PONO CAPI Item 1.01. Entry into a Material Definitive Agreement.
Merger Agreement
This section describes the material provisions of the Merger Agreement (as defined below) but does not purport to describe all of the terms thereof. The following summary is qualified in its entirety by reference to the complete text of the Merger Agreement, a copy of which is attached hereto as Exhibit 2.1. Unless otherwise defined herein, the capitalized terms used below are defined in the Merger Agreement.
The Merger
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Pursuant to the Merger Agreement, at the closing of the transactions contemplated by the Merger Agreement (the "Closing"), Merger Sub will merge with and into AERWINS, with AERWINS continuing as the surviving corporation (the "Surviving Corporation").
Merger Consideration
As consideration for the Merger, the holders of AERWINS securities collectively
shall be entitled to receive from Pono, in the aggregate, a number of Pono
securities with an aggregate value equal to (the "Merger Consideration") (a) Six
Hundred Million
The Merger Consideration otherwise payable to AERWINS stockholders is subject to the withholding of a number of shares of Pono common stock equal to three percent (3.0%) of the Merger Consideration to be placed in escrow for post-closing adjustments (if any) to the Merger Consideration.
The Merger Consideration is subject to adjustment after the Closing based on
confirmed amounts of the Closing Net Indebtedness,
Representations and Warranties
The Merger Agreement contains customary representations and warranties by each of Pono and AERWINS. Certain of the representations are subject to specified exceptions and qualifications contained in the Merger Agreement or in information provided pursuant to certain disclosure schedules to the Merger Agreement.
Covenants of the Parties
Under the Merger Agreement, each party agrees to use its commercially reasonable efforts to effect the Closing. The Merger Agreement also contains certain customary covenants by the parties during the period between the signing of the Merger Agreement and the earlier of the Closing or the termination of the Merger Agreement in accordance with its terms, including covenants regarding the conduct of their respective businesses, efforts, access, confidentiality and public announcements, the Pono proxy statement for the transaction (which includes the adoption of a new equity incentive plan for Pono with a number of awards thereunder equal to 15% of the issued and outstanding shares of Pono immediately after the Closing), notice of breaches, no insider trading, indemnification of directors and officers, and other customary covenants. The parties also have agreed to the following covenants:
? Each party is subject to a "no-shop" obligation between signing of the Merger
Agreement and Closing and will not be allowed to solicit or discuss competing
transactions with other potential parties during such time period.
? The Pono board of directors after the Closing will consist of at least seven
directors, including: (i) five (5) persons designated prior to the Closing by
AERWINS, three of whom must qualify as independent directors; (ii) one (1)
person designated prior to the Closing by Pono; and (iii) one (1) person
mutually agreed upon and designated prior to the Closing by Pono and AERWINS,
who must qualify as an independent director.
? AERWINS shall deliver audited financial statements prepared in accordance with
GAAP and audited in accordance with PCAOB auditing standards for the fiscal
years ended
2022 (the "PCAOB Audited Financials").
Indemnification
The representations and warranties of AERWINS and Pono contained in the Merger Agreement will not survive the Closing, and from and after the Closing, AERWINS and Pono will not have any further obligations, nor shall any claim be asserted or action be brought against AERWINS and Pono or their respective representatives with respect thereto. The covenants and agreements made by AERWINS and Pono in the Merger Agreement, including any rights arising out of any breach of such covenants or agreements, shall not survive the Closing, except for those covenants and agreements contained therein that by their terms apply or are to be performed in whole or in part after the Closing (which such covenants shall survive the Closing and continue until fully performed in accordance with their terms).
Conditions to Consummation of the Merger
The consummation of the Merger is subject to customary Closing conditions unless waived, including:
? the approval by the stockholders of each of AERWINS and Pono;
? approvals of any required governmental authorities and the expiration or
termination of any anti-trust waiting periods;
? receipt of specified third-party consents;
? no law or order preventing the transactions;
? after giving effect to the redemption, Pono shall have at least
net tangible assets as required by its charter;
? the parties agree to waive any minimum cash requirement as a Closing condition;
? the members of the post-Closing Pono board shall have been elected or appointed
as of the Closing;
? the Registration Statement shall have been declared effective by the
shall remain effective as of the Closing, and no stop order or similar order
shall be in effect with respect to the Registration Statement; and
? the shares of Pono common stock issued as Merger Consideration shall have been
approved for listing on Nasdaq, subject to official notice of issuance.
In addition, unless waived by AERWINS, the obligations of AERWINS to consummate the Merger are subject to the satisfaction of the following Closing conditions, in addition to customary certificates and other closing deliveries: (a) the representations and warranties of Pono being true and correct as of the date of the Merger Agreement and as of the Closing (subject to Material Adverse Effect); (b) Pono having performed in all material respects the respective obligations and complied in all material respects with their respective covenants and agreements under the Merger Agreement required to be performed or complied with on or prior the date of the Closing; (c) absence of any Material Adverse Effect with respect to Pono since the date of the Merger Agreement which is continuing and uncured; and (d) the Escrow Agreement and the Registration Rights Agreement being executed and delivered.
Unless waived by Pono, the obligations of Pono and Merger Sub to consummate the Merger are subject to the satisfaction of the following Closing conditions, in addition to customary certificates and other closing deliveries: (a) the representations and warranties of AERWINS being true and correct as of the date of the Merger Agreement and as of the Closing (subject to Material Adverse Effect); (b) AERWINS having performed in all material respects the respective obligations and complied in all material respects with its covenants and agreements under the Merger Agreement required to be performed or complied with on or prior the date of the Closing; and (c) absence of any Material Adverse Effect with respect to AERWINS as a whole since the date of the Merger Agreement which is continuing and uncured; and (d) each Lock-Up Agreement, the Non-Competition Agreement, the Escrow Agreement, the Registration Rights Agreement, and employment agreements with specified employees being executed and delivered.
Termination
The Merger Agreement may be terminated under certain customary and limited circumstances at any time prior to the Closing, including:
? by mutual agreement;
? for the other party's uncured breach;
? if there is a government order preventing the Closing; . . .
Item 7.01 Regulation FD Disclosure.
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The foregoing (including Exhibit 99.1) is being furnished pursuant to Item 7.01 and will not be deemed to be filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise be subject to the liabilities of that section, nor will it be deemed to be incorporated by reference in any filing under the Securities Act of 1933, as amended (the "Securities Act") or the Exchange Act.
Forward Looking Statements
Certain statements herein are "forward-looking statements" within the meaning of
the "safe harbor" provisions of the Private Securities Litigation Reform Act of
1995 with respect to the proposed business combination. These forward-looking
statements generally are identified by the words "believe," "project," "expect,"
"anticipate," "estimate," "intend," "strategy," "aim," "future," "opportunity,"
"plan," "may," "should," "will," "would," "will be," "will continue," "will
likely result" and similar expressions, but the absence of these words does not
mean that a statement is not forward-looking. 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. Actual results may differ from their expectations, estimates
and projections and consequently, you should not rely on these forward-looking
statements as predictions of future events. Many factors could cause actual
future events to differ materially from the forward-looking statements contained
herein, including but not limited to: (i) the risk that the business combination
may not be completed in a timely manner or at all, which may adversely affect
the price of Pono's securities; (ii) the failure to satisfy the conditions to
the consummation of the business combination, including the approval of the
merger agreement by the stockholders of Pono; (iii) the occurrence of any event,
change or other circumstance that could give rise to the termination of the
merger agreement; (iv) the outcome of any legal proceedings that may be
instituted against any of the parties to the merger agreement following the
announcement of the entry into the merger agreement and proposed business
combination; (v) redemptions exceeding anticipated levels or the failure to meet
Additional Information and Where to Find It
No Offer or Solicitation
This press release does not constitute (i) a solicitation of a proxy, consent, or authorization with respect to any securities or in respect of the proposed business combination, or (ii) an offer to sell or the solicitation of an offer to buy any securities, or a solicitation of any vote or approval, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation, or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offering of securities shall be made except by means of a prospectus meeting the requirements of the Securities Act.
Participants in the Solicitation
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
The following exhibits are being filed herewith:
Exhibit No. Description 2.1† Agreement and Plan of Merger, datedSeptember 7, 2022 , by and among Pono, Merger Sub, AERWINS, the Purchaser Representative, and the Seller Representative. 10.1 Form of Lock-up Agreement. 10.2 Non-Competition Agreement. 10.3 Registration Rights Agreement. 10.4 Purchaser Support Agreement. 10.5 Voting Agreement. 99.1 Press Release, datedSeptember 7, 2022 . 104 Cover Page Interactive Data File (embedded within the Inline XBRL document)
† Certain of the exhibits and schedules to this Exhibit have been omitted in
accordance with Regulation S-K Item 601(b)(2). The Registrant agrees to furnish
a copy of all omitted exhibits and schedules to the Securities and Exchange
Commission upon its request.
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