Item
1.01. Entry into a Material Definitive Agreement.
Master
Purchase Agreement
On
July 7, 2021, Electric Last Mile, Inc., a Delaware corporation (“ELM”) and wholly owned subsidiary of Electric Last Mile
Solutions, Inc., executed a Master Purchase Agreement (the “Master Purchase Agreement”) with Liuzhou Wuling Automobile Industry
Co., Ltd. (“Wuling”) for the purchase by ELM of certain products, kits, parts, accessories, and other materials used in the
manufacture of electric commercial vehicles (the “Goods”). Pursuant to the Master Purchase Agreement, Wuling granted ELM
the exclusive right to market, distribute and sell certain of the Goods in North America and to manufacture, assemble, market, distribute
and sell ELM’s products incorporating the Goods. The Master Purchase Agreement sets forth the general terms and conditions for
the sale of the Goods to ELM. ELM’s individual purchases of Goods will be made pursuant to mutually agreeable, binding purchase
orders, issued by ELM, setting forth the particular Goods and the quantities, prices and delivery dates of the Goods to be purchased.
Such a purchase order will be deemed accepted by Wuling unless Wuling rejects the purchase order in writing within 48 hours of receipt.
The initial purchase prices of the Goods have been set by mutual agreement between the parties, and the prices for any new categories
of Goods, or for jointly developed Goods, will be mutually agreed upon between the parties prior to entering into the first individual
purchase order for such Goods.
Pursuant
to the Master Purchase Agreement, the parties have agreed that: (i) Wuling will retain its rights to its pre-existing intellectual property,
and (ii) during the development process, for the parts jointly developed by both parties, the corresponding intellectual property rights
will be shared by both parties; for parts independently developed by Wuling, the relevant intellectual property rights will be owned
by Wuling; and for parts independently developed by ELM, the relevant intellectual property rights will be owned by ELM; however, if
the development is carried out on the basis of the data, models and other information provided by Wuling, the intellectual property rights
will be jointly owned by the parties. The parties further agreed that: (a) with respect to the intellectual property rights solely owned
by one party, if the other party (or a third party) requests that such intellectual property rights be licensed, a separate written agreement
shall be executed by the parties, and (b) with respect to the intellectual property rights jointly owned by both parties, neither party
may transfer or license such intellectual property rights to a third party without written consent from the other party.
The
Master Purchase Agreement is effective as of March 19, 2021, with an initial term of five years, which will automatically extend for
additional one-year terms unless either party, at least 180 days prior to the end of the then in-effect term, gives written notice to
the other party of its intent not to extend such term. In addition, the Master Purchase Agreement may be terminated by either party upon
180 days prior written notice or upon certain specified termination events.
Agreement
for Engineering, Design and Development Services
On
July 7, 2021, ELM executed an Agreement for Engineering, Design and Development Services (the “Services Agreement”), which
is effective as of March 18, 2021, with Wuling. Pursuant to the Services Agreement, Wuling will serve as ELM’s non-exclusive supplier
for certain engineering, design, development, and validation services (the “Services”) intended to support the manufacture
of electric vehicles by ELM. Wuling will provide the Services to ELM pursuant to individual purchase orders and statements of works,
which will set forth the specifications, deliverables, and fees related to such Services. To facilitate the provision of the Services
under the Services Agreement, each party has agreed to set up a full-time team, consisting of at least four members from Wuling, including,
but not limited to, experts in manufacturing engineering, program management, logistics and product engineering.
Consistent
with the terms of the Master Purchase Agreement, pursuant to the Services Agreement, the parties have agreed that: (i) Wuling will retain
its rights to its pre-existing intellectual property, and (ii) during the development process, for the parts jointly developed by both
parties, the corresponding intellectual property rights will be shared by both parties; for parts independently developed by Wuling,
the relevant intellectual property rights will be owned by Wuling; and for parts independently developed by ELM, the relevant intellectual
property rights will be owned by ELM; however, if the development is carried out on the basis of the data, models and other information
provided by Wuling, the intellectual property rights will be jointly owned by the parties. The parties further agreed that: (a) with
respect to the intellectual property rights solely owned by one party, if the other party (or a third party) requests that such intellectual
property rights be licensed, a separate written agreement shall be executed by the parties, and (b) with respect to the intellectual
property rights jointly owned by both parties, neither party may transfer or license such intellectual property rights to a third party
without written consent from the other party.
The
Services Agreement was executed in connection with the Master Purchase Agreement and is expected to continue in effect until the Master
Purchase Agreement is terminated or expires.
Supplemental
Agreement
On
July 7, 2021, ELM executed a Supplemental Agreement with Wuling, which amends and supplements the Master Purchase Agreement and the Services
Agreement (together, the “Original Agreements”). The Supplemental Agreement clarifies the engineering, design and development
process as well as the roles and responsibilities of each party. Specifically, pursuant to the Supplemental Agreement, ELM is responsible
for product liability claims in North America arising from Goods purchased from Wuling, and Wuling is responsible for product liability
claims arising from the parts it produces for ELM to the extent Wuling contributed to the development and manufacturing of the part giving
rise to the claim. Additionally, ELM is responsible for establishing the technical standards for parts produced pursuant to the Original
Agreements for the U.S. market and for ensuring that all engineering development pursuant to the Original Agreements is in compliance
with applicable U.S. laws and regulations.
Pursuant
to the Supplemental Agreement, within 14 working days after execution of the Supplemental Agreement, ELM will pay Wuling a retainer of
RMB 26 million (or equivalent U.S. dollars) as advance payment for engineering development and support services. Further, pursuant to
the Supplemental Agreement, ELM is obligated to continue to replenish such funds during the development process, within 14 working days
after notice from Wuling, to ensure the retainer amount held by Wuling is not less than RMB 26 million (or equivalent U.S. dollars).
If, at the end of the development process, a balance of the retainer remains, Wuling shall return such remaining balance to ELM within
14 working days after both parties determine that all development work has been accomplished and ELM confirms in writing.
The
foregoing summaries of the Master Purchase Agreement, Services Agreement and Supplemental Agreement do not purport to be complete and
are qualified in their entirety by reference to the agreements, copies of which are attached as Exhibits 10.1, 10.2 and 10.3 to this
Current Report on Form 8-K and incorporated by reference herein.