ITEM 1.01 ENTRY INTO A MATERIAL AGREEMENT.
Merger Agreement:
On June 01, 2023, American Battery Materials, Inc.,
a Delaware corporation (“ABM”, or the “Company”) entered into an Agreement and Plan of Merger (the
“Merger Agreement”) by and among Seaport Global Acquisition II Corp., a Delaware corporation (NASDAQ: SGII) (“SGII”),
and Lithium Merger Sub, Inc., a Delaware corporation and wholly-owned subsidiary of SGII (“Merger Sub”).
SGII is a blank check company, also referred to as
a special purpose acquisition company (SPAC), formed for the purpose of effectuating a merger, capital stock exchange, asset acquisition,
stock purchase, reorganization or other similar business combination with one or more businesses. SGII is an early stage and
emerging growth company.
Pursuant to the Merger Agreement, Merger Sub will
merge with and into ABM, with ABM surviving the merger (the “Merger” and, together with the other transactions contemplated
by the Merger Agreement, the “Transactions”). As a result of the Transactions, ABM will become a wholly-owned subsidiary
of SGII, with the stockholders of ABM becoming stockholders of SGII.
Under the Merger Agreement, the stockholders of ABM
will receive a number of shares of SGII common stock based on an exchange ratio (the “Exchange Ratio”), the numerator
of which is equal to the number of shares of SGII common stock equal to the quotient of (i) (A) $160,000,000, plus (B) Closing
Date Cash, minus (C) the Closing Date Indebtedness, plus (D) the aggregate exercise price of all Company Warrants (excluding
any Company Warrants that will terminate by their terms upon the Effective Time), divided by (ii) $10.00, and the denominator of
which is equal to the number of outstanding shares of ABM, including Company Convertible Note Conversion Shares (all capitalized terms
in the Exchange Ratio as defined in the Merger Agreement).
The holders of Specified Convertible Notes will receive
a number of shares of SGII common stock determined by dividing all principal and accrued interest under such notes by the applicable conversion
prices set forth in such notes. The holders of ABM options and warrants will receive SGII options and warrants equal to the number of
shares of ABM Common Stock subject to the ABM options and warrants multiplied by the Exchange Ratio, at an exercise price per share equal
to the exercise price of the ABM options and warrants divided by the Exchange Ratio.
In connection with the Transactions, Seaport Global
SPAC II, LLC (“Sponsor”), SGII’s sponsor from its initial public offering, agreed to enter into a lock-up agreement
(the “Sponsor Lock-Up Agreement”), pursuant to which the SGII common stock held by Sponsor will be subject to transfer
restrictions until the earlier of (i) one year from the Closing of the Merger; (ii) the date on which the last sales price of SGII common
stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations and recapitalizations) for any
20-trading days within any 30-trading day period commencing at least 150-trading days after the Closing of the Merger; and, (iii) the
date on which SGII completes a liquidation, merger, capital stock exchange or other similar transaction that results in all of SGII’s
stockholders having the right to exchange their shares of common stock for cash, securities or other property.
Certain stockholders of ABM receiving shares of SGII
common stock in connection with the Merger have agreed to enter into lock-up agreements (the “Stockholder Lock-Up Agreement”),
pursuant to which such stockholders will be subject to the same lockup period to which Sponsor will be subject for all shares of SGII
common stock held by such persons.
The Transactions are expected to be consummated in
2023, after the required approval by the stockholders of SGII and the fulfillment of certain other conditions.
The following summaries of the Merger Agreement and
the other agreements to be entered into by the parties are qualified in their entirety by reference to the text of the Merger Agreement
and agreements entered into in connection therewith. The Merger Agreement is attached as Exhibit 2.1 hereto and incorporated herein by
reference. Capitalized terms not defined herein have the meaning given in the Merger Agreement.
Representations and Warranties
The Merger Agreement contains representations and
warranties of ABM relating to, among other things, due organization and qualification; subsidiaries; the authorization, performance and
enforceability against ABM of the Merger Agreement; absence of conflicts; the consent, approval or authorization of governmental authorities;
pre-transaction capitalization; SEC reports, financial statements, Sarbanes-Oxley Act and absence of undisclosed liabilities; litigation
and proceedings; compliance with laws; intellectual property matters; contracts and absence of defaults; benefit plans; labor matters;
tax matters; brokers’ fees; insurance; assets and real property, including mining claims; environmental matters; absence of certain
changes or events; transactions with affiliates; internal controls; permits; customers and suppliers; and statements made in the Registration
Statement on Form S-4 required to be prepared in connection with the Transactions (the “Registration Statement”).
The Merger Agreement contains representations and
warranties of each of SGII and Merger Sub relating to, among other things, due organization and qualification; the authorization, performance
and enforceability against SGII and Merger Sub of the Merger Agreement; absence of conflicts; litigation and proceedings; the consent,
approval or authorization of governmental authorities; financial ability and trust account; brokers’ fees; SEC reports, financial
statements, Sarbanes-Oxley Act and absence of undisclosed liabilities; business activities and the absence of certain changes or events;
statements made in the Registration Statement; no outside reliance; tax matters; capitalization; and Nasdaq listing.
Covenants
The Merger Agreement includes customary covenants
of the parties with respect to business operations prior to consummation of the Transactions and efforts to satisfy conditions to the
consummation of the Transactions. The Merger Agreement also contains additional covenants of the parties, including, among others, covenants
providing for SGII and ABM to cooperate in the preparation of the Registration Statement.
Trust Account Waiver
The Company agreed that it and its affiliates will
not have any right, title, interest or claim of any kind in or to any monies in SGII’s trust account held for its public shareholders,
and agreed not to, and waived any right to, make any claim against the trust account (including any distributions therefrom).
Conditions to Closing
Mutual Conditions
Consummation of the Transactions is conditioned on
approval thereof by SGII’s stockholders. In addition, each party’s obligation to consummate the Merger is conditioned upon,
among other things:
| ● | all necessary permits, approvals, clearances,
and consents of or filings with regulatory authorities having been procured or made, as applicable; |
| ● | no
order, judgment, injunction, decree, writ, stipulation, determination or award, in each case,
entered by or with any governmental authority, or statute, rule or regulation being in force
that enjoins or prohibits the consummation of the Transactions; |
| ● | SGII
having at least $5,000,001 of net tangible assets remaining prior to the Merger after taking
into account any redemptions by holders of SGII common stock that properly demand that SGII
redeem their common stock for their pro rata share of the trust account prior to the Closing
of the Transactions; |
| ● | the
Registration Statement having become effective in accordance with the provisions of the Securities
Act of 1933, as amended from time-to-time (the “Securities Act”), no stop
order having been issued by the SEC that remains in effect with respect to the Registration
Statement, and no proceeding seeking such a stop order having been threatened or initiated
by the SEC that remains pending; |
| ● | the
delivery by each party to the other party of a certificate with respect to (i) the truth
and accuracy of such party’s representations and warranties as of execution of the
Merger Agreement and as of the Closing of the Transactions and (ii) the performance by such
party of covenants contained in the Merger Agreement required to by complied with by such
party in all material respects as of or prior to the Closing; |
| ● | approval
of the Transactions by the SGII’s stockholders; and |
| ● | approval
of the Transactions by ABM’s stockholders. |
ABM’s
Conditions to Closing
The
obligations of ABM to consummate the Merger are also conditioned upon, among other things:
| ● | the
Available Closing Date Cash being equal to or in excess of $20,000,000.00; |
| ● | the
accuracy of the representations and warranties of SGII and Merger Sub (subject to certain
bring-down standards); |
| ● | performance
of the covenants of SGII and Merger Sub to be performed by such parties in all material respects
as of or prior to the Closing; |
| ● | SGII
filing an amended and restated certificate of incorporation with the Secretary of State of
the State of Delaware and adopting amended and restated bylaws, each in substantially the
form as attached to the Merger Agreement; |
| ● | Sponsor
having executed and delivered an earnout agreement with SGII and ABM in form and substance
mutually satisfactory to the parties (the “Sponsor Earnout Agreement”)
prior to the Registration Statement becoming effective; |
| ● | SGII
executing the Stockholders’ Agreement (as defined below); |
| ● | SGII
executing the Sponsor Lock-Up Agreement; and |
| ● | the
SGII common stock to be issued pursuant to the Merger Agreement and underlying the exchanged
options and warrants having been approved for listing on a national securities exchange.
|
SGII’s
and Merger Sub’s Conditions to Closing
The
obligations of SGII and Merger Sub to consummate the Merger are also conditioned upon, among other things:
| ● | the
accuracy of the representations and warranties of ABM (subject to certain bring-down standards); |
| ● | performance
of the covenants of ABM to be performed by ABM in all material respects as of or prior to
the Closing; |
| ● | all
directors of ABM that will not continue as directors of ABM having executed and delivered
to SGII letters of resignation; |
| ● | ABM
having implemented certain measures related to compliance with the Sarbanes-Oxley Act; |
| ● | ABM
having executed and delivered Sponsor Earnout Agreement prior to the Registration Statement
becoming effective; |
| ● | certain
executives of ABM each executing and delivering an employment agreement with SGII and/or
ABM in form and substance mutually satisfactory to such parties; |
| ● | certain
employees of ABM each executing and delivering an earnout agreement with SGII in form and
substance mutually satisfactory to such parties; |
| ● | certain
stockholders of ABM each executing and delivering a restrictive covenant agreement with SGII
and ABM in form and substance mutually satisfactory to such parties; |
| ● | certain
stockholders of ABM each executing and delivering a Stockholder Lock-Up Agreement; and |
| ● | certain
stockholders of ABM executing and delivering the Stockholders’ Agreement (as defined
below). |
Waiver
If permitted under applicable law, SGII or ABM may
waive any inaccuracies in the representations and warranties made to such party and contained in the Merger Agreement and waive compliance
with any agreements or conditions for the benefit of such party contained in the Merger Agreement. However, pursuant to SGII’s existing
amended and restated certificate of incorporation, the condition requiring that SGII have at least $5,000,001 of net tangible assets may
not be waived.
Termination
The
Merger Agreement may be terminated at any time, but not later than the Closing of the Merger, as follows:
| ● | by
mutual written consent of SGII and ABM; |
| ● | by
either SGII or ABM if the Transactions are not consummated on or before the later of August
19, 2023 and such later date as SGII’s stockholders may approve, provided that the
terminating party shall not have been the primary cause of the failure to close by such date; |
| ● | by
either SGII or ABM if consummation of the Transactions is permanently enjoined or prohibited
by the terms of a final, non-appealable order, decree or ruling of a governmental entity
or a statute, rule or regulation, provided that the terminating party shall not have been
the primary cause of thereof; |
| ● | by
either SGII or ABM if the other party has breached any of its representations, warranties
or covenants, such that the closing conditions would not be satisfied at the Closing, and
has not cured such breach within 45 days of notice from the other party of its intent to
terminate, provided that the terminating party is itself not in breach; |
| ● | by
SGII if the written consent of ABM’s stockholders approving the Transactions has not
been obtained and delivered to SGII within seven (7) days following the execution of the
Merger Agreement; and |
| ● | by
either SGII or ABM if, at the SGII shareholder meeting, the Merger Agreement shall fail to
be approved by the required vote described herein (subject to any adjournment or recess of
the meeting). |
Related Agreements:
Registration Rights Agreement
In connection with the execution of the Merger Agreement,
Sponsor and certain of ABM’s stockholders have entered into an Amended and Restated Registration Rights Agreement (the “Registration
Rights Agreement”) pursuant to which SGII will agree to file a shelf registration statement with respect to the registrable
securities under the Registration Rights Agreement. SGII also agreed to provide customary “piggyback” registration rights.
The Registration Rights Agreement also provides that SGII will pay certain expenses relating to such registrations and indemnify the stockholders
against certain liabilities. The Registration Rights Agreement is attached as Exhibit 10.1 hereto and incorporated herein by reference.
Stockholders’ Agreement
At the Closing of the Merger, Sponsor and certain
stockholders of ABM will enter into a Stockholders’ Agreement (the “Stockholders’ Agreement”) with SGII,
pursuant to which Sponsor will have the right to designate up to two directors for election to SGII’s board of directors for so
long as it maintains ownership of a certain percentage interest in SGII.
Stockholder Support Agreement
In connection with the execution of the Merger Agreement,
certain stockholders of ABM who hold a majority of the outstanding stock of ABM entitled to vote have entered into a Stockholder Support
Agreement, pursuant to which they have agreed to vote in favor of the Transactions at a meeting called to approve the Transactions by
ABM stockholders (or to act by written consent approving the Transactions). The Stockholder Support agreement is attached as Exhibit 10.2
hereto and incorporated herein by reference.
Sponsor Support Agreement
In connection with the execution of the Merger Agreement,
Sponsor and ABM have entered into a Sponsor Support Agreement, pursuant to which Sponsor has agreed to vote in favor of the Transactions
at a meeting called to approve the Transactions by SGII stockholders (or to act by written consent approving the Transactions). The
Sponsor Support Agreement is attached as Exhibit 10.3 hereto and incorporated herein by reference.
Financing Arrangements
In connection with the execution of the Merger Agreement,
SGII and ABM entered into a Prepaid Forward Purchase Agreement (the “FSPA”) with (i) Meteora Special Opportunity Fund
I, LP; (ii) Meteora Capital Partners, LP; and, (iii) Meteora Select Trading Opportunities Master, LP (collectively, “Meteora”).
Pursuant to the FSPA, Meteora is expected to purchase up to 4,200,000 Class A common SGII Shares (“FPA Shares”) subject
to a cap of 9.9% of outstanding shares on a post-Transaction basis, at a per share price no more than the price per share paid to redeeming
SGII public shareholders in connection with the vote to approve the Transactions (the “Redemption Price”), or up to
approximately $43,000,000 based on the current Redemption Price, in advance of the consummation of the Transactions. If Meteora purchases
less than 4,200,000 FPA Shares, it will be entitled to receive warrants to purchase shares of SGII common stock in an amount equal to
the difference of 4,200,000 and the number of FPA Shares purchased in the market by Meteora and subject to the FSPA. The form of warrant
shall be agreed upon by the parties within forty-five (45) days of the execution of the FSPA. Such warrants will be exercisable at US
$10.00 per share, subject to reduction upon any Dilutive Offering Reset (as defined in the FSPA). In connection with its purchase of the
FPA Shares, Meteora will waive its redemption rights in connection with the shareholder vote to approve the Transactions. Entities and
funds managed by Meteora own equity interests in Sponsor.
Following the Closing of the Transactions, an amount
equal to the number of FPA Shares multiplied by the Redemption Price, less 1.00%, will be prepaid to Meteora. The remaining 1.00% (the
“Prepayment Shortfall”) will be released to SGII at the Closing of the Transactions. The FPA Shares held by Meteora
and subject to the FSPA may be sold into the market by Meteora at any time following the Closing of the Transactions. Meteora is entitled
to sell into the market FPA Shares without any payment to SGII until the proceeds from such sales equals the Prepayment Shortfall. SGII
may receive up to US $37,800,000 from the termination of all or a portion of the FSPA transaction at $10.00 per terminated FPA Share,
subject to reduction upon any Dilutive Offering Reset. To the extent Meteora elects not to terminate the FSPA transaction prior to the
maturity date, SGII will be entitled to receive from Meteora the number of FPA Shares not so terminated, and Meteora will be entitled
to “maturity” consideration, paid in Shares or cash, subject to the terms of the FSPA. The maturity date is the third anniversary
of the Closing of the Transactions, subject to acceleration upon the volume weighted average price per share being at or below $5.00 per
share for any 20 trading days during a 30 consecutive trading day-period and upon any delisting of SGII common stock.
The FSPA provides that Meteora is entitled to transfer
and/or assign all or a portion of its rights and obligations under the FSPA to one or more third parties of its choosing. Additionally,
according to the terms of the FSPA, SGII has agreed to indemnify Meteora against certain losses in connection with the FSPA and to pay
certain consideration and fees, including without limitation a quarterly fee, a breakage fee and share consideration equal to 300,000
shares at the Redemption Price.
Note that this summary is qualified entirely by the
specific terms of the FSPA, attached as Exhibit 10.4 hereto and incorporated herein by reference.