Item 1.01 Entry into a Material Definitive Agreement.
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.
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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
. . .
Item 1.02 Termination of a Material Definitive Agreement.
As previously announced, on October 13, 2021, an affiliate of ACE's sponsor
committed to purchase no less than $25 million of ACE's 12% convertible senior
notes due 2025 pursuant to a Note Subscription Agreement (the "Note Subscription
Agreement"). On January 18, 2022, ACE, Tempo Automation and such affiliate of
ACE's sponsor entered into a Letter Agreement (the "Termination Agreement"),
pursuant to which the Note Subscription Agreement was terminated in its entirety
in accordance with its terms.
The foregoing descriptions of the Note Subscription Agreement and the
Termination Agreement do not purport to be complete and are qualified in their
entirety by the terms and conditions of the full text of the Note Subscription
Agreement, which was previously filed as Exhibit 10.2 to ACE's Current Report on
Form 8-K filed with the SEC on October 14, 2021, and the full text of the
Termination Agreement, which is attached hereto as Exhibit 10.5, each of which
is incorporated by reference herein.
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Item 3.02 Unregistered Sales of Equity Securities.
The disclosure set forth above in Item 1.01 of this Current Report on Form 8-K
is incorporated by reference in this Item 3.02 to the extent required herein.
The shares of common stock to be issued in connection with the Subscription
Agreement and the Promissory Notes will not be registered under the Securities
Act of 1933, as amended (the "Securities Act"), and will be issued in reliance
on the exemption from registration requirements thereof provided by
Section 4(a)(2) of the Securities Act.
Additional Information and Where to Find It
Additional information about the proposed transaction (the "Tempo Transaction")
between Tempo Automation, Inc. (collectively with its subsidiaries and pro forma
for its acquisition of Compass AC Holdings, Inc. and Whizz Systems, Inc.,
"Tempo") and ACE, including a copy of the Merger Agreement and investor
presentation, was provided in a Current Report on Form 8-K filed by ACE with the
SEC on October 14, 2021, and is available at www.sec.gov. In connection with the
Tempo Transaction, ACE has filed a registration statement on Form S-4 (the
"Registration Statement") with the SEC, which includes a preliminary proxy
statement to be distributed to holders of ACE's ordinary shares in connection
with ACE's solicitation of proxies for the vote by ACE's shareholders with
respect to the Tempo Transaction and other matters as described in the
Registration Statement, as well as the prospectus relating to the offer of
securities to be issued to Tempo stockholders in connection with the Tempo
Transaction. After the Registration Statement has been declared effective, ACE
will mail a definitive proxy statement, when available, to its shareholders. The
Registration Statement includes information regarding the persons who may, under
SEC rules, be deemed participants in the solicitation of proxies to ACE's
shareholders in connection with the Tempo Transaction. ACE will also file other
documents regarding the Tempo Transaction with the SEC. Before making any voting
decision, investors and security holders of ACE and Tempo are urged to read the
Registration Statement, the proxy statement/prospectus contained therein, and
all other relevant documents filed or that will be filed with the SEC in
connection with the Tempo Transaction as they become available because they will
contain important information about the Tempo Transaction.
Investors and security holders can obtain free copies of the proxy
statement/prospectus and all other relevant documents filed or that will be
filed with the SEC by ACE through the website maintained by the SEC at
www.sec.gov. In addition, the documents filed by ACE may be obtained free of
charge from ACE's website at acev.io or by written request to ACE at ACE
Convergence Acquisition Corp., 1013 Centre Road, Suite 403S, Wilmington, DE
19805.
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Forward-Looking Statements
This Current Report on Form 8-K contains certain forward-looking statements
within the meaning of the federal securities laws with respect to the proposed
business combination (the "Proposed Business Combination") between Tempo and
ACE, including statements regarding the benefits of the Proposed Business
Combination, the anticipated timing of the Proposed Business Combination, the
services offered by Tempo and the markets in which it operates, and Tempo's
projected future results. These forward-looking statements generally are
identified by the words "believe," "project," "expect," "anticipate,"
"estimate," "intend," "strategy," "future," "opportunity," "plan," "may,"
"should," "will," "would," "will be," "will continue," "will likely result," and
similar expressions. Forward-looking statements are predictions, projections and
other statements about future events that are based on current expectations and
assumptions and, as a result, are subject to risks and uncertainties that could
cause the actual results to differ materially from the expected results. Many
factors could cause actual future events to differ materially from the
forward-looking statements in this document, including but not limited to: (i)
the risk that the Proposed Business Combination may not be completed in a timely
manner or at all, which may adversely affect the price of ACE's securities, (ii)
the risk that the acquisition by Tempo Automation, Inc. of each of Compass AC
Holdings, Inc. and Whizz Systems, Inc. may not be completed in a timely manner
or at all, (iii) the risk that the Proposed Business Combination may not be
completed by ACE's business combination deadline and the potential failure to
obtain an extension of the business combination deadline if sought by ACE, (iv)
the failure to satisfy the conditions to the consummation of the Proposed
Business Combination, including the receipt of the requisite approvals of ACE's
shareholders and Tempo's stockholders, respectively, the satisfaction of the
minimum trust account amount following redemptions by ACE's public shareholders
and the receipt of certain governmental and regulatory approvals, (v) the lack
of a third party valuation in determining whether or not to pursue the Proposed
Business Combination, (vi) the occurrence of any event, change or other
circumstance that could give rise to the termination of the agreement and plan
of merger, (vii) the effect of the announcement or pendency of the Proposed
Business Combination on Tempo's business relationships, performance, and
business generally, (viii) risks that the Proposed Business Combination disrupts
current plans of Tempo and potential difficulties in Tempo employee retention as
a result of the Proposed Business Combination, (ix) the outcome of any legal
proceedings that may be instituted against Tempo or against ACE related to the
agreement and plan of merger or the Proposed Business Combination, (x) the
ability to maintain the listing of ACE's securities on The Nasdaq Stock Market
LLC, (xi) the price of ACE's securities may be volatile due to a variety of
factors, including changes in the competitive and highly regulated industries in
which Tempo plans to operate, variations in performance across competitors,
changes in laws and regulations affecting Tempo's business and changes in the
combined capital structure, (xii) the ability to implement business plans,
forecasts, and other expectations after the completion of the Proposed Business
Combination, and identify and realize additional opportunities, (xiii) the risk
of downturns in the highly competitive industry in which Tempo operates, (xiv)
the impact of the global COVID-19 pandemic, (xv) the enforceability of Tempo's
intellectual property, including its patents, and the potential infringement on
the intellectual property rights of others, cyber security risks or potential
breaches of data security, (xvi) the ability of Tempo to protect the
intellectual property and confidential information of its customers, (xvii) the
risk of downturns in the highly competitive additive manufacturing industry, and
(xviii) other risks and uncertainties described in ACE's registration statement
on Form S-1 (File No. 333-239716), which was originally filed with the SEC on
July 6, 2020 (as amended, the "Form S-1"), and Annual Report on Form 10-K for
the fiscal year ended December 31, 2020, filed with the SEC on March 17, 2021,
and subsequently amended (as amended, the "Form 10-K"), and its subsequent
Quarterly Reports on Form 10-Q. The foregoing list of factors is not exhaustive.
These forward-looking statements are provided for illustrative purposes only and
are not intended to serve as, and must not be relied on by investors as, a
guarantee, an assurance, a prediction or a definitive statement of fact or
probability. You should carefully consider the foregoing factors and the other
risks and uncertainties described in the "Risk Factors" section of the Form S-1,
the Form 10-K, Quarterly Reports on Form 10-Q, the Registration Statement, the
proxy statement/prospectus contained therein, and the other documents filed by
ACE from time to time with the SEC. These filings identify and address other
important risks and uncertainties that could cause actual events and results to
differ materially from those contained in the forward-looking statements. These
risks and uncertainties may be amplified by the COVID-19 pandemic, which has
caused significant economic uncertainty. Forward-looking statements speak only
as of the date they are made. Readers are cautioned not to put undue reliance on
forward-looking statements, and Tempo and ACE assume no obligation and do not
intend to update or revise these forward-looking statements, whether as a result
of new information, future events, or otherwise, except as required by
securities and other applicable laws. Neither Tempo nor ACE gives any assurance
that either Tempo or ACE, respectively, will achieve its expectations.
No Offer or Solicitation
This communication is for informational purposes only and does not constitute an
offer or invitation for the sale or purchase of securities, assets or the
business described herein or a commitment to ACE with respect to any of the
foregoing, and this communication shall not form the basis of any contract, nor
is it a solicitation of any vote, consent, or approval in any jurisdiction
pursuant to or in connection with the Tempo Transaction or otherwise, nor shall
there be any sale, issuance or transfer of securities in any jurisdiction in
contravention of applicable law.
Participants in Solicitation
ACE and Tempo, and their respective directors and executive officers, may be
deemed participants in the solicitation of proxies of ACE's shareholders in
respect of the Tempo Transaction. Information about the directors and executive
officers of ACE is set forth in ACE's Form 10-K for the period ended December
31, 2020, as amended. Additional information regarding the identity of all
potential participants in the solicitation of proxies to ACE's shareholders in
connection with the proposed Tempo Transaction and other matters to be voted
upon at the special meeting, and their direct and indirect interests, by
security holdings or otherwise, is set forth in ACE's proxy statement. Investors
may obtain such information by reading such proxy statement.
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Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
Exhibit
No. Description
10.1* Subscription Agreement, dated as of January 18, 2022, by and among
ACE Convergence Acquisition Corp., Tempo Automation, Inc., OCM Tempo
Holdings, LLC and Tor Asia Credit Opportunity Master Fund II LP
10.2 Letter Agreement, dated as of January 18, 2022, by and among ACE
Convergence Acquisition Corp., Tempo Automation, Inc. and OCM Tempo
Holdings, LLC
10.3 Information Rights and Confidentiality Agreement, dated as of
January 18, 2022, by and among ACE Convergence Acquisition Corp.,
Tempo Automation, Inc. and Tor Asia Credit Opportunity Master Fund II
LP
10.4 Form of Convertible Promissory Note
10.5 Letter Agreement, dated as of January 18, 2022, by and among ACE
Convergence Acquisition Corp., Tempo Automation, Inc. and ACE SO3 SPV
Limited
104 Cover Page Interactive Data File (embedded within the Inline XBRL
document)
* Schedules and exhibits have been omitted pursuant to Item 601(b)(2) of
Regulation S-K. ACE agrees to furnish supplementally a copy of any omitted
schedule or exhibit to the SEC upon request.
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