act. The Purchaser is acquiring the Note (and any shares of Class A Common Stock issuable upon conversion of the Note) for its own account, and not with a view toward, or for sale in connection with, any distribution thereof in violation of any federal or state securities or “blue sky” law, or with any present intention of distributing or selling the Note (or any shares of Class A Common Stock issuable upon conversion of the Note) in violation of the Securities Act.
	(b)	The Purchaser acknowledges that it is aware that there are substantial risks incident to the purchase and ownership of the Notes (and any shares of Class A Common Stock issuable upon conversion of the Note) and has sufficient knowledge and experience in financial and business matters so as to be capable of evaluating the merits and risks of its investment in the Note (and any shares of Class A Common Stock issuable upon conversion of the Note) and is able at this time and in the foreseeable future to bear the economic risks of such investment, including the risk of total loss of the Purchaser’s investment in the Company. The Purchaser acknowledges specifically that a possibility of total loss exists. The Purchaser has sought such accounting, legal and tax advice as the Purchaser has considered necessary to make an informed investment decision. The Purchaser represents and acknowledges that the Purchaser has adequately analyzed and fully considered the risks of an investment in the Notes (and any shares of Class A Common Stock issuable upon conversion of the Note) and determined that the Notes (and any shares of Class A Common Stock issuable upon conversion of the Note) are a suitable investment for the Purchaser. The Purchaser has been provided a reasonable opportunity to undertake and has undertaken such investigation and has been provided with and has evaluated such documents and information as it has deemed necessary to enable it to make an informed and intelligent decision with respect to the execution, delivery and performance of this Agreement. The Purchaser understands and agrees that no federal or state agency has passed upon or endorsed the merits of the offering of the Notes (and any shares of Class A Common Stock issuable upon conversion of the Note) or made any findings or determination as to the fairness of an investment in the Notes (and any shares of Class A Common Stock issuable upon conversion of the Note).

 

 

4. Unregistered Securities; Legend. Such Purchaser understands that the shares of Class A Common Stock issuable upon conversion of the Notes have not been registered under the Securities Act or any state securities law, by reason of their issuance in a transaction exempt from the registration requirements of the Securities Act and such laws, that the shares of Class A Common Stock issuable upon conversion of the Notes must be held indefinitely unless they are subsequently registered under the Securities Act and such laws or a subsequent disposition thereof is exempt from registration, that the shares of Class A Common Stock issuable upon conversion of the Notes shall bear a legend to such effect, and that appropriate transfer instructions may be issued. Such Purchaser further understands that such exemption depends upon, among other things, the bona fide nature of such Purchaser’s investment intent expressed herein.

 

5. No General Solicitation. Neither the Purchaser, nor any of its officers, directors, employees, agents, stockholders or partners has either directly or indirectly, including through a broker or finder (i) engaged in any general solicitation or (ii) published any advertisements in connection with the offer and sale of the Notes.

 

6. Brokers and Finders. The Purchaser has not retained, utilized or been represented by, or otherwise become obligated to, any broker, placement agent, financial advisor or finder in connection with the Transactions contemplated by this Agreement.

 

7. Foreign Purchasers. If the Purchaser is not a United States person (as defined by Section 7701(a)(30) of the Code), the Purchaser represents that it has satisfied itself as to the full observance of the laws of its jurisdiction in connection this Agreement, including (i) the legal requirements within its jurisdiction for the purchase of the Note and the shares of Class A Common Stock issuable upon conversion of the Note, (ii) any foreign exchange restrictions applicable to such purchase, (iii) any governmental or other consents that may need to be obtained, and (iv) the income tax and other tax consequences, if any, that may be relevant to the purchase, holding, redemption, sale, or transfer of the Note and the shares of Class A Common Stock issuable upon conversion of the Note. Such Purchaser’s subscription and payment for and continued beneficial ownership of the Note and the shares of Class A Common Stock issuable upon conversion of the Note will not violate any applicable securities or other laws of such Purchaser’s jurisdiction.

 

 

8. Compliance with Office of Foreign Assets Control. The Purchaser represents and warrants that the Purchaser is not (i) a person or entity named on the List of Specially Designated Nationals and Blocked Persons administered by the U.S. Treasury Department’s Office of Foreign Assets Control (“OFAC”) or in any Executive Order issued by the President of the United States and administered by OFAC (“OFAC List”), or a person or entity prohibited by any OFAC sanctions program, (ii) a Designated National as defined in the Cuban Assets Control Regulations, 31 C.F.R. Part 515 or (iii) a non-U.S. shell bank or providing banking services indirectly to a non-U.S. shell bank (collectively, a “Prohibited Investor”). The Purchaser agrees to provide law enforcement agencies, if requested thereby, such records as required by applicable Law, provided that the Purchaser is permitted to do so under applicable Law. Purchaser represents that if it is a financial institution subject to the Bank Secrecy Act (31 U.S.C. Section 5311 et seq.), as amended by the USA PATRIOT Act of 2001, and its implementing regulations (collectively, the “BSA/PATRIOT Act”), that the Purchaser maintains policies and procedures reasonably designed to comply with applicable obligations under the BSA/PATRIOT Act. The Purchaser also represents that, to the extent required, it maintains policies and procedures reasonably designed for the screening of its investors against the OFAC sanctions programs, including the OFAC List. The Purchaser further represents and warrants that, to the extent required, it maintains policies and procedures reasonably designed to ensure that the funds held by the Purchaser and used to purchase the Notes were legally derived.

 

9. Employee Benefit Plans. If the Purchaser is an employee benefit plan that is subject to Title I of ERISA, a plan, an individual retirement account or other arrangement that is subject to section 4975 of the Code or an employee benefit plan that is a governmental plan (as defined in section 3(32) of ERISA), a church plan (as defined in section 3(33) of ERISA), a non-U.S. plan (as described in section 4(b)(4) of ERISA) or other plan that is not subject to the foregoing but may be subject to provisions under any other federal, state, local, non-U.S. or other laws or regulations that are similar to such provisions of ERISA or the Code, or an entity whose underlying assets are considered to include “plan assets” of any such plan, account or arrangement (each, a “Plan”) subject to the fiduciary or prohibited transaction provisions of ERISA or section 4975 of the Code, the Purchaser represents and warrants that neither the Company or any of its respective Affiliates (the “Transaction Parties”) have acted as the Plan’s fiduciary, or have been relied on for advice, with respect to its decision to acquire and hold the Notes, and none of the Transaction Parties shall at any time be relied upon as the Plan’s fiduciary with respect to any decision to acquire, continue to hold or transfer the Notes.

 

10. Group Membership. Except as expressly disclosed in a Schedule 13D or Schedule 13G (or amendments thereto) filed by such Purchaser with the SEC with respect to the beneficial ownership of the Company’s Common Stock prior to the date hereof, the Purchaser is not currently (and at all times through Closing will refrain from being or becoming) a member of a “group” (within the meaning of Section 13(d)(3) or Section 14(d)(2) of the Exchange Act), including any group acting for the purpose of acquiring, holding or disposing of equity securities of the Company (within the meaning of Rule 13d-5(b)(1) under the Exchange Act).

 

 

11. Committee on Foreign Investment in the United States. The Purchaser will not acquire a substantial interest (as defined in 31 C.F.R. Part 800.244) in the Company as a result of the purchase and sale of the Notes hereunder such that a Declaration or Joint Voluntary Notice to the Committee on Foreign Investment in the United States would become mandatory under 31 C.F.R. Part 800. The Purchaser will not have or otherwise obtain control (as defined in 31 C.F.R. Part 800.208) over the Company from and after the Closing as a result of the purchase and sale of the Notes hereunder.

 

Article IV

ADDITIONAL COVENANTS AND RIGHTS

 

1. Information Rights. The Company shall deliver or make available (for clarity, information publicly available on the SEC’s website shall be deemed to have been made available) to the Purchasers:

 

	(a)	No later than the earlier of (i) 135 days following the end of each fiscal year or (ii) the date on which such statements are required to be provided by the Company to one or more of its lenders pursuant to any credit agreement or other similar arrangement, audited consolidated financial statements of the Company for such fiscal year (including balance sheet, statement of operations and comprehensive income, statement of changes in capital (deficit) and statement of cash flows), consisting of statements of (i) the consolidated financial condition of the Company as of the end of such fiscal year and (ii) income and cash flows for such fiscal year, prepared in accordance with GAAP by a nationally-recognized audit firm;
	(b)	No later than ninety (90) days following the end of each fiscal quarter, unaudited quarterly financial statements of the Company (including balance sheet, statement of operations and comprehensive income and statement of changes in capital (deficit)), prepared in accordance with GAAP;
	(c)	Any information any such Purchaser may reasonably require for tax reporting and the preparation of tax returns; and
	(d)	Any other information reasonably necessary for any such Purchaser to prepare any filings or fulfill other required reporting obligations as may be required by the disclosure requirements of the SEC or pursuant to the Exchange Act or the rules and regulations promulgated thereunder.

 

2. Limitations on Public Disclosure. The Purchaser and the Company shall, and shall cause their Affiliates to, consult with each other before issuing, and give each other the opportunity to review and comment upon, any press release or other public statements with respect to the Transactions, and shall not issue any such press release or make any such public statement without the consent of the other party, which shall not be unreasonably withheld, conditioned or delayed, except as such press release or announcement that the Purchaser or the Company determines, after consultation with outside legal counsel, is required by applicable Law, judgment, court process or the rules and regulations of any national securities exchange or national securities quotation system, in which case the party required to make the press release or announcement shall, if reasonably practicable, consult with the other party about, and allow the other party reasonable time (taking into account the circumstances) to comment on, such press release or announcement in advance of such issuance, and the party required to make the press release or announcement will consider such comments in good faith.

 

3. Reservation of Class A Common Stock. The Company shall reserve and keep available at all times, free of preemptive or similar rights, a number of shares of Class A Common Stock equal to the maximum number of Class A Common Stock issuable upon conversion of the Notes at any time for purposes of satisfying conversions of the Notes.

 

 

Article V

MISCELLANEOUS

 

1. No Waiver; Cumulative Remedies. No failure or delay on the part of any party to this Agreement in exercising any right, power or remedy hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any such right, power or remedy preclude any other or further exercise thereof or the exercise of any other right, power or remedy hereunder. The remedies herein provided are cumulative and not exclusive of any remedies provided by law.

 

2. Amendments, Waivers and Consents. Any provision in this Agreement to the contrary notwithstanding, changes in or additions to this Agreement or the Notes may be made, and compliance with any covenant or provision herein or therein set forth may be omitted or waived, if the Company obtains consent thereto in writing from the Holders of at least 60% of the aggregate principal amount of the Subordinated Obligations outstanding at such time (it being understood that any Subordinated Obligations that have been converted or exchanged into shares of Class A Common Stock shall not be outstanding for purposes of determining the amount of Subordinated Obligations outstanding) (the “Requisite Holders”); provided, however, that (i) no such change, addition, omission or waiver shall reduce the principal or interest rate on any Subordinated Obligations, without the consent of each Subordinated Creditor (as defined in the Note) affected thereby and (ii) no amendment shall be effective against a Subordinated Creditor which materially and adversely affects such Subordinated Creditor’s rights under this Agreement or under any Subordinated Obligations in a manner that is adverse to and materially different from the effect on other Subordinated Creditors, without such Subordinated Creditor’s written consent. In the event the Company offers payments or other incentives to Holders in connection with the Company seeking the approval of the Requisite Holders under this ARTICLE V, Section 2, the Company must offer such payment or other incentives to all Holders.

 

3. Addresses for Notices, etc. All notices and other communications given or made pursuant to this Agreement shall be in writing and shall be conclusively deemed effectively given upon the earlier of actual receipt or: (i) personal delivery to the party to be notified, (ii) when sent, if sent by electronic mail during normal business hours of the recipient, and if not sent during normal business hours, then on the recipient’s next Business Day, (iii) five (5) days after having been sent by registered or certified mail, return receipt requested, postage prepaid, or (iv) one (1) Business Day after deposit with a nationally recognized overnight courier, freight prepaid, specifying next Business Day delivery, with written verification of receipt. All communications shall be sent to the respective parties at their address as set forth on their signature pages, or to such e-mail address or address as subsequently modified by written notice given in accordance with this ARTICLE V, Section 3. If notice is given to the Company, a copy shall also be sent to Sullivan & Cromwell LLP, 125 Broad Street, New York, NY 10004, Attn: Jared Fishman; which copy shall not constitute notice.

 

 

4. Binding Effect; Assignment. No Purchaser may assign its rights hereunder, by operation of law of otherwise, except to an Affiliate, without the prior written consent of the Company, which consent may not be unreasonably withheld. Such assignee shall be deemed a “Purchaser” for purposes of this Agreement; provided that such assignment of rights shall be contingent upon the assignor and assignee providing a written instrument to the Company notifying the Company of such assignment and the assignor agreeing in writing to be bound by the terms of this Agreement. Nothing in this Agreement, express or implied, is intended to confer upon any party other than the parties hereto or their respective successors and permitted assignees any rights, remedies, obligations or liabilities under or by reason of this Agreement, except as expressly provided herein.

 

5. Survival of Representations and Warranties. All representations and warranties made in this Agreement, the Notes or any other instrument or document delivered in connection herewith or therewith, shall survive the execution and delivery hereof or thereof.

 

6. Entire Agreement. This Agreement and the Registration Rights Agreement (including any Schedules and Exhibits hereto) constitute the full and entire understanding and agreement among the parties with respect to the subject matter hereof, and any other written or oral agreement relating to the subject matter hereof existing between the parties is expressly canceled.

 

7. Severability. In case any one or more of the provisions contained in this Agreement is for any reason held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality, or unenforceability shall not affect any other provision of this Agreement, and such invalid, illegal, or unenforceable provision shall be reformed and construed so that it will be valid, legal, and enforceable to the maximum extent permitted by law.

 

8. Most Favored Nations.

 

(a)

If, within 12 months of the Initial Closing, the Company enters into any other agreement or instrument for Qualified Convertible Securities that contains economic or financial terms (howsoever designated) that are more favorable to the lender or holder of such security than those contained in this Agreement or the Note, the Company agrees that such economic or financial terms shall automatically be deemed to apply equally to this Agreement and the Note and agreements of the Company hereunder and under the Note, and shall be deemed to be incorporated into this Agreement and the Note mutatis mutandis, as if each reference therein to the other lender or holder were a reference to the Purchasers, and as if each reference therein to the relevant agreement or instrument for Qualified Convertible Securities were a reference to this Agreement and the Note. Promptly upon any request by the Purchasers therefor, the Company will execute and deliver such amendments to this Agreement and the Note, make such registrations and do such further acts as the Purchasers may reasonably request to reflect the inclusion of such more favorable economic or financial terms in this Agreement and the Note.

 

 

(b)

If, within 24 months of the Initial Closing, the Company enters into any other agreement or instrument for Qualified Convertible Securities which is senior in priority to the Notes, that benefits from any guaranty, security or other credit support, or that contains covenants, undertakings or events of default (howsoever designated) that are more favorable to the lender or holder of such security than those contained in this Agreement or the Note, the Company agrees that such priority ranking, guaranty, security, credit support, covenant, undertaking or event of default shall automatically be deemed to apply equally to this Agreement and the Note and agreements of the Company hereunder and under the Note, and shall be deemed to be incorporated into this Agreement and the Note mutatis mutandis, as if each reference therein to the other lender or holder were a reference to the Purchasers, and as if each reference therein to the relevant agreement or instrument for Qualified Convertible Securities were a reference to this Agreement and the Note. Promptly upon any request by the Purchasers therefor, the Company will execute and deliver such amendments to this Agreement and the Note, make such registrations and do such further acts as the Purchasers may reasonably request to reflect the inclusion of such more favorable guaranty, security, credit support, covenants, undertakings and events of default in this Agreement and the Note.

 

9. Governing Law. This Agreement and the obligations of the Company hereunder shall be governed by and interpreted and determined in accordance with, the laws of the General Corporation Law of the State of Delaware as to matters within the scope thereof, and as to all other matters shall be governed by, and construed in accordance with, the internal laws of the State of Delaware (excluding the laws and rules of law applicable to conflicts or choice of law).

 

10. Counterparts. This Agreement may be executed in two (2) or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Counterparts may be delivered via electronic mail (including pdf or any electronic signature complying with the U.S. federal ESIGN Act of 2000, e.g., www.docusign.com) or other transmission method and any counterpart so delivered shall be deemed to have been duly and validly delivered and be valid and effective for all purposes.

 

11. Further Assurances. From and after the date of this Agreement, upon the request of the Purchasers or the Company, the Company and the Purchasers shall execute and deliver such instruments, documents or other writings as may be reasonably necessary or desirable to confirm and carry out and to effectuate fully the intent and purposes of this Agreement.

 

12. Exculpation Among Purchasers. Each Purchaser acknowledges that it is not relying upon any Person, other than the Company and its officers and directors in their capacities as such, in making its investment or decision to invest in the Company. Each Purchaser agrees that no other Purchaser nor the respective controlling persons, officers, directors, partners, agents, stockholders or employees of any other Purchaser shall be liable for any action heretofore or hereafter taken or omitted to be taken by any of them in connection with the purchase and sale of the Notes.

 

[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

 

 

IN WITNESS WHEREOF, the parties hereto have executed this Convertible Security Investment Agreement on the day, month and year first above written.

 

COMPANY:

 

AST SPACEMOBILE, INC.
By:	/s/ Sean Wallace
Name:	Sean Wallace
Title:	Chief Financial Officer

 

Place of Execution: New York, New York

 

Address for Notice:

 

Midland Intl. Air & Space Port

2901 Enterprise Lane

Midland, Texas 79706

 

[Signature Page to Convertible Security Investment Agreement]

 

 

Purchaser Signature Page

 

By executing this page in the space provided, the undersigned investor hereby agrees (i) that it is a “Purchaser” as defined in the Convertible Security Investment Agreement, dated as of January 16, 2024, by and among AST SpaceMobile, Inc., a Delaware corporation and the Purchasers party thereto (the “Purchase Agreement”), (ii) that it is a party to the Purchase Agreement for all purposes, (iii) that it is bound by all terms and conditions of the Purchase Agreement, and (iv) that it is subscribing for a Note in the aggregate principal amount set forth below.

PURCHASER:

 

AT&T Venture Investments, LLC
By:	/s/ Robert LaGrone
Name:	Robert LaGrone
Title:	SVP, Corporate Development

 

Address for Notice:

 

208 S. Akard St.

Dallas, TX 75202

 

[Signature Page to Convertible Security Investment Agreement]

 

 

Purchaser Signature Page

 

By executing this page in the space provided, the undersigned investor hereby agrees (i) that it is a “Purchaser” as defined in the Convertible Security Investment Agreement, dated as of January 16, 2024, by and among AST SpaceMobile, Inc., a Delaware corporation and the Purchasers party thereto (the “Purchase Agreement”), (ii) that it is a party to the Purchase Agreement for all purposes, (iii) that it is bound by all terms and conditions of the Purchase Agreement, and (iv) that it is subscribing for a Note in the aggregate principal amount set forth below.

 

PURCHASER:

 

VODAFONE VENTURES LIMITED
By:	/s/ Edward Verner
Name:	Edward Verner
Title:	M&A Executive

 

Place of Execution: London, UK

 

Address for Notice:

 

1 Kingdom Street,

Vodafone Ventures

Limited,

One Kingdom Street,

Paddington, London,

W2 6BY

 

[Signature Page to Convertible Security Investment Agreement]

 

 

Purchaser Signature Page

 

By executing this page in the space provided, the undersigned investor hereby agrees (i) that it is a “Purchaser” as defined in the Convertible Security Investment Agreement, dated as of January 16, 2024, by and among AST SpaceMobile, Inc., a Delaware corporation and the Purchasers party thereto (the “Purchase Agreement”), (ii) that it is a party to the Purchase Agreement for all purposes, (iii) that it is bound by all terms and conditions of the Purchase Agreement, and (iv) that it is subscribing for a Note in the aggregate principal amount set forth below.

PURCHASER:

 

GOOGLE LLC
By:	/s/ Sanjay Kapoor
Name:	Sanjay Kapoor
Title:	Vice President, Corporate Development

 

Place of Execution: Mountain View, CA

 

Address for Notice:

 

1600 Amphitheatre Parkway

Mountain View, CA 94043

 

[Signature Page to Convertible Security Investment Agreement]

 

 

Exhibit B

 

Form of Note

 

THIS NOTE, AND THE SECURITIES ISSUABLE UPON CONVERSION OF THIS NOTE, HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR THE APPLICABLE SECURITIES LAWS OF ANY STATE, AND MAY NOT BE PLEDGED, SOLD, ASSIGNED OR OTHERWISE TRANSFERRED EXCEPT AS PERMITTED UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION UNDER SUCH LAWS OR AN EXEMPTION FROM SUCH REGISTRATION REQUIREMENT. INVESTORS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME. THE ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL, IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER, TO THE EFFECT THAT SUCH PLEDGE, SALE, ASSIGNMENT OR TRANSFER IS EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND ALL APPLICABLE STATE SECURITIES LAWS.

 

FOR PURPOSES OF SECTIONS 1272, 1273 AND 1275 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED, THIS NOTE IS BEING ISSUED WITH ORIGINAL ISSUE DISCOUNT. THE COMPANY AGREES TO PROVIDE PROMPTLY TO THE HOLDER OF THIS NOTE, UPON WRITTEN REQUEST, THE ISSUE PRICE, AMOUNT OF ORIGINAL ISSUE DISCOUNT, ISSUE DATE, AND YIELD TO MATURITY. ANY SUCH WRITTEN REQUEST SHOULD BE MADE PURSUANT TO SECTION 11.

 

No. [●]

 

AST SPACEMOBILE, INC.

 

Convertible Note

 

$[●]

[●, 2024]

 

For value received, AST SpaceMobile, Inc. (the “Company”), hereby promises to pay to the order of [●] (hereinafter together with his, her or its successors in title and assigns referred to as the “Holder”), on demand by the Requisite Holders on or after [●, 2034] (the “Maturity Date”), the original principal sum of $[●], as may be increased pursuance to the payment of PIK Interest (as defined below) pursuant to Section 1.1, together with accrued and unpaid interest thereon as set forth below (the “Amount Due”), unless earlier repaid or converted pursuant to the terms and conditions set forth below.

 

This Convertible Note (this “Note”) is one in a series of convertible notes (collectively, the “Notes”) issued by the Company pursuant to that certain Convertible Security Investment Agreement, dated as of [●, 2024], by and among the Company and the parties thereto (the “Purchase Agreement”). Capitalized terms used but not defined herein shall have the meanings ascribed to them in the Purchase Agreement.

 

 

1. Interest.

 

1.1 During the term of this Note, interest shall accrue on the Amount Due at an annual interest rate of five and a half percent (5.50%) (“Interest”), commencing on the Initial Closing, payable semi-annually on each June 30 and December 30, commencing June 30, 2024 (each, an “Interest Payment Due Date”). Interest shall be payable semi-annually in arrears on each Interest Payment Due Date, at the Company’s option, either (i) in cash or (ii) by increasing the principal amount of this Note by the amount of such interest (with such increased amount thereafter accruing Interest as well) on each Interest Payment Due Date (“PIK Interest”). In the event that the Company elects to pay PIK Interest on this Note pursuant to this Section 1.1, the schedule attached hereto as Annex A shall be annotated accordingly to reflect such increase to the principal amount on account of such payment of PIK Interest and the Company shall pay interest on subsequent Interest Payment Due Dates on the basis of such increased principal amount.

 

1.2 If the Company intends to pay cash with respect to the interest due on any Interest Payment Due Date in accordance with Section 1.1, the Company shall deliver a written notice of such election (a “Cash Interest Election”) to the Holder on or before the third (3^rd) calendar day immediately prior to the applicable Interest Payment Due Date.

 

1.3 If the Company has not delivered a Cash Interest Election with respect to an Interest Payment Due Date on or before the third (3^rd) calendar day immediately prior to the applicable Interest Payment Due Date, the principal amount of this Note will be increased by the amount of interest payable on such Interest Payment Due Date, and the Company shall make a record on its books of such increase to reflect such PIK Interest.

 

1.4 Interest hereunder will be paid to the Holder as provided in Section 2.1. All interest will be computed on the basis of a 360-day year of twelve (12) 30-day months and, for partial months, on the basis of the number of days actually elapsed in a 30-day month.

 

2. Amount Due.

 

2.1 Payments. Payment of principal and interest (if required) shall be made in immediately available funds in lawful currency of the United States of America at the offices of the Holder or at such other place as the Holder hereof shall have designated to the Company in writing. Payment shall be credited first to any costs, expenses or charges then payable to the Holder, then to accrued interest then due and payable, and then to principal.

 

2.2 Notes Pari Passu. Each of the Notes shall rank equally without preference or priority of any kind over one another, and all payments and recoveries payable on account of principal and interest on the Notes shall be paid and applied ratably and proportionately on the Amount Due on all outstanding Notes on the basis of their original principal amount.

 

2.3 Prepayment. Subject to Section 2.4, this Note may not be prepaid without the written consent of the Requisite Holders. Any such approved prepayment must be made in accordance with Section 2.2 above.

 

2.4 Fundamental Change. In the event of a Fundamental Change, the Note shall be due and payable immediately prior to the consummation or occurrence, as applicable, in an amount equal to (i) the aggregate principal amount outstanding on the Note, plus (ii) all accrued and unpaid interest thereon. The Company shall deliver to all Holders on or before the tenth (10th) Business Day prior to the consummation of such Fundamental Change a Fundamental Change Notice. No failure of the Company to give the foregoing notice and no defect therein shall limit the Company’s obligation to repay the Note or affect the Holders’ right to convert its Note, as applicable, in accordance with this Section 2.4. If a Fundamental Change event occurs at any time within the twelve (12) months following the Initial Closing, the Holder shall have the right, at the Holder’s option, to convert, in whole or in part, the principal outstanding under this Note, together with all accrued but unpaid interest thereon, pursuant to the conversion mechanics set forth in Section 4.1 notwithstanding the fact that such conversion would occur during the twelve (12) month period following the Initial Closing; it being understood that such conversion shall be permissible solely to the extent all Governmental Approvals, if applicable to the Holder, shall have been obtained and effective as of the date such Notes are converted.

 

 

3. Event of Default. If one or more Events of Default shall have occurred and be continuing (whatever the reason for such Event of Default and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body), then, and in each and every such case (other than an Event of Default specified in clause f) or g) of “Event of Default” under ARTICLE I, Section 5 of the Purchase Agreement with respect to the Company), unless the principal of all of the Subordinated Obligations (as defined below) shall have already become due and payable, the Requisite Holders by notice in writing to the Company may declare 100% of the principal of, and accrued and unpaid interest on, all the Subordinated Obligations to be due and payable immediately, and upon any such declaration the same shall become and shall automatically be immediately due and payable, anything in the Subordinated Obligations contained to the contrary notwithstanding. If an Event of Default specified in clauses f) or g) of “Event of Default” under ARTICLE I, Section 5 of the Purchase Agreement with respect to the Company occurs and is continuing, 100% of the principal of, and accrued and unpaid interest, if any, on, all Subordinated Obligations shall automatically be immediately due and payable without any declaration or other act on the part of any Holder.

 

4. Conversion.

 

4.1 Optional Conversion by the Holders. Subject to (i) Section 2.4 and (ii) Section 4.5, at any time after twelve (12) months following the Initial Closing, the Holder shall have the right, at the Holder’s option, to convert, in whole or in part, the principal outstanding under this Note, together with all accrued but unpaid interest thereon (such portion of the principal outstanding elected to be converted, together with all accrued but unpaid interest thereon, the “Converted Outstanding Balance”), into that number of validly issued and fully paid shares of Class A Common Stock determined by dividing the Converted Outstanding Balance by the conversion price of $5.75 (as proportionately increased or decreased as necessary to reflect the proportionate change in the shares of Class A Common Stock as a result of any stock dividends, stock splits, recapitalizations, combinations, consolidations or the like) (the “Conversion Price”). The Holder’s election to convert this Note, in whole or in part, into (i) shares of Class A Common Stock and, if applicable, (ii) in the event of a partial conversion, a new Note with the same terms as this Note, with a principal amount equal to (A) the Amount Due immediately prior to the delivery of the Holder Conversion Notice, minus (B) the Converted Outstanding Balance (such new Company Note, a “New Note”), pursuant to this Section 4 shall be effective upon (1) the receipt by the Company of written notice in accordance with Section 12 (a “Holder Conversion Notice”), which shall be irrevocable, and (2) the cancellation of this Note by the Company, which shall be deemed to occur automatically upon receipt by the Company of a Holder Conversion Notice (regardless of whether this Note has been surrendered by the Holder).

 

 

4.2 Optional Conversion by the Company. Subject to (i) the satisfaction of the Governmental Approvals, if applicable with respect to the Holder, and (ii) Section 4.5, if at any time after twelve (12) months following the Initial Closing, the VWAP of the Company’s shares of Class A Common Stock equals or exceeds one hundred and thirty percent (130%) of the Conversion Price (as proportionately increased or decreased as necessary to reflect the proportionate change in the shares of Class A Common Stock as a result of any stock dividends, stock splits, recapitalizations, combinations, consolidations or the like) for thirty (30) consecutive Trading Days, prior to the date of the Company Conversion Notice (as defined below), the Company shall have the right on the immediately succeeding Trading Day after the last Trading Day of such 30-Trading Day period, at the Company’s option, to cause the Holder to convert, in whole or in part, the principal outstanding under this Note, together with the Converted Outstanding Balance, into that number of validly issued and fully paid shares of Class A Common Stock determined by dividing the Converted Outstanding Balance by the conversion price of the Conversion Price (as proportionately increased or decreased as necessary to reflect the proportionate change in the shares of Class A Common Stock as a result of any stock dividends, stock splits, recapitalizations, combinations, consolidations or the like). The Company’s election to cause the Holder to convert this Note, in whole or in part, into (a) shares of Class A Common Stock and (b) in the event of a partial conversion, a New Note with the same terms as this Note, with a principal amount equal to (x) the Amount Due immediately prior to the delivery of the Company Conversion Notice, minus (y) the Converted Outstanding Balance, pursuant to this Section 4 shall be effective upon (i) the receipt by the Holder of written notice in accordance with Section 11 (a “Company Conversion Notice”), which shall be irrevocable, and (ii) the cancellation of this Note by the Company, which shall be deemed to occur automatically upon receipt by the Holder of a Company Conversion Notice (regardless of whether this Note has been surrendered by the Holder). Each of the Holder and the Company will use its reasonable best efforts to take or cause to be taken all actions, and do or cause to be done, all things necessary, proper or advisable to obtain all necessary Governmental Approvals, if applicable with respect to the Holder.

 

4.3 Fractional Shares. No fractional shares of any of the Company’s equity securities, including the Class A Common Stock, will be issued in connection with any conversion of this Note and if a fractional share results from the conversion of the Note, the Company will round down to the nearest whole share.

 

4.4 Certificate or Book Entry Statement. As promptly as practicable after the conversion of this Note, the Company at its expense will issue and deliver to the Holder, upon surrender of the Note, a certificate or certificates for the number of full shares of Class A Common Stock issuable upon such conversion, or if such shares of Class A Common Stock are to be issued in unregistered form, a book entry confirmation statement from the Company’s transfer agent confirming the issuance of the shares of Class A Common Stock.

 

 

4.5 Holder’s Conversion Limitations. Notwithstanding anything to the contrary contained in this Note, the Company shall not effect any conversion of this Note pursuant to Section 4.2 with respect to a Note held by any Holder who, together with its Affiliates, holds less than $100,000,000 in aggregate principle amount of the Notes, and any Holder who, together with its Affiliates, holds less than $100,000,000 in aggregate principal amount of the Notes shall not effect any conversion of this Note pursuant to Section 4.1, in either case, into shares of Class A Common Stock to the extent that after giving effect to such conversion the aggregate number of shares of Class A Common Stock then beneficially owned by such Holder and its Affiliates and any other Persons whose beneficial ownership of shares of Class A Common Stock would be aggregated with such Holder’s for purposes of Section 13(d) of the Exchange Act would exceed 4.99% (the “Beneficial Ownership Limitation”) of the total number of issued and outstanding shares of Class A Common Stock; provided, that the Beneficial Ownership Limitation shall only apply to the extent that the Class A Common Stock is deemed to constitute an “equity security” pursuant to Rule 13d-1 under the Exchange Act. For purposes of this Note, in determining the number of outstanding shares of Common Stock, such Holder may rely on the number of outstanding shares of Class A Common Stock as reflected in (i) the Company’s most recent Quarterly Report on Form 10-Q or Annual Report on Form 10-K, as the case may be, filed with the SEC prior to the date hereof, (ii) a more recent public announcement by the Company or (iii) any other notice by the Company or its transfer agent setting forth the number of shares of Common Stock outstanding. Upon the written request of such Holder, the Company shall within two (2) Trading Days confirm in writing or by electronic mail to such Holder the number of shares of Class A Common Stock then outstanding. In any case, the number of outstanding shares of Class A Common Stock shall be determined after giving effect to the conversion or exercise of securities of the Company, including this Note, by such Holder and its Affiliates since the date as of which such number of outstanding shares of Class A Common Stock was reported. By written notice to the Company, such Holder may from time to time increase or decrease the maximum percentage to any other percentage specified not in excess of 9.99% in such notice; provided that any such increase will not be effective until the sixty-first (61st) day after such notice is delivered to the Company. For purposes of this Section 4.5, the aggregate number of shares of Common Stock or voting securities beneficially owned by such Holder and its Affiliates and any other Persons whose beneficial ownership of shares of Class A Common Stock would be aggregated with such Holder’s for purposes of Section 13(d) of the Exchange Act shall include the shares of Class A Common Stock issuable upon the conversion of this Note with respect to which such determination is being made, but shall exclude the number of shares of Class A Common Stock which would be issuable upon (i) conversion of the remaining unconverted portion of this Note by such Holder and (ii) exercise or conversion of the unexercised, non-converted or non-cancelled portion of any other securities of the Company that do not have voting power (including, without limitation, any securities of the Company which would entitle the holder thereof to acquire at any time shares of Class A Common Stock, including, without limitation, any debt, preferred stock, right, option, warrant or other instrument that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, shares of Class A Common Stock), is subject to a limitation on conversion or exercise analogous to the limitation contained herein and is beneficially owned by such Holder or any of its Affiliates and other Persons whose beneficial ownership of shares of Class A Common Stock would be aggregated with such Holder’s for purposes of Section 13(d) of the Exchange Act.

 

4.6 Conversion Price Adjustment. If, within 12 months of the Initial Closing, the Company in any manner issues or sells (excluding the issuance or sale of restricted share or restricted share units, or options to employees, officers or directors of the Company pursuant to any share or option plan duly adopted for such purpose) any Qualified Convertible Security and the lowest price per share for which one share of Class A Common Stock is issuable upon the conversion, exercise or exchange thereof is less than the then Conversion Price (a “Dilutive Issuance”), then the Conversion Price for all purposes, including for the avoidance of doubt Section 4.2, shall be reduced to the lowest price per share for which one share of Class A Common Stock is issuable upon the conversion, exercise or exchange thereof in connection with such Dilutive Issuance.

 

 

5. [RESERVED].

 

6. No Set-Off. All payments by the Company under this Note shall be made without set-off or counterclaim and be without any deduction or withholding for any taxes or fees of any nature, unless the obligation to make such deduction or withholding is imposed by law, in which case the Company shall make any withholding required by law.

 

7. Subordination.

 

7.1 To induce one or more lenders to extend credit to the Company, and for the benefit of such lenders, the Holder agrees, by its acceptance of this Note, for itself and for each future holder (if any) of this Note, that the obligations evidenced by this Note are expressly subordinate and junior in right of payment to all indebtedness for borrowed money of the Company (other than the Notes) under any agreement or contract with any senior creditor, including principal amounts and accrued interest and/or profit, as the case may be (including, without limitation, any interest and/or profit, as the case may be, that accrues after the commencement of any case, proceeding or other action relating to the bankruptcy, insolvency or reorganization of the Company) (the “Senior Obligations”). For purposes of this Note, “subordinate and junior in right of payment” shall mean that no part of the Subordinated Obligations shall have any claim to the Company’s assets on a parity with or prior to the claim of the Senior Obligations. From and after the date of receipt of notice from any senior creditor of any default with respect to any of the Senior Obligations, the Subordinated Creditor (as defined below) shall not ask for, demand, sue for, take or receive any payments with respect to all or any part of the Subordinated Obligations or any security therefor, whether from the Company or any other source, unless and until the Senior Obligations have been paid in full. The Subordinated Creditor further agrees that upon any distribution of money or assets, or readjustment of the indebtedness of the Company whether by reason of foreclosure, liquidation, composition, bankruptcy, arrangement, receivership, assignment for the benefit of creditors or any other action or proceeding involving the Subordinated Obligations, or the application of the assets of the Company to the payment or liquidation thereof, the senior creditors shall be entitled to receive payment in full in cash of all of the Senior Obligations prior to the payment of any part of the Subordinated Obligations.

 

7.2 If, notwithstanding the provisions of Section 7.1 of this Note, any payment or distribution of any character (whether in cash, securities or other property) or any security shall be received by the Subordinated Creditor, in each case, in respect of this Note, in contravention of Section 7.1, and before all the Senior Obligations shall have been indefeasibly paid in full in cash (other than contingent obligations for which no claim or demand has been made), such payment, distribution or security shall be held in trust for the benefit of, and shall be immediately paid over or delivered or transferred to, the senior creditors or the agent for the senior creditors for the benefit of the senior creditors, as applicable. Such payments received by the Subordinated Creditor and delivered to the senior creditors or the agent for the senior creditors, as applicable, shall be deemed not to be a payment on this Note for any reason whatsoever and the indebtedness under this Note shall remain as if such erroneous payment had never been paid by the Company or received by the Subordinated Creditor. In the event of the failure of the Subordinated Creditor to endorse or assign any such payment, distribution or security, a senior creditor is hereby irrevocably authorized to endorse or assign the same.

 

 

8. Treatment of the Notes. The Company and the Holder agree, unless otherwise required by a change in applicable law or by a determination (as defined in Section 1313(a) of the Code), (i) not to treat this Note as a “contingent payment debt instruments” governed by Treasury Regulations Section 1.1275-4, and (ii) not to file any tax return, statement, report or declaration inconsistent with the foregoing.

 

9. Transfers; Successors and Assigns.

 

9.1 This Note, and the obligations and rights of the parties hereunder, shall be binding upon and inure to the benefit of the Company, the holder of this Note, and their respective heirs, successors and assigns; provided, however, that the Company may not transfer or assign its obligations hereunder, by operation of law or otherwise, without the written consent of the Requisite Holders; and provided further that the Holder may not transfer or assign its rights hereunder, by operation of law of otherwise, except to an Affiliate, without the consent of the Company. Any purported transfer by a Holder in violation of this paragraph shall be void ab initio.

 

9.2 Notwithstanding anything else in this Note to the contrary, the right of any Holder (or transferee) to receive principal or interest payments under this Note may be transferred only through the surrender of the current Note and reissuance of a new note by the Company pursuant to the provisions of this paragraph. The foregoing language is intended to cause the Note to be in “registered form” as defined in Treasury Regulations Sections 5f.103-1(c) and 1.871-14(c) and shall be interpreted and applied consistently therewith.

 

10. No Rights or Liabilities as Stockholder; No Personal Liability. This Note does not by itself entitle the Holder to any voting rights or other rights as a stockholder of the Company. In the absence of conversion of this Note, no provisions of this Note, and no enumeration herein of the rights or privileges of the Holder, shall cause the Holder to be a stockholder of the Company for any purpose. Holder agrees that no stockholder, director or officer of the Company shall have any personal liability for the repayment of this Note.

 

11. Amendment. This Note may be amended or modified, or compliance with any term, covenant, agreement, condition or provision set forth herein may be omitted or waived, either generally or in a particular instance and either retroactively or prospectively, upon written consent of the Company and the Requisite Holders; provided, however, that (i) no such change, addition, omission or waiver shall reduce the principal or interest rate on any Note, without the consent of the holder thereof and (ii) no amendment shall be effective against a Holder which materially and adversely affects such Holder’s rights under such Holder’s Notes in a manner that is adverse to and materially different from the effect on other Holders of the Notes, without such Holder’s written consent.

 

 

12. Notices. All notices and other communications given or made pursuant to this Agreement shall be in writing and shall be deemed effectively given upon the earlier of actual receipt or: (i) personal delivery to the party to be notified, (ii) when sent, if sent by electronic mail during normal business hours of the recipient, and if not sent during normal business hours, then on the recipient’s next Business Day, (iii) five (5) days after having been sent by registered or certified mail, return receipt requested, postage prepaid, or (iv) one (1) Business Day after deposit with a nationally recognized overnight courier, freight prepaid, specifying next Business Day delivery, with written verification of receipt. All communications shall be sent to the respective parties at their address as set forth on their signature pages to the Purchase Agreement, or to such e-mail address or address as subsequently modified by written notice given in accordance with this Section 11. If notice is given to the Company, a copy shall also be sent to Sullivan & Cromwell LLP, 125 Broad Street, New York, NY 10004, Attn: Jared Fishman, which copy shall not constitute notice.

 

13. Severability. If one or more provisions of this Note are held to be unenforceable under applicable law, such provision shall be excluded from this Note and the balance of the Note shall be interpreted as if such provision were so excluded and shall be enforceable in accordance with its terms.

 

14. Governing Law. This Note and the obligations of the Company hereunder shall be governed by and interpreted and determined in accordance with, the laws of the General Corporation Law of the State of Delaware as to matters within the scope thereof, and as to all other matters shall be governed by, and construed in accordance with, the internal laws of the State of Delaware (excluding the laws and rules of law applicable to conflicts or choice of law).

 

15. Intercreditor Provisions. This Note constitutes a part of a series of obligations, together with all other Notes issued under this series (collectively, the “Subordinated Obligations”, and each holder or lender thereof, a “Subordinated Creditor”). By accepting this Note, the Subordinated Creditor hereof agrees that any and all payments under the Subordinated Obligations as between all Subordinated Creditors shall be paid equally and ratably. Furthermore, without the approval or joinder of the Requisite Holders, no Subordinated Creditor may accelerate the obligations of the Company under its Subordinated Obligations and commence and complete the exercise of all of its other rights and remedies thereunder. No Subordinated Creditor has an obligation to the other Subordinated Creditors to take any steps with regard to the enforcement or protection of other Subordinated Creditors’ rights to the security for its Subordinated Obligation. In the event of a default by the Company under any Subordinated Obligation, should any payment, distribution or security or proceeds be received by a Subordinated Creditor upon or with respect to such Subordinated Creditor’s Subordinated Obligation prior to the satisfaction in full of the default, such Subordinated Creditor shall immediately deliver the same equally and ratably to all Subordinated Creditors in the form received (except for endorsement or assignment by such Subordinated Creditor where required), for ratable application on the Subordinated Obligations (whether or not then due) and, until so delivered, the same shall be held in trust on behalf of all Subordinated Creditors by such Subordinated Creditor as the property of all Subordinated Creditors. Notwithstanding anything herein to the contrary, the Company may not prepay a Subordinated Obligation at any time in whole or in part, unless (i) no default exists under the Subordinated Obligations, (ii) such payment on the Subordinated Obligations will be paid equally and ratably to all Subordinated Creditors, or (iii) all Subordinated Creditors otherwise agree in writing to such prepayment.

 

[Signature on following page]

 

 

IN WITNESS WHEREOF, this Note has been duly executed on behalf of the undersigned on the day and in the year first written above.

 

AST SPACEMOBILE, INC.
By:
Name:	[●]
Title:	[●]

 

Place of Execution: [New York, New York]

 

[Signature Page to Convertible Note]

 

 

IN WITNESS WHEREOF, this Note has been duly acknowledged on behalf of the undersigned on the day and in the year first written above.

 

[PURCHASER]
By:
Name:	[●]
Title:	[●]

 

Place of Execution: [New York, New York]

 

[Signature Page to Convertible Note]

 

 

 

Exhibit 10.2

 

Form of

INVESTOR AND REGISTRATION RIGHTS AGREEMENT

 

Dated as of January              , 2024

 

 

TABLE OF CONTENTS

 

		Page
Article I REGISTRATION		1
1.1	Demand Registrations	1
1.2	Piggyback Registrations	4
1.3	Shelf Registration Statement	5
1.4	Withdrawal Rights	7
1.5	Holdback Agreements	7
1.6	Registration Procedures	8
1.7	Registration Expenses	12
1.8	Miscellaneous	12
1.9	Registration Indemnification	13
Article II DEFINITIONS		15
2.1	Defined Terms	15
2.2	Interpretation	19
Article III ADDITIONAL AGREEMENTS		19
3.1	Agreement to Vote for Change of Control	19
Article IV MISCELLANEOUS		19
4.1	Term	19
4.2	Notices	19
4.3	Amendments and Waivers	20
4.4	Successors and Assigns and Transferees	20
4.5	Severability	21
4.6	Transfer of Registrable Securities	21
4.7	Counterparts	21
4.8	Entire Agreement	21
4.9	APPLICABLE LAW; JURISDICTION OF DISPUTES	21
4.10	WAIVER OF JURY TRIAL	22
4.11	Specific Performance	22
4.12	No Third Party Beneficiaries	22
4.13	No Recourse	22

 

 

INVESTOR AND REGISTRATION RIGHTS AGREEMENT, dated as of January         , 2024 (this “Agreement”), among AST SpaceMobile, Inc., a Delaware corporation (the “Company”), and each of the persons whose name appears on the signature pages hereto or becomes a party hereto pursuant to Section 4.4.

 

W I T N E S S E T H:

 

WHEREAS, the Company and each of the persons whose name appears on the signature pages hereto or becomes a party hereto pursuant to Section 4.4 (the “Investors” and each an “Investor”) have entered into that certain Convertible Security Investment Agreement, dated as of January 16, 2024 (the “Investment Agreement”), pursuant to which the Company may issue and sell to one or more Investors Notes having an aggregate principal amount of up to $110,000,000;

 

WHEREAS, pursuant to and subject to the terms and conditions of the Investment Agreement and the Notes, the Notes may be converted into shares of Company Common Stock (as defined herein) (the “Conversion Shares”); and

 

WHEREAS, pursuant to the terms of, and in consideration for each Investor entering into, the Investment Agreement, and to induce each Investor to execute and deliver the Investment Agreement, the Company has agreed to provide each Investor with certain registration rights with respect to the Registrable Securities (as defined herein) as set forth herein.

 

NOW, THEREFORE, in consideration of the mutual covenants, representations, warranties and agreements contained in this Agreement, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound hereby, the parties agree as follows:

 

Article I

REGISTRATION

 

1.1 Demand Registrations.

 

(a) Subject to the terms and conditions hereof, solely during any period when the Company is not eligible under Applicable Law to register Registrable Securities on Form S-3 pursuant to Section 1.3, any Demand Stockholders (“Requesting Stockholders”) shall be entitled to make a number of written requests of the Company (each, a “Demand”) set forth in Section 1.1(c) hereof for registration under the Securities Act of an amount of Registrable Securities then held by such Requesting Stockholders that equals or is greater than the Registrable Amount (a “Demand Registration”). Thereupon the Company will, subject to the terms of this Agreement, use its reasonable best efforts to effect the registration as promptly as practicable under the Securities Act of:

 

(i) the Registrable Securities which the Company has been so requested to register by the Requesting Stockholders for disposition in accordance with the intended method of disposition stated in such Demand;

 

 

(ii) all other Registrable Securities which the Company has been requested to register pursuant to Section 1.1(b), but subject to Section 1.1(g); and

 

(iii) all shares of Company Common Stock which the Company may elect to register in connection with any offering of Registrable Securities pursuant to this Section 1.1, but subject to Section 1.1(g); all to the extent necessary to permit the disposition (in accordance with the intended methods thereof) of the Registrable Securities and the additional shares of Company Common Stock, if any, to be so registered.

 

(b) A Demand shall specify (i) the aggregate number of Registrable Securities requested to be registered in such Demand Registration, (ii) the intended method of disposition in connection with such Demand Registration, to the extent then known and (iii) the identity of the Requesting Stockholder(s). Within three (3) Business Days after receipt of a Demand, the Company shall give written notice of such Demand to all other Holders of Registrable Securities. The Company shall include in the Demand Registration covered by such Demand all Registrable Securities with respect to which the Company has received a written request for inclusion therein from the Holder thereof within ten (10) days after the Company’s notice required by this paragraph has been given, subject to Section 1.1(g). Each such written request shall comply with the requirements of a Demand as set forth in this Section 1.1(b).

 

(c) The Requesting Stockholders shall have the right to request only a total of up to three (3) Demand Registrations; provided that no more than one (1) Demand Registration may be made in any six (6)-month period. A Demand Registration shall not be deemed to have been effected and shall not count as a Demand Registration (i) unless a registration statement with respect thereto has become effective and has remained effective for a period of at least one hundred eighty (180) days or such shorter period in which all Registrable Securities included in such Demand Registration have actually been sold thereunder (provided that such period shall be extended for a period of time equal to the period the Holder of Registrable Securities refrains from selling any securities included in such registration statement at the request of the Company or the lead managing underwriter(s) pursuant to the provisions of this Agreement) or (ii) if, after it has become effective, such Demand Registration becomes subject, prior to one hundred eighty (180) days after effectiveness, to any stop order, injunction or other order or requirement of the Commission or other Governmental Authority, other than by reason of any act or omission by the applicable Selling Stockholders.

 

(d) Demand Registrations shall be on such appropriate registration form of the Commission as shall be selected by the Company and reasonably acceptable to the Requesting Stockholders.

 

(e) The Company shall not be obligated to (i) subject to Section 1.1(c), maintain the effectiveness of a registration statement under the Securities Act filed pursuant to a Demand Registration for a period longer than one hundred eighty (180) days or (ii) effect any Demand Registration (A) within six months of a “firm commitment” Underwritten Offering in which all Demand Stockholders were offered “piggyback” rights pursuant to Section 1.2 (subject to Section 1.2(b)) and at least 90% of the number of Registrable Securities requested by such Requesting Stockholders to be included in such Demand Registration were included and sold or (B) within six months of the completion of any other Demand Registration (including, for the avoidance of doubt, any Underwritten Offering pursuant to any Shelf Registration Statement).

 

 

(f) The Company shall be entitled to postpone (upon written notice to the Requesting Stockholders and any other Holders whose Registrable Securities are covered by such Demand pursuant to Section 1.1(b)) the filing or the effectiveness of a registration statement for any Demand Registration in the event of a Blackout Period until the expiration of the applicable Blackout Period. In the event of a Blackout Period, the Company shall deliver to the Requesting Stockholders requesting registration and any other Holders whose Registrable Securities are covered by such Demand pursuant to Section 1.1(b) a certificate signed by either the chief executive officer or the chief financial officer of the Company certifying that, in the good faith judgment of the Company, the conditions described in the definition of Blackout Period are met.

 

(g) If, in connection with a Demand Registration or Shelf Offering that involves an Underwritten Offering, the lead managing underwriter(s) advise(s) the Company that, in its (their) reasonable opinion, the inclusion of all of the securities sought to be registered in connection with such Demand Registration would adversely affect the success thereof, then the Company shall include in such registration statement only such securities as the Company is reasonably advised by such lead managing underwriter(s) can be sold without such adverse effect as follows and in the following order of priority: (i) first, pro rata among the Holders that have requested to participate in such Demand Registration based on the relative number of Registrable Securities then held by each such Holder; (ii) second, securities the Company proposes to sell for its own account; and (iii) third, only if all of the securities referred to in clauses (i) and (ii) have been included in such registration, all other securities of the Company duly requested to be included in such registration statement by other persons, pro rata on the basis of the amount of such other securities requested to be included or such other allocation method determined by the Company.

 

(h) Any time that a Demand Registration or Shelf Offering involves an Underwritten Offering, the Holders of a majority of the Registrable Securities then held by the Holders who have requested to participate in such Demand Registration or Shelf Offering shall select the investment banker(s) and manager(s) that will serve as managing underwriters (including which such managing underwriters will serve as lead or co-lead) and underwriters with respect to the offering of such Registrable Securities; provided that such investment banker(s) and manager(s) shall be subject to the prior written consent of the Company, not to be unreasonably withheld, conditioned or delayed.

 

 

1.2 Piggyback Registrations.

 

(a) Subject to the terms and conditions hereof, whenever the Company proposes to register any Company Common Stock under the Securities Act for its own account or for the account of other persons who are not Demand Stockholders (other than a registration by the Company (i) on Form S-4 or any successor form thereto, (ii) on Form S-8 or any successor form thereto, or (iii) pursuant to Section 1.1) (a “Piggyback Registration”), the Company shall give all Holders prompt written notice thereof (but not less than ten (10) days prior to the filing by the Company with the Commission of any registration statement with respect thereto). Such notice (a “Piggyback Notice”) shall specify the number of shares of Company Common Stock proposed to be registered, the proposed date of filing of such registration statement with the Commission, the proposed means of distribution, the proposed managing underwriter(s) (if any) and a good faith estimate by the Company of the proposed minimum offering price of such shares of Company Common Stock, in each case to the extent then known. Subject to Section 1.2(b), the Company shall include in each such Piggyback Registration all Registrable Securities held by Holders (a “Piggyback Seller”) with respect to which the Company has received written requests (which written requests shall specify the number of Registrable Securities requested to be disposed of by such Piggyback Seller) for inclusion therein, on the same terms and conditions as the other securities otherwise being sold pursuant to such registration statement, within ten (10) days after such Piggyback Notice is received by such Piggyback Seller.

 

(b) If, in connection with a Piggyback Registration that involves an Underwritten Offering, the lead managing underwriter(s) advises the Company that, in its reasonable opinion, the inclusion of all the shares of Company Common Stock sought to be included in such Piggyback Registration by (i) the Company, (ii) other Persons who have sought to have shares of Company Common Stock registered in such Piggyback Registration pursuant to rights to demand (other than pursuant to so-called “piggyback” or other incidental or participation registration rights) such registration (such Persons being “Other Demanding Sellers”), (iii) the Piggyback Sellers and (iv) any other proposed sellers of shares of Company Common Stock (such Persons being “Other Proposed Sellers”), as the case may be, would adversely affect the success thereof, then the Company shall include in the registration statement applicable to such Piggyback Registration only such shares of Company Common Stock as the Company is so reasonably advised by such lead managing underwriter(s) can be sold without such an adverse effect, as follows and in the following order of priority:

 

(i) if the Piggyback Registration relates to an offering for the Company’s own account, then (A) first, such number of shares of Company Common Stock to be sold by the Company as the Company, in its reasonable judgment and acting in good faith and in accordance with sound financial practice, shall have determined, (B) second, Registrable Securities of Piggyback Sellers, pro rata based on the number of Registrable Securities then held by each such Piggyback Seller, (C) third, shares of Company Common Stock sought to be registered by Other Demanding Sellers, pro rata on the basis of the number of shares of Company Common Stock proposed to be sold by such Other Demanding Sellers and (D) fourth, only if all of the securities referred to in clauses (A) through (C) have been included in such registration, other shares of Company Common Stock proposed to be sold by any Other Proposed Sellers; or

 

(ii) if the Piggyback Registration relates to an offering other than for the Company’s own account, then (A) first, such number of shares of Company Common Stock sought to be registered by each Other Demanding Seller pro rata in proportion to the number of securities sought to be registered by all such Other Demanding Sellers, (B) second, Registrable Securities of Piggyback Sellers, pro rata based on the number of shares of Registrable Securities then held by each such Piggyback Seller, and (C) third, only if all of the securities referred to in clauses (A) and (B) have been included in such registration, other shares of Company Common Stock proposed to be sold by any Other Proposed Sellers.

 

 

(c) For clarity, in connection with any Underwritten Offering under this Section 1.2, the Company shall not be required to include the Registrable Securities of a Piggyback Seller in the Underwritten Offering unless such Piggyback Seller accepts the terms of the underwriting as agreed upon between the Company and the lead managing underwriter(s), which shall be selected by the Company.

 

(d) If, at any time after giving written notice of its intention to register any shares of Company Common Stock as set forth in this Section 1.2 and prior to the time the registration statement filed in connection with such Piggyback Registration is declared effective, the Company shall determine for any reason not to register such shares of Company Common Stock, the Company may, at its election, give written notice of such determination to the Piggyback Sellers within five (5) Business Days thereof and thereupon shall be relieved of its obligation to register any Registrable Securities in connection with such particular withdrawn or abandoned Piggyback Registration; provided that Demand Stockholders may continue the registration as a Demand Registration pursuant to the terms of Section 1.1.

 

1.3 Shelf Registration Statement.

 

(a) If the Company is a well-known seasoned issuer (as defined in Rule 405 under the Securities Act) as of the date of this Agreement or otherwise eligible to offer securities under or file with automatic effectiveness, the Company shall file by the twelve (12)-month anniversary of the date of this Agreement, a registration statement on Form S-3 or any successor form thereto (“Form S-3”) providing for an offering to be made on a continuous basis pursuant to Rule 415 under the Securities Act (a “Shelf Registration Statement”) in the form of an automatic shelf registration statement (as defined in Rule 405 under the Securities Act) or any successor form thereto registering all Registrable Securities then held by the Holders. If the Company is not expected to be a well-known seasoned issuer (as defined in Rule 405 under the Securities Act) immediately following the date of this Agreement, then, subject to the availability of a registration statement on Form S-3 to the Company, any of the Demand Stockholders may by written notice delivered to the Company (the “Shelf Notice”) require the Company to file as soon as reasonably practicable, and to use reasonable best efforts to cause to be declared effective by the Commission as soon as reasonably practicable after such filing date, a Shelf Registration Statement relating to the offer and sale, from time to time, of an amount of Registrable Securities then held by such Demand Stockholders that equals or is greater than the Registrable Amount.

 

(b) Within ten (10) days after receipt of a Shelf Notice pursuant to Section 1.3(a), the Company will deliver written notice thereof to all other Holders of Registrable Securities. Each other Holder of Registrable Securities may elect to participate with respect to its Registrable Securities in the Shelf Registration Statement in accordance with this Agreement and the plan and method of distribution set forth in such Shelf Registration Statement by delivering to the Company a written request to so participate within ten (10) days after the Shelf Notice is received by any such Holder of Registrable Securities.

 

 

(c) Subject to Section 1.3(d), the Company will use its reasonable best efforts to keep a Shelf Registration Statement continuously effective until the earlier of (i) the date on which all Registrable Securities covered by the Shelf Registration Statement have been sold thereunder in accordance with the plan and method of distribution disclosed in the prospectus included in the Shelf Registration Statement, or otherwise cease to be Registrable Securities; and (ii) the date on which this Agreement terminates pursuant to Section 4.1.

 

(d) Notwithstanding anything to the contrary contained in this Agreement, the Company shall be entitled, from time to time, by providing written notice to the Holders whose Registrable Securities are registered under the Shelf Registration Statement, to require such Holders to suspend the use of the prospectus for sales of Registrable Securities under the Shelf Registration Statement during any Blackout Period. In the event of a Blackout Period, the Company shall deliver to such Holders a certificate signed by either the chief executive officer or the chief financial officer of the Company certifying that, in the good faith judgment of the Company, the conditions described in the definition of Blackout Period are met. After the expiration of any Blackout Period and without any further request from a Holder of Registrable Securities, the Company to the extent necessary shall as promptly as reasonably practicable prepare a post-effective amendment or supplement to the Shelf Registration Statement or the prospectus, or any document incorporated therein by reference, or file any other required document so that, as thereafter delivered to purchasers of the Registrable Securities included therein, the prospectus will not include an untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading.

 

(e) At any time that a Shelf Registration Statement is effective, if one or more Demand Stockholders deliver a notice to the Company (a “Take-Down Notice”) stating that such Demand Stockholder(s) intend to sell a Registrable Amount of Registrable Securities on the Shelf Registration Statement in an Underwritten Offering (a “Shelf Offering”), the Company shall promptly, and in a manner reasonably agreed with such Demand Stockholder(s) amend or supplement the Shelf Registration Statement as may be necessary in order to enable such Registrable Securities to be distributed pursuant to the Shelf Offering (taking into account, solely in connection with (x) a Non-Marketed Underwritten Shelf Offering that will be completed prior to the one (1) year anniversary of the date of this Agreement or (y) a Marketed Underwritten Shelf Offering, the inclusion of Registrable Securities by any other Holders pursuant to this Section 1.3). The Demand Stockholders shall have the right to request only a total of four (4) Shelf Offerings pursuant to this Section 1.3(e) and (i) any Marketed Underwritten Shelf Offering shall be subject to the provisions of Section 1.1(e)(ii) as if such Underwritten Shelf Offering were a Demand Registration (provided that references therein to six months shall be deemed to refer to four months) and (ii) the Demand Stockholders cannot effect any Non-Marketed Underwritten Shelf Offering within thirty (30) days of any other Shelf Offering. In connection with any Shelf Offering that is an Underwritten Offering and where the plan of distribution set forth in the applicable Take-Down Notice includes a customary “road show” (including an “electronic road show”) or other substantial marketing effort by the Company and the underwriters (a “Marketed Underwritten Shelf Offering”) unless the Take-Down Notice is executed by or on behalf of all the Demand Stockholders (even if all the Demand Stockholders are not participating in such Marketed Underwritten Shelf Offering), the Company shall forward the Take-Down Notice to all Demand Stockholders whose Registrable Securities are included on the Shelf Registration Statement and the Company and such proposing Demand Stockholder(s) shall permit each such Demand Stockholders to include its Registrable Securities included on the Shelf Registration Statement in the Marketed Underwritten Shelf Offering if such Demand Stockholder notifies the proposing Demand Stockholder(s) and the Company within five (5) days after delivery of the Take-Down Notice to such Demand Stockholders. In connection with any Shelf Offering that is an Underwritten Offering but is not a Marketed Underwritten Shelf Offering (a “Non-Marketed Underwritten Shelf Offering”) and which will be completed no later than the one (1) year anniversary of the Initial Closing, unless the Take-Down Notice is executed on behalf of all of the Demand Stockholders (even if all the Demand Stockholders are not participating in such Non-Marketed Underwritten Shelf Offering) the Company shall forward the Take-Down Notice to all other Demand Stockholders whose Registrable Securities are included on the Shelf Registration Statement and the Company and such Demand Stockholder(s) shall permit each such Demand Stockholder to include its Registrable Securities included on the Shelf Registration Statement in the Non-Marketed Underwritten Shelf Offering if such Demand Stockholder notifies the proposing Demand Stockholder(s) and the Company within whatever time period the proposing Demand Stockholders determine is required given the anticipated timing of such Non-Marketed Underwritten Shelf Offering as set forth in the relevant Take-Down Notice.

 

 

(f) For the avoidance of doubt, any Shelf Offering will be subject to Sections 1.1(g) and (h).

 

1.4 Withdrawal Rights. Any Demand Stockholder having notified or directed the Company to include any or all of its Registrable Securities in a registration statement under the Securities Act shall have the right to withdraw any such notice or direction with respect to any or all of the Registrable Securities designated by it for registration by giving written notice to such effect to the Company prior to the effective date of such registration statement. In the event of any such withdrawal, the Company shall not include such Registrable Securities in the applicable registration and such Registrable Securities shall continue to be Registrable Securities for all purposes of this Agreement (subject to the other terms and conditions of this Agreement). No such withdrawal shall affect the obligations of the Company with respect to the Registrable Securities not so withdrawn if any other Demand Holder has requested that Registrable Securities be included in such registration; provided, however, that in the case of a Demand Registration, if such withdrawal shall reduce the number of Registrable Securities sought to be included in such registration below the Registrable Amount, then the Company shall as promptly as practicable give each Demand Stockholder seeking to register Registrable Securities notice to such effect and, within ten (10) days following the mailing of such notice, such Demand Stockholders still seeking registration shall, by written notice to the Company, elect to register additional Registrable Securities to satisfy the Registrable Amount or elect that such registration statement not be filed or, if theretofore filed, be withdrawn. During such ten (10) day period, the Company shall not file such registration statement if not theretofore filed or, if such registration statement has been theretofore filed, the Company shall not seek, and shall use reasonable best efforts to prevent, the effectiveness thereof.

 

1.5 Holdback Agreements. (a) In connection with any Underwritten Offering in which a Holder participates pursuant to Section 1.2, each such Holder agrees to enter into customary agreements, including such customary carve-outs and limitations as any such Holder may reasonably request, restricting the public sale or distribution of equity securities of the Company (including sales pursuant to Rule 144 under the Securities Act) to the extent required in writing by the lead managing underwriter(s) with respect to an applicable Underwritten Offering during the period commencing on the date of the “pricing” of such Underwritten Offering) and continuing for not more than the lesser of (i) the period to which the Company (subject to customary carve-outs and limitations) is restricted and (ii) sixty (60) days after the date of the “final” prospectus (or “final” prospectus supplement if the Underwritten Offering is made pursuant to a Shelf Registration Statement), pursuant to which such Underwritten Offering shall be made, or such other period as is required by the lead managing underwriter(s). Any discretionary waiver or termination of the requirements under the foregoing provisions made by the Company or applicable lead managing underwriter(s) shall apply to each Holder on a pro rata basis. (b) If any Demand Registration involves an Underwritten Offering or in the event of a Marketed Underwritten Shelf Offering, the Company will not effect any public sale or distribution of any common equity (or securities convertible into or exchangeable or exercisable for common equity) (other than a registration statement on Form S-4, Form S-8 or any successor forms thereto) for its own account, within sixty (60) days, after the date of such Underwritten Offering or Marketed Underwritten Shelf Offering, as applicable, except as may otherwise be agreed between the Company and the lead managing underwriter(s) of such Underwritten Offering or Marketed Underwritten Shelf Offering, as applicable.

 

 

1.6 Registration Procedures.

 

(a) If and whenever the Company is required to effect the registration of any Registrable Securities under the Securities Act as provided in Section 1.1, Section 1.2 or Section 1.3, the Company shall as expeditiously as reasonably practicable:

 

(i) prepare and file with the Commission a registration statement to effect such registration in accordance with the intended method or methods of distribution of such securities and thereafter use reasonable best efforts to cause such registration statement to become and remain effective pursuant to the terms of this Article I; provided, however, that the Company may discontinue any registration of its securities which are not Registrable Securities at any time prior to the effective date of the registration statement relating thereto; provided, further, that before filing such registration statement or any amendments thereto, the Company will furnish to the Holders which are including Registrable Securities in such registration (“Selling Stockholders”), their counsel and the lead managing underwriter(s) and their counsel, if any, copies of all such documents proposed to be filed, which documents will be subject to the review and reasonable comment of such counsel, and other documents reasonably requested by such counsel, including any comment letter from the Commission, and, if requested by such counsel, provide such counsel a reasonable opportunity to participate in the preparation of such registration statement and each prospectus included therein. The Company shall not file any such registration statement or prospectus or any amendments or supplements thereto with respect to a Demand Registration to which the Holders of a majority of Registrable Securities held by the Selling Stockholder(s), their counsel or the lead managing underwriter(s), if any, shall reasonably object, in writing, on a timely basis, unless, in the opinion of the Company, such filing is necessary to comply with Applicable Law;

 

(ii) prepare and file with the Commission such amendments and supplements to such registration statement and the prospectus used in connection therewith as may be necessary to keep such registration statement effective pursuant to the terms of this Article I, and comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such registration statement;

 

(iii) if requested by the lead managing underwriter(s), if any, or the Holders of a majority of the then outstanding Registrable Securities being sold in connection with an Underwritten Offering, promptly include in a prospectus supplement or post-effective amendment such information as the lead managing underwriter(s), if any, and such Holders may reasonably request in order to permit the intended method of distribution of such securities and make all required filings of such prospectus supplement or such post-effective amendment as soon as reasonably practicable after the Company has received such request; provided, however, that the Company shall not be required to take any actions under this Section 1.6(a)(iii) that are not, in the opinion of counsel for the Company, in compliance with Applicable Law;

 

(iv) furnish to the Selling Stockholders and each underwriter, if any, of the securities being sold by such Selling Stockholders such number of conformed copies of such registration statement and of each amendment and supplement thereto, such number of copies of the prospectus contained in such registration statement (including each preliminary prospectus and any summary prospectus) and each free writing prospectus (as defined in Rule 405 of the Securities Act) (a “Free Writing Prospectus”) utilized in connection therewith and any other prospectus filed under Rule 424 under the Securities Act, in conformity with the requirements of the Securities Act, and such other documents as such Selling Stockholders and underwriter, if any, may reasonably request in order to facilitate the public sale or other disposition of the Registrable Securities owned by such Selling Stockholders;

 

(v) use reasonable best efforts to register or qualify or cooperate with the Selling Stockholders, the underwriters, if any, and their respective counsel in connection with the registration or qualification (or exemption from such registration or qualification) of such Registrable Securities covered by such registration statement under such other securities laws or “blue sky” laws of such jurisdictions as the Selling Stockholders and any underwriter of the securities being sold by such Selling Stockholders shall reasonably request, and to keep each such registration or qualification (or exemption therefrom) effective during the period such registration statement is required to be kept effective and take any other action which may be necessary or reasonably advisable to enable such Selling Stockholders and underwriters to consummate the disposition in such jurisdictions of the Registrable Securities owned by such Selling Stockholders, except that the Company shall not for any such purpose be required to (A) qualify generally to do business as a foreign corporation in any jurisdiction wherein it would not but for the requirements of this clause (v) be obligated to be so qualified, (B) subject itself to taxation in any such jurisdiction or (C) file a general consent to service of process in any such jurisdiction;

 

 

(vi) use reasonable best efforts to cause such Registrable Securities to be listed on each securities exchange on which similar securities issued by the Company are then listed and, if no such securities are so listed, use reasonable best efforts to cause such Registrable Securities to be listed on the New York Stock Exchange or the Nasdaq Stock Market;

 

(vii) use reasonable best efforts to cause such Registrable Securities covered by such registration statement to be registered with or approved by such other governmental agencies or authorities as may be reasonably necessary to enable the Selling Stockholder(s) thereof to consummate the disposition of such Registrable Securities;

 

(viii) use reasonable best efforts to provide and cause to be maintained a transfer agent and registrar for all Registrable Securities covered by such registration statement from and after a date not later than the effective date of such registration statement;

 

(ix) in an Underwritten Offering, enter into an underwriting agreement in form, scope and substance as is customary in underwritten offerings and in connection therewith, (A) make representations and warranties to the Holders of such Registrable Securities and the underwriters, if any, with respect to the business of the Company and its subsidiaries, and the registration statement, prospectus and documents, if any, incorporated or deemed to be incorporated by reference therein, in each case, in form, substance and scope as are customarily made by issuers in underwritten offerings, and, if true, confirm the same if and when requested, (B) include in the underwriting agreement indemnification provisions and procedures substantially to the effect set forth in Section 1.9 hereof with respect to all parties to be indemnified pursuant to said Section except as otherwise agreed by the Holders of a majority of the Registrable Securities being sold and (C) deliver such documents and certificates as are reasonably requested by the Holders of a majority of the Registrable Securities being sold, their counsel and the lead managing underwriters(s), if any, to evidence the continued validity of the representations and warranties made pursuant to sub-clause (A) above and to evidence compliance with any customary conditions contained in the underwriting agreement. The above shall be done at each closing under such underwriting agreement, or as and to the extent required thereunder;

 

(x) in connection with an Underwritten Offering, use reasonable best efforts to obtain for the Selling Stockholders and underwriter(s) (A) opinions of counsel for the Company, covering the matters customarily covered in opinions requested in underwritten offerings and such other matters as may be reasonably requested by such Selling Stockholders and underwriters and (B) “comfort” letters and updates thereof (or, in the case of any such Person which does not satisfy the conditions for receipt of a “comfort” letter specified in Auditing Standards No. 6101 (former Statement on Auditing Standards No. 72), an “agreed upon procedures” letter) signed by the independent public accountants who have certified the Company’s financial statements and, to the extent required, any other financial statements included in such registration statement, covering the matters customarily covered in “comfort” letters in connection with underwritten offerings;

 

 

(xi) make available for inspection by the Selling Stockholders, any underwriter participating in any disposition pursuant to any registration statement, and any attorney, accountant or other agent or representative retained in connection with such offering by such Selling Stockholders or underwriter (collectively, the “Inspectors”), such financial and other records, pertinent corporate documents and instruments of the Company (collectively, the “Records”), as shall be reasonably necessary, or as shall otherwise be reasonably requested, to enable them to exercise their due diligence responsibility, and cause the officers, directors and employees of the Company and its subsidiaries (and use its reasonable best efforts to cause its auditors) to participate in customary due diligence calls and to supply all information in each case reasonably requested by any such representative, underwriter, attorney, agent or accountant in connection with such registration statement; provided, however, that the Company shall not be required to provide any information under this clause (xi) if (A) the Company believes, after consultation with counsel for the Company, that to do so would cause the Company to forfeit an attorney-client privilege that was applicable to such information or (B) if either (1) the Company has requested and been granted from the Commission confidential treatment of such information contained in any filing with the Commission or documents provided supplementally or otherwise or (2) the Company reasonably determines in good faith that such Records are confidential and so notifies the Inspectors in writing; unless prior to furnishing any such information with respect to clause (1) or (2) such Selling Stockholder requesting such information enters into, and causes each of its Inspectors to enter into, a confidentiality agreement on terms and conditions reasonably acceptable to the Company; provided, further, that each Selling Stockholder agrees that it will, upon learning that disclosure of such Records is sought in a court of competent jurisdiction or by another Governmental Authority, give notice to the Company and allow the Company, at its expense, to undertake appropriate action seeking to prevent disclosure of the Records deemed confidential;

 

(xii) as promptly as practicable notify in writing the Selling Stockholder and the underwriters, if any, of the following events: (A) the filing of the registration statement, any amendment thereto, the prospectus or any prospectus supplement related thereto or post-effective amendment to the registration statement or any Free Writing Prospectus utilized in connection therewith, and, with respect to the registration statement or any post-effective amendment thereto, when the same has become effective; (B) any request by the Commission or any other U.S. or state governmental authority for amendments or supplements to the registration statement or the prospectus or for additional information; (C) the issuance by the Commission of any stop order suspending the effectiveness of the registration statement or the initiation of any proceedings by any Person for that purpose; (D) the receipt by the Company of any notification with respect to the suspension of the qualification of any Registrable Securities for sale under the securities or “blue sky” laws of any jurisdiction or the initiation or threat of any proceeding for such purpose; (E) if at any time the representations and warranties of the Company contained in any underwriting agreement contemplated by Section 1.6(a)(ix) cease to be true and correct in any material respect; and (F) subject to the provisions of this Agreement relating to a Blackout Period, upon the happening of any event that makes any statement made in such registration statement or related prospectus or any document incorporated or deemed to be incorporated therein by reference untrue in any material respect or that requires the making of any changes in such registration statement, prospectus or documents so that, in the case of the registration statement, it will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading, and that in the case of the prospectus, it will not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading, and, at the request of any Selling Stockholder, promptly prepare and furnish to such Selling Stockholder a reasonable number of copies of a supplement to or an amendment of such registration statement or prospectus as may be necessary so that, as thereafter delivered to the purchasers of such Registrable Securities, such prospectus shall not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading;

 

(xiii) use reasonable best efforts to obtain the withdrawal of any order suspending the effectiveness of such registration statement, or the lifting of any suspension of the qualification (or exemption from qualification) of any of the Registrable Securities for sale in any jurisdiction at the earliest reasonably practicable date, except that, subject to the requirements of Section 1.6(a)(v), the Company shall not for any such purpose be required to (A) qualify generally to do business as a foreign corporation in any jurisdiction wherein it would not but for the requirements of this clause (xiii) be obligated to be so qualified, (B) subject itself to taxation in any such jurisdiction or (C) file a general consent to service of process in any such jurisdiction;

 

(xiv) cooperate with the Selling Stockholders and the lead managing underwriter(s) to facilitate the timely preparation and delivery of certificates or book-entry security entitlements (which shall not bear any restrictive legends unless required under Applicable Law) representing securities sold under any registration statement, and enable such securities to be in such denominations and registered in such names as the lead managing underwriter(s) or such Selling Stockholders may request and keep available and make available to the Company’s transfer agent prior to the effectiveness of such registration statement a supply of such certificates;

 

(xv) cooperate with each seller of Registrable Securities and each underwriter or agent participating in the disposition of such Registrable Securities and their respective counsel in connection with any filings required to be made with FINRA; and

 

(xvi) have appropriate officers of the Company prepare and make presentations at a reasonable number of “road shows” and before analysts, as the case may be, and other information meetings reasonably organized by the underwriters and otherwise use its reasonable best efforts to cooperate as reasonably requested by the Selling Stockholders and the underwriters in the offering, marketing or selling of the Registrable Securities.

 

 

(b) The Company may require each Selling Stockholder and each underwriter, if any, to furnish the Company in writing such information regarding each Selling Stockholder or underwriter and the distribution of such Registrable Securities as the Company may from time to time reasonably request in writing to complete or amend the information required by such registration statement.

 

(c) Each Selling Stockholder agrees that upon receipt of any notice from the Company of the happening of any event of the kind described in clauses (B), (C), (D), (E) and (F) of Section 1.6(a)(xii), such Selling Stockholder shall forthwith discontinue such Selling Stockholder’s disposition of Registrable Securities pursuant to the applicable registration statement and prospectus relating thereto until such Selling Stockholder’s receipt of the copies of the supplemented or amended prospectus contemplated by Section 1.6(a)(xii), or until it is advised in writing by the Company that the use of the applicable prospectus may be resumed, and has received copies of any additional or supplemental filings that are incorporated or deemed to be incorporated by reference in such prospectus; provided, however, that the Company shall extend the time periods under Section 1.1(c) with respect to the length of time that the effectiveness of a registration statement must be maintained by the amount of time the Holder is required to discontinue disposition of such securities.

 

(d) With a view to making available to the Holders the benefits of Rule 144 under the Securities Act and any other rule or regulation of the Commission that may at any time permit a holder to sell securities of the Company to the public without registration or pursuant to a registration on Form S-3 (or any successor form), the Company shall:

 

(i) use reasonable best efforts to make and keep adequate current public information available, as those terms are understood and defined in Rule 144 under the Securities Act;

 

(ii) use reasonable best efforts to file with the Commission in a timely manner all reports and other documents required of the Company under the Exchange Act, at any time when the Company is subject to such reporting requirements;

 

(iii) furnish to any Holder, promptly upon request, a written statement by the Company as to its compliance with the reporting requirements of Rule 144 under the Securities Act and of the Exchange Act, a copy of the most recent annual or quarterly report of the Company, and such other reports and documents so filed or furnished by the Company with the Commission as such Holder may reasonably request in connection with the sale of Registrable Securities without registration (in each case to the extent not readily publicly available); and

 

(iv) otherwise provide such Holder with such customary assistance as is reasonably requested.

 

 

1.7 Registration Expenses. All fees and expenses incident to the Company’s performance of its obligations under this Article I, including (a) all registration and filing fees, including all fees and expenses of compliance with securities and “blue sky” laws (including the reasonable and documented fees and disbursements of counsel for the underwriters in connection with “blue sky” qualifications of the Registrable Securities pursuant to Section 1.6(a)(v)) and all fees and expenses associated with filings required to be made with FINRA (including, if applicable, the fees and expenses of any “qualified independent underwriter” as such term is defined in FINRA Rule 5121), (b) all printing (including expenses of printing certificates for the Registrable Securities in a form eligible for deposit with the Depository Trust Company and of printing prospectuses if the printing of prospectuses is requested by a Demand Stockholder) and copying expenses, (c) all messenger, telephone and delivery expenses, (d) all fees and expenses of the Company’s independent certified public accountants and counsel (including with respect to “comfort” letters and opinions), (e) expenses of the Company incurred in connection with any “road show” and (f) reasonable and documented fees and disbursements of one counsel for all Holders whose Registrable Securities are included in a registration statement, which counsel shall be selected by the Holders of a majority of the Registrable Securities being sold in connection therewith, shall be borne solely by the Company whether or not any registration statement is filed or becomes effective. In connection with the Company’s performance of its obligations under this Article I, the Company will pay its internal expenses (including all salaries and expenses of its officers and employees performing legal or accounting duties and the expense of any annual audit) and the expenses and fees for listing the securities to be registered on each securities exchange and included in each established over-the-counter market on which similar securities issued by the Company are then listed or traded. Each Selling Stockholder shall pay its portion of all underwriting discounts and commissions and transfer taxes, if any, relating to the sale of such Selling Stockholder’s Registrable Securities pursuant to any registration.

 

1.8 Miscellaneous.

 

(a) Not less than five (5) Business Days before the expected filing date of each registration statement pursuant to this Agreement, the Company shall notify each Holder of Registrable Securities who has timely provided the requisite notice hereunder entitling such holder to register Registrable Securities in such registration statement of the information, documents and instruments from such holder that the Company or any underwriter reasonably requests in connection with such registration statement, including, to the extent applicable, a questionnaire, custody agreement, power of attorney, lock-up letter (in accordance with Section 1.5) and underwriting agreement (the “Requested Information”). If the Company has not received, on or before the second Business Day before the expected filing date, the Requested Information from such holder, the Company may file the registration statement without including Registrable Securities of such holder. The failure to so include in any registration statement the Registrable Securities of a holder of Registrable Securities (with regard to that registration statement) shall not result in any liability on the part of the Company to such Holder.

 

(b) The Company shall not grant any demand, piggyback or shelf registration rights, the terms of which are senior to or conflict with the rights granted to the Holders of Registrable Securities hereunder to any other Person, or enter into any other agreements that conflict with the rights granted to the Holders of Registrable Securities under this Agreement (except to the extent contemplated under the definition of “Blackout Period”), without the prior written consent of Demand Stockholders holding a majority of the Registrable Securities then held by all Demand Stockholders.

 

 

(c) The Company will cooperate with the Holders and the managing underwriter(s), if any, to facilitate the timely preparation and delivery of certificates or book entries (which, in either case, shall not bear any restrictive legends) representing Registrable Securities to be sold by any Holder pursuant to any registration statement or sold pursuant to Rule 144 under the Securities Act, and enable such shares to be in such denominations and registered in such names as the selling Holders or managing underwriter(s) may request.

 

1.9 Registration Indemnification.

 

(a) The Company agrees, without limitation as to time, to indemnify and hold harmless, to the fullest extent permitted by Law, each Selling Stockholder and its Affiliates and their respective officers, directors, members, shareholders, employees, managers, partners and agents and each Person who controls (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act) such Selling Stockholder or such other indemnified Person and the officers, directors, members, shareholders, employees, managers, partners, accountants, attorneys and agents of each such controlling Person, from and against all losses, claims, damages, liabilities, costs, expenses (including reasonable expenses of investigation and reasonable attorneys’ fees and expenses) and amounts paid in settlement (collectively, the “Losses”), as incurred, arising out of, caused by, resulting from or relating to any untrue statement (or alleged untrue statement) of a material fact contained in any registration statement, prospectus or preliminary prospectus or Free Writing Prospectus or any amendment or supplement thereto or any omission (or alleged omission) of a material fact required to be stated therein or necessary to make the statements therein (in the case of a prospectus, preliminary prospectus, Free Writing Prospectus or any amendment or supplement thereto, in light of the circumstances under which they were made) not misleading, except insofar as the same are caused by any information furnished in writing to the Company by any Selling Stockholder expressly for use therein.

 

(b) In connection with any registration statement in which a Selling Stockholder is participating, without limitation as to time, each such Selling Stockholder shall, severally and not jointly, indemnify the Company, its directors, officers, stockholders, employees, managers, partners and agents, and each Person who controls (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act) the Company, from and against all Losses, as incurred, arising out of, caused by, resulting from or relating to any untrue statement (or alleged untrue statement) of material fact contained in the registration statement, prospectus or preliminary prospectus or Free Writing Prospectus or any amendment or supplement thereto or any omission (or alleged omission) of a material fact required to be stated therein or necessary to make the statements therein (in the case of a prospectus, preliminary prospectus, Free Writing Prospectus or any amendment or supplement thereto, in light of the circumstances under which they were made) not misleading, in each case solely to the extent, but only to the extent, that such untrue statement or omission is made in such registration statement, prospectus or preliminary prospectus or Free Writing Prospectus or any amendment or supplement thereto in reliance upon and in conformity with written information regarding such Selling Stockholder furnished to the Company by such Selling Stockholder expressly for inclusion in such registration statement, prospectus or preliminary prospectus or Free Writing Prospectus or any amendment or supplement thereto. Notwithstanding the foregoing, no Selling Stockholder shall be liable under this Section 1.9(b) for amounts in excess of the net proceeds received by such holder in the offering giving rise to such liability.

 

(c) Any Person entitled to indemnification hereunder shall give prompt written notice to the indemnifying party of any claim with respect to which it seeks indemnification; provided, however, the failure to give such notice shall not release the indemnifying party from its obligation, except to the extent that the indemnifying party has been actually and materially prejudiced by such failure to provide such notice on a timely basis.

 

(d) In any case in which any such action is brought against any indemnified party, and it notifies an indemnifying party of the commencement thereof, the indemnifying party will be entitled to participate therein, and, to the extent that it may wish, to assume the defense thereof, with counsel reasonably satisfactory to such indemnified party, and after notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof and acknowledging the obligations of the indemnifying party with respect to such proceeding, the indemnifying party will not (so long as it shall continue to have the right to defend, contest, litigate and settle the matter in question in accordance with this paragraph) be liable to such indemnified party hereunder for any legal or other expense subsequently incurred by such indemnified party in connection with the defense thereof (unless (i) such indemnified party reasonably objects to such assumption on the grounds that there are defenses available to it which are different from or in addition to the defenses available to such indemnifying party and, as a result, a conflict of interest exists or (ii) the indemnifying party shall have failed within a reasonable period of time to assume such defense and the indemnified party is or would reasonably be expected to be materially prejudiced by such delay, in either of which events the indemnified party shall be promptly reimbursed by the indemnifying party for the reasonable fees and expenses incurred in connection with retaining one separate legal counsel (for the avoidance of doubt, for all indemnified parties in connection therewith)). For the avoidance of doubt, notwithstanding any such assumption by an indemnifying party, the indemnified party shall have the right to employ separate counsel in any such matter and participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such indemnified party except as provided in the previous sentence. An indemnifying party shall not be liable for any settlement of an action or claim effected without its consent (which consent shall not be unreasonably withheld, conditioned or delayed). No matter shall be settled by an indemnifying party without the consent of the indemnified party (which consent shall not be unreasonably withheld, conditioned or delayed), unless such settlement (x) includes as an unconditional term thereof the giving by the claimant or plaintiff to such indemnified party of a release from all liability in respect to such claim or litigation, (y) does not include any statement as to or any admission of fault, culpability or a failure to act by or on behalf of any indemnified party and (z) is settled solely for cash for which the indemnified party would be entitled to indemnification hereunder.

 

(e) The indemnification provided for under this Agreement shall survive the sale of the Registrable Securities and the termination of this Agreement.

 

 

(f) If recovery is not available or insufficient under the foregoing indemnification provisions for any reason or reasons other than as specified therein, any Person who would otherwise be entitled to indemnification by the terms thereof shall nevertheless be entitled to contribution with respect to any Losses with respect to which such Person would be entitled to such indemnification but for such reason or reasons, in such proportion as is appropriate to reflect the relative fault of the indemnifying party, on the one hand, and such indemnified party, on the other hand, in connection with the actions, statements or omissions that resulted in such Losses as well as any other relevant equitable considerations. The relative fault of the indemnifying party and of the indemnified party shall be determined by reference to, among other things, whether the untrue (or alleged untrue) statement of a material fact or the omission (or alleged omission) to state a material fact relates to information supplied by the indemnifying party or by the indemnified party, the Persons’ relative intent, knowledge and access to information concerning the matter with respect to which the claim was asserted, the opportunity to correct and prevent any statement or omission, and other equitable considerations appropriate under the circumstances. It is hereby agreed that it would not necessarily be equitable if the amount of such contribution were determined by pro rata or per capita allocation. No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not found guilty of such fraudulent misrepresentation. Notwithstanding the foregoing, no Selling Stockholder shall be required to make a contribution in excess of the net proceeds received by such Selling Stockholder from its sale of Registrable Securities in connection with the offering that gave rise to the contribution obligation.

 

Article II

DEFINITIONS

 

2.1 Defined Terms. Capitalized terms when used in this Agreement have the following meanings:

 

“Affiliate” means, (a) any other Person which directly or indirectly through one or more intermediaries controls, or is controlled by, or is under common control with, such specified Person (for the purposes of this definition, “control” (including, with correlative meanings, the terms “controlling,” “controlled by” and “under common control with”), as used with respect to any Person, means the 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, by agreement or otherwise), (b) for the avoidance of doubt, if such specified Person is an investment fund, any other investment fund, the primary investment advisor to which is the primary investment advisor to such specified Person or an Affiliate thereof, and (c) if such specified Person is a natural Person, any family member of such natural Person. “Controlled” and “controlling” shall be construed accordingly. Notwithstanding the foregoing, for all purposes of this Agreement, in no event shall an Affiliate of any Investor include any “portfolio company” (as such term is customarily used among institutional investors) of any Investor.

 

“Agreement” has the meaning set forth in the preamble.

 

 

“Applicable Law” means, with respect to any Person, any Law applicable to such Person, its assets, properties, operations or business.

 

“Beneficial Owner” or “Beneficially Own” has the meaning assigned to such term in Rule 13d-3 under the Exchange Act, and a Person’s beneficial ownership of securities shall be calculated in accordance with the provisions of such Rule (in each case, irrespective of whether or not such Rule is actually applicable in such circumstance).

 

“Blackout Period” means in the event that the Board of Directors of the Company determines in good faith that the registration or sale of Registrable Securities would reasonably be expected to materially adversely affect or materially interfere with any bona fide material financing of the Company or any material transaction under consideration by the Company or would require disclosure of information that has not been, and is not otherwise required to be, disclosed to the public, the premature disclosure of which would materially adversely affect the Company, a period of up to forty-five (45) consecutive Trading Days; provided that a Blackout Period may not occur for more than an aggregate of ninety (90) days in any three-hundred sixty-five (365)-day period.

 

“Business Day” means a day on which banks are generally open for normal business in New York, New York, which day is not a Saturday or a Sunday.

 

“Change of Control” means: (a) the sale of all or substantially all of the assets of the Company; (b) a sale or merger of the Company; or (c) a consolidation, recapitalization or reorganization, resulting in a transfer of more than fifty percent (50%) of the ownership of the Company.

 

“Commission” means the Securities and Exchange Commission or any other federal agency administering the Securities Act.

 

“Company” has the meaning set forth in the preamble.

 

“Company Common Stock” means the Company’s Class A common stock, par value $0.0001 per share.

 

“Conversion Shares” has the meaning set forth in the recitals.

 

“Demand” has the meaning set forth in Section 1.1(a).

 

“Demand Registration” has the meaning set forth in Section 1.1(a).

 

“Demand Stockholder” means any Investor that holds Registrable Securities.

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

 

“Form S-3” has the meaning set forth in Section 1.3(a).

 

“Free Writing Prospectus” has the meaning set forth in Section 1.6(a)(iv).

 

 

“Governmental Authority” means any court, administrative agency or commission or other governmental authority or instrumentality, domestic or foreign, or applicable exchange or self-regulatory organization, including FINRA.

 

“Holder” means each holder of Registrable Securities that is a party to this Agreement.

 

“Inspectors” has the meaning set forth in Section 1.6(a)(xi).

 

“Initial Closing” has the meaning set forth in the Investment Agreement.

 

“Investment Agreement” has the meaning set forth in the recitals.

 

“Investor” or “Investors” has the meaning set forth in the preamble.

 

“Law” means any federal, state, provincial, local, municipal, foreign, international, multinational or other order, judgment, decree, constitution, law, ordinance, regulation, statute, treaty, code, rule, by-law, writ, injunction, decision, arbitration award, franchise, license, agency requirement, permit or other award of any Governmental Authority, or any policy, guideline, notice or protocol, in each case, to the extent that it has the force of law.

 

“Losses” has the meaning set forth in Section 1.9(a).

 

“Marketed Underwritten Shelf Offering” has the meaning set forth in Section 1.3(e).

 

“Non-Liable Person” has the meaning set forth in Section 4.13.

 

“Non-Marketed Underwritten Shelf Offering” has the meaning set forth in Section 1.3(e).

 

“Notes” has the meaning set forth in the Investment Agreement.

 

“Other Demanding Sellers” has the meaning set forth in Section 1.2(b).

 

“Other Proposed Sellers” has the meaning set forth in Section 1.2(b).

 

“Person” means any natural person or any corporation, partnership, limited liability company, association, trust or other entity or organization, including any Governmental Authority.

 

“Piggyback Notice” has the meaning set forth in Section 1.2(a).

 

“Piggyback Registration” has the meaning set forth in Section 1.2(a).

 

“Piggyback Seller” has the meaning set forth in Section 1.2(a).

 

“Records” has the meaning set forth in Section 1.6(a)(xi).

 

 

“Registrable Amount” means an amount of Registrable Securities having an aggregate value of at least $50 million (based on the anticipated offering price (as reasonably determined in good faith by the Company)), without regard to any underwriting discount or commission.

 

“Registrable Securities” means all of the Conversion Shares and any shares of Company Common Stock received with respect to the Conversion Shares in connection with any stock split or subdivision, stock dividend, distribution or similar transaction; provided that any such Conversion Shares shall cease to be Registrable Securities upon the earliest of (i) when they are sold by a Holder pursuant to an effective registration statement under the Securities Act, (ii) when they have been sold by a Holder pursuant to Rule 144 under the Securities Act, (iii) when they shall have ceased to be outstanding and (iv) when they may be sold pursuant to Rule 144 under the Securities Act without manner of sale or volume limitations.

 

“Requested Information” has the meaning set forth in Section 1.8(a).

 

“Requesting Stockholders” has the meaning set forth in Section 1.1(a).

 

“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

 

“Selling Stockholders” has the meaning set forth in Section 1.6(a)(i).

 

“Shelf Notice” has the meaning set forth in Section 1.3(a).

 

“Shelf Offering” has the meaning set forth in Section 1.3(e).

 

“Shelf Registration Statement” has the meaning set forth in Section 1.3(a).

 

“Take-Down Notice” has the meaning set forth in Section 1.3(e).

 

“Trading Day” has the meaning set forth in the Investment Agreement.

 

“Transfer” means any direct or indirect sale, assignment, encumbrance, pledge, hypothecation, disposition, loan or other transfer, or entry into any Agreement with respect to any sale, assignment, encumbrance, pledge, hypothecation, disposition, loan or other transfer, excluding entry into this Agreement and the Investment Agreement and the consummation of the transactions contemplated hereby and thereby.

 

“Underwritten Offering” means a sale of securities of the Company to an underwriter or underwriters for reoffering to the public.

 

“Voting Shares” has the meaning set forth in Section 3.1.

 

 

2.2 Interpretation. Whenever used herein, the words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation”, and the words “hereof” and “herein” and similar words shall be construed as references to this Agreement as a whole and not limited to the particular Article, Section, Annex, Exhibit or Schedule in which the reference appears. Unless the context otherwise requires, references herein: (x) to Articles, Sections, Annexes, Exhibits and Schedules mean the Articles, Sections and Annexes of, and Exhibits and Schedules attached to, this Agreement; (y) to an agreement, instrument or other document means such agreement, instrument or other document as amended, supplemented and modified from time to time to the extent permitted by the provisions thereof; and (z) to a statute means such statute as amended from time to time and includes any successor legislation thereto and any regulations promulgated thereunder. References to “$” or “dollars” means United States dollars. Any reference in this Agreement to any gender shall include all genders. The meanings of defined terms are equally applicable to the singular and plural forms of the defined terms. The Annexes, and Schedules referred to herein shall be construed with, and as an integral part of, this Agreement to the same extent as if they were set forth verbatim herein. The headings of the Articles and Sections are for convenience of reference only and do not affect the interpretation of any of the provisions hereof. If, and as often as, there is any change in the outstanding shares of Company Common Stock by reason of stock dividends, splits, reverse splits, spin-offs, split-ups, mergers, reclassifications, reorganizations, recapitalizations, combinations or exchanges of shares and the like, appropriate adjustment shall be made in the provisions of this Agreement so as to fairly and equitably preserve, as far as practicable, the rights and obligations set forth herein that continue to be applicable on the date of such change. No rule of construction against the draftsperson shall be applied in connection with the interpretation or enforcement of this Agreement, as this Agreement is the product of negotiation between sophisticated parties advised by counsel.

 

Article III

ADDITIONAL AGREEMENTS

 

3.1 Agreement to Vote for Change of Control. During the term of this Agreement, each Investor shall vote or cause to be voted all Registrable Securities registered in the name of, or Beneficially Owned by such Investor (hereinafter referred to as the “Voting Shares”), in accordance with the recommendation of the Board of Directors of the Company with respect to any Change of Control transaction. Except as explicitly provided in this Section 3.1, each Investor is free to vote or cause to be voted all Voting Shares Beneficially Owned by such Investor. For the avoidance of doubt, nothing in this Section 3.1 shall require an Investor to exercise or convert any security exercisable or convertible for voting securities of the Company.

 

Article IV

MISCELLANEOUS

 

4.1 Term. This Agreement will be effective as of date of this Agreement and shall terminate with respect to any Holder upon such time as such Holder ceases to hold or Beneficially Own any remaining Registrable Securities or upon the dissolution, liquidation or winding up of the Company or a Change of Control. Sections 1.9 and Articles II and III shall survive any termination; provided, however, that the termination of this Agreement shall not relieve any party from any liability for the breach of any obligations set forth in this Agreement prior to such termination.

 

4.2 Notices. All notices, consents and other communications hereunder shall be in writing and shall be given (and shall be deemed to have been duly given upon receipt) by hand delivery, by prepaid overnight courier (providing written proof of delivery), by confirmed email transmission or by certified or registered mail (return receipt requested and first class postage prepaid), addressed as follows:

 

(a) If to any Holder, to such Holder at the address indicated on Schedule A hereto.

 

  

(b) if to the Company, to:

 

AST SpaceMobile, Inc.

Midland Intl. Air & Space Port

2901 Enterprise Lane

Midland, Texas 79706

E-mail: legal@ast-science.com

Attention: General Counsel

 

With a concurrent copy to (which shall not be considered notice):

 

Sullivan & Cromwell LLP

125 Broad Street

New York, NY 10004

Facsimile: (212) 291-9280

E-mail: fishmanj@sullcrom.com

Attention: Jared M. Fishman

 

4.3 Amendments and Waivers. No provision of this Agreement may be amended or modified unless such amendment or modification is in writing and signed by (i) the Company and (ii) Holders Beneficially Owning a majority of the Conversion Shares then Beneficially Owned by all Holders. No failure or delay by any party in exercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by Applicable Law.

 

4.4 Successors and Assigns and Transferees. Neither the Company nor the Investors shall assign this Agreement or any of their respective rights or obligations hereunder, except to an Affiliate; provided that any transaction, whether by merger, reorganization, restructuring, consolidation, financing or otherwise, whereby the Company remains the surviving entity immediately after such transaction shall not be deemed an assignment; provided, further that such transferee shall only be admitted as a party hereunder and become a Holder upon its, his or her execution and delivery of a joinder agreement, in form and substance reasonably acceptable to the Company agreeing to be bound by the terms and conditions of this Agreement as if such person were a Holder party hereto; whereupon such Person will be treated as a Holder for all purposes of this Agreement, with the same rights, benefits and obligations hereunder as the transferring Holder with respect to the transferred Registrable Securities. Except as provided in the immediately preceding sentence, neither this Agreement nor any of the rights or obligations hereunder shall be assigned by any of the parties hereto without the prior written consent of the other parties. Subject to the preceding sentence, this Agreement will be binding upon, inure to the benefit of and be enforceable by the parties and their respective successors and assigns. Any attempted assignment in violation of this Section 4.4 shall be void.

 

 

4.5 Severability. It is the intent of the parties that the provisions of this Agreement shall be enforced to the fullest extent permissible under Applicable Law and public policies applied in each jurisdiction in which enforcement is sought. If any particular provision or portion of this Agreement shall be adjudicated to be invalid or unenforceable, such provision or portion thereof shall be deemed amended to the minimum extent necessary to render such provision or portion valid and enforceable, and such amendment will apply only with respect to the operation of such provision or portion in the particular jurisdiction in which such adjudication is made.

 

4.6 Transfer of Registrable Securities. The Investor shall not Transfer any Registrable Securities, by operation of law or otherwise, except to an Affiliate, without the consent of the Company. Any purported transfer by an Investor in violation of this paragraph shall be void ab initio.

 

4.7 Counterparts. This Agreement may be executed in two (2) or more counterparts, all of which shall be considered one and the same agreement and shall become effective when counterparts have been signed (including by electronic signature) by each of the parties and delivered (including pdf or any electronic signature complying with the U.S. federal ESIGN Act of 2000, e.g., www.docusign.com) to the other parties, it being understood that each party need not sign the same counterpart.

 

4.8 Entire Agreement. This Agreement (including the documents and the instruments referred to in this Agreement), together with the Investment Agreement, constitutes the entire agreement and supersedes all prior agreements and understandings, both written and oral, between the parties with respect to the subject matter of this Agreement.

 

4.9 APPLICABLE LAW; JURISDICTION OF DISPUTES. THIS AGREEMENT AND ALL LITIGATION, CLAIMS, ACTIONS, SUITS, HEARINGS OR PROCEEDINGS (WHETHER CIVIL, CRIMINAL OR ADMINISTRATIVE AND WHETHER BASED ON CONTRACT, TORT OR OTHERWISE), DIRECTLY OR INDIRECTLY, ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR THE ACTIONS OF THE COMPANY OR THE INVESTORS IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT HEREOF OR THEREOF, SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT GIVING EFFECT TO ANY CHOICE OR CONFLICT OF LAWS, PROVISION OR RULE (WHETHER OF THE STATE OF DELAWARE OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF DELAWARE. EACH OF THE PARTIES HERETO HEREBY (A) EXPRESSLY AND IRREVOCABLY SUBMITS TO THE EXCLUSIVE PERSONAL JURISDICTION OF THE COURT OF CHANCERY OF THE STATE OF DELAWARE (PROVIDED THAT IF JURISDICTION IS NOT THEN AVAILABLE IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE, THE PERSONAL JURISDICTION OF ANY UNITED STATES FEDERAL COURT LOCATED IN THE STATE OF DELAWARE OR ANY OTHER DELAWARE STATE COURT) IN THE EVENT ANY DISPUTE ARISES OUT OF THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, (B) AGREES THAT IT WILL NOT ATTEMPT TO DENY OR DEFEAT SUCH PERSONAL JURISDICTION BY MOTION OR OTHER REQUEST FOR LEAVE FROM ANY SUCH COURT AND (C) AGREES THAT IT WILL NOT BRING ANY ACTION RELATING TO THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT IN ANY COURT OTHER THAN THE COURT OF CHANCERY OF THE STATE OF DELAWARE (PROVIDED THAT IF JURISDICTION IS NOT THEN AVAILABLE IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE, SUCH ACTION MAY BE BROUGHT ANY UNITED STATES FEDERAL COURT LOCATED IN THE STATE OF DELAWARE OR ANY OTHER DELAWARE STATE COURT); PROVIDED THAT EACH OF THE PARTIES SHALL HAVE THE RIGHT TO BRING ANY ACTION OR PROCEEDING FOR ENFORCEMENT OF A JUDGMENT ENTERED BY ANY UNITED STATES FEDERAL COURT LOCATED IN THE STATE OF DELAWARE OR ANY DELAWARE STATE COURT IN ANY OTHER COURT OR JURISDICTION.

 

 

4.10 WAIVER OF JURY TRIAL. EACH OF THE COMPANY AND THE INVESTORS IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE ACTIONS OF THE COMPANY OR THE INVESTORS IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT THEREOF.

 

4.11 Specific Performance. The parties hereto agree that monetary damages would not be an adequate remedy in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms. It is expressly agreed that the parties hereto shall be entitled to equitable relief, including injunctive relief and specific performance of the terms hereof, this being in addition to any other remedies to which they are entitled at law or in equity.

 

4.12 No Third Party Beneficiaries. Nothing in this Agreement shall confer any rights upon any Person other than the parties hereto and each such party’s respective heirs, successors and permitted assigns; provided that the Persons indemnified under Section 1.9 are intended third party beneficiaries of Section 1.9.

 

4.13 No Recourse. Notwithstanding anything that may be expressed or implied in this Agreement, and notwithstanding the fact that any party hereto may be a partnership or limited liability company, each party hereto, by its acceptance of the benefits of this Agreement, covenants, agrees and acknowledges that no Persons other than the named parties hereto shall have any obligation hereunder and that it has no rights of recovery hereunder against, and no recourse hereunder or in respect of any oral representations made or alleged to be made in connection herewith shall be had against, any former, current or future director, officer, agent, Affiliate, manager, assignee, incorporator, controlling Person, fiduciary, representative or employee of any Investor (or any of their heirs, successors or permitted assigns), or against any former, current or future director, officer, agent, employee, Affiliate, manager, assignee, incorporator, controlling Person, fiduciary, representative, general or limited partner, stockholder, manager or member of any of the foregoing Persons, but in each case not including the named parties hereto (each, a “Non-Liable Person”), whether by or through attempted piercing of the corporate veil, by or through a claim (whether in tort, contract or otherwise) by or on behalf of such party against any Non-Liable Person, by the enforcement of any assignment or by any legal or equitable proceeding, or by virtue of any statute, regulation or other Applicable Law or otherwise; it being expressly agreed and acknowledged that no personal liability whatsoever shall attach to, be imposed on or otherwise be incurred by any Non-Liable Person, as such, for any obligations of the applicable party under this Agreement or the transactions contemplated hereby, in respect of any oral representations made or alleged to have been made in connection herewith or therewith or for any claim (whether in tort, contract or otherwise) based on, in respect of or by reason of, such obligations or their creation.

 

[The remainder of this page left intentionally blank.]

 

 

IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement by their authorized representatives as of the date first above written.

 

	AST SPACEMOBILE, INC.
	By
	Name:
	Title:

 

 

IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement by their authorized representatives as of the date first above written.

 

	INVESTORS
	[●]
	By
	Name:
	Title:

 

 

 

Exhibit 99.1

 

 

AST SpaceMobile Secures Strategic Investment From AT&T, Google and Vodafone

 

Investment and strategic agreements accelerate AST SpaceMobile’s mission to close the global connectivity gap by bringing 5G broadband service from space to billions of people worldwide

 

$206.5 million financing, comprised of convertible notes, non-dilutive commercial payments, and a planned future draw on the company’s existing credit facility

 

MIDLAND, TX, January 18, 2024 – AST SpaceMobile, Inc. (“AST SpaceMobile”) (NASDAQ: ASTS), the company building the first and only space-based cellular broadband network accessible directly by everyday smartphones, today announced strategic investment from AT&T, Google and Vodafone and aggregate new financing of up to $206.5 million in gross proceeds. In addition to the $155 million strategic investment, the company also plans to draw up to $51.5 million from the company’s existing senior-secured credit facility.

 

New investors AT&T and Google, joined by existing investor Vodafone, are at the forefront of wireless innovation, with products and services serving billions of people daily. This significant investment in AST SpaceMobile underscores confidence in the company’s technology and leadership position in the emerging space-based cellular direct-to-device market, with the potential to offer connectivity to today’s 5.5 billion cellular devices when they are out of coverage.

 

AST SpaceMobile currently operates the largest-ever commercial communications array in low Earth orbit, the BlueWalker 3 satellite. The company invented the space-based direct-to-device market, and its patented design facilitates broadband connectivity directly to standard, unmodified cellular devices, adhering to today’s cellular standards. In 2023, the company solidified its status as the industry’s leading innovator, working alongside partners AT&T, Vodafone, Rakuten and Nokia, to achieve multiple historic technical breakthroughs in space-based cellular communications – including the demonstration of 2G, 4G LTE and 5G calls, and 14 Mbps download speeds per 5 MHz channels – directly from space to everyday smartphones. For the company’s planned operational satellites, beams are designed to support capacity of up to 40 MHz, potentially enabling data transmission speeds of up to 120 Mbps. With over 40 agreements and understandings with mobile network operators globally, who collectively service over 2 billion subscribers, AST SpaceMobile’s pioneering in-orbit technology is poised to be the solution for eliminating cellular connectivity gaps around the world.

 

Abel Avellan, Chairman and CEO of AST SpaceMobile, said, “Our vision at AST SpaceMobile has always been to chart a course of collaborative innovation and integration with the world’s leading wireless companies, which is why we are so thrilled to be welcoming this new strategic investment from AT&T, Google and Vodafone. With this strategic investment, we are gaining capital, invaluable expertise, and strategic partnership. This investment comes alongside prior investments by other leaders in the wireless ecosystem, including Rakuten, American Tower, and Bell Canada, all of whom are not only part owners of AST SpaceMobile but also serve as our technology partners and customers. Each new partnership signifies that market leaders worldwide have tremendous confidence in our vision and ability to ensure that the future of cellular broadband is borderless.”

 

 

Chris Sambar, Executive Vice President, Head of Network, AT&T, said “Through our work with AST SpaceMobile, we’ve already proven the possibilities that satellite has to offer in helping connect more people via text, voice and video. We’re excited to deepen our relationship with this investment as we continue to drive a first-of-its-kind innovation forward and work together to achieve this shared vision of space-based connectivity for consumers, businesses and first responders all around the globe.”

 

Margherita Della Valle, Vodafone Group chief executive, said “Vodafone’s investment and collaboration with AST SpaceMobile will help make our mobile connectivity services available everywhere for our customers across Europe and Africa. Customers in remote rural areas, on land or out at sea, will be able to benefit from fast and reliable 5G broadband directly to their existing smartphones without the need for specialist equipment.”

 

The strategic investment is intended to support the commercial roll-out of AST SpaceMobile’s network and is comprised of a mix of equity-linked capital and non-dilutive commercial payments. The investment includes:

 

	●	$110 million of 10-year subordinated convertible notes with 5.50% interest (which may be paid in kind), with a conversion price of $5.75 per share, a 39% premium to the final trading price on January 16, 2024; invested by AT&T, Google and Vodafone
	●	$20 million revenue commitment from AT&T, predicated on the launch and successful initial operation of the first 5 commercial satellites
	●	$25 million minimum revenue commitment from Vodafone, subject to a definitive agreement

 

The non-dilutive commercial payments by customers of the SpaceMobile network, creditable against future service revenue, provide a model for other wireless companies around the world to participate in the initial rollout of commercial SpaceMobile service.

 

In addition to the strategic investment, the new investors expanded their strategic and commercial ties to support the buildout of the SpaceMobile network, including:

 

	●	Vodafone and AT&T have placed purchase orders for network equipment from AST SpaceMobile to support planned commercial service, for an undisclosed amount
	●	Google and AST SpaceMobile agreed to collaborate on product development, testing and implementation plans for SpaceMobile network connectivity on Android and related devices

 

UBS Investment Bank, Barclays and Quilty Space acted as financial advisers to AST SpaceMobile on the strategic investment, with Sullivan & Cromwell LLP serving as legal counsel. The terms and conditions of the transaction are more fully described in the Company’s Current Report on Form 8-K, being filed today with the Securities and Exchange Commission.

 

AST SpaceMobile has more than 3,100 patent and patent-pending claims for its technology and operates state-of-the-art, vertically integrated manufacturing and testing facilities in Midland, Texas, which collectively span 185,000 square feet.

 

The company also has agreements and understandings with more than 40 mobile network operators globally, which have over 2 billion existing subscribers total, including Vodafone Group, Rakuten Mobile, AT&T, Bell Canada, Orange, Telefonica, TIM, MTN, Saudi Telecom Company, Zain KSA, Etisalat, Indosat Ooredoo Hutchison, Telkomsel, Smart Communications, Globe Telecom, Millicom, Smartfren, Telecom Argentina, Telstra, Africell, Liberty Latin America and others. Vodafone, Rakuten, American Tower and Bell Canada are also existing investors in AST SpaceMobile.

 

AST SpaceMobile recently announced the achievement of Space-Based 5G Cellular Broadband Connectivity From Everyday Smartphones. A video memorializing the 5G connection and other testing milestones using BlueWalker 3 can be viewed here.

 

 

About AST SpaceMobile

 

AST SpaceMobile is building the first and only global cellular broadband network in space to operate directly with standard, unmodified mobile devices based on our extensive IP and patent portfolio. Our engineers and space scientists are on a mission to eliminate the connectivity gaps faced by today’s five billion mobile subscribers and finally bring broadband to the billions who remain unconnected. For more information, follow AST SpaceMobile on YouTube, X (Formerly Twitter), LinkedIn and Facebook. Watch this video for an overview of the SpaceMobile mission.

 

Forward-Looking Statements

 

This communication contains “forward-looking statements” that are not historical facts, and involve risks and uncertainties that could cause actual results of AST SpaceMobile to differ materially from those expected and projected. These forward-looking statements can be identified by the use of forward-looking terminology, including the words “believes,” “estimates,” “anticipates,” “expects,” “intends,” “plans,” “may,” “will,” “would,” “potential,” “projects,” “predicts,” “continue,” or “should,” or, in each case, their negative or other variations or comparable terminology.

 

These forward-looking statements involve significant risks and uncertainties that could cause the actual results to differ materially from the expected results. Most of these factors are outside AST SpaceMobile’s control and are difficult to predict. Factors that may cause such differences include, but are not limited to: (i) expectations regarding AST SpaceMobile’s strategies and future financial performance, including AST’s future business plans or objectives, expected functionality of the SpaceMobile Service, anticipated timing of the launch of the Block 1 Bluebird satellites, anticipated demand and acceptance of mobile satellite services, prospective performance and commercial opportunities and competitors, the timing of obtaining regulatory approvals, ability to finance its research and development activities, commercial partnership acquisition and retention, products and services, pricing, marketing plans, operating expenses, market trends, revenues, liquidity, cash flows and uses of cash, capital expenditures, and AST’s ability to invest in growth initiatives; (ii) the negotiation of definitive agreements with mobile network operators relating to the SpaceMobile service that would supersede preliminary agreements and memoranda of understanding and the ability to enter into commercial agreements with other parties or government entities; (iii) the ability of AST SpaceMobile to grow and manage growth profitably and retain its key employees and AST SpaceMobile’s responses to actions of its competitors and its ability to effectively compete; (iv) changes in applicable laws or regulations; (v) the possibility that AST SpaceMobile may be adversely affected by other economic, business, and/or competitive factors; (vi) the outcome of any legal proceedings that may be instituted against AST SpaceMobile; and (vii) other risks and uncertainties indicated in the Company’s filings with the SEC, including those in the Risk Factors section of AST SpaceMobile’s Form 10-K filed with the SEC on March 31, 2023.

 

AST SpaceMobile cautions that the foregoing list of factors is not exclusive. AST SpaceMobile cautions readers not to place undue reliance upon any forward-looking statements, which speak only as of the date made. For information identifying important factors that could cause actual results to differ materially from those anticipated in the forward-looking statements, please refer to the Risk Factors incorporated by reference into AST SpaceMobile’s Form 10-K filed with the SEC on March 31, 2023. AST SpaceMobile’s securities filings can be accessed on the EDGAR section of the SEC’s website at www.sec.gov. Except as expressly required by applicable securities law, AST SpaceMobile disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise.

 

Investor Contact:

Scott Wisniewski

investors@ast-science.com

 

Media Contact:

Allison

Zac Rivera

347-251-1662

AstSpaceMobile@allisonpr.com

 

 

v3.23.4

Cover	Jan. 16, 2024
Document Type	8-K
Amendment Flag	false
Document Period End Date	Jan. 16, 2024
Entity File Number	001-39040
Entity Registrant Name	AST SpaceMobile, Inc.
Entity Central Index Key	0001780312
Entity Tax Identification Number	84-2027232
Entity Incorporation, State or Country Code	DE
Entity Address, Address Line One	Midland Intl. Air & Space Port
Entity Address, Address Line Two	2901 Enterprise Lane
Entity Address, City or Town	Midland
Entity Address, State or Province	TX
Entity Address, Postal Zip Code	79706
City Area Code	(432)
Local Phone Number	276-3966
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Entity Emerging Growth Company	true
Elected Not To Use the Extended Transition Period	false
Class A common stock, par value $0.0001 per share
Title of 12(b) Security	Class A common stock, par value $0.0001 per share
Trading Symbol	ASTS
Security Exchange Name	NASDAQ
Warrants exercisable for one share of Class A common stock at an exercise price of $11.50
Title of 12(b) Security	Warrants exercisable for one share of Class A common stock at an exercise price of $11.50
Trading Symbol	ASTSW
Security Exchange Name	NASDAQ

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