Item
1.01. Entry into a Material Definitive Agreement
General
On
January 5, 2020, Nebula Acquisition Corp., a Delaware corporation (“NAC”), BRP Hold 11, Inc., a Delaware corporation
(“Blocker”), the Blocker’s sole stockholder (the “Blocker Holder”), Nebula Parent
Corp., a Delaware corporation (“ParentCo”), NBLA Merger Sub LLC, a Texas limited liability company (“Merger
Sub LLC”), NBLA Merger Sub Corp., a Delaware corporation (“Merger Sub Corp”), Open Lending, LLC,
a Texas limited liability company (the “Company”), and Shareholder Representative Services LLC, a Colorado
limited liability company, as the Securityholder Representative, entered into a business combination agreement (the “Agreement”)
pursuant to which NAC will acquire the Company for consideration of a combination of cash and shares (as further explained below).
The terms of the Agreement, which contains customary representations and warranties, covenants, closing conditions, termination
fee provisions and other terms relating to the mergers and the other transactions contemplated thereby, are summarized below.
Capitalized terms used in this Current Report on Form 8-K but not otherwise defined herein have the meanings given to them in
the Agreement.
The
Merger Agreement
Structure
of the Transaction
The
acquisition is structured as a “double dummy” transaction, resulting in the following:
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(a)
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Each
of ParentCo, Merger Sub Corp and Merger Sub LLC are newly formed entities that were formed
for the sole purpose of entering into and consummating the transactions set forth in
the Agreement. ParentCo is a wholly-owned direct subsidiary of NAC and both Merger Sub
LLC and Merger Sub Corp are wholly-owned direct subsidiaries of ParentCo.
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(b)
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On
the Closing Date, each of the following transactions will occur in the following order:
(i) Merger Sub Corp will merge with and into NAC (the “First Merger”),
with NAC surviving the First Merger as a wholly owned subsidiary of ParentCo (the “NAC
Surviving Company”); (ii) immediately following the First Merger and prior
to the Blocker Contribution (as defined below), Blocker shall redeem a specified number
of shares of Blocker common stock in exchange for cash (the “Blocker Redemption”);
(iii) immediately following the Blocker Redemption, ParentCo will acquire, and the Blocker
Holder will contribute to ParentCo the remaining shares of Blocker common stock after
giving effect to the Blocker Redemption (the “Blocker Contribution”)
such that, following the Blocker Contribution, Blocker will be a wholly-owned subsidiary
of the ParentCo; (iv) immediately following the Blocker Contribution, Merger Sub LLC
will merge with and into the Company (the “Second Merger”), with the
Company surviving the Second Merger as a wholly-owned subsidiary of ParentCo (the “Surviving
Company”); (v) immediately following the Second Merger, Blocker will acquire,
and ParentCo will contribute to Blocker all common units of the Surviving Company directly
held by ParentCo after the Second Merger; and (vi) the NAC Surviving Company will acquire
and ParentCo will contribute to the NAC Surviving Company the remaining shares of Blocker
common stock after giving effect to the Blocker Redemption and the Blocker Contribution
(the “ParentCo Blocker Contribution”) such that, following the ParentCo
Blocker Contribution, Blocker shall be a wholly-owned subsidiary of the NAC Surviving
Company (together with the other transactions related thereto, the “Proposed
Transactions”).
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(c)
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Contemporaneously
with the execution of the Agreement, True Wind Capital and several fundamental investors
entered into certain subscription agreements (collectively, the “Subscription
Agreements”), pursuant to which, at Closing, True Wind Capital and such other
persons agreed to subscribe for and purchase ParentCo Common Shares for an aggregate
cash amount of $200,000,000 at a purchase price of $10.00 per share, anchored by True
Wind Capital, which has agreed to subscribe to and purchase $85,000,000 worth of NAC
Class A Common Stock.
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(d)
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In
addition, contemporaneously with the execution of the Agreement, (i) certain Company
Unitholders representing 48% of the Company’s outstanding membership interests
entered into a Company Support Agreement (the “Company Support Agreement”),
pursuant to which such Company Unitholders agreed, among other things, to approve the
Agreement and the Proposed Transactions, (ii) certain stockholders of NAC entered into
Investor Support Agreements (each, an “Investor Support Agreement”),
pursuant to which certain NAC stockholders agreed, among other things, to approve the
Agreement, the Proposed Transactions, not to redeem any shares held by such stockholders
in connection with the Proposed Transactions and to tender any warrants to purchase NAC
Class A Common Stock held by such stockholder to NAC for cash consideration of $1.50
per whole warrant and to vote all such warrants held by such NAC stockholder in favor
of any amendment to the terms of such warrants proposed by NAC, including to reduce the
term of all outstanding warrants to purchase shares of NAC Class A Common Stock to expire
upon the consummation of the First Merger (the “Warrant Amendment”);
and (iii) the holders of the NAC Class B Common Stock entered into a Founder Support
Agreement (the “Founder Support Agreement”), pursuant to which, among
other things, such holders agreed to approve the Agreement, the Proposed Transactions
and forfeit any NAC Warrants held by them to NAC, as well as waive any anti-dilution
rights provided to such NAC stockholder in NAC’s current certificate of incorporation.
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(e)
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The
parties will also enter into a Tax Receivable Agreement (the “Tax Receivable
Agreement”) and an Investors Rights Agreement (the “Investor Rights
Agreement”), each of which are closing conditions of the parties to consummate
the Proposed Transactions.
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Consideration
The
aggregate consideration payable to the members of the Company and the Blocker Holder for the Proposed Transaction consists of
the Company Merger Consideration, the Blocker Redemption Amount, the Blocker Consideration and the Contingency Consideration.
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(a)
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The
Cash Consideration and the Share Consideration
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The
Cash Consideration is an amount equal to (i) the Available Cash (as defined below), plus (ii) the aggregate amount of all cash
held by the Company or any of its subsidiaries as of 8:00 a.m. Eastern Time on the Business Day after the last date that any NAC
stockholder may exercise its redemption rights (the “Reference Time”), plus (iii) the net proceeds of the Debt
Financing received by the Company prior to the First Merger, minus (iv) any Company Transaction Expenses in excess of $10,000,000.
The
Share Consideration is the number of ParentCo Common Shares equal to the quotient of: (i) (1) $1,260,625,000 minus, (2) the Available
Cash (as defined below), minus (3) the net proceeds of the Debt Financing (as defined below) received by the Company prior to
the First Merger; divided by (ii) $10.00.
Available
Cash is the amount equal to, as of the Reference Time: (i) the principal amount of immediately available funds contained in NAC’s
Trust Fund (the “Trust Fund”) available for release to NAC, ParentCo and the Company as applicable, plus (ii)
the net amount of immediately available funds held by NAC pursuant to the Subscription Agreements, minus (iii) $35,000,000, minus
(iv) the NAC Expenses set forth on a certificate delivered by NAC on the Closing Date, plus (v) the amount of cash as of the Reference
Time held by NAC without restriction outside of the Trust Fund and any interest earned on the amount of cash held inside the Trust
Fund.
Debt
Financing is the incurrence by the Company and/or its subsidiaries of up to $225,000,000 senior secured credit facilities from
a syndicate of financial institutions.
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(b)
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Company
Merger Consideration
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Company
Merger Consideration consists of a combination of cash and shares. The Company Cash Consideration is an amount equal to the Cash
Consideration, multiplied by a percentage as determined by the Company’s board of directors in accordance with the Company’s
organizational documents (the “Company Percentage”). The Company Share Consideration is the number of ParentCo
Common Shares equal to the Share Consideration, multiplied by the Company Percentage.
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(c)
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Blocker
Redemption Amount and Blocker Consideration
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Blocker
shall redeem a number of shares of Blocker common stock having a value equal to the Blocker’s cash as of the Reference Time
minus Blocker’s unpaid taxes, if any, as determined in good faith by the Board of Directors of Blocker. The Blocker Consideration
for the Contribution consists of a combination of cash and shares. The Blocker Cash Consideration is an amount equal to the Cash
Consideration, multiplied by a percentage as determined by the Company’s board of directors in accordance with the Company’s
organizational documents (the “Blocker Percentage”). The Blocker Share Consideration is a number of ParentCo
Common Shares equal to the Share Consideration multiplied by the Blocker Percentage.
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(d)
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Contingency
Consideration
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As
a part of the overall Aggregate Consideration, the Blocker Holders and the Company Unitholders will be issued up to 15,000,000
additional ParentCo Common Shares. Each of the First Level Contingency Consideration and Second Level Contingency Consideration,
is equal to 7,500,000 ParentCo Common Shares. The Blocker Holders and the Company Unitholders will be entitled to the First Level
Contingency Consideration, if prior to or as of the second anniversary of the Closing, the daily volume weighted average (“VWAP”)
of the ParentCo Common Shares is greater than or equal to $12.00 over any 20 trading days within any 30-trading day period. The
Blocker Holders and the Company Unitholders will be entitled to the Second Level Contingency Consideration if, prior to or as
of the second anniversary of the Closing, the VWAP is greater than or equal to $14.00 over any 20 trading days within any 30-trading
day period.
If
a Change of Control of ParentCo occurs prior to the second anniversary of the Closing, the Company Unitholders and the Blocker
Holder will be entitled to receive any portion of the applicable Contingency Consideration that is issuable pursuant to each of
the First Level Contingency Consideration and Second Level Contingency Consideration and that remains unissued prior to the consummation
of such Change of Control.
Proxy
Statement/Prospectus and Stockholder Meeting
As
promptly as practicable, after the date of the Agreement, (i) NAC shall prepare and file with the Securities and Exchange Commission
(the “SEC”) the proxy statement/prospectus (as amended or supplemented from time to time, the “Proxy
Statement/Prospectus”) to be sent to the stockholders of NAC soliciting proxies from such stockholders to obtain the
NAC Stockholders Approval at the meeting of NAC’s stockholders and (ii) ParentCo and NAC shall prepare and file with the
SEC a registration statement on Form S-4 or such other applicable form, in which the Proxy Statement/Prospectus will be included
as a prospectus, in connection with the registration under the Securities Act of 1933, as amended (the “Securities Act”),
of the ParentCo Common Shares issuable in connection with the Proposed Transactions.
Tender
Offer
As
soon as reasonably practicable after the date of the Agreement, NAC will commence a tender offer to acquire each of the issued
and outstanding NAC Warrants in exchange for $1.50, net to the seller in cash per NAC warrant (the “Tender Offer”).
The obligation of NAC to accept for payment, and pay for, all NAC Warrants validly tendered pursuant to the Tender Offer will
be subject to the satisfaction or (if permitted pursuant to the terms of the Agreement) waiver of (and shall not be subject to
any other conditions) the conditions that (a) there shall be validly tendered (and not withdrawn) 8,250,000 NAC Warrants and (b)
the First Merger shall have been consummated. The Tender Offer will be coupled with a consent solicitation that will require any
person tendering a NAC Warrant to vote in favor of the Warrant Amendment, which, among other things, will reduce the term of any
and all remaining NAC Warrants to expire upon the consummation of the First Merger. The Tender Offer will initially be scheduled
to expire on the later of: (a) 20 Business Days following the Offer Commencement Date; and (b) the Closing Date (unless otherwise
agreed to in writing by NAC and the Company).
Closing
The
Closing will be on a date to be specified by NAC and the Company, but in no event later than three Business Days following the
satisfaction or waiver of all of the closing conditions. NAC will convene and hold a special meeting of the stockholders of NAC
on or around January 9, 2020 for the purpose of voting to extend the deadline for NAC to consummate the Proposed Transactions
(the “Extension”). It is expected that the First Merger will occur on or before June 12, 2020, which is the
outside date to complete a business combination if approved at the special meeting of stockholders of NAC.
Representations,
Warranties and Covenants
The
Agreement contains customary representations, warranties and covenants of (a) the Company and Blocker and (b) ParentCo, NAC, Merger
Sub Corp and Merger Sub LLC relating to, among other things, their ability to enter into the Agreement and their outstanding capitalization.
Conditions
to Closing
General
Conditions
The
obligation of the parties to consummate the Proposed Transactions is conditioned on, among other things, the satisfaction or waiver
(where permissible) by NAC and the Company of the following conditions, (a) the stockholders of NAC shall have approved and adopted
the NAC Stockholder Approval; (b) no governmental authority shall have enacted, issued, promulgated, enforced or entered any law,
rule, regulation, judgment, decree, writ, injunction, determination, order or award which is then in effect and has the effect
of making the Proposed Transactions illegal or otherwise prohibiting consummation of the Proposed Transactions; (c) all required
filings under the HSR Act shall have been completed and any applicable waiting period (and any extension thereof) applicable to
the consummation of the First Merger, the Blocker Contribution and the Second Merger under the HSR Act shall have expired or been
terminated, and any pre-Closing approvals or clearances reasonably required thereunder shall have been obtained; (d) the consents,
approvals and authorizations legally required to be obtained to consummate the Proposed Transactions set forth on a schedule to
the Agreement shall have been obtained from and made with all governmental authorities; (e) between the date of the Agreement
and the consummation of the Second Merger, the net tangible assets held by NAC in the aggregate shall be equal to at least $5,000,001;
(f) the ParentCo Common Shares issuable in connection with the Proposed Transactions, shall be duly authorized by the Board of
Directors of NAC and ParentCo and ParentCo’s organizational documents and ParentCo’s initial listing application with
the Nasdaq Capital Market in connection with the Proposed Transactions shall have been approved and, immediately following the
closing of the Proposed Transactions, ParentCo shall satisfy any applicable initial and continuing listing requirements of the
Nasdaq Capital Market and ParentCo shall not have received any notice of non-compliance therewith, and the ParentCo Common Shares,
shall have been approved for listing on the Nasdaq Capital Market; (g) the members of the Company shall have approved and adopted
the Member Approval; and (h) all of the conditions to the consummation of the Tender Offer (other than the consummation of the
First Merger) shall have been satisfied and the Warrant Amendment shall have been approved.
ParentCo,
NAC, Merger Sub Corp and Merger Sub LLC Conditions to Closing
The
obligations of ParentCo, NAC, Merger Sub Corp and Merger Sub LLC to consummate the Proposed Transactions are subject to the satisfaction
or waiver by NAC (where permissible) of the following additional conditions:
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The
representations and warranties of the Company contained in the Agreement shall be true
and correct (without giving effect to any limitation as to “materiality”
or “Company Material Adverse Effect” or any similar limitation set forth
herein) in all respects as of the Closing Date, as though made on and as of the Closing
Date (except to the extent that any such representation and warranty is made of an earlier
date, in which case such representation and warranty shall be true and correct as of
such earlier date), except where the failure of such representations and warranties to
be true and correct, taken as a whole, does not cause a Company Material Adverse Effect
(the “Company Representation Condition”).
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The
representations and warranties of Blocker contained in the Agreement shall be true and
correct (without giving effect to any limitation as to “materiality” or “material
adverse effect” or any similar limitation set forth herein) in all respects as
of the Closing Date, as though made on and as of the Closing Date (except to the extent
that any such representation and warranty is made of an earlier date, in which case such
representation and warranty shall be true and correct as of such earlier date), except
where the failure of such representations and warranties to be true and correct, taken
as a whole, does not cause a material adverse effect on Blocker’s ability to consummate
the Proposed Transactions (the “Blocker Representation Condition”).
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The
Company, the Blocker Holder and the Blocker, respectively, shall have performed or complied
in all material respects with all agreements and covenants required by the Agreement
to be performed or complied with by it on or prior to the consummation of the Second
Merger (the “Company Covenant Condition”).
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The
Company shall have delivered to NAC a certificate, dated the Closing Date, signed by
an authorized officer of the Company, certifying as to the satisfaction of the Company
Representation Condition and the Company Covenant Condition (as it relates to the Company).
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The
Company shall have delivered to NAC a certificate, dated the Closing Date, signed by
the Secretary of the Company certifying as to the resolutions of the Company’s
Board of Managers and the members of the Company holding a majority of all the outstanding
Company Membership Units entitled to vote authorizing and approving the Proposed Transactions.
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Blocker
shall have delivered to NAC a certificate, dated the Closing Date, signed by an authorized
officer of Blocker, certifying as to the satisfaction of the Blocker Representation Condition
and the Company Covenant Condition (as it relates to the Blocker).
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Blocker
and the Blocker Holder shall have delivered to NAC a certificate, dated the Closing Date,
signed by the Secretary of the Company certifying as to the resolutions of Blocker’s
Board of Directors approving the Proposed Transactions.
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The
Blocker Holder shall have delivered, or caused to be delivered, to NAC and ParentCo a
counterpart signature of a contribution agreement executed by the Blocker Holder.
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The
Company shall have delivered, or caused to be delivered, to NAC the Company Certificate
duly executed by an authorized officer of the Company in accordance with Section 2.04(b)
of the Agreement.
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The
Company shall have delivered to NAC the Payment Spreadsheet in accordance with Section
2.04(b) of the Agreement.
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The
Company shall have delivered to NAC counterpart signatures of the Tax Receivable Agreement
executed by the Company, Blocker, the Blocker Holder and specified Company Unitholders.
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The
Company shall have delivered, or cause to be delivered, to NAC and ParentCo a counterpart
signature of the Investors Rights Agreement.
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Company,
Blocker and the Blocker Holder Conditions to Closing
The
obligations of the Company, Blocker and the Blocker Holder to consummate the Proposed Transactions are subject to the satisfaction
or waiver (where permissible) of the following additional conditions:
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The
representations and warranties of NAC contained in the Agreement shall be true and correct
(without giving effect to any limitation as to “materiality” or “NAC
Material Adverse Effect” or any similar limitation set forth herein) in all respects
as of the Closing Date, as though made on and as of the Closing Date (except to the extent
that any such representation and warranty is made of an earlier date, in which case such
representation and warranty shall be true and correct as of such earlier date), except
where the failure of such representations and warranties to be true and correct, taken
as a whole, does not cause a NAC Material Adverse Effect (the “NAC Representation
Condition”).
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Each
of ParentCo, NAC, Merger Sub Corp and Merger Sub LLC, respectively, shall have performed
or complied in all material respects with all agreements and covenants required by the
Agreement to be performed or complied with by it on or prior to the consummation of the
Second Merger (the “NAC Covenant Condition”).
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NAC
shall have delivered to the Company a certificate, dated the Closing Date, signed by
an authorized officer of NAC, certifying as to the satisfaction of the NAC Representation
Condition and the NAC Covenant Condition.
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NAC
shall have delivered to the Company, dated the Closing Date, signed by the Secretary
of NAC certifying as to the resolutions of ParentCo’s, NAC’s, Merger Sub
Corp’s and Merger Sub LLC’s respective board of directors unanimously authorizing
and approving the Proposed Transactions and respective stockholders or members, as applicable,
authorizing and approving the Proposed Transactions.
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Immediately
following the consummation of the Second Merger, no single stockholder of ParentCo (other
than Blocker Holder, True Wind Capital or any party to a Subscription Agreement) shall
own in excess of nine and nine-tenths percent (9.9%) of the voting shares of ParentCo,
and no three stockholders of ParentCo (excluding the Company Unitholders, the Blocker
Holder, True Wind Capital and the parties to the Subscription Agreements) shall own in
excess of twenty-five percent (25%) of the voting shares of ParentCo.
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NAC
and ParentCo shall have delivered to the Company Unitholders, Blocker and the Blocker
Holder counterpart signatures of the Tax Receivable Agreement executed by NAC and ParentCo.
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The
individuals set forth on an exhibit to the Agreement shall have been appointed to the
ParentCo Board effective as of the Closing.
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NAC
and ParentCo shall have delivered to the Company a counterpart signature of the Investors
Rights Agreement executed by ParentCo.
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The
Available Cash shall be equal to or greater than $295,000,000 without any breach, inaccuracy
or failure to perform of any of the representations, warranties or covenants set forth
in Section 4.03(g) or Section 7.13(e) of the Agreement.
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NAC
shall have delivered, or caused to be delivered, to the Company the NAC Certificate duly
executed by an authorized officer of NAC in accordance with Section 2.04(c) of the Agreement.
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Termination
The
Agreement may be terminated at any time by the Company or NAC, respectively, as follows:
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(a)
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By
NAC or the Company, if (i) NAC and the Company provide mutual written consent; (ii) the
First Merger shall not have occurred on or before the earlier to occur of June 12, 2020,
or the date that NAC is required to dissolve or liquidate (the “Outside Date”);
provided, however, that the Agreement may not be terminated pursuant to this clause (ii)
by or on behalf of any party that is in breach or violation of any representation, warranty,
covenant, agreement or obligation contained in the Agreement and such breach or violation
is the primary cause of the failure of a condition set forth in Article VII of the Agreement
to be satisfied on or prior to the Outside Date; (iii) any governmental authority in
the United States will have enacted, issued, promulgated, enforced or entered any Law
which has become final and nonappealable and has the effect of making consummation of
the Proposed Transactions illegal or otherwise preventing or prohibiting consummation
of the Proposed Transactions.
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(b)
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By
NAC or the Company, if the NAC Stockholder Approval is not adopted and approved.
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(c)
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By
NAC or the Company, if the Member Approval is not adopted and approved (the “Company
Approval Termination Right”).
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(d)
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By
NAC upon a breach of any representation, warranty, covenant or agreement on the part
of the Company set forth in the Agreement, or if any representation or warranty of the
Company shall have become untrue, in either case such that the conditions set forth in
Section 8.02(a) and Section 8.02(b) of the Agreement would not be satisfied (“Terminating
Company Breach”); provided, that NAC has not waived such Terminating Company
Breach and ParentCo, NAC, Merger Sub Corp or Merger Sub LLC is not then in breach of
any representation, warranty, covenant or agreement on the part of ParentCo, NAC, Merger
Sub Corp or Merger Sub LLC set forth in the Agreement such that the conditions set forth
in Section 8.03(a) or Section 8.03(b) would not be satisfied; provided, however, that,
if such Terminating Company Breach is curable by the Company, NAC may not terminate the
Agreement pursuant to a Terminating Company Breach for so long as the Company continues
to exercise its reasonable efforts to cure such breach, unless such breach is not cured
within thirty (30) days after notice of such breach is provided by NAC to the Company.
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(e)
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By
the Company upon a breach of any representation, warranty, covenant or agreement on the
part of ParentCo, NAC, Merger Sub Corp and Merger Sub LLC, set forth in the Agreement,
or if any representation or warranty of ParentCo, NAC, Merger Sub Corp and Merger Sub
LLC shall have become untrue, in either case such that the conditions set forth in Section
8.03(a) of the Agreement would not be satisfied (“Terminating NAC Breach”);
provided, that the Company has not waived such Terminating NAC Breach and the Company,
Blocker or the Blocker Holder are not then in breach of any representation, warranty,
covenant or agreement on the part of the Company, Blocker or the Blocker Holder set forth
in the Agreement such that the conditions set forth in Section 8.02(a) and Section 8.02(b)
of the Agreement would not be satisfied; provided, however, that, if such Terminating
NAC Breach is curable by ParentCo, NAC, Merger Sub Corp and Merger Sub LLC, the Company
may not terminate this Agreement pursuant to a Terminating NAC Breach for so long as
ParentCo, NAC, Merger Sub Corp and Merger Sub LLC continue to exercise their reasonable
efforts to cure such breach, unless such breach is not cured within thirty (30) days
after notice of such breach is provided by the Company to NAC.
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(f)
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By
the Company, if immediately following the Extension Meeting required pursuant to Section
7.14 of the Agreement and after giving effect to the exercise of any Redemption Rights
by stockholders of NAC, NAC shall have less than an aggregate of $170,000,000 of cash
held in the Trust Fund, provided that during the five (5) Business Day period immediately
following the Extension Meeting, NAC may take any and all actions to increase the cash
held in the Trust Fund to an amount greater than $170,000,000 so that if the cash held
in the Trust Fund is greater than $170,000,000 on the date that is five (5) Business
Days following the Extension Meeting, then the Company’s right to terminate this
Agreement pursuant to this Section 9.01(g) shall be deemed waived and of no further effect.
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If
the Agreement is terminated pursuant to a Company Approval Termination Right and if (and only if) at the time of such termination:
(a) each of the conditions to Closing set forth in Section 8.01 of the Agreement shall have been satisfied or waived by NAC and
the Company (other than the condition set forth in Section 8.01(g) of the Agreement); and (b) each of the conditions to Closing
set forth in Section 8.03 of the Agreement shall have been satisfied or waived by the Company (other than those conditions that
by their nature are to be satisfied at the Closing, but subject to NAC certifying in writing to the Company that NAC shall satisfy
such conditions at the Closing and that NAC will consummate the Closing within three (3) Business Days after the date on which
the condition set forth in Section 8.01(g) of the Agreement shall have been satisfied), then the Company shall pay to NAC, a non-refundable
fee in the amount of $40,000,000 (the “Termination Fee”) promptly, but in no event later than sixty (60) days,
following the termination of this Agreement. In the event of any payment of the Termination Fee to NAC, NAC will allocate any
such amounts as follows: (i) to pay the expenses of NAC, including professional fees, incurred in connection with the Proposed
Transaction; (ii) to purchase from the Sponsor the warrants to purchase NAC Class A Common Stock that the Sponsor purchased in
connection with NAC’s initial public offering; (iii) to reimburse NAC for its expenses in connection with the Proposed Transaction;
(iv) to pay the expenses incurred by the Subscribers in connection with the PIPE, as defined below; (v) to pay certain other fees
and expenses in connection with the Proposed Transaction and the PIPE; and (vi) to pay any taxes applicable to NAC. After such
payments, the remaining portion of the Termination Fee will be divided among the holders of NAC Class A Common Stock eligible
to receive distributions upon the liquidation of NAC at such time and the Subscribers who committed to purchase ParentCo Common
Shares in the PIPE. Notwithstanding anything to the contrary contained in Section 9.03(b) of the Agreement or elsewhere in the
Agreement, if the Agreement is terminated under the circumstances set forth in the first sentence of this paragraph, NAC’s
right to receive the Termination Fee pursuant shall be the sole and exclusive remedy of NAC, ParentCo and their respective securityholders,
Affiliates and Representatives against the Company, Blocker, the Blocker Holder and their respective securityholders, Affiliates
and Representatives, and NAC, ParentCo and their respective securityholders, Affiliates and Representatives shall be deemed to
have waived all other remedies (including equitable remedies) with respect to: (i) any failure of the Proposed Transactions to
be consummated; (ii) any breach by the Company, Blocker or the Blocker Holder of their respective obligations to consummate the
Proposed Transactions or any other provision set forth in the Agreement; (iii) any inaccuracy in any representation or warranty
set forth in the Agreement; and (iv) any breach of any of the covenants or obligations set forth in the Agreement. Upon payment
by the Company of the Termination Fee, neither the Company, Blocker, the Blocker Holder nor any of their respective securityholders,
Affiliates or Representatives shall have any further liability or obligation (under the Agreement or otherwise) relating to or
arising out of the Agreement or any of the Proposed Transactions, and, in no event shall NAC, ParentCo nor any of their respective
securityholders, Affiliates or Representatives seek to recover any money damages or losses, or seek to pursue any other recovery,
judgment, damages or remedy (including any equitable remedy) of any kind, in connection with the Agreement or the Proposed Transactions.
A
copy of the Agreement is filed with this Current Report on Form 8-K as Exhibit 2.1 and is incorporated herein by reference. The
foregoing description of the Agreement is qualified in its entirety by reference to the full text of the Agreement filed with
this Current Report on Form 8-K. The Agreement is included to provide investors and security holders with information regarding
its terms. It is not intended to provide any other factual information about NAC, the Company or the other parties thereto. In
particular, the assertions embodied in representations and warranties by the Company, Blocker, ParentCo, NAC, Merger Sub Corp
and Merger Sub LLC contained in the Agreement are qualified by information in the disclosure schedules provided by the parties
in connection with the signing of the Agreement. These disclosure schedules contain information that modifies, qualifies and creates
exceptions to the representations and warranties set forth in the Agreement. Moreover, certain representations and warranties
in the Agreement were used for the purpose of allocating risk between the parties, rather than establishing matters as facts.
Accordingly, investors and security holders should not rely on the representations and warranties in the Agreement as characterizations
of the actual state of facts about the Company, Blocker, ParentCo, NAC, Merger Sub Corp and Merger Sub LLC.
Founder
Support Agreement
Contemporaneously
with the execution of the Agreement, the holders of the NAC Class B Common Stock (including Nebula Holdings, LLC, the “Sponsor”)
entered into the Founder Support Agreement, pursuant to which, among other things:
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Such
holders agreed to approve the Agreement and the Proposed Transactions.
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Such
holders agreed to forfeit (without consideration) all NAC Warrants held by them to NAC.
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The
Sponsor agreed that to the extent the NAC Expenses shall exceed an amount equal to $25,000,000
plus the amount of cash as of the Reference Time held by NAC without restriction outside
of the Trust Fund and any interest earned on the amount of cash held inside the Trust
Fund (collectively, the “NAC Expense Cap”), then, the Sponsor shall, on the
Closing Date, in its sole option, either (a) pay any such amount in excess of the NAC
Expense Cap to NAC in cash, by wire transfer of immediately available funds to the account
designated by NAC, or (b) forfeit to NAC (for no consideration) such number of shares
of NAC Class B Common Stock (valued at $10.00 per share of NAC Class B Common Stock)
held by the Sponsor that would, in the aggregate, have a value equal to such amount in
excess of the NAC Expense Cap; provided, that if Sponsor shall elect to forfeit shares
of NAC Class B Common Stock and the number of shares of NAC Class B Common Stock available
for forfeiture shall be insufficient to satisfy the Sponsor’s obligations to satisfy
such excess NAC Expenses, then Sponsor shall, on the Closing Date, satisfy any such additional
in cash on the Closing Date.
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Such
holders agreed to certain amendments to the lock up terms set forth in that certain letter
agreement, dated January 9, 2018, by and among NAC and such holders, pursuant to which
the lock up term will be extended for up to seven years following the Closing for half
the shares held by such holders, depending on the trading price of the ParentCo Common
Shares (and subject to forfeiture if such trading prices are not reached).
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Such
holders waived any anti-dilution protections provided to holders of the NAC Class B Common
Stock in NAC’s current certificate of incorporation.
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Such
holders will be issued up to 1,250,000 additional ParentCo Common Shares (the “Earn-Out
Shares”) as follows: (i) such holders will be entitled to an aggregate of 625,000
ParentCo Common Shares, if prior to or as of the second anniversary of the Closing, the
VWAP is greater than or equal to $12.00 over any 20 trading days within any 30-trading
day period; and (ii) such holders will be entitled to an aggregate of an additional 625,000
ParentCo Common Shares if, prior to or as of the second anniversary of the Closing, the
VWAP is greater than or equal to $14.00 over any 20 trading days within any 30-trading
day period. If a Change of Control of ParentCo occurs prior to the second anniversary
of the Closing, such holders will be entitled to receive all unissued Earn-Out Shares
prior to the consummation of such Change of Control.
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The
foregoing description of the Founder Support Agreement is qualified in its entirety by reference to the full text of Founder Support
Agreement, a copy of which is included as Exhibit 10.1 to this Current Report on Form 8-K, and incorporated herein by reference.
Investor
Support Agreement
Contemporaneously
with the execution of the Agreement, certain stockholders of NAC entered into the Investor Support Agreement, pursuant to which,
among other things, certain holders agreed (i) to approve the Agreement and the Proposed Transactions; (ii) not to redeem any
shares held by such stockholders in connection with the Proposed Transactions and (iii) to tender any warrants to purchase NAC
Class A Common Stock held by such stockholder to NAC for cash consideration of $1.50 per whole warrant and to vote all such warrants
held by such NAC stockholder in favor of any amendment to the terms of such warrants proposed by NAC, including the Warrant Amendment.
The
foregoing description of the Investor Support Agreement is qualified in its entirety by reference to the full text of Form of
Investor Support Agreement, a copy of which is included as Exhibit 10.2 to this Current Report on Form 8-K, and incorporated herein
by reference.
Company
Support Agreement
Contemporaneously
with the execution of the Agreement, certain Company Unitholders entered into the Company Support Agreement, pursuant to which
such Company Unitholders agreed to approve the Agreement and the Proposed Transactions.
The
foregoing description of the Company Support Agreement is qualified in its entirety by reference to the full text of Company Support
Agreement, a copy of which is included as Exhibit 10.3 to this Current Report on Form 8-K, and incorporated herein by reference.
Tax
Receivable Agreement
At
the Closing, NAC will enter into the Tax Receivable Agreement with the Blocker, the Blocker Holder, the Company and the members
of the Company. The Tax Receivable Agreement will generally provide for certain payments and make certain arrangements with respect
to any tax benefits to be derived by ParentCo and its subsidiaries (including the Company and its subsidiaries, as applicable
and without duplication) as the result of the Second Merger, the Blocker Contribution and the making of payments under the Tax
Receivable Agreement.
The
foregoing description of the Tax Receivable Agreement is qualified in its entirety by reference to the full text of the Form of
the Tax Receivable Agreement, a copy of which is included as Exhibit G to the Agreement, filed as Exhibit 2.1 to this Current
Report on Form 8-K, and incorporated herein by reference.
Investor
Rights Agreement
In
connection with the Proposed Transactions, the Company, NAC, ParentCo, certain persons and entities holding membership units of
the Company and certain persons and entities holding founder shares of NAC (collectively, the “Holders”), will
enter into the Investor Rights Agreement at the Closing. The Investor Rights Agreement will provide for certain designation rights
with respect to the board of directors of ParentCo, such that the Sponsor and Bregal Sagemount, the Company’s largest minority
equity holder, and specified Company members will each have the right to designate two agreed upon board representatives, for
period of time following the Closing.
Pursuant
to the terms of the Investor Rights Agreement, ParentCo will be obligated to file a registration statement to register the resale
of certain securities of ParentCo held by the Holders. In addition, pursuant to the terms of the Investor Rights Agreement and
subject to certain requirements and customary conditions, including with regard to the number of demand rights that may be exercised,
the Holders may demand at any time or from time to time, that ParentCo file a registration statement on Form S-1, or any similar
long-form registration statement, or if available, on Form S-3 to register the shares of common stock of ParentCo held by such
Holders. The Investor Rights Agreement will also provide the Holders with “piggy-back” registration rights, subject
to certain requirements and customary conditions. The Investor Rights Agreement further provides for ParentCo Common Shares held
by the Holders to be locked-up for 180 days after the Closing.
The
foregoing description of the Investor Rights Agreement is qualified in its entirety by reference to the full text of the Form
of the Investor Rights Agreement, a copy of which is included as Exhibit H to the Agreement, filed as Exhibit 2.1 to this Current
Report on Form 8-K and incorporated herein by reference.
Private
Placement and Subscription Agreements
In
connection with the Proposed Transactions, NAC has obtained commitments from interested investors (each a “Subscriber”)
to purchase shares of NAC Class A Common Stock, which will be converted into ParentCo Common Shares in connection with the Closing
(the “PIPE Shares”), for a purchase price of $10.00 per share, in a private placement (the “PIPE”).
Several fundamental investors have committed $200 million to participate in the transaction through the PIPE anchored by True
Wind Capital. True Wind Capital has agreed to subscribe for $85,000,000 worth of PIPE Shares for a purchase price of $10.00 per
share. Certain offering related expenses are payable by NAC, including customary fees payable to the placement agents, Deutsche
Bank Securities and Goldman Sachs & Co., LLC. Such commitments are being made by way of the Subscription Agreements, by and
among each Subscriber, NAC, the Company and ParentCo. The purpose of the sale of the PIPE Shares is to raise additional capital
for use in connection with the Proposed Transactions and to meet the minimum cash requirements provided in the Agreement. It is
intended that the Subscription Agreements for the entire PIPE will be entered into contemporaneously with the execution of the
Agreement.
The
PIPE Shares are identical to the shares of common stock that will be held by NAC’s public stockholders at the time of the
Closing, other than the PIPE Shares, when initially issued by NAC in connection with the PIPE Closing, and such shares will not
be registered with the SEC) nor available to trade on the Nasdaq Capital Market.
The
closing of the sale of PIPE Shares (the “PIPE Closing”) will be contingent upon the substantially concurrent
consummation of the Proposed Transactions. The PIPE Closing will occur on the date of, and immediately prior to, the consummation
of the First Merger. The PIPE Closing will be subject to customary conditions, including:
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ParentCo’s
initial listing application with the Nasdaq Capital Market in connection with the Proposed
Transaction shall have been approved and, immediately following the Closing, ParentCo
shall satisfy any applicable initial and continuing listing requirements of the Nasdaq
Capital Market and ParentCo shall not have received any notice of non-compliance therewith,
and the ParentCo Common Shares, shall have been approved for listing on the Nasdaq Capital
Market;
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all
representations and warranties of NAC and the Subscriber contained in the relevant Subscription
Agreement shall be true and correct in all material respects (other than representations
and warranties that are qualified as to materiality or Material Adverse Effect (as defined
in the Subscription Agreements)), which representations and warranties shall be true
in all respects) at, and as of, the PIPE Closing; and
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as
of the Closing Date, there has been no material adverse change in the business, properties,
financial condition, stockholders’ equity or results of operations of NAC and its
subsidiaries taken as a whole since the date of the Subscription Agreement (other than
(i) the election by holders of the NAC Class A Common Stock to exercise redemption rights
in connection with (x) the special meeting of NAC’s stockholders to approve the
Proposed Transactions or (y) a special meeting of NAC’s stockholders to approve
the extension of time for NAC to complete the Proposed Transactions, and (ii) in connection
with any offer to purchase outstanding NAC Warrants).
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all
conditions precedent to the Closing of the Proposed Transactions, including the approval
by NAC’s stockholders, shall have been satisfied or waived.
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Pursuant
to the Subscription Agreements, ParentCo will agree that, within 45 calendar days after the consummation of the Proposed Transactions,
ParentCo will file with the SEC (at ParentCo’s sole cost and expense) a registration statement registering the resale of
the shares of common stock received by the Subscriber in connection with the Proposed Transactions (the “Resale Registration
Statement”), and ParentCo shall use its commercially reasonable efforts to have the Resale Registration Statement declared
effective as soon as practicable after the filing thereof; provided, however, that ParentCo’s obligations to include the
shares held by a Subscriber in the Resale Registration Statement will be contingent upon the respective Subscriber furnishing
in writing, to ParentCo, such information regarding the Subscriber, the securities of ParentCo held by such Subscriber and the
intended method of disposition of the shares, as shall be reasonably requested by ParentCo to effect the registration of such
shares, and will execute such documents in connection with such registration, as ParentCo may reasonably request, which will be
what is customary of a selling stockholder in similar situations.
Under
certain circumstances, additional payments by ParentCo may be assessed with respect to the shares of common stock included in
the registerable securities in the event that (1) a Resale Registration Statement has not been declared effective by the SEC by
the earlier of (A) 90 days (or 120 days if the SEC notifies ParentCo that it will “review” the Resale Registration
Statement) following the Closing, or (B) 10 Business Days after the SEC notifies ParentCo that it will not review the Resale Registration
Statement, subject to certain potential timing adjustments or (2) the Resale Registration Statement is declared effective by the
SEC but thereafter ceases to be effective prior to the expiration of a designated effective period. The additional payments by
ParentCo shall accrue on the applicable registrable securities at a rate of 0.5% of the aggregate purchase price paid for such
registrable securities per month, subject to certain terms and limitations (including a cap of 5.0% of the aggregate purchase
price).
Each
Subscription Agreement will terminate upon the earlier to occur of (w) such date and time as the Agreement is terminated in accordance
with its terms, (x) upon the mutual written agreement of each of the parties to the Subscription Agreement, (y) any of the conditions
to the PIPE Closing are not satisfied or waived on or prior to the PIPE Closing and, as a result thereof, the transactions contemplated
by the Subscription Agreement are not consummated at the PIPE Closing or (z) December 31, 2020.
The
foregoing description of the Subscription Agreements is qualified in its entirety by reference to the full text of the Form of
the Subscription Agreement, a copy of which is included as Exhibit 10.4 to this Current Report on Form 8-K, and incorporated herein
by reference.