Item 1.01. Entry into a Material Definitive Agreement.
On
June 13, 2022, we entered into an Agreement and Plan of Merger, dated as of June 13, 2022 (the “Acquisition Agreement”),
with SemaConnect, Inc., a Delaware corporation (“SemaConnect”). Pursuant to the Acquisition Agreement, we will acquire SemaConnect
by way of a two-step merger qualified as a reorganization within the meaning of Code Section 368(a)(1)(A), as a result of which it will
become our wholly owned subsidiary (the “Acquisition”). SemaConnect is a leading provider of electric vehicle (EV) charging
infrastructure solutions in North America. Based on information provided by SemaConnect, it currently has nearly 13,000 EV chargers in
place at over 1,800 site host locations and more than 150,000 registered EV driver members. SemaConnect maintains its headquarters, in-house
research & development and manufacturing facility in Bowie, Maryland. SemaConnect has a diverse suite of EV products, including Level
2 and DC Fast chargers, as well as its charging-as-a-service program which provides a full package of EV charging solutions. SemaConnect’s
hardware and cloud-based software solutions reach a wide range of critical EV charging customers across municipal, parking, multifamily,
hotel, office, retail and commercial sectors in the United States and Canada. SemaConnect was founded in 2008 by entrepreneur Mahi Reddy.
Under
the terms of the Acquisition Agreement, the acquisition consideration is Two Hundred Million Six
Hundred Thousand Dollars ($200,600,000),
on a cash-free, debt-free basis and is subject to certain customary adjustments for working capital. The consideration
to be paid in
the transaction consists of: (i) Eighty
Million Six Hundred Thousand Dollars ($80,600,000) in
cash, (x) Forty Million Dollars ($40,000,000) of which will be paid upon closing of the Acquisition Agreement (the
“Closing”), and (y) the remaining $40,600,000 of
which will be paid not earlier than nine months following the Closing and not later than three years following the Closing; and (ii)
One Hundred Twenty Million Dollars ($120,000,000) in shares
of our common stock (the “Stock Payment”). The Stock Payment will be calculated based on the arithmetic
average of the daily volume weighted average
price of our common stock during the 20 consecutive trading days ending on the last trading day prior
to the date of the Closing. The shares that will be issued under the Stock Payment are subject to a lock-up agreement for three
months following issuance, and a leak-out agreement during each subsequent five one-month periods thereafter whereby, among other
conditions, no more than 20% of the shares that will be issued to a SemaConnect stockholder may be sold by such stockholder. Each of
the stockholders of SemaConnect who receive our stock will
receive registration rights in respect of the shares issued to such stockholder under the Stock Payment pursuant to a registration
rights agreement.
The
following sums of cash will be held in escrow accounts following the Closing to cover the following items:
(x) One Million Five Hundred Thousand Dollars ($1,500,000) for any losses or damages we may incur by reason of, among other things, any
misrepresentation or breach of warranty by SemaConnect under the Acquisition Agreement, and (y) Five Hundred Thousand Dollars
($500,000) for any amounts we are owed under working capital adjustments. Another post-closing remedy for indemnity claims is the
proceeds from representations and warranties insurance that we have obtained in connection with the Acquisition.
In
connection with the Acquisition, certain stockholders of SemaConnect will be subject to standstill provisions for a period of 12
months after the Closing, which will prohibit them from, among other things, (i) acquiring any of our securities or assets; (ii) effecting
a tender or exchange offer, merger or other business combination involving our company; (iii) soliciting proxies or consents to vote
any of our voting securities; (iv) forming, joining or in any way participating in any group; (v) seeking to control or influence the
management, board of directors or policies of our company; (vi) taking any action which might force us to make a public announcement,
and (vii) entering into any discussions or arrangements with any third party with respect to any of the foregoing, subject to certain
exceptions.
Additionally,
certain key employees of SemaConnect will enter into employment offer letters with our company, including Mr. Reddy, who will remain
the Chief Executive Officer of our SemaConnect subsidiary following the Closing.
In
order to comply with the market rules of The NASDAQ Stock Market, the Acquisition Agreement includes a “share cap” to limit
the number of shares that can be issued under the Acquisition Agreement to 19.9% of our outstanding shares (determined immediately prior
to the Closing).
Prior
to entering into the Acquisition Agreement, neither SemaConnect nor any SemaConnect stockholder had any material relationship or association
with us. The acquisition consideration was determined as a result of arm’s-length negotiations between the parties. There are presently
no significant changes anticipated in the business or product lines of either our company or SemaConnect.
The
foregoing description of the Acquisition Agreement does not purport to be complete and is qualified in its entirety by reference to the
full text of such agreement, a copy of which is furnished as Exhibit 2.1 and is incorporated herein by reference in its entirety.