Item 1.01 Entry into a Material Definitive Agreement.
Second Amended and Restated Subscription Agreements
As previously announced, on March 16, 2022, ACE Convergence Acquisition Corp.
("ACE") entered into Amended and Restated Subscription Agreements with Tempo
Automation, Inc. ("Tempo Automation") and certain investors (the "PIPE
Investors"). ACE, after its domestication (the "Domestication") as a Delaware
corporation pursuant to 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., is hereinafter referred to as "New Tempo,"
and the transactions contemplated by the Merger Agreement are hereinafter
referred to as the "Business Combination."
On July 6, 2022, ACE entered into Second Amended and Restated Subscription
Agreements (the "Second A&R Subscription Agreements") with each of the PIPE
Investors. Pursuant to the Second A&R Subscription Agreements, among other
things, the parties agreed to reduce the minimum Adjustment Period VWAP (as
defined in the Second A&R Subscription Agreements) from $6.50 to $4.00.
Additionally, ACE agreed (1) to issue 2,000,000 additional shares (the "PIPE
Incentive Shares") to the PIPE Investors on a pro rata basis as an incentive to
subscribe for and purchase the shares under the Second A&R Subscription
Agreements, (2) that if the Adjustment Period VWAP is less than $10.00 per
share, the number of additional shares each PIPE Investor will be entitled to
receive shall be (i) (A) (x) the number of shares issued to such PIPE Investor
at the closing of the subscription and held by such PIPE Investor on the
Measurement Date (as defined in the Second A&R Subscription Agreements), times
(y) $10.00, minus the Adjustment Period VWAP, minus (B) the number of PIPE
Incentive Shares, times the Adjustment Period VWAP, divided by (ii) the
Adjustment Period VWAP, and (3) to issue additional shares of New Tempo common
stock to each PIPE Investor in the event that the Additional Period VWAP (as
defined below) is less than the Adjustment Period VWAP. In such case, each PIPE
Investor will be entitled to receive a number of shares of New Tempo common
stock equal to the lesser of (1) such PIPE Investor's pro rata portion of
2,000,000 shares, and (2) (i) (A) (x) the number of shares issued to such PIPE
Investor pursuant to such subscription agreement and held by such PIPE Investor
on the last day of the 30 calendar day period ending on the date that is 15
months following the closing of the subscriptions (such 30 calendar day period,
the "Additional Period"), times (y) the Adjustment Period VWAP, minus the
average of the volume weighted average price of a share of New Tempo common
stock determined for each of the trading days during the Additional Period (the
"Additional Period VWAP"), minus (B) the number of PIPE Incentive Shares, times
the Additional Period VWAP, divided by (ii) the Additional Period VWAP.
Notwithstanding the foregoing, in the event that New Tempo consummates a
strategic transaction during the 15-month period beginning on the closing date,
then the measurement date for the issuance of such additional shares shall be
one day prior to the closing date of such strategic transaction, and the
Additional Period VWAP will be deemed to equal the price per share paid or
payable to the holders of outstanding shares of New Tempo common stock in
connection with such strategic transaction. If such price is payable in whole or
in part in the form of consideration other than cash, the value of such
consideration will be (a) with respect to any securities, (i) the average of the
closing prices of the sales of such securities on all securities exchanges on
which such securities are then listed, averaged over a period of 30 trading days
ending on the day as of which such value is being determined and the 29
consecutive days preceding such day, or (ii) if the information contemplated by
the preceding clause (i) is not practically available, then the fair value of
such securities as of the date of valuation as determined in accordance with the
succeeding clause (b), and (b) with respect to any other non-cash assets, the
fair value thereof as of the date of valuation, as determined by an independent,
nationally recognized valuation firm reasonably selected by New Tempo, on the
basis of an orderly sale to a willing, unaffiliated buyer in an arm's-length
transaction, taking into account all factors determinative of value as the
investment banking firm determines relevant (and giving effect to any transfer
taxes payable in connection with such sale).
The foregoing description of the Second A&R Subscription Agreements does not
purport to be complete and is qualified in its entirety by the terms and
conditions of the Second A&R Subscription Agreements, the form of which is
attached hereto as Exhibit 10.1 and is incorporated herein by reference.
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Amendment to Sponsor Support Agreement
As previously announced, on October 13, 2021, ACE, Tempo Automation and certain
other parties entered into a Sponsor Support Agreement (the "Original Sponsor
Support Agreement" and, as amended, the "Sponsor Support Agreement").
On July 6, 2022, in connection with the execution of the Second A&R Subscription
Agreements, the parties to the Original Sponsor Support Agreement entered into
an Amendment to Sponsor Support Agreement (the "SSA Amendment"), pursuant to
which, among other things, certain Sponsors (as defined in the Sponsor Support
Agreement, and, each, an "Earnout Sponsor") agreed, immediately prior to the
Domestication, to contribute, transfer, assign, convey and deliver to ACE an
aggregate of 5,595,000 founder shares in exchange for an aggregate of 3,595,000
Class A ordinary shares of ACE (the "SSA Exchange"). Pursuant to the SSA
Amendment, the Earnout Sponsors also agreed to subject an aggregate of 2,000,000
shares of New Tempo common stock (the "Sponsor Earnout Shares") received in the
SSA Exchange to certain earnout vesting conditions or, should such shares fail
to vest, forfeiture to ACE for no consideration. On the earlier of (i) the date
which is 15 months following the closing of the Business Combination and
(ii) immediately prior to the closing of a strategic transaction, the Sponsor
Earnout Shares will vest in an amount equal to (A) the number of Sponsor Earnout
Shares, less (B) the number of Sponsor Earnout Shares, if any, issuable in the
aggregate under the Second A&R Subscription Agreements. In the event of a
strategic transaction, the holders of any vested Sponsor Earnout Shares will be
eligible to participate in such strategic transaction with respect to such
Sponsor Earnout Shares on the same terms, and subject to the same conditions, as
the other holders of shares of New Tempo common stock generally.
The foregoing description of the SSA Amendment does not purport to be complete
and is qualified in its entirety by the terms and conditions of the SSA
Amendment, a copy of which is attached hereto as Exhibit 10.2 and is
incorporated herein by reference.
Item 3.02 Unregistered Sales of Equity Securities.
The information disclosed under Item 1.01 of this Current Report on Form 8-K is
incorporated by reference into this Item 3.02 to the extent required herein. The
shares of common stock of New Tempo or Class A ordinary shares of ACE that may
be issued pursuant to the Second A&R Subscription Agreements and the Sponsor
Support Agreement, respectively, 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 (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 U.S. Securities
and Exchange Commission (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 (as it has been and may be amended or
supplemented from time to time, the "Registration Statement"). The Registration
Statement has been declared effective, and ACE has filed a post-effective
amendment thereto. In advance of the vote by ACE's shareholders with respect to
the Tempo Transaction and other matters as described in the Registration
Statement, ACE will mail a definitive proxy statement to its shareholders in
connection with ACE's solicitation of proxies for such vote. The Registration
Statement also includes a prospectus relating to the offer of securities to be
issued to Tempo stockholders in connection with the Tempo Transaction. 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
Automation 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 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) volatility in the price of ACE's securities 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"), ACE's Annual Report on Form 10-K for
the fiscal year ended December 31, 2021, filed with the SEC on March 10, 2022
(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.
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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 Annual Report on Form 10-K for the year
ended December 31, 2021. 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 extraordinary general 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.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
Exhibit
No. Description
10.1 Form of Second Amended and Restated Subscription Agreement
10.2 Amendment to Sponsor Support Agreement, dated as of July 6, 2022, by
and among ACE Convergence Acquisition Corp., Tempo Automation, Inc. and
the other parties thereto
104 Cover Page Interactive Data File (embedded within the Inline XBRL
document)
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