ESCROW AGREEMENT AMENDMENT
Exhibit 10.7
ESCROW AGREEMENT AMENDMENT
Effective as of the Closing, Section 3.2 of the Escrow Agreement shall be deleted in its entirety and replaced with the following:
(a) Forfeiture of Sponsor Upfront Shares; Release of Sponsor Upfront Escrow Shares and SPAC Director Shares. Except as otherwise set forth herein, the Escrow Agent shall hold the shares remaining after any cancellation required pursuant to Section 3.1. Effective immediately prior to the consummation of the transactions contemplated by the BCA (as defined below), Sponsor shall forfeit and surrender the Shares Forfeiture Amount, the Escrow Agent shall release such forfeited shares of Common Stock to the Company for cancellation. Of such remaining shares, the Sponsor Upfront Escrow Shares including the SPAC Director Shares shall be held pursuant to this Section 3.2(a) and the Sponsor Earn-Out Shares shall be held pursuant to Section 3.2(b). The Sponsor Upfront Escrow Shares and the SPAC Director Shares shall be held for a period expiring on the earlier of (I) one (1) year following the date of the consummation of the transactions contemplated by the Business Combination Agreement, dated as of July 25, 2020, by and among the Company, Clever Leaves Holdings, Inc., Novel Merger Sub Inc. and Clever Leaves International Inc. (the “BCA”) and (II) the date on which the closing price of the shares of Common Stock on the Trading Market as reported by Bloomberg Financial L.P. using the AQR function equals or exceeds Twelve Dollars Fifty Cents ($12.50) per share (as adjusted for stock splits, stock dividends, reorganizations, and recapitalizations) for any twenty (20) trading days within any consecutive thirty (30)-trading-day period commencing after the 180th day after the consummation of the transactions contemplated by the BCA (such period, the “Initial Stockholder Upfront Escrow Period”). Upon expiration of the Initial Stockholder Upfront Escrow Period, the Escrow Agent shall disburse and release to the Initial Stockholders all Sponsor Upfront Escrow Shares and SPAC Director Shares held with respect to such Initial Stockholders (and any applicable stock power), upon receipt of a written notice executed by Sponsor (with evidence a copy of such written notice shall have been delivered to Holdco), in form reasonably acceptable to the Escrow Agent, certifying the expiration of the Initial Stockholder Upfront Escrow Period and the number of Sponsor Upfront Escrow Shares and SPAC Director Shares to be disbursed and released to each Initial Stockholder. The Escrow Agent shall have no further duties under this Section 3.2(a) with respect to the Sponsor Upfront Escrow Shares and the SPAC Director Shares after the disbursement of the Sponsor Upfront Escrow Shares to the Initial Stockholders.
(b) Release of Sponsor Earn-Out Shares. The Escrow Agent shall hold, disburse and release the Sponsor Earn-Out Shares as follows:
(i) The Escrow Agent shall hold the First Level Earn-Out Shares until the closing price per share of the shares of Common Stock equals or exceeds the First Earn-Out Target at any time prior to or on the First Target Expiration Date. The Escrow Agent shall disburse and release to Sponsor all First Level Earn-Out Shares (and any applicable stock power), upon receipt of a written notice executed by Sponsor (with evidence a copy of such written notice shall have been delivered to Holdco), in form reasonably acceptable to the Escrow Agent, certifying the achievement of the First Earn-Out Target (the “First Earn-Out Target Release Notice”). In the event that the First Earn-Out Target Release Notice is not delivered on or prior to the First Target Expiration Date, then the Escrow Agent shall automatically disburse and release the First Level Earn-Out Shares (and any applicable stock power) to Holdco for cancellation. The Escrow Agent shall have no further duties under this Section 3.2(b)(i) with respect to the First Level Earn-Out Shares after the disbursement of the First Level Earn-Out Shares to Sponsor or Holdco, as the case may be.
(ii) Additionally, the Escrow Agent shall hold the Second Level Earn-Out Shares until the closing price per share of the shares of Common Stock equals or exceeds the Second Earn-Out Target at any time prior to or on the Second Target Expiration Date. The Escrow Agent shall disburse and release to Sponsor all Second Level Earn-Out Shares (and any applicable stock power), upon receipt of written notice executed by Sponsor (with evidence a copy of such written notice shall have been delivered to Holdco), in form reasonably acceptable to the Escrow Agent, certifying the achievement of the Second Earn-Out Target (the “Second Earn-Out Target Release Notice”). In the event that the Second Earn-Out Target Release Notice is not delivered on or prior to the Second Target Expiration Date, then the Escrow Agent shall automatically disburse and release the Second Level Earn-Out Shares (and any applicable stock power) to Holdco for cancellation. The Escrow Agent shall have no further duties under this Section 3.2(b)(ii) with respect to the Second Level Earn-Out Shares after the disbursement of the Second Level Earn-Out Shares to Sponsor or Holdco, as the case may be.
(iii) The Earn-Out Shares and the Earn-Out Targets shall be adjusted to reflect appropriately the effect of any stock splits, reverse splits, stock dividends, reorganizations, reclassifications and other similar events with respect to the Holdco Common Shares, occurring on or after the date hereof and prior to the time any such Earn-Out Shares are released to Sponsor or returned to Holdco, as the case may be.
(iv) For purposes of this Section 3.2:
“Available Cash Amount” means, after giving effect to the exercise of Redemption Rights and payments related thereto, the aggregate amount of cash held either in or outside the Trust Account, including the aggregate amount of the PIPEs, including, for the avoidance of doubt, the aggregate amount of the Agreed PIPE (as defined in the BCA) (excluding any PIK Amount) consummated prior to, or as of, the closing of the transactions contemplated by the BCA.
“Closing” shall have the meaning set forth in the BCA.
“Earn-Out Shares” means the First Level Earn-Out Shares and the Second Level Earn-Out Shares, as the case may be.
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“Earn-Out Targets” means the First Earn-Out Target and the Second Earn-Out Target, as the case may be.
“First Earn-Out Target” means that the closing price per share of Common Stock on the Trading Market as reported by Bloomberg Financial L.P. using the AQR function equals or exceeds Twelve Dollars Fifty Cents ($12.50) for any twenty (20) trading days within any consecutive thirty (30)-trading-day period commencing after Closing
“First Level Earn-Out Shares” means the number of Holdco Common Shares equal to Fifty Percent (50%) of the Sponsor Earn-Out Shares.
“First Target Expiration Date” means the second (2nd) anniversary of the Closing.
“Maximum Upfront Shares Amount” means 1,168,421 Holdco Common Shares. For the avoidance of doubt, the Company may issue up to the aggregate amount of 2,631,579 shares of Common Stock at $9.50 (or higher) per share for a PIPE in the amount of twenty-five million dollars ($25,000,000) and such issuance pursuant to such PIPE shall in no event reduce the Maximum Upfront Shares Amount.
“Minimum Upfront Shares Amount” means 460,000 Holdco Common Shares.
“Net Capital” means an aggregate amount equal to (A) the Available Cash Amount, minus (B) SPAC’s good faith estimate of the SPAC Transaction Expenses (as defined in the BCA) delivered to the Company pursuant to Section 3.01(b) of the BCA.
“PIK Amount” means the accrued payment-in-kind interest on the Secured Convertible Notes (as defined in the BCA), which shall be invested into the Agreed PIPE.
“Second Earn-Out Target” means that the closing price per share of Common Stock on the Trading Market as reported by Bloomberg Financial L.P. using the AQR function equals or exceeds Fifteen Dollars ($15.00) for any twenty (20) trading days within any consecutive thirty (30)-trading-day period commencing after Closing.
“Second Level Earn-Out Shares” means the number of Holdco Common Shares equal to Fifty Percent (50%) of the Sponsor Earn-Out Shares.
“Second Target Expiration Date” means the fourth (4th) anniversary of the Closing.
“Shares Forfeiture Amount” means a number of shares of Common Stock equal to (A) 3,250,000 minus (B) the Sponsor Upfront Escrow Shares minus (C) the Sponsor Earn-Out Shares, if any.
“SPAC Director Shares” means 60,000 Sponsor Upfront Escrow Shares held by members of the Board of Directors of SPAC.
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“Sponsor Earn-Out Shares” means a number of shares of Common Stock (rounded down to the nearest whole share) equal to (A) the Sponsor Earn-Out Value, divided by (C) $5.00; provided that the number of Sponsor Earn-Out Shares shall not be less than zero or greater than 1,300,000.
“Sponsor Earn-Out Value” means an amount equal to (A) the Sponsor Value, minus (B) the Sponsor Upfront Shares Value.
“Sponsor Upfront Escrow Shares” means a number of shares of Common Stock (rounded down to the nearest whole share) equal to (A) the Sponsor Value, divided by (B) $10.00; provided that the number of Sponsor Upfront Escrow Shares shall not be less than the Minimum Upfront Shares Amount or greater than the Maximum Upfront Shares Amount.
“Sponsor Upfront Shares Value” means an amount equal to (A) the Sponsor Upfront Escrow Shares, multiplied by (B) $10.00.
“Sponsor Value” means an amount equal to (A) the Net Capital, multiplied by (B) twenty percent (20%).
“Trading Market” means the stock market on which the shares of Common Stock shall be trading at the time of determination.
Effective as of the closing of the transactions contemplated by the BCA, a new Exhibit B shall be inserted in its entirety after Exhibit A to the Escrow Agreement, as amended, which is an illustrative calculation of (a) Net Capital, (b) Shares Forfeiture Amount, (c) Sponsor Earn-Out Shares, (d) Sponsor Earn-Out Value, (e) Sponsor Upfront Escrow Shares, (f) Sponsor Upfront Shares Value and (g) Sponsor Value.
Effective as of the Closing, the following Section 3.3 shall be inserted in its entirety immediately following Section 3.2 of the Escrow Agreement, as amended.
3.3 Effective as of the closing of the transactions contemplated by the BCA, the shares of Common Stock held in escrow pursuant to the terms of this Agreement shall become common shares of Holdco (“Holdco Common Shares”) in accordance with the terms and conditions of the BCA. Effective as of the Closing of the transactions contemplated by the BCA and for purposes of this Agreement, references to shares of “Common Stock” in this Agreement are hereby deemed to refer to Holdco Common Shares. Effective as of the closing of the transactions contemplated by the BCA, Holdco shall be deemed to be “the Company” for all purposes of this Agreement.
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