November 30, 2021
Exhibit 10.4
November 30, 2021
00000 Xxxxxxx Xxxxx, Xxxxx 0000
Reston, VA 20190
Re: Initial Public Offering
Ladies and Gentlemen:
This letter (this “Letter Agreement”) is being delivered to you in accordance with the Underwriting Agreement (the “Underwriting Agreement”) entered into by and among PROOF Acquisition Corp I, a Delaware corporation (the “Company”), and BofA Securities, Inc. (the “Underwriter”), relating to an underwritten initial public offering (the “Public Offering”) of 27,600,000 of the Company’s units
(including 3,600,000 units that may be purchased pursuant to the Underwriter’s option to purchase additional units, the “Units”), each comprising of one share of the Company’s Class A
common stock, par value $0.0001 per share (the “Common Stock”), and one-half of one redeemable warrant (each whole warrant, a “Warrant”).
Each Warrant entitles the holder thereof to purchase a share of Common Stock at a price of $11.50 per share, subject to adjustment. The Units will be sold in the Public Offering pursuant to a registration statement on Form S-1 and a prospectus (the
“Prospectus”) filed by the Company with the U.S. Securities and Exchange Commission (the “Commission”). Certain capitalized
terms used herein are defined in paragraph 1 hereof.
In order to induce the Company and the Underwriter to enter into the Underwriting Agreement and to proceed with the Public Offering and for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, PROOF Acquisition Sponsor I, LLC (the “Sponsor”) and each of the undersigned (each, an “Insider” and,
collectively, the “Insiders”) hereby agree with the Company as follows:
1. Definitions. As used herein, (i) “Business Combination” shall mean a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination
with one or more businesses or entities; (ii) “Founder Shares” shall mean the shares of Class B common stock of the Company, par value $0.0001 per share, outstanding prior to the
consummation of the Public Offering issued to the Sponsor and to certain funds and accounts managed by subsidiaries of BlackRock, Inc. (collectively, “BlackRock”) in private placements and
the shares of Common Stock that will be issued upon the automatic conversion of the shares of Class B common stock, par value $0.0001 per share, at the time of the initial Business Combination; (iii) “Private Placement Warrants” shall mean the warrants to be issued to our Sponsor and to BlackRock in a private placement simultaneously with the closing of the Public Offering and any warrants that may be issued upon conversion of
working capital loans or extension promissory notes, if any; (iv) “Public Shareholders” shall mean the holders of shares of Common Stock included in the Units issued in the Public
Offering; (v) “Public Shares” shall mean the shares of Common Stock included in the Units issued in the Public Offering; (vi) “Trust
Account” shall mean the trust account into which a portion of the net proceeds of the Public Offering and the sale of the Private Placement Warrants shall be deposited; (vii) “Transfer”
shall mean the (a) direct or indirect sale, offer to sell, contract or agreement to sell, hypothecation, pledge, grant or sale of any option, right, warrant or contract to purchase, purchase of any option or contract to sell, lending, or other
transfer or disposal of or agreement to dispose of, directly or indirectly, or establishment or increase of a put equivalent position or liquidation with respect to or decrease of a call equivalent position within the meaning of Section 16 of the
Securities Exchange Act of 1934, as amended, and the rules and regulations of the Commission promulgated thereunder with respect to, any security, (b) entry into any swap or other arrangement that transfers to another, in whole or in part, directly
or indirectly, any of the economic consequences of ownership of any security, whether any such transaction is to be settled by delivery of such securities, in cash or otherwise, or (c) public announcement of any intention to effect any transaction
specified in clause (a) or (b); and (viii) “Charter” shall mean the Company’s Amended and Restated Certificate of Incorporation, as the same may be amended from time to time.
2. Representations and Warranties.
(a) The Sponsor and each Insider, with respect to itself, herself or himself, represent and warrant to the Company that it, she or he has the full right and power, without violating any agreement to which it, she or he
is bound (including, without limitation, any non-competition or non-solicitation agreement with any employer or former employer), to enter into this Letter Agreement, as applicable, and to serve as an officer of the Company and/or a director on the
Company’s Board of Directors (the “Board”), as applicable, and each Insider hereby consents to being named in the Prospectus, road show and any other materials as an officer and/or
director of the Company, as applicable.
(b) Each Insider represents and warrants, with respect to herself or himself, that such Insider’s biographical information furnished to the Company (including any such information included in the Prospectus) is true
and accurate in all material respects and does not omit any material information with respect to such Insider’s background. The Insider’s questionnaire furnished to the Company is true and accurate in all material respects. Each Insider represents
and warrants that such Insider is not subject to or a respondent in any legal action for, any injunction, cease-and-desist order or order or stipulation to desist or refrain from any act or practice relating to the offering of securities in any
jurisdiction; such Insider has never been convicted of, or pleaded guilty to, any crime (i) involving fraud, (ii) relating to any financial transaction or handling of funds of another person, or (iii) pertaining to any dealings in any securities
and such Insider is not currently a defendant in any such criminal proceeding; and such Insider has never been suspended or expelled from membership in any securities or commodities exchange or association or had a securities or commodities license
or registration denied, suspended or revoked.
3. Business Combination Vote. The Sponsor and each Insider, with respect to itself or herself or himself, agrees that if the Company seeks stockholder approval of a proposed initial Business Combination, then
in connection with such proposed initial Business Combination, it, she or he, as applicable, shall vote all Founder Shares and any Public Shares held by it, her or him, as applicable, in favor of such proposed initial Business Combination
(including any proposals recommended by the Board in connection with such Business Combination) and not redeem any Public Shares held by it, her or him, as applicable, in connection with such stockholder approval.
4. Failure to Consummate a Business Combination; Trust Account Waiver.
(a) The Sponsor and each Insider hereby agree, with respect to itself, herself or himself, that in the event that the Company fails to consummate its initial Business Combination within the time period set forth in the
Charter, the Sponsor and each Insider shall take all reasonable steps to cause the Company to (i) cease all operations except for the purpose of winding up; (ii) as promptly as reasonably possible but not more than 10 business days thereafter,
redeem 100% of the Public Shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest earned on the funds held in the Trust Account and not previously released to the Company
to pay franchise and income taxes (less up to $100,000 of interest to pay dissolution expenses), divided by the number of then issued and outstanding Public Shares, which redemption will completely extinguish Public Shareholders’ rights as
stockholders (including the right to receive further liquidation distributions, if any); and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the Company’s remaining stockholders and the Board,
liquidate and dissolve, subject in the case of clauses (ii) and (iii) to the Company’s obligations under Delaware law to provide for claims of creditors and in all cases subject to the other requirements of applicable law. The Sponsor and each
Insider agree not to propose any amendment to the Charter (i) that would modify the substance or timing of the Company’s obligation to provide holders of the Public Shares the right to have their shares redeemed in connection with an initial
Business Combination or to redeem 100% of the Public Shares if the Company does not complete an initial Business Combination within the required time period set forth in the Charter or (ii) with respect to any provision relating to the rights of
holders of Public Shares, unless the Company provides its Public Shareholders with the opportunity to redeem their Public Shares upon approval of any such amendment at a per-share price, payable in cash, equal to the aggregate amount then on
deposit in the Trust Account, including interest earned on the funds held in the Trust Account and not previously released to the Company to pay its franchise and incomes taxes, if any, divided by the number of then-outstanding Public Shares.
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(b) The Sponsor and each Insider, with respect to itself, herself or himself, acknowledges that it, she or he has no right, title, interest or claim of any kind in or to any monies held in the Trust Account or any
other asset of the Company as a result of any liquidation of the Company with respect to the Founder Shares held by it, her or him, if any. The Sponsor and each of the Insiders hereby further waive, with respect to any Founder Shares and Public
Shares held by it, her or him, as applicable, any redemption rights it, she or he may have in connection with the consummation of a Business Combination, including, without limitation, any such rights available in the context of a stockholder vote
to approve such Business Combination or a stockholder vote to approve an amendment to the Charter (i) that would modify the substance or timing of the Company’s obligation to provide holders of the Public Shares the right to have their shares
redeemed in connection with an initial Business Combination or to redeem 100% of the Public Shares if the Company has not consummated an initial Business Combination within the time period set forth in the Charter or (ii) with respect to any
provision relating to the rights of holders of Public Shares (although the Sponsor and the Insiders shall be entitled to liquidation rights with respect to any Public Shares they hold if the Company fails to consummate a Business Combination within
the required time period set forth in the Charter).
5. Lock-up; Transfer Restrictions.
(a) The Sponsor and the Insiders agree that they shall not Transfer any Founder Shares (the “Founder Shares Lock-up”) until the earliest of (A) one year after
the completion of an initial Business Combination and (B) the date following the completion of an initial Business Combination on which the Company completes a liquidation, merger, share exchange or other similar transaction that results in all of
the Company’s stockholders having the right to exchange their shares of Common Stock for cash, securities or other property (the “Founder Shares Lock-up Period”). Notwithstanding the
foregoing, if, subsequent to a Business Combination, the closing price of the shares of Common Stock equals or exceeds $12.00 per share (as adjusted for share sub-divisions, share capitalizations, share consolidations, reorganizations,
recapitalizations and the like) for any 20 trading days within a 30-trading day period commencing at least 150 days after the Company’s initial Business Combination, the Founder Shares shall be released from the Founder Shares Lock-up.
(b) The Sponsor and Insiders agree that they shall not effectuate any Transfer of Private Placement Warrants or shares of Common Stock underlying such warrants until 30 days after the completion of an initial Business
Combination.
(c) Notwithstanding the provisions set forth in paragraphs 5(a) and (b), Transfers of the Founder Shares, Private Placement Warrants and shares of Common Stock underlying the Private Placement Warrants
are permitted (a) transfers to the Company’s officers or directors, any affiliates or family members of any of the Company’s officers or directors, officers, directors or members of the Sponsor or their affiliates, or any affiliates of our Sponsor
(or former sponsor if such transfer occurs after a dissolution of the Sponsor); (b) in the case of an individual, by gift to a member of one of the individual’s immediate family, an estate planning vehicle or to a trust, the beneficiary of which is
a member of the individual’s immediate family, an affiliate of such person or to a charitable organization; (c) in the case of an individual, by virtue of laws of descent and distribution upon death of the individual; (d) in the case of an
individual, pursuant to a qualified domestic relations order; (e) by private sales or transfers made in connection with the consummation of a Business Combination at prices no greater than the price at which the Founder Shares, Private Placement
Warrants or shares of Common Stock, as applicable, were originally purchased; (f) by virtue of the laws of the State of Delaware or the Sponsor’s operating agreement or BlackRock’s organizational documents upon liquidation or dissolution of the
Sponsor or BlackRock; (g) in the event of the Company’s liquidation prior to the completion of a Business Combination; or (h) in the event of completion of a liquidation, merger, share exchange or other similar transaction which results in all of
the Company’s Public Shareholders having the right to exchange their shares of Common Stock for cash, securities or other property subsequent to the completion of an initial Business Combination; provided, however, that in the case
of clauses (a) through (h) these permitted transferees must enter into a written agreement agreeing to be bound by these transfer restrictions.
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(d) During the period commencing on the effective date of the Prospectus and ending 180 days after such date, the Sponsor and each Insider shall not, without the prior written consent of the Underwriter, Transfer any
Units, shares of Common Stock, Founder Shares, Warrants or Private Placement Warrants, or any securities convertible into, or exercisable or exchangeable for, Units, shares of Common Stock, Founder Shares, Warrants or Private Placement Warrants; provided, however, that the foregoing shall not apply to (x) the forfeiture by the Sponsor of any Founder Shares pursuant to their terms or (y) the issuance and sale by
the Company of shares of Class B common stock, par value $0.0001 per share, to BlackRock and the redemption by the Company of shares of Class B common stock from the Sponsor.
6. Remedies. The Sponsor and each of the Insiders hereby agree and acknowledge that (i) each of the Underwriter and the Company would be irreparably injured in the event of a breach by the Sponsor or such
Insider of its, her or his obligations, as applicable under paragraphs 3, 4, 5, 7, 10 and 11, (ii) monetary damages may not be an adequate remedy for such breach and (iii) the non-breaching party
shall be entitled to injunctive relief, in addition to any other remedy that such party may have in law or in equity, in the event of such breach.
7. Payments by the Company. Except as disclosed in the Prospectus, neither the Sponsor nor any affiliate of the Sponsor nor any director or officer of the Company nor any affiliate of the directors or officers
shall receive from the Company any finder’s fee, reimbursement, consulting fee, monies in respect of any payment of a loan or other compensation prior to, or in connection with any services rendered in order to effectuate the consummation of the
Company’s initial Business Combination (regardless of the type of transaction that it is).
8. Director and Officer Liability Insurance. The Company will maintain an insurance policy or policies providing directors’ and officers’ liability insurance, and the Insiders shall be covered by such policy or
policies, in accordance with its or their terms, to the maximum extent of the coverage available for any of the Company’s directors or officers.
9. Termination. This Letter Agreement shall terminate on the earlier of (i) the expiration of the Founder Shares Lock-up Period and (ii) the liquidation of the Company.
10. Indemnification. In the event of the liquidation of the Trust Account upon the failure of the Company to consummate its initial Business Combination within the time period set forth in the Charter, the
Sponsor (the “Indemnitor”) agrees to indemnify and hold harmless the Company against any and all loss, liability, claim, damage and expense whatsoever (including, but not limited to, any
and all legal or other expenses reasonably incurred in investigating, preparing or defending against any litigation, whether pending or threatened) to which the Company may become subject as a result of any claim by (i) any third party for services
rendered or products sold to the Company (except for the Company’s independent auditors) or (ii) any prospective target business with which the Company has discussed entering into a transaction agreement (a “Target”); provided, however, that such indemnification of the Company by the Indemnitor (x) shall apply only to the extent necessary to ensure that such claims by a third party for services rendered or
products sold to the Company or a Target do not reduce the amount of funds in the Trust Account to below the lesser of (i) $10.00 per Public Share and (ii) the actual amount per Public Share held in the Trust Account as of the date of the
liquidation of the Trust Account if less than $10.00 per Public Share due to reductions in the value of the trust assets, in each case net of interest that may be withdrawn to pay the Company’s tax obligations, (y) shall not apply to any claims by
a third party or Target who executed a waiver of any and all rights to the monies held in the Trust Account (whether or not such waiver is enforceable) and (z) shall not apply to any claims under the Company’s indemnity of the Underwriter against
certain liabilities, including liabilities under the Securities Act of 1933, as amended. The Indemnitor shall have the right to defend against any such claim with counsel of its choice reasonably satisfactory to the Company if, within 15 days
following written receipt of notice of the claim to the Indemnitor, the Indemnitor notifies the Company in writing that it shall undertake such defense.
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11. Forfeiture of Founder Shares. To the extent that the Underwriter does not exercise its option to purchase additional Units within 45 days from the date of the Prospectus in full (as further described in the
Prospectus), the Sponsor agrees to automatically surrender to the Company for no consideration, for cancellation at no cost, an aggregate number of Founder Shares so that the number of Founder Shares will equal of 20% of the sum of the total number
of shares of Common Stock and Founder Shares outstanding at such time. The Sponsor and Insiders further agree that to the extent that the size of the Public Offering is increased or decreased, the Company will effect a share capitalization or a
share repurchase, as applicable, with respect to the Founder Shares immediately prior to the consummation of the Public Offering in such amount as to maintain the number of Founder Shares at 20% of the sum of the total number of shares of Common
Stock and Founder Shares outstanding at such time.
12. Entire Agreement. This Letter Agreement constitutes the entire agreement and understanding of the parties hereto in respect of the subject matter hereof and supersedes all prior understandings, agreements,
or representations by or among the parties hereto, written or oral, to the extent they relate in any way to the subject matter hereof or the transactions contemplated hereby. This Letter Agreement may not be changed, amended, modified or waived
(other than to correct a typographical error) as to any particular provision, except by a written instrument executed by all parties hereto.
13. Assignment. No party hereto may assign either this Letter Agreement or any of its rights, interests, or obligations hereunder without the prior written consent of the other parties. Any purported assignment
in violation of this paragraph shall be void and ineffectual and shall not operate to transfer or assign any interest or title to the purported assignee. This Letter Agreement shall be binding on the Sponsor, each of the Insiders and each of their
respective successors, heirs, personal representatives and assigns and permitted transferees.
14. Counterparts. This Letter Agreement may be executed in any number of original or facsimile counterparts, and each of such counterparts shall for all purposes be deemed to be an original, and all such
counterparts shall together constitute but one and the same instrument.
15. Effect of Headings. The paragraph headings herein are for convenience only and are not part of this Letter Agreement and shall not affect the interpretation thereof.
16. Severability. This Letter Agreement shall be deemed severable, and the invalidity or unenforceability of any term or provision hereof shall not affect the validity or enforceability of this Letter Agreement
or of any other term or provision hereof. Furthermore, in lieu of any such invalid or unenforceable term or provision, the parties hereto intend that there shall be added as a part of this Letter Agreement a provision as similar in terms to such
invalid or unenforceable provision as may be possible and be valid and enforceable.
17. Governing Law. This Letter Agreement shall be governed by and construed and enforced in accordance with the laws of the State of New York, without giving effect to conflicts of law principles that would
result in the application of the substantive laws of another jurisdiction. The parties hereto (i) all agree that any action, proceeding, claim or dispute arising out of, or relating in any way to, this Letter Agreement shall be brought and enforced
in the courts of New York City, in the State of New York, and irrevocably submit to such jurisdiction and venue, which jurisdiction and venue shall be exclusive, and (ii) waive any objection to such exclusive jurisdiction and venue or that such
courts represent an inconvenient forum.
18. Notices. Any notice, consent or request to be given in connection with any of the terms or provisions of this Letter Agreement shall be in writing and shall be sent by express mail or similar private
courier service, by certified mail (return receipt requested), by hand delivery or facsimile transmission.
[Signature Page Follows]
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Sincerely,
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PROOF ACQUISITION SPONSOR I, LLC
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By PROOF Sponsor Management, LLC
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Its Manager
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By:
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/s/ Xxxxxx X. Xxxxxxx
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Name:
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Xxxxxx X. Xxxxxxx
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Title:
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Managing Member
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[Signature Page to Letter Agreement]
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/s/ Xxxxxxx Xxxxxxx
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Xxxxxxx Xxxxxxx
Director (Lead Independent Director)
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[Signature Page to Letter Agreement]
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/s/ Xxxx X. Xxxxxx, Xx.
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Xxxx X. Xxxxxx, Xx.
Chief Executive Officer and Director
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[Signature Page to Letter Agreement]
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/s/ Xxxxx X. Xxxxxxxx
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Xxxxx X. Xxxxxxxx
Chairman of the Board
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[Signature Page to Letter Agreement]
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/s/ Xxxx Xxxxxx
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Xxxx Xxxxxx
Director
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[Signature Page to Letter Agreement]
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/s/ Xxxxxx X. Xxxxxxx
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Xxxxxx X. Xxxxxxx
Chief Financial Officer
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[Signature Page to Letter Agreement]
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/s/ Xxxx Xxxxxxx
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Xxxx Xxxxxxx
Director
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[Signature Page to Letter Agreement]
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/s/ Xxxxxxx X. Xxxxxxxx
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Xxxxxxx X. Xxxxxxxx
General Counsel and Corporate Secretary
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[Signature Page to Letter Agreement]
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Acknowledged and Agreed:
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By:
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/s/ Xxxx X. Xxxxxx, Xx. |
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Name:
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Xxxx X. Xxxxxx, Xx.
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Title:
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Chief Executive Officer and Director
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[Signature Page to Letter Agreement]
