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Item 1.01
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Entry into a Material Definitive Agreement.
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Subscription Agreement
On January 18, 2022, ACE Convergence
Acquisition Corp. (“ACE”) entered into a Subscription Agreement (the “Subscription Agreement”) with Tempo Automation,
Inc. (“Tempo Automation”), OCM Tempo Holdings, LLC (“OCM”) and Tor Asia Credit Opportunity Master Fund II LP (“Tor”).
Pursuant to the Subscription Agreement, OCM, an affiliate of Oaktree Capital Management, L.P. (collectively with its affiliates or affiliated
investment funds and/or managed or controlled accounts, “Oaktree”), has committed to purchase $175 million in aggregate principal
amount of ACE’s 13% convertible senior notes due 2025 concurrently with the closing (the “Closing”) of the previously
announced business combination between ACE and Tempo Automation, which Closing is subject to the satisfaction or waiver of the conditions
stated in the Agreement and Plan of Merger (the “Merger Agreement”), dated as of October 13, 2021, by and among ACE, Tempo
Automation and ACE Convergence Subsidiary Corp., and other customary closing conditions. The Subscription Agreement also provides for
the purchase of $25 million in aggregate principal amount of ACE’s 13% convertible senior notes due 2025 concurrently with the Closing
by Tor, an investment partner of ACE, which investment replaces the previously announced investment in ACE’s
12% convertible senior notes due 2025 by an affiliate of ACE’s sponsor, ACE Convergence Acquisition LLC, as disclosed under
Item 1.02 to this Current Report on Form 8-K below, which disclosure is incorporated by reference to this Item 1.01 to the extent required
herein.
The
obligations of the parties to consummate the transactions contemplated by the Subscription Agreement are conditioned upon, among other
things: (i) the domestication of ACE as a Delaware corporation and the shares of domesticated common stock underlying the notes having
been conditionally approved for listing on the Nasdaq Stock Market LLC, (ii) no governmental authority having enacted, issued, promulgated,
enforced or entered any judgment, order, law, rule or regulation that has the effect of making consummation of the transactions contemplated
by the Subscription Agreement illegal, or otherwise restraining, prohibiting or enjoining consummation of such transactions, and no such
governmental authority having instituted or threatened in writing a proceeding seeking to impose any such restraint or prohibition, subject
to certain limited exceptions, (iii) all documentation as reasonably necessary or desirable to effectuate the transactions contemplated
by the Subscription Agreement or the Indenture (as defined therein) having been duly executed and delivered, (iv) all conditions precedent
to the closing of the Transactions (as defined in the Subscription Agreement) having been satisfied or waived, subject to certain exceptions,
and the closing of each of the Transactions occurring substantially concurrently with or immediately following the Closing (as defined
in the Subscription Agreement), (v) with respect to ACE’s obligation to close, all representations and warranties of each Subscriber
(as defined in the Subscription Agreement) being true and correct in all material respects, and the Subscribers having performed, satisfied
and complied in all material respects with all covenants, agreements and conditions required by the Subscription Agreement, in each case
subject to certain exceptions, and (vi) with respect to a Subscriber’s obligation to close, (a) all representations and warranties
of ACE being true and correct in all material respects, subject to certain exceptions, (b) ACE having performed, satisfied and complied
in all material respects with all covenants, agreements and conditions required by the Subscription Agreement, (c) there having been no
amendment, waiver or modification to any of the Transaction Agreements (as defined in the Subscription Agreement) that would reasonably
be expected to adversely affect the Subscribers in any manner, or to the merger/purchase consideration and/or closing consideration (including
earn-outs or similar payments) set forth in any of the Transaction Agreements, in each case without the Lead Subscriber’s (as defined
in the Subscription Agreement) prior written consent, (d) there not having occurred any Company Material Adverse Effect (as defined in
the Merger Agreement) or any material adverse effect as it relates to each of Compass AC Holdings, Inc. (“Compass”) and Whizz
Systems, Inc. (“Whizz”), (e) there being no indebtedness other than Permitted Indebtedness (as defined in the Subscription
Agreement) (f) ACE, Tempo Automation, Compass, Whizz or any of their respective subsidiaries not having issued any equity interests other
than as described in the Subscription Agreement, (g) unless otherwise approved in writing by the Lead Subscriber, none of ACE, Tempo Automation,
Compass, Whizz or any of their respective subsidiaries having entered into any debt, equity or other financing or related transaction
to raise capital in connection with consummation of the Transactions, except for Permitted Indebtedness and as contemplated under clause
(f) above, (h) ACE having paid certain fees and expenses of the Subscribers incurred in connection with the Subscription Agreement, (i)
the Subscribers having received certain opinions of counsel to ACE, Tempo Automation, Compass and Whizz and each of their respective subsidiaries,
(j) there having not been any Default or Event of Default (each, as defined in the Subscription Agreement), (k) there being no
less than an amount equal to $25 million, plus certain other amounts, in unrestricted cash and cash equivalents on ACE’s consolidated
balance sheet on a pro forma basis after giving effect to the Transactions and (l) each Subscriber having received certain information
in order to complete such Subscriber’s “Know your Customer” or Anti-Money Laundering Laws (each, as defined in the Subscription
Agreement) investigation as may be required under such Subscriber’s internal compliance policies or anti-money laundering policies.
The closings under the Subscription
Agreement will occur substantially concurrently with the Closing. The Subscription Agreement also contemplates a registration rights agreement,
pursuant to which ACE will agree that it shall, within six months following the Closing, submit to or file with the U.S. Securities and
Exchange Commission (the “SEC”) a registration statement covering the resale of certain shares of domesticated ACE’s
common stock and other equity securities of domesticated ACE that are held by the parties thereto from time to time, and shall use its
commercially reasonable efforts to have such registration statement declared effective as soon as practicable after the filing thereof,
but no later than the earlier of (a) the 90th calendar day following the filing date thereof if the SEC notifies ACE that it will “review”
such registration statement and (b) the 10th business day after the date ACE is notified by the SEC that such registration statement will
not be “reviewed” or will not be subject to further review.
Additionally, pursuant to the
Subscription Agreement, each Subscriber agrees to waive any and all claims against the trust account established in connection with ACE’s
initial public offering.
The Subscription Agreement will
terminate and be of no further force and effect upon the earliest to occur of (a) termination of the Merger Agreement, (b) written agreement
of ACE and the Lead Subscriber, (c) written notice by ACE or the Lead Subscriber if, on the closing date of the Transactions, any of the
conditions to Closing (as defined in the Subscription Agreement) with respect to the Lead Subscriber have not been satisfied and, as a
result thereof, the transactions contemplated by the Subscription Agreement are not consummated, or (d) written notice by the Lead Subscriber
to ACE as a result of (i) the termination of either of those certain transaction agreements between Tempo Automation and each of Whizz
and Compass, (ii) the Agreement End Date (as defined in the Merger Agreement), or (iii) six months after the date of the Subscription
Agreement, in each case if the Closing (as defined in the Subscription Agreement) with respect to the Lead Subscriber shall not have occurred.
Notwithstanding the foregoing, each Subscriber other than the Lead Subscriber shall have the right to terminate the Subscription Agreement,
solely with respect to itself, if the Closing (as defined in the Subscription Agreement) with respect to the Lead Subscriber has occurred
but the Closing (as defined in the Subscription Agreement) with respect to such other Subscriber has not occurred as a result of any of
the conditions to Closing (as defined in the Subscription Agreement) set forth in Sections 2(c) or 2(e) of the Subscription Agreement
having not been satisfied.
Oaktree Side Letter
In connection with entry into
the Subscription Agreement, on January 18, 2022, ACE, Tempo Automation and OCM entered into a Letter Agreement (the “Oaktree Side
Letter”), pursuant to which Oaktree shall have the right (but not the obligation), commencing on the Closing Date (as defined in
the Oaktree Side Letter) and ending on the date Oaktree no longer holds or controls notes in an aggregate principal amount that is at
least 50% of the aggregate principal amount of notes purchased by Oaktree on the Closing Date, to appoint two individuals to attend, as
board observers and participants in a nonfiduciary and non-voting capacity, each meeting of the board of directors of domesticated ACE
and any duly authorized committee thereof. The Oaktree Side Letter also provides for certain liquidity reporting requirements of ACE to
Oaktree, and provides Oaktree with certain access and inspection rights of ACE’s or any of its subsidiaries’ respective properties
and records.
The
Oaktree Side Letter will automatically terminate upon the earliest to occur of (a) the termination of the Subscription Agreement (other
than a termination in connection with the Closing (as defined in the Subscription Agreement)), (b) the time at which all of the notes
held by Oaktree or any transferee of any of Oaktree’s rights thereunder are converted into Common Stock (as defined in the Oaktree
Side Letter), and (c) the time at which Oaktree or any transferee of any of Oaktree’s rights thereunder no longer owns or controls
at least $25 million in aggregate principal amount of the notes.
Tor Side Letter
In connection with entry into
the Subscription Agreement, on January 18, 2022, ACE, Tempo Automation and Tor entered into an Information Rights and Confidentiality
Agreement (the “Tor Side Letter”), which provides for certain liquidity reporting requirements of ACE to Tor, and provides
Tor with certain access and inspection rights of ACE’s or any of its subsidiaries’ respective properties and records.
The Tor Side Letter will automatically
terminate upon the earliest to occur (a) the termination of the Subscription Agreement (other than a termination in connection with the
Closing (as defined in the Subscription Agreement)), (b) the time at which all of the notes held by Tor (and/or one or more of its affiliates
or affiliated investment funds and/or managed or controlled accounts) are converted into Common Stock (as defined in the Tor Side Letter),
and (c) with respect to Tor and/or one or more of its affiliates or affiliated investment funds and/or managed or controlled accounts,
the time at which Tor (and/or one or more of its affiliates or affiliated investment funds and/or managed or controlled accounts) no longer
owns or controls at least $25 million in aggregate principal amount of the notes.
Promissory Notes
As previously announced, on or
prior to October 13, 2021, ACE entered into subscription agreements with certain investors, pursuant to, and on the terms and subject
to the conditions of which, certain investors collectively subscribed for 8,200,000 shares of domesticated ACE’s common stock for
an aggregate purchase price equal to $82 million, pursuant to certain subscription agreements (the “Common Stock Subscription Agreements”).
On January 18, 2022, ACE and
Tempo Automation entered into Convertible Promissory Notes (the “Promissory Notes”) with certain of such investors, pursuant
to which such investors agreed to loan to Tempo Automation up to an aggregate $5 million, which loans may be converted into common stock
of ACE at a conversion price of $10.00 per share. Pursuant to the Promissory Notes, the principal balances of such notes shall reduce
the “Subscription Amount” (as defined in the Common Stock Subscription Agreements) of such investors on a dollar-for-dollar
basis.
The foregoing descriptions of
the Subscription Agreement, the Oaktree Side Letter, the Tor Side Letter, the Common Stock Subscription Agreements and the Promissory
Notes do not purport to be complete and are qualified in their entirety by the terms and conditions of the full text of the Subscription
Agreement, a copy of which is attached hereto as Exhibit 10.1, the full text of the Oaktree Side Letter, a copy of which is attached hereto
as Exhibit 10.2, the full text of the Tor Side Letter, a copy of which is attached hereto as Exhibit 10.3, the full text of the Common
Stock Subscription Agreements, the form of which was previously filed as Exhibit 10.1 to ACE’s Current Report on Form 8-K filed
with the SEC on October 14, 2021, and the full text of the Promissory Notes, the form of which is attached hereto as Exhibit 10.4, each
of which is incorporated herein by reference.